Exhibit 10.2
(Multicurrency--Cross Border)
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of June 30, 1998
Project Orange Associates L.P. and Niagara Mohawk Power Corporation
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have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will bc governed by this Master Agreement, which
includes the schedule (the "Schedule"), and thc documents and other confirming
evidence (each a "Confirmation") exchanged between thc parties confirming those
Transactions.
Accordingly, the parties agree as follows:--
1. Interpretation
(a) Definitions. The terms defined in Section 14 and in the Schedule will have
the meanings therein specified for the purpose of this Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the provisions of
the Schedule and the other provisions of this Master Agreement, the
Schedule will prevail. In the event of any inconsistency between the
provisions of any Confirmation and this Master Agreement (including the
Schedule), such Confirmation will prevail for the purpose of the relevant
Transaction.
(c) Single Agreement. All Transactions arc entered into in reliance on the fact
that this Master Agreement and all Confirmations form a single agreement
between the parties (collectively referred to as this "Agreement") and the
parties would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for value
on that date in the place of the account specified in the relevant
Confirmation or otherwise pursuant to this Agreement, in freely
transferable funds and in the manner customary for payments in the required
currency. Where settlement is by delivery (that is, other than by payment),
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such delivery will be made for receipt on the due date in the manner
customary for the relevant obligation unless otherwise specified in the
relevant Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to (1)
the condition precedent that no Event of Default or Potential Event of
Default with respect to the other party has occurred and is continuing, (2)
the condition precedent that no Early Termination Date In respect Of the
relevant Transaction has occurred or been effectively designated and (3)
each other applicable condition precedent specified in this Agreement.
(b) Change of Account. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to
which such change applies unless such other party gives timely notice of a
reasonable objection to such change.
(c) Netting. If on any date amounts would otherwise be payable:--
(i) in the same currency, and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to apply to such Transactions from such date). This election may
be made separately (or different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.
(d) Deduction or Withholding for Tax.
(i) Gross-Up. All payments under this Agreement will be made without any
deduction or withholding for or on account of any Tax unless such deduction
or withholding is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, then in effect. If
a party is so required to deduct or withhold, then that party ("X') will:--
(1) promptly notify the other party ("Y") of such requirement:
(2) pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be
deducted or withheld from any additional amount paid by X to Y under
this Section 2(d)) promptly upon the
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earlier of determining that such deduction or withholding is required
or receiving notice that such amount has been assessed against Y:
(3) promptly forward to Y an official receipt (or a certified copy),
or other documentation reasonably acceptable to Y, evidencing such
payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to the
payment to which Y is otherwise entitled under this Agreement, such
additional amount as is necessary to ensure that the net amount
actually received by Y (free and clear of Indemnifiable Taxes, whether
assessed against X or Y) will equal the full amount Y would have
received had no such deduction or withholding been required. However,
X will not be required to pay any additional amount to Y to the extent
that it would not be required to be paid but for:--
(A) the failure by Y to comply with or perform any agreement
contained in Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to Section
3(f) to be accurate and true unless such failure would not have
occurred but for (I) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date
on which a Transaction is entered into (regardless of whether such
action is taken or brought with respect to a party to this
Agreement) or (II) a Change in Tax Law.
(ii) Liability. If:--
(1) X is required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, to make any deduction
or withholding in respect of which X would not be required to pay an
additional amount to Y under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly against
X,
then, except to the extent Y has satisfied or then satisfies the liability
resulting from such Tax, Y will promptly pay to X the amount of such
liability (including any related liability for interest, but including any
related liability for penalties only if Y has failed to comply with or
perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).
(e) Default Interest; Other Amounts. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.
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3. Representations
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered into
and, in the case of the representations in Section 3(f), at all times until the
termination of this Agreement) that:--
(a) Basic Representations.
(i) Status. It is duly organised and validly existing under the laws of the
jurisdiction of its organisation or incorporation and, if relevant under
such laws, in good standing;
(ii) Powers. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to deliver
this Agreement and any other documentation relating to this Agreement that
it is required by this Agreement to deliver and to perform its obligations
under this Agreement and any Obligations it has under any Credit Support
Document to which it is a party and has taken all necessary action to
authorise such execution, delivery and performance;
(iii) No Violation or Conflict. Such execution, delivery and performance do
not violate or conflict with any law applicable to it, any provision of its
constitutional documents, any order or judgment of any court or other
agency of government applicable to it or any of its assets or any
contractual restriction binding on or affecting it or any of its assets;
(iv) Consents. All governmental and other consents that are required to
have been obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party have been obtained and are in full
force and effect and all conditions of any such consents have been complied
with; and
(v) Obligations Binding. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute legal, valid and
binding obligations, enforceable in accordance with their respective terms
(subject to applicable bankruptcy, reorganisation, insolvency, moratorium
or similar laws affecting creditors' rights generally and subject, as to
enforceability, to equitable principles of general application (regardless
of whether enforcement is sought in a proceeding in equity or at law)).
(b) Absence of Certain Events. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding at
law or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.
(d) Accuracy of Specified information. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
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(e) Payer Tax Representation. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(e) is accurate and true.
(f) Payee Tax Representations. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(f) is accurate and true.
4. Agreements
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:--
(a) Furnish Specified Information. It will deliver to the other party or, in
certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:--
(i) any forms, documents or certificates relating to taxation specified in
the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any Confirmation; and
(iii) upon reasonable demand by such other party, any form or document that
may be required or reasonably requested in writing in order to allow such
other party or its Credit Support Provider to make a payment under this
Agreement or any applicable Credit Support Document without any deduction
or withholding for or on account of any Tax or with such deduction or
withholding at a reduced rate (so long as the completion, execution or
submission of such form or document would not materially prejudice the
legal or commercial position of the party in receipt of such demand), with
any such form or document to be accurate and completed in a manner
reasonably satisfactory to such other party and to be executed and to be
delivered with any reasonably required certification,
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.
(b) Maintain Authorisations. It will use all reasonable efforts to maintain in
full force and effect all consents of any governmental or other authority
that are required to be obtained by it with respect to this Agreement or
any Credit Support Document to which it is a party and will use all
reasonable efforts to obtain any that may become necessary in the future.
(c) Comply with Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to
comply would materially impair its ability to perform its obligations under
this Agreement or any Credit Support Document to which it is a party.
(d) Tax Agreement. It will give notice of any failure of a representation made
by it under Section 3(f) to be accurate and true promptly upon learning of
such failure.
(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of
this Agreement by a jurisdiction in which it is incorporated, organised,
managed and controlled, or considered to have its seat, or in which a
branch or office through which it is acting for the purpose of this
Agreement is
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located ("Stamp Tax Jurisdiction") and will indemnify the other party against
any Stamp Tax levied or imposed upon the other party or in respect of the other
party's execution or performance of this Agreement by any such Stamp Tax
Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the
other party.
5. Events of Default and Termination Events
(a) Events of Default. The Occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an 'Event of Default") with respect to such party:--
(i) Failure to Pay or Deliver. Failure by the party to make, when due, any
payment under this Agreement or delivery under Section 2(a)(i) or 2(e)
required to be made by it if such failure is not remedied on or before the
third Local Business Day after notice of such failure is given to the
party;
(ii) Breach of Agreement. Failure by the party to comply with or perform
any agreement or obligation (other than an obligation to make any payment
under this Agreement or delivery under Section 2(a)(i) or 2(e) or to give
notice of a Termination Event or any agreement or obligation under Section
4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party
in accordance with this Agreement if such failure is not remedied on or
before the thirtieth day after notice of such failure is given to the
party;
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider of such party to
comply with or perform any agreement or obligation to he complied with
or performed by it in accordance with any Credit Support Document if
such failure is continuing after any applicable grace period has
elapsed;
(2) the expiration or termination of such Credit Support Document or the
failing or ceasing of such Credit Support Document to be in full force
and effect for the purpose of this Agreement (in either case other than
in accordance with its terms) prior to the satisfaction of all
obligations of such party under each Transaction to which such Credit
Support Document relates without the written consent of the other party;
or
(3) the party or such Credit Support Provider disaffirms, disclaims,
repudiates or rejects, in whole or in part, or challenges the validity
of, such Credit Support Document;
(iv) Misrepresentation. A representation (other than a representation under
Section 3(e) or (f)) made or repeated or deemed to have been made or
repeated by the party or any Credit Support Provider of such party in this
Agreement or any Credit Support Document proves to have been incorrect or
misleading in any material respect when made or repeated or deemed to have
been made or repeated;
(v) Default under Specified Transaction. The party, any Credit Support
Provider of such party or any applicable Specified Entity of such party(l)
defaults under a Specified Transaction and, after giving effect to any
applicable notice requirement or grace period, there occurs a liquidation
of, an acceleration of obligations under, or an early termination
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of, that Specified Transaction, (2) defaults, after giving effect to any
applicable notice requirement or grace period, in making any payment or
delivery due on the last payment, delivery or exchange date of, or any
payment on early termination of, a Specified Transaction (or such default
continues for at least three Local Business Days if there is no applicable
notice requirement or grace period) or (3) disaffirms, disclaims,
repudiates or rejects, in whole or in part, a Specified Transaction (or
such action is taken by any person or entity appointed or empowered to
operate it or act on its behalf);
(vi) Cross Default. If "Cross Default" is Specified in the Schedule as
applying to the party, the occurrence or existence of (1) a default, event
of default or other similar condition or event (however described) in
respect of such party, any Credit Support Provider of such party or any
applicable Specified Entity of such party under one or more agreements or
instruments relating to Specified Indebtedness of any of them (individually
or collectively) in an aggregate amount of not less than the applicable
Threshold Amount (as specified in the Schedule) which has resulted in such
Specified Indebtedness becoming, or becoming capable at such time of being
declared, due and payable under such agreements or instruments, before it
would otherwise have been due and payable or (2) a default by such party,
such Credit Support Provider or such Specified Entity (individually or
collectively) in making one or more payments on the due date thereof in an
aggregate amount of not less than the applicable Threshold Amount under
such agreements or instruments (after giving effect to any applicable
notice requirement or grace period);
(vii) Bankruptcy. The party, any Credit Support Provider of such party or
any applicable Specified Entity of such party:--
(1) is dissolved (other than pursuant to a consolidation, amalgamation
or merger); (2) becomes insolvent or is unable to pay its debts or fails
or admits in writing its inability generally to pay its debts as they
become due; (3) makes a general assignment, arrangement or composition
with or for the benefit of its creditors; (4) institutes or has
instituted against it a proceeding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy or insolvency law or
other similar law affecting creditors' rights, or a petition is
presented for its winding-up or liquidation, and, in the case of any
such proceeding or petition instituted or presented against it, such
proceeding or petition (A) results in a judgment of insolvency or
bankruptcy or the entry of an order for relief or the making of an order
for its winding-up or liquidation or (B) is not dismissed, discharged,
stayed or restrained in each case within 30 days of the institution or
presentation thereof; (5) has a resolution passed for its winding-up,
official management or liquidation (other than pursuant to a
consolidation, amalgamation or merger); (6) seeks or becomes subject to
the appointment of an administrator, provisional liquidator,
conservator, receiver, trustee, custodian or other similar official for
it or for all or substantially all its assets; (7) has a secured party
take possession of all or substantially all its assets or has a
distress, execution, attachment, sequestration or other legal process
levied, enforced or sued on or against all or substantially all its
assets and such secured party maintains possession, or any such process
is not dismissed, discharged, stayed or restrained, in each case within
30 days thereafter; (8) causes or is subject to any event with respect
to it which, under the applicable laws of any jurisdiction, has an
analogous effect to any of the events specified in clauses (1) to (7)
(inclusive); or (9) takes any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the foregoing
acts; or
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(viii) Merger Without Assumption. The party or any Credit Support Provider
of such party consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and, at
the time of such consolidation, amalgamation, merger or transfer:-
(1) the resulting, surviving or transferee entity fails to assume all
the obligations of such party or such Credit Support Provider under this
Agreement or any Credit Support Document to which it or its predecessor
was a party by operation of law or pursuant to an agreement reasonably
satisfactory to the other party to this Agreement; or
(2) the benefits of any Credit Support Document fall to extend (without
the consent of the other party) to the performance by such resulting,
surviving or transferee entity of its obligations under this Agreement.
(b) Termination Events. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an illegality
if the event is specified in (i) below, a Tax Event if the event is
specified in (ii) below or a Tax Event Upon Merger if the event is
specified in (iii) below, and, if specified to be applicable, a Credit
Event Upon Merger if the event is specified pursuant to (iv) below or an
Additional Termination Event if the event is specified pursuant to (v)
below:--
(i) Illegality. Due to the adoption of, or any change in, any applicable
law after the date on which a Transaction is entered into, or due to the
promulgation of, or any change in, the interpretation by any court,
tribunal or regulatory authority with competent jurisdiction of any
applicable law after such date, it becomes unlawful (other than as a result
of a breach by the party of Section 4(b)) for such party (which will be the
Affected Party):--
(1) to perform any absolute or contingent obligation to make a payment
or delivery or to receive a payment or delivery in respect of such
Transaction or to comply with any other material provision of this
Agreement relating to such Transaction: or
(2) to perform, or for any Credit Support Provider of such party to
perform, any contingent or other obligation which the party (or such
Credit Support Provider) has under any Credit Support Document relating
to such Transaction;
(ii) Tax Event. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on which
a Transaction is entered into (regardless of whether such action is taken
or brought with respect to a party to this Agreement) or (y) a Change in
Tax Law, the party (which will be the Affected Party) will, or there is a
substantial likelihood that it will, on the next succeeding Scheduled
Payment Date (1) be required to pay to the other party an additional amount
in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (except in
respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a
payment from which an amount is required to be deducted or withheld for or
on account of a Tax (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) and no additional amount is required to be paid in
respect of such Tax under Section 2(d)(i)(4) (other than by reason of
Section 2(d)(i)(4)(A) or (B));
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(iii) Tax Event Upon Merger. The party (the "Burdened Party') on the next
succeeding Scheduled Payment Date will either (1) be required to pay an
additional amount in respect of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or
6(e)) or (2) receive a payment from which an amount has been deducted or
withheld for or on account of any Indemnifiable Tax in respect of which the
other party is not required to pay an additional amount (other than by
reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of a
party consolidating or amalgamating with, or merging with or into, or
transferring all or substantially all its assets to, another entity (which
will be the Affected Party) where such action does not constitute an event
described in Section 5(a)(viii);
(iv) Credit Event Upon Merger. If "Credit Event Upon Merger" is specified
in the Schedule as applying to the party, such party ("X"), any Credit
Support Provider of X or any applicable Specified Entity of X consolidates
or amalgamates with, or merges with or into, or transfers all or
substantially all its assets to, another entity and such action does not
constitute an event described in Section 5(a)(viii) but the
creditworthiness of the resulting, surviving or transferee entity is
materially weaker than that of X, such Credit Support Provider or such
Specified Entity, as the case may be, immediately prior to such action
(and, in such event, X or its successor or transferee, as appropriate, will
be the Affected Party); or
(v) Additional Termination Event. If any "Additional Termination Event" is
specified in the Schedule or any Confirmation as applying, the occurrence
of such event (and, in such event, the Affected Party or Affected Parties
shall be as specified for such Additional Termination Event in the Schedule
or such Confirmation).
(c) Event of Default and Illegality. If an event or circumstance which would
otherwise constitute or give rise to an Event of Default also constitutes
an Illegality, it will be treated as an Illegality and will not constitute
an Event of Default.
6. Early Termination
(a) Right to Terminate Following Event of Default. If at any time an Event of
Default with respect to a party (the "Defaulting Party") has occurred and
is then continuing, the other party (the "Non-defaulting Party") may, by
not more than 20 days notice to the Defaulting Party specifying the
relevant Event of Default, designate a day not earlier than the day such
notice is effective as an Early Termination Date in respect of all
outstanding Transactions. If, however, "Automatic Early Termination" is
specified in the Schedule as applying to a party, then an Early Termination
Date in respect of all outstanding Transactions will occur immediately upon
the occurrence with respect to such party of an Event of Default specified
in Section 5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto,
(8), and as of the time immediately preceding the institution of the
relevant proceeding or the presentation of the relevant petition upon the
occurrence with respect to such party of an Event of Default specified in
Section 5(a)(vii)(4) or, to the extent analogous thereto, (g).
(b) Right to Terminate Following Termination Event.
(i) Notice. If a Termination Event occurs, an Affected Party will, promptly
upon becoming aware of it, notify the other party, specifying the nature of
that Termination Event and each Affected Transaction and will also give
such other information about that Termination Event as the other party may
reasonably require.
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(ii) Transfer to A void Termination Event. If either an Illegality under
Section 5(b)(i)(l) or a Tax Event occurs and there is only one Affected
Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the
Affected Party, the Affected Party will, as a condition w its right to
designate an Early Termination Date under Section 6(b)(iv), use all
reasonable efforts (which will not require such party to incur a loss,
excluding immaterial, incidental expenses) to transfer within 20 days after
it gives notice under Section 6(b)(i) all its rights and obligations under
this Agreement in respect of the Affected Transactions to another of its
Offices or Affiliates so that such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days after
the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be subject to
and conditional upon the prior written consent of the other party, which
consent will not be withheld if such other party's policies in effect at
such time would permit it to enter into transactions with the transferee on
the terms proposed.
(iii) Two Affected Parties, If an Illegality under Section 5(b)(i)(1) or a
Tax Event occurs and there are two Affected Parties, each party will use
all reasonable efforts to reach agreement within 30 days after notice
thereof is given under Section 6(b)(i) on action to avoid that Termination
Event.
(iv) Right to Terminate, If;--
(1) a transfer under Section 6(b)(ii) or an agreement under Section
6(b)(iii), as the case may be, has not been effected with respect to all
Affected Transactions within 30 days after an Affected Party gives
notice under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon Merger
or an Additional Termination Event occurs, or a Tax Event Upon Merger
occurs and the Burdened Party is not the Affected Party.
either party in the case of an Illegality, the Burdened Party in the case
of a Tax Event Upon Merger, any Affected Party in the case of a Tax Event
or an Additional Termination Event if there is more than one Affected
Party, or the party which Is not the Affected Party in the case of a Credit
Event Upon Merger or an Additional Termination Event if there is only one
Affected Party may, by not more than 20 days notice to the other party and
provided that the relevant Termination Event is then continuing, designate
a day not earlier than the day such notice is effective as an Early
Termination Date in respect of all Affected Transactions.
(c) Effect of Designation.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the date so
designated, whether or not the relevant Event of Default or Termination
Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early Termination
Date, no further payments or deliveries under Section 2(a)(i) or 2(c) in
respect of the Terminated
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Transactions will be required to be made, but without prejudice to the
other provisions of this Agreement. The amount, if any, payable in respect
of an Early Termination Date shall be determined pursuant to Section 6(e).
(d) Calculations.
(i) Statement. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and will
provide to the other party a statement (1) showing, in reasonable detail,
such calculations (including all relevant quotations and specifying any
amount payable under Section 6(e)) and (2) giving details of the relevant
account to which any amount payable to it is to be paid. In the absence of
written confirmation from the source of a quotation obtained in determining
a Market Quotation, the records of the party obtaining such quotation will
be conclusive evidence of the existence and accuracy of such quotation.
(ii) Payment Date. An amount calculated as being due in respect of any
Early Termination Date under Section 6(e) will be payable on the day that
notice of the amount payable is effective (in the case of an Early
Termination Date which is designated or occurs as a result of an Event of
Default) and on the day which is two Local Business Days after the day on
which notice of the amount payable is effective (in the case of an Early
Termination Date which is designated as a result of a Termination Event).
Such amount will be paid together with (to the extent permitted under
applicable law) interest thereon (before as well as after judgment) in the
Termination Currency, from (and including) the relevant Early Termination
Date to (but excluding) the date such amount is paid, at the Applicable
Rate. Such interest will be calculated on the basis of daily compounding
and the actual number of days elapsed.
(e) Payments on Early Termination. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.
(i) Events of Default. If the Early Termination Date results from an
Event of Default:--
(1) First Method and Market Quotation. If the First Method and Market
Quotation apply, the Defaulting Party will pay to the Non-defaulting
Party the excess, if a positive number, of (A) the sum of the Settlement
Amount (determined by the Non-defaulting Party) in respect of the
Terminated Transactions and the Termination Currency Equivalent of the
Unpaid Amounts Owing to the Non-defaulting Party over (B) the
Termination Currency Equivalent of the Unpaid Amounts owing to the
Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply, the
Defaulting Party will pay to the Non-defaulting Party, if a positive
number, the Non-defaulting Party's Loss in respect of this Agreement.
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(3) Second Method and Market Quotation. If the Second Method and Market
Quotation apply, an amount will be payable equal to (A) the sum of the
Settlement Amount (determined by the Non-defaulting Party) in respect of
the Terminated Transactions and the Termination Currency Equivalent of
the Unpaid Amounts owing to the Non-defaulting Party less (B) the
Termination Currency Equivalent of the Unpaid Amounts owing to the
Defaulting Party. If that amount is a positive number, the Defaulting
Party will pay it to the Non-defaulting Party; if it is a negative
number, the Non-defaulting Party will pay the absolute value of that
amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss apply, an
amount will be payable equal to the Non-defaulting Party's Loss in
respect of this Agreement. If that amount is a positive number, the
Defaulting Party will pay it to the Non-defaulting Party; if it is a
negative number, the Non-defaulting Party will pay the absolute value of
that amount to the Defaulting Party.
(ii) Termination Events. If the Early Termination Date results from a
Termination Event:--
(1) One Affected Party. If there is one Affected Party, the amount
payable will be determined in accordance with Section 6(e)(i)(3), if
Market Quotation applies, or Section 6(e)(i)(4), if Loss applies,
except that, in either case, references to the Defaulting Party and to
the Non-defaulting Party will be deemed to be references to the
Affected Party and the party which is not the Affected Party,
respectively, and, if Loss applies and fewer than all the Transactions
are being terminated, Loss shall be calculated in respect of all
Terminated Transactions.
(2) Two Affected Parties. If there are two Affected Parties:--
(A) if Market Quotation applies, each party will determine a
Settlement Amount in respect of the Terminated Transactions, and an
amount will be payable equal to (I) the sum of (a) one-half of the
difference between the Settlement Amount of the party with the
higher Settlement Amount ("X") and the Settlement Amount of the
party with the lower Settlement Amount ("Y") and (b) the
Termination Currency Equivalent of the Unpaid Amounts owing to X
less (II) the Termination Currency Equivalent of the Unpaid Amounts
owing to Y; and
(B) if Loss applies, each party will determine its Loss in respect
of this Agreement (or, if fewer than all the Transactions are being
terminated, in respect of all Terminated Transactions) and an
amount will be payable equal to one-half of the difference between
the Loss of the party with the higher Loss ("X") and the Loss of
the party with the lower Loss ("Y").
If the amount payable Is a positive number, Y will pay it to X; if it
is a negative number, X will pay the absolute value of that amount to
Y.
(iii) Adjustment for Bankruptcy. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies in
respect of a party, the amount determined under this Section 6(e) will be
subject to such adjustments as are appropriate and permitted by law to
reflect any payments or deliveries made by one party to the other
-12-
under this Agreement (and retained by such other party) during the period
from the relevant Early Termination Date to the date for payment determined
under Section 6(d)(ii).
(iv) Pre-Estimate. The parties agree that if Market Quotation applies an
amount recoverable under this Section 6(e) is a reasonable pre-estimate of
loss and not a penalty, Such amount is payable for the loss of bargain and
the loss of protection against future risks and except as otherwise
provided in this Agreement neither party will be entitled to recover any
additional damages as a consequence of such losses.
7. Transfer
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that:--
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of
all or substantially all its assets to, another entity (but without
prejudice to any other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in any
amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be void.
8. Contractual Currency
(a) Payment in the Contractual Currency. Each payment under this Agreement will
be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable
law, any obligation to make payments under this Agreement in the
Contractual Currency will not be discharged or satisfied by any tender in
any currency other than the Contractual Currency, except to the extent such
tender results in the actual receipt by the party to which payment is owed,
acting in a reasonable manner and in good faith in converting the currency
so tendered into the Contractual Currency, of the full amount in the
Contractual Currency of all amounts payable in respect of this Agreement.
If for any reason the amount in the Contractual Currency so received falls
short of the amount in the Contractual Currency payable in respect of this
Agreement, the party required to make the payment will, to the extent
permitted by applicable law, immediately pay such additional amount in the
Contractual Currency as may be necessary to compensate for the shortfall.
If for any reason the amount in the Contractual Currency so received
exceeds the amount in the Contractual Currency payable in respect of this
Agreement, the party receiving the payment will refund promptly the amount
of such excess.
(b) Judgments. To the extent permitted by applicable law, if any judgment or
order expressed in a currency other than the Contractual Currency is
rendered (i) for the payment of any amount owing in respect of this
Agreement, (ii) for the payment of any amount relating to any early
termination in respect of this Agreement or (iii) in respect of a judgment
or order of another court for the payment of any amount described in (i) or
(ii) above, the party seeking recovery, after recovery in full of the
aggregate amount to which such party is entitled pursuant to the judgment
or order, will be entitled to receive immediately from the other party the
amount of any shortfall of the Contractual Currency received by such party
as a consequence of sums paid in such other currency and will refund
promptly to the other party any excess of the Contractual Currency received
by such party as a consequence of sums paid in such other
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currency if such shortfall or such excess arises or results from any variation
between the rate of exchange at which the Contractual Currency is converted into
the currency of the judgment or order for the purposes of such judgment or order
and the rate of exchange at which such party is able, acting in a reasonable
manner and in good faith in converting the currency received into the
Contractual Currency, to purchase the Contractual Currency with the amount of
the currency of the judgment or order actually received by such party. The term
"rate of exchange" includes, without limitation, any premiums and costs of
exchange payable in connection with the purchase of or conversion into the
Contractual Currency.
(c) Separate Indemnities. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and
independent causes of action, will apply notwithstanding any indulgence
granted by the party to which any payment is owed and will not be affected
by judgment being obtained or claim or proof being made for any other sums
payable in respect of this Agreement.
(d) Evidence of Loss. For the purpose of this Section 8, It will be sufficient
for a party to demonstrate that It would have suffered a loss had an actual
'exchange or purchase been made.
9. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and
supersedes all oral communication and prior writings with respect thereto.
(b) Amendments. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing
evidenced by a facsimile transmission) and executed by each of the parties
or confirmed by an exchange of telexes or electronic messages on an
electronic messaging System.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive
the termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative
and not exclusive of any rights, powers, remedies and privileges provided
by law.
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver in respect
of it) may be executed and delivered in counterparts (including by
facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of each
Transaction from the moment they agree to those terms (whether orally or
otherwise). A Confirmation shall be entered into as soon as practicable and
may be executed and delivered in counterparts (including by facsimile
transmission) or he created by an exchange of telexes or by an exchange of
electronic messages on an electronic messaging system, which in each case
will be sufficient for all purpose-s to evidence a binding supplement to
this Agreement. The parties will specify therein or through another
effective means that any such counterpart, telex or electronic message
constitutes a Confirmation.
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(f) No Waiver of Rights. A failure or delay in exercising any right, power or
privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege
will not be presumed to preclude any subsequent or further exercise, of
that right, power or privilege or the exercise of any other right, power or
privilege.
(g) Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken
into consideration in interpreting this Agreement.
10. Offices; Multibranch Parties
(a) If Section 10(a) is specified in the Schedule as applying, each party that
enters into a Transaction through an Office other than its head or home
office represents to the other party that, notwithstanding the place of
booking office or jurisdiction of incorporation or organisation of such
party, the obligations of such party are the same as if it had entered into
the Transaction through its head or home office. This representation will
be deemed to be repeated by such party on each date on which a Transaction
is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may nuke and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office
through which it makes and receives payments or deliveries with respect to
a Transaction will be specified in the relevant Confirmation.
11. Expenses
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document to
which the Defaulting Party is a party or by reason of the early termination of
any Transaction, including, but not limited to, costs of collection.
12. Notices
(a) Effectiveness. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice
or other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--
(i) if in writing and delivered in person or by courier, on the date it is
delivered;
(ii) if sent by telex, on the date the recipient's answerback is received;
(iii) if sent by facsimile transmission, on the date that transmission is
received by a responsible employee of the recipient in legible form (it
being agreed that the burden of
-15-
proving receipt will be on the sender and will not be met by a transmission
report generated by the senders facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or the
equivalent (return receipt requested), on the date that mail is delivered
or its delivers' is attempted: or
(v) if sent by electronic messaging system, on the date that electronic
message is received.
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) Change of Addresses. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details
at which notices or other communications are to be given to it.
13. Governing Law and Jurisdiction
(a) Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings"), each party irrevocably:--
(i) submits to the jurisdiction of the English courts, if this Agreement
is expressed to be governed by English law, or to the non-exclusive
jurisdiction of the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New York City, if
this Agreement is expressed to be governed by the laws of the State of New
York; and
(ii) waives any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any claim that
such Proceedings have been brought in an inconvenient forum and further
waives the right to object with respect to such Proceedings, that such
court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Xxx 0000 or any modification, extension or re-
enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) Service of Process. Each party irrevocably appoints the Process Agent (if
any) specified opposite its name in the Schedule to receive, for it and on
its behalf, service of process In any proceedings. If for any reason any
party's Process Agent is unable to act as such, such party will promptly
notify the other party and within 30 days appoint a substitute process
agent acceptable to the other party. The parties irrevocably consent to
service of process given in the manner
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provided for notices in Section 12. Nothing in this Agreement will affect the
right of either party to serve process in any other manner permitted by
law.
(d) Waiver of Immunities. Each party irrevocably waives, to the fullest extent
permitted by applicable law, with respect to itself and its revenues and
assets (irrespective of their use or intended use), all immunity on the
grounds of sovereignty or other similar grounds from (i) suit, (ii)
jurisdiction of any court, (iii) relief by way of injunction, order for
specific performance or for recovery of property, (iv) attachment of its
assets (whether before or after judgment) and (v) execution or enforcement
of any judgment to which it or its revenues or assets might otherwise be
entitled in any Proceedings in the courts of any jurisdiction and
irrevocably agrees, to the extent permitted by applicable law, that it will
not claim any such immunity in any Proceedings.
14. Definitions
As used in this Agreement:--
"Additional Termination Event" has the meaning specified in Section 5(b).
"Affected Party" has the meaning-specified in Section 5(b).
"Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"Affiliate" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"Applicable Rate" means:--
(a) in respect of obligations payable or deliverable (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section
6(d)(ii)) on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would
have been but (or Section 2(a)(iii)) by a Non-defaulting Party, the Non-
default Rate; and
(d) in all other cases, the Termination Rate.
"Burdened Party" has the meaning, specified in Section 5(b).
"Change in Tax Law" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs on or after the date on which the
irrelevant Transaction is entered into.
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"consent" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.
"Credit Event Upon Merger" has the meaning specified in Section 5(b).
"Credit Support Document" means any agreement or instrument that is specified as
such in this Agreement.
"Credit Support Provider" has the meaning specified in the Schedule.
"Default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
"Defaulting Party" has the meaning specified in Section 6(a).
"Early Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"Event of Default" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.
"Illegality" has the meaning specified in Section 5(b).
"Indemnifiable Tax" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation authority imposing such
Tax and the recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such jurisdiction,
or being or having been organised, present or engaged in a trade or business in
such jurisdiction, or having or having had a permanent establishment or fixed
place of business in such jurisdiction, but excluding a connection arising
solely from such recipient or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this
Agreement or a Credit Support Document).
"law" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority) and
"lawful" and "unlawful" will be construed accordingly.
"Local Business Day" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(h), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
with respect to such Specified Transaction.
"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party
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reasonably determines in good faith to be its total losses and costs (or gain,
in which case expressed as a negative number) in connection with this Agreement
or that Terminated Transaction or group of Terminated Transactions, as the case
may be, including any loss of bargain, cost of funding or, at the election of
such party but without duplication, loss or cost incurred as a result of its
terminating, liquidating, obtaining or reestablishing any hedge or related
trading position (or any gain resulting from any of them). Loss includes losses
and costs (or gains) in respect of any payment or delivery required to have been
made (assuming satisfaction of each applicable condition precedent) on or before
the relevant Early Termination Date and not made, except, so as to avoid
duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does
not include a party's legal fees and out-of-pocket expenses referred to under
Section 11. A party will determine its Loss as of the relevant Early Termination
Date, or, if that is not reasonably practicable, as of the earliest date
thereafter as is reasonably practicable. A party may (but need not) determine
its Loss by reference to quotations of relevant rates or prices from one or more
leading dealers in the relevant markets.
"Market Quotation" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference Market-
maker to enter into a transaction (the "Replacement Transaction") that would
have the effect of preserving for such party the economic equivalent of any
payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have been required after that date. For this
purpose, Unpaid Amounts in respect of the Terminated Transaction or group of
Terminated Transactions are to be excluded but, without limitation, any payment
or delivery that would, but for the relevant Early Termination Date, have been
required (assuming satisfaction of each applicable condition precedent) after
that Early Termination Date is to be included. The Replacement Transaction would
be subject to such documentation as such party and the Reference Market-maker
may, in good faith, agree. The party making the determination (or its agent)
will request each Reference Market-maker to provide its quotation to the extent
reasonably practicable as of the same day and time (without regard to-different
time zones) on or as soon as reasonably practicable after the relevant Early
Termination Date. The day and time as of which those quotations are to be
obtained will be selected in good faith by the party obliged to make a
determination under Section 6(e), and, if each party is so obliged, after
consultation with the other. If more than three quotations are provided, the
Market Quotation will be the arithmetic mean of the quotations, without regard
to the quotations having the highest and lowest values. If exactly three such
quotations are provided, the Market Quotation will be the quotation remaining
after disregarding the highest and lowest quotations. For this purpose, if more
than one quotation has the same highest value or lowest value, then one of such
quotations shall be disregarded. If fewer than three quotations are provided, it
will be deemed that the Market Quotation in respect of such Terminated
Transaction or group of Terminated Transactions cannot be determined.
"Non-default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.
"Non-defaulting Party" has the meaning specified in Section 6(a).
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"Office" means a branch or office of a party, which may be such party's head or
home office.
"Potential Event of Default" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.
"Reference Market-makers" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.
"Relevant Jurisdiction" means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organised, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, from or through which such payment
is made.
"Scheduled Payment Date" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"Set-off" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
"Settlement Amount" means, with respect to a party and any Early Termination
Date, the sum of:--
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined and
(b) such party's Loss (whether positive or negative and without reference to
any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions (or which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"Specified Entity" has the meaning specified in the Schedule.
"Specified Indebtedness" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.
"Specified Transaction" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions
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and (c) any other transaction identified as a Specified Transaction in this
Agreement or the relevant confirmation.
"Stamp Tax" means any stamp, registration, documentation or similar tax.
'Tax" means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto) that is
imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax.
"Tax Event" has the meaning specified in Section 5(b).
"Tax Event Upon Merger" has the meaning specified in Section 5(b).
"Terminated Transactions" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"Termination Currency" has the meaning specified in the Schedule.
"Termination Currency Equivalent" means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) (or the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a rate
for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.
"Termination Event" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.
"Termination Rate" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"Unpaid Amounts" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market value of that which was (or
-21-
would have been) required to be delivered as of the originally scheduled date
for delivery, in each case together with (to the extent permitted under
applicable law) interest, in the currency of such amounts, from (and including)
the date such amounts or obligations were or would have been required to have
been paid or performed to (but excluding) such Early Termination Date at the
Applicable Rate. Such amounts of interest will be calculated on the basis of
daily compounding and the actual number of days elapsed. The fair market value
of any obligation referred to in clause (b) above shall be reasonably determined
by the party obliged to make the determination under Section 6(e) or, if each
party is so obliged, it shall be the average of the Termination Currency
Equivalents of the fair market values reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
Project Orange Associates, L.P. NIAGARA MOHAWK POWER CORPORATION
By: NCP Syracuse, Inc., By: /s/ Xxxxxxx X. Xxxxxx
Its General Partner ___________________________________
Name: Xxxxxxx X. Xxxxxx
By: NCP Energy, Inc. Title: V.P. Marketing & Planning
Its Attorney-in-Fact Date:
By: /s/ Xxxxx Xxxx
_____________________
Name: Xxxxx Xxxx
Title: President
Date:
-22-
SCHEDULE TO ISDA MASTER AGREEMENT
DATED AS OF JUNE 30, 1998
Between Project Orange Associates, L.P. "PROJECT ORANGE" and
Niagara Mohawk Power Corporation "NIAGARA"
I. TERMINATION PROVISIONS
1(a). "Specified Entity" shall mean in relation to NIAGARA for the
purpose of:
(1) Section 5(a)(v): None
(2) Section 5(a)(vi): None
(3) Section 5(a)(vii): None
(4) Section 5(b)(iv): None
1(b). "Specified Entity" shall mean in relation to PROJECT ORANGE for
the purpose of:
(1) Section 5(a)(v): None
(2) Section 5(a)(vi): None
(3) Section 5(a)(vii): None
(4) Section 5(b)(iv): None
1(c). "Specified Transaction" will have the meaning specified in
Section 14 of this Agreement.
1(d). The "Cross Default" provisions of Section 5(a)(vi) will apply to
PROJECT ORANGE and NIAGARA, except that the words "or becoming
capable at such time of being declared" shall be deleted
therefrom.
"Specified Indebtedness" shall have the meaning specified in
Section 14.
"Threshold Amount" means (i) with respect to NIAGARA, the lesser
of $50,000,000 or an amount equal to 10% of NIAGARA's
shareholders' equity as of the end of its most recently completed
fiscal year, and (ii) with respect to PROJECT ORANGE,
$30,000,000.
1(e). The "Credit Event Upon Merger" provisions of Section 5(b)(iv)
will apply to NIAGARA and PROJECT ORANGE; provided, however, that
in no event shall an assignment of the Agreement in compliance
with the terms of the Agreement be deemed a Credit Event Upon
Merger.
Page -1-
1(f). The "Automatic Early Termination" provisions of Section 6(a) will
apply to either NIAGARA or PROJECT ORANGE.
1(g). "Payments on Early Termination": For purposes of Section 6(e) of
this Agreement, Loss and the Second Method will apply.
1(h). "Termination Currency" means United States Dollars.
1(i). "Additional Termination Event" will not apply.
II. TAX REPRESENTATIONS
(a) Payer Representations: For the purpose of Section 3(e) of this
Agreement, PROJECT ORANGE will make the following representation
and NIAGARA will make the following representation:
It is not required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, of any
Relevant Jurisdiction to make any deduction or withholding for or
on account of any Tax from any payment (other than interest under
Section 2(e), 6 (d)(ii) or 6 (e) of this Agreement) to be made by
it to the other party under this Agreement. In making this
representation, it may rely on (i) the accuracy of any
representations made by the other party pursuant to Section 3(f)
of this Agreement, (ii) the satisfaction of the agreement
contained in Section 4(a)(i) or 4 (a)(iii) of this Agreement and
the accuracy and effectiveness of any document provided by the
other party pursuant to Section 4(a)(i) or 4(a)(iii) of this
Agreement and (iii) the satisfaction of the agreement of the
other party contained in Section 4(d) of this Agreement, provided
that it shall not be a breach of this representation where
reliance is placed on clause (ii) and the other party does not
deliver a form or document under Section 4(a)(iii) by reason of
material prejudice to its legal or commercial position.
(b) Payee Representations: For the purpose of Section 3(f) of this
Agreement, PROJECT ORANGE makes the representation specified
below:
(i) It is a Limited Partnership organized under the laws of
the State of Delaware
For the purpose of Section 3(f) of this Agreement, NIAGARA makes
the representation specified below:
(i) It is a corporation organized under the laws of the State
of New York.
Page -2-
III. AGREEMENT TO DELIVER DOCUMENTS
For the purposes of Section 4(a)(i) and (ii) of this Agreement, each party
agrees to deliver the following documents, as applicable:
(a) Tax forms, documents or certificates to be delivered are:
Each of PROJECT ORANGE and NIAGARA shall, as soon as practicable after
demand, deliver to the other party any form or document required or
reasonably requested in order to allow a party to make payments under
this Agreement without deduction or withholding for or on account of
any Tax or with such deduction or withholding at a reduced rate.
(b) Other documents to be delivered are:
Party required Covered by
to deliver Form/Document/ Date by which Section 3(d)
document Certificate to be delivered Representation
-------- ----------- --------------- --------------
PROJECT An opinion of counsel Upon execution of Yes
ORANGE and to PROJECT ORANGE this Agreement.
NIAGARA and NIAGARA
substantially in the form
of Exhibit A to this
---------
Schedule.
PROJECT An incumbency certificate Upon execution of Yes
ORANGE and with respect to the this Agreement.
NIAGARA signatory of this
Agreement.
PROJECT Annual audited financial Upon execution of Yes
ORANGE and statements of such party, this Agreement and
NIAGARA or its Credit Support upon request after public availability
Providers, as the case may thereof.
be, prepared in accordance
with generally accepted
accounting principles
consistently applied ("GAAP").
PROJECT Quarterly unaudited Upon request after Yes
ORANGE and financial statements of public availability
NIAGARA such party, or its Credit thereof.
Page -3-
Support Providers, as the
case may be, for its most
recent fiscal quarter
prepared in accordance
with GAAP.
PROJECT A copy of the resolutions Upon execution of Yes
ORANGE and (the "Authorizing this Agreement.
NIAGARA Resolution") of the board of
directors or other governing
body of such party, pursuant
to which such party is
authorized to enter into this
Agreement and each Trans-
action entered into under this
Agreement.
IV. MISCELLANEOUS
4.1 Addresses for Notices: For purposes of Section 12(a) of this
Agreement, the addresses for notices and communications for NIAGARA
and PROJECT ORANGE are as follows:
For PROJECT ORANGE:
Project Orange Associates, L.P.
c/o GPU International, Inc.
Xxx Xxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: President
For NIAGARA:
Director of Energy Transactions
Niagara Mohawk Power Corporation
000 Xxxx Xxxx., Xxxx
Xxxxxxxx, XX 00000
Facsimile: 000-000-0000
4.2 Process Agent: For the purpose of Section 13 of this Agreement:
PROJECT ORANGE appoints as its Process Agent: Not applicable
Page -4-
NIAGARA appoints as its Process Agent: Not applicable
4.3 Offices: The provisions of Section 10(a) will apply to this Agreement.
4.4 Multibranch Party: For the purpose of Section 10(c) of this Agreement:
PROJECT ORANGE is not a Multibranch Party.
NIAGARA is not a Multibranch Party.
4.5 Calculation Agent: The Calculation Agent is NIAGARA; provided, that if
NIAGARA fails to comply with or perform any of its agreements or
obligations in that capacity or if any Event of Default with respect
to NIAGARA has occurred and is continuing, then upon notice to
NIAGARA, PROJECT ORANGE (or its designee) shall be the Calculation
Agent for so long as such failure or such Event of Default, as the
case may be, continues.
4.6 Credit Support Documents: None.
4.7 Credit Support Provider: Not Applicable.
4.8 Choice of Law: This Agreement shall be governed by and construed in
accordance with the laws of the State of New York (without reference
to the choice of law doctrine).
4.9 Netting of Payments: Subparagraph (ii) of Section 2(c) of this
Agreement shall not apply to any Transaction under this Agreement.
4.10 Affiliate: Notwithstanding Section 14 of this Agreement, means, with
respect to NIAGARA or PROJECT ORANGE, any other person or entity which
controls, is controlled by, or is under common control with, such
party, wherein the term "control" shall mean the power to direct the
management and policies by or of such party through ownership of
voting securities, by contract, or otherwise.
V. OTHER PROVISIONS
(a) ISDA Definitions
The definitions and provisions contained in the 1991 ISDA Definitions
(the "1991 Definitions") (the "ISDA Definitions"), as published by the
International Swaps and Derivatives Association, Inc. (formerly the
International Swap Dealers Association, Inc.), are incorporated into
this Agreement. Any terms used and not otherwise defined herein which
are contained in the ISDA Definitions shall have
Page -5-
the meaning set forth herein. In the event of any inconsistency
between the ISDA Definitions and any other definitions incorporated
into a Confirmation, the definitions incorporated into such
Confirmation will govern.
(b) Representations
Section 3 is amended by adding the following at the end of the
Section:
(g) Non-reliance: In connection with this Agreement, each
Transaction, and any other documentation relating to this
Agreement to which it is a party or that it is required to
deliver:
(i) it has consulted with its own legal, regulatory, tax,
business, investment, financial and accounting advisors to
the extent it has deemed necessary, and it has made its
own investment, hedging and trading decisions (including
decisions regarding the suitability of any Transaction
made pursuant to this Agreement) based upon its own
judgment and upon any advice from such advisors as it has
deemed necessary and not upon any view expressed by the
other party;
(ii) it is not relying on any representations (whether written
or oral) of the other party other than the representations
expressly set forth in this Agreement and in any
Confirmation;
(iii) it has a full understanding of all the terms, conditions
and risks (economic and otherwise) of the Agreement and
each Transaction and is capable of assuming and willing to
assume those risks;
(iv) it is entering into this Agreement, each Transaction and
such other documentation as principal, and not as agent or
in any other capacity, fiduciary or otherwise; and
(v) the other party is not acting as a fiduciary or financial,
investment or commodity trading advisor for it.
(h) Eligible Swap Participant: It is an "eligible swap participant"
as defined in Section 35.1(b) of the regulations of the Commodity
Futures Trading Commission.
(c) Affected Parties in Termination Events
For purposes of Section 6(e) (Payments on Early Termination), both
parties shall
Page -6-
be deemed to be Affected Parties in connection with any Illegality or Tax
Event, so that payments in connection with early termination shall be
calculated as provided in Section 6(e)(ii).
(d) Set-off
Section 6 of the Agreement is modified to include the following additional
sub-clause (f).
(f) Set-off: Any amount (the "Early Termination Amount") payable to
one party (the "Payee") by the other party (the "Payer") under
Section 6(e), in circumstances where there is a Defaulting Party
or one Affected Party in the case where a Termination Event under
Section 5(b)(iv) has occurred, will, at the option of the party
("X") other than the Defaulting Party or the Affected Party (and
without prior notice to the Defaulting Party or the Affected
Party), be reduced by its set-off against any amount(s) (the
"Other Agreement Amount") payable (whether at such time or in the
future or upon the occurrence of a contingency) by the Payee to
the Payer (irrespective of the currency, place of payment or
booking office of the obligation) under any other agreement(s)
between the Payee and the Payer or instrument(s) or
undertaking(s) issued or executed by one party to, or in favor
of, the other party (and the Other Agreement Amount will be
discharged promptly and in all respects to the extent it is so
set-off). X will give notice to the other party of any set-off
effected under this Section 6(f).
For this purpose, either the Early Termination Amount or the
Other Agreement Amount (or the relevant portion of such amounts)
may be converted by X into the currency in which the other is
denominated at the rate of exchange at which such party would be
able, acting in a reasonable manner and in good faith, to
purchase the relevant amount of such currency.
If an obligation is unascertained, X may in good faith estimate
that obligation and set-off in respect of the estimate, subject
to the relevant party accounting to the other when the obligation
is ascertained.
Nothing in this Section 6(f) shall be effective to create a
charge or other security interest. This Section 6(f) shall be
without prejudice and in addition to any right of set-off,
combination of accounts, lien or other right to which any party
is at any time otherwise entitled (whether by operation of law,
contract or otherwise).
Page -7-
(e) Miscellaneous
Add the following paragraph c to Section 7:
(c) a party making such transfer shall provide prompt written
notification thereof to the other party.
Add the following paragraphs at the end of Section 9:
(h) Severability: In the event that any provision of this Agreement
is declared illegal, invalid or otherwise unenforceable by a court of
competent jurisdiction, the remainder of this Agreement shall not be
affected except to the extent necessary to delete such illegal,
invalid or unenforceable provision, unless the deletion of such
provision shall substantially impair the benefits of the remaining
portions of this Agreement.
(i) Waiver of Jury Trial: Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by jury
in respect of any suit, action or proceeding relating to this
Agreement or, after any assignment which requires a Credit Support
Document, such Credit Support Document. Each party (i) certifies that
no representative, agent or attorney of the other party of, after any
assignment which requires a Credit Support Provider, such Credit
Support Provider has represented, expressly or otherwise, that such
other party would not, in the event of such a suit, action or
proceeding, seek to enforce the foregoing waiver and (ii) acknowledges
that it and the other party have been induced to enter into this
Agreement and, after any assignment which requires a Credit Support
Document, provide for any such Credit Support Document, by, among
other things, the mutual waivers and certifications in this Section.
Page -8-
IN WITNESS WHEREOF, the parties have executed this document by their duly
authorized officers as of the date specified on the first page of this document.
NIAGARA MOHAWK POWER CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
_________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
PROJECT ORANGE ASSOCIATES, L.P.
By: NCP Syracuse, Inc.
Its: General Partner
By: NCP Energy
Its: Attorney-In-Fact
By: /s/ Xxxxx Xxxx
_________________________
Name: Xxxxx Xxxx
Title: President
Page -9-
EXHIBIT A
FORM OF OPINION OF COUNSEL
Ladies and Gentlemen:
We have acted as counsel to Project Orange Associates, L.P. (the "Company")
in connection with the execution and delivery by the Company of an ISDA Master
Agreement (1992 Multicurrency - Cross Border) dated as of [Date] (including the
Schedule thereto, the Confirmation dated ____________________ and the
Transaction referred to therein, collectively the "Agreement") between the
Company and ____________________. Capitalized terms used herein and not
otherwise defined herein shall have the meanings set forth in the Agreement.
In connection with the opinions expressed below, we have examined and
relied upon executed copies of the Agreement and such other documents and
records of the Company and certificates or other comparable documents of public
officials and representatives of the Company and others as we have deemed
necessary or appropriate for the purposes of this opinion. In our examination,
we have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as conformed, certified or photostatic copies
thereof, and the authenticity of the originals of such conformed, certified or
photostatic copies. We have assumed the due execution and delivery, pursuant to
due authorization, of the Agreement by the parties thereto other than the
Company.
Based upon the foregoing and subject to the limitations, qualifications and
exceptions set forth below, we are of the opinion that:
(1) The Company is duly organized and validly existing and has requisite
power and authority to enter in to, execute and deliver the Agreement and to
perform its obligations thereunder.
(2) The Agreement has been duly authorized, executed and delivered by the
Company.
(3) The execution, delivery and performance of the Agreement by the Company
does not violate or conflict with any United States federal or New York State
law or regulation applicable to the Company, any order or judgment of any court
or other agency of government applicable to the Company or any of its assets of
which I have knowledge or, to the best of my knowledge after due inquiry, any
material contract binding on or affecting the Company or any of its assets.
(4) All United States federal or New York State governmental and other
consents, authorizations, licenses, approvals, registrations, declarations and
filings that are required to have been obtained by the Company with respect to
the execution, delivery or performance of the
Page -10-
Agreement have been obtained and are in full force and effect and all conditions
of any such consents, authorizations, licenses, approvals, registrations,
declarations and filings have been complied with.
The opinions expressed herein are further subject to the following
assumptions, exceptions, limitations and qualifications:
A. We are members of the Bar of the State of New York and do not impart
to be expert in the laws of any other jurisdiction, other than the
Federal laws of the United States. The opinions expressed herein are
limited to questions arising under the Federal laws of the United
States and the laws of the State of New York. The opinion expressed in
paragraph (3) relates only to those laws and regulations that, in our
experience, are normally applicable to, or relevant in connection
with, transactions of the type provided for in agreements similar to
the Agreement.
B. We have assumed that:
a. the Transactions relate solely to transactions which are not
traded on or over any commodities or other exchange;
b. each party to the Agreement has a valid business purpose for
entering therein and into each Transaction; and
c. the execution, delivery and performance of the Agreement by each
party are exempt from the provisions of the Commodity Exchange
Act (as amended) as provided in 17 C.F.R. (S)35.2.
This opinion is as of the date hereof, and we undertake no, and hereby
disclaim any, obligation to advise you of any change in any matter set forth
herein. The opinions expressed herein are solely for your benefit in connection
with the above transaction and may not be relied on in any manner or for any
purpose by, or disclosed to, any person other than the addressee hereof. This
opinion is specific to the transactions and documents referred to herein, and
this opinion should not be assumed to state general principles of law applicable
to transactions of this kind.
Very truly yours,
Page -11-
CONFIRMATION
Project Orange Associates, L.P.
c/o GPU International, Inc.
Xxx Xxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Ladies and Gentlemen:
The purpose of this letter agreement (this "Confirmation") is to confirm
the terms and conditions of the Transaction entered into between us on the date
hereof specified below (the "Transaction"). This Confirmation constitutes a
"Confirmation" as referred to in the ISDA Master Agreement specified below.
This Confirmation supplements, forms part of, and is subject to the ISDA
Master Agreement dated as of 1992, as amended and supplemented from time to
time, between Niagara Mohawk Power Corporation ("NIAGARA") and Project Orange
Associates, L.P. ("PROJECT ORANGE"). All provisions contained in the ISDA
Master Agreement govern this Confirmation except as expressly modified below.
I. PAYMENT OBLIGATIONS
THE OBLIGATIONS INCURRED PURSUANT TO THIS CONFIRMATION SHALL REQUIRE CASH
PAYMENTS AND SHALL IN NO EVENT BE INTERPRETED TO REQUIRE THE PURCHASE OR
SALE OF ELECTRICITY.
1.1 Payment on Settlement Date: Subject to Section 1.2 of this
Confirmation, on each Settlement Date, NIAGARA shall be obligated to
pay to PROJECT ORANGE the sum of the accrued and unpaid Fixed Payments
from and including the Interval commencing at 12:00 a.m. on the
immediately preceding Settlement Date to but excluding the Interval
commencing at 12:00 a.m. on the current Settlement Date, and PROJECT
ORANGE shall be obligated to pay to NIAGARA the sum of the accrued and
unpaid Floating Payments from and including the Interval commencing at
12:00 a.m. on the immediately preceding Settlement Date to but
excluding the Interval commencing at 12:00 a.m. on the current
Settlement Date. Such payment obligations shall be paid on a net basis
pursuant to Section 2(c) of the Agreement.
1.2 Payment Dispute Mechanism: If PROJECT ORANGE (or NIAGARA in the event
that PROJECT ORANGE or its designee is then acting as the Calculation
Agent), in good faith, disputes any part of any Notice of a net
payment obligation, PROJECT ORANGE (or NIAGARA in the event that
PROJECT ORANGE or its designee is then acting as the Calculation
Agent) shall provide a written
Page -1-
explanation of the basis for such dispute and the undisputed portion
of the net payment obligations set forth in such Notice shall be paid
by the party obligated to pay such amounts no later than the
applicable Payment Date. Any underpayment or overpayment under this
Section 1.2 shall bear interest at the prime rate for U.S. currency as
published from time to time under "Money Rates" in The Wall Street
Journal, from and including the Payment Date any such underpayment or
overpayment was originally due to but excluding the date on which such
underpayment or overpayment is finally settled by the parties hereto,
or in the event the parties hereto are unable to settle such matter,
such matter shall be settled by an independent nationally recognized
public accounting firm mutually selected by the parties, whose
determination shall be final and binding on the parties hereto and
whose fees and expenses shall be borne by the party found to be at
substantial fault by such independent public accounting firm. No
Notice (or payment obligation thereunder) shall be subject to this
Section 1.2 unless a notice of dispute is given with respect thereto
within one year of the Payment Date applicable to such Notice.
II. DEFINITIONS
In addition to the terms defined in Section 14 of the Agreement, the
following terms shall have the following meanings for purposes of this
Confirmation:
Approved Assignee: Shall be (i) any person, having a long-term unsecured
debt credit rating of no less than Investment Grade issued by Xxxxx'x
Investors Service, Inc., or any successor thereof ("Xxxxx'x"), or Standard
& Poor's Ratings Services, a division of the XxXxxx-Xxxx Companies, Inc.,
or any successor thereof ("S&P"), or the equivalent of such rating from
another nationally recognized rating agency; (ii) any Affiliate of PROJECT
ORANGE; provided (x) such Affiliate has a long-term unsecured debt credit
rating of no less than Investment Grade issued by Xxxxx'x or S&P or the
equivalent of such rating from another nationally recognized rating agency,
or (y) such Affiliate has a net worth calculated in accordance with
generally accepted accounting principles ("Net Worth"), that is equal to or
greater than the Net Worth of the entity making assignment or transfer (or
its Credit Support Provider, if it has one) on the date of such assignment
or transfer, or (z) PROJECT ORANGE unconditionally guarantees, pursuant to
a guarantee in form and substance reasonably satisfactory to NIAGARA, the
obligations of such Affiliate so assigned or transferred (in which case
PROJECT ORANGE shall be a Credit Support Provider and such guarantee shall
be a Credit Support Document); (iii) any of the other Gas IPPs party to a
Restated Contract (as defined in the definition of Proxy-Market Price
Period) with NIAGARA or their respective Affiliates; provided (x) such
other Gas IPP or such Affiliate has a long-term unsecured debt credit
rating of no less than Investment Grade issued by Xxxxx'x or S&P or the
equivalent of such rating from another nationally recognized rating agency,
or (y) such other Gas IPP or such Affiliate has a Net Worth that is equal
to or greater than the Net Worth of the entity making
Page -2-
assignment or transfer (or its Credit Support Provider, if it has one) on
the date of such assignment or transfer, or (z) PROJECT ORANGE (in the case
of an assignment or transfer to another Gas IPP) or such other Gas IPP (in
the case of an assignment or transfer to any of its Affiliates)
unconditionally guarantees, pursuant to a guarantee in form and substance
reasonably satisfactory to NIAGARA, the obligations of such other Gas IPP
or such Affiliate, as the case may be, so assigned or transferred (in which
case PROJECT ORANGE or such Gas IPP, as applicable, shall be a Credit
Support Provider and such guarantee shall be a Credit Support Document); or
(iv) any other person who has a Net Worth that is equal to or greater than
the Net Worth of the entity making assignment or transfer (or its Credit
Support Provider, if it has one) on the date of such assignment or
transfer; provided evidence of such qualifying Net Worth is reasonably
demonstrated to NIAGARA;
Business Day: Notwithstanding Section 14 of this Agreement, shall mean any
day other than a Saturday, Sunday or other day on which banks in the State
of New York are authorized or required to be closed.
Competitive Transition Charge: Shall mean a charge, however designated, for
the recovery of strandable costs.
Consummation Date: Shall have the meaning set forth in Section 10.2 of the
Master Restructuring Agreement.
Contract Price: Shall mean for the first two Contract Years of the Term of
this Agreement $53.84/MWh and $54.62/MWh, respectively.
Contract Year: Shall mean the period commencing at 11:59:59 p.m. on the
Consummation Date and ending at 11:59:59 p.m. on the first anniversary of
the last day of the month in which the Consummation Date occurs and each
successive 12-month period thereafter to the extent applicable.
FERC: Shall mean the Federal Energy Regulatory Commission.
Fixed Payment: Shall mean an amount for each Interval equal to the NIAGARA
Payment Obligation for the current Interval.
Floating Payment: Shall mean an amount for each Interval equal to the sum
of (i) the IPP Payment Obligation for the current Interval, and (ii) if
applicable, the Market Capacity Price in $/MW multiplied by the weight
averaged capacity associated with the Notional Quantity of electricity for
each Interval occurring from and including the Interval commencing at 12:00
a.m. on the immediately preceding Settlement Date and to but excluding the
Interval commencing at 12:00 a.m. on the current Settlement Date.
Page -3-
Gas IPPs: Shall mean those IPPs which produce power using primarily natural
gas.
Governmental Authority: Shall mean any federal, state, municipal or local
governmental authority, department, commission, board, agency, body or
official, whether executive, legislative, administrative, regulatory or
judicial, including but not limited to the FERC and the PSC.
Indexed Contract Price: Shall mean, beginning on the first day of the third
Contract Year of the Term of this Agreement and continuing thereafter, the
price calculated in accordance with the indexing formula set forth in
Schedule 1 attached hereto.
Initial Interval: Shall be the first Interval under this Agreement.
Interval: Shall be (i) 1 hour; provided that, in the event that following
the Proxy-Market Price Period, ISO/PE procedures require the use of an
alternate time period, such alternate time period shall automatically be
deemed to be incorporated in, and shall supersede, the 1 hour period set
forth herein, or (ii) such time period as NIAGARA and PROJECT ORANGE shall
mutually agree in writing; provided that such mutually agreed upon time
period may only be subsequently modified upon the prior written consent of
NIAGARA and PROJECT ORANGE.
IPP Payment Obligation: Shall be an amount equal to the product of the
Notional Quantity of electricity during the applicable Interval multiplied
by the Proxy-Market Price or the Market Price, as the case may be,
applicable to such Interval.
IPPs: Shall mean those independent power producers that are identified on
the signature pages and on Schedule A of the MRA.
ISO/PE: Shall mean a New York Independent System Operator and Power
Exchange.
ISO/PE Establishment Date: Shall be the first day of the month following
the calendar month in which the ISO/PE is established.
Investment Grade: Shall mean a senior unsecured debt rating as published by
S&P of not less than BBB- (or its then-equivalent) and an equivalent rating
as published by Moody's.
Market Capacity Price: Shall equal zero (i) prior to the ISO/PE
Establishment Date (as defined below) and (ii) thereafter at any time when
no separate market for capacity exists. Commencing on the first day of the
month following the calendar month in which the ISO/PE Establishment Date
occurs and only if there then exists a separate market for capacity, the
Market Capacity Price shall mean the market price paid to sellers for
capacity, at the region in which the PROJECT ORANGE's Project's bus bar is
located,
Page -4-
established by the ISO/PE capacity auction; provided, however, that at such
time the parties shall conduct good faith negotiations and diligently
endeavor to mutually determine whether to continue the pricing referred to
in clause (i) of the definition of Proxy-Market Price for a mutually agreed
upon additional period of time. Following the Proxy-Market Price Period and
only if there then exists a separate market for capacity, the parties shall
conduct good faith negotiations and diligently endeavor to adjust the
applicable capacity on a basis consistent with the structure of such
separate market.
Market Price: Shall mean for any Interval commencing on the first day of
the month following the calendar month in which the ISO/PE Establishment
Date occurs, the day ahead locational based market price ("LBMP") paid to
sellers for energy, at the PROJECT ORANGE's Project's bus bar or the region
in which the PROJECT ORANGE's Project's bus bar is located, specified and
published by the ISO/PE; provided, however, that at such time the parties
shall conduct good faith negotiations and diligently endeavor to mutually
determine whether to continue the pricing referred to in clause (i) of the
definition of Proxy-Market Price for a mutually agreed upon additional
period of time.
MRA: Shall mean the Agreement dated July 9, 1997, as amended, by and
between NIAGARA and the independent power producers identified therein.
NIAGARA Payment Obligation: Shall mean an amount equal to the product of
the Notional Quantity of electricity during the applicable Interval
multiplied by the Contract Price or the Indexed Contract Price, as the case
may be, applicable to such Interval.
NIAGARA Restructuring: Shall mean NIAGARA's proposed corporate
restructuring and disaggregation in connection with PowerChoice proposal.
Notice: After calculating the payments owing pursuant to Section 1.1 of
this Confirmation, NIAGARA shall provide PROJECT ORANGE with notice (each,
a "Notice") of any net payment obligation resulting therefrom on or before
the 5th day of the first calendar month following the Settlement Date;
provided that, in the event that following the Proxy-Market Price Period,
ISO/PE procedures require an alternate date for payment notices, such
alternate notice date shall automatically be deemed to be incorporated in,
and shall supersede, the notice date set forth herein.
Notional Quantity: Shall mean, for each Interval, the sum of the contract
quantity of electricity (in MWh) for each hour or fraction thereof in such
Interval, for which PROJECT ORANGE and NIAGARA are contractually committed.
The contract quantities for Contract Years during the Proxy-Market Price
Period are set forth in Schedule 2A attached hereto. The contract
quantities for Contract Years after the Proxy-Market Price Period are set
forth in Schedule 2B attached hereto.
Page -5-
NYPSL: Shall mean the New York Public Service Law, as amended.
Payment Date: Shall occur each month commencing on the Commencement Date
and shall be the day of such month which is the later of (i) the 25th day
of the calendar month after the relevant Settlement Date, provided such day
is a Business Day, and if such day is not a Business Day on the first
Business Day following such 25th day, or (ii) the 15th day after the
receipt by PROJECT ORANGE of a Notice from NIAGARA, provided such day is a
Business Day, and if such is not a Business Day, on the first Business Day
following such 15th day. Notwithstanding the foregoing, in the event that
following the Proxy-Market Price Period ISO/PE procedures require alternate
dates for payments, such alternate payment dates shall automatically be
deemed to be incorporated in, and shall supersede, the payment dates set
forth herein.
Project: Shall be PROJECT ORANGE's natural gas-fired electric generating
plant located in the City of Syracuse, New York.
Proxy-Market Price: Shall mean for any Interval (i) prior to and until the
ISO/PE Establishment Date, NIAGARA's short-term avoided energy and capacity
costs at the voltage level of PROJECT ORANGE's Project bus bar, as stated
in its tariff approved by the PSC providing for the purchase of power from
PURPA qualifying facilities, which tariff is currently designated as S.C.-
6, as the same may be in effect from time to time or any successor tariff
thereto or such other price as may be agreed upon by NIAGARA and PROJECT
ORANGE during individual negotiations, and (ii) after the ISO/PE
Establishment Date, the Market Price and, if applicable, the Market
Capacity Price; provided, however, that at such time the parties shall
conduct good faith negotiations and diligently endeavor to mutually
determine whether to continue the pricing referenced in clause (i) above
for a mutually agreed upon additional period of time. The Proxy-Market
Price shall not be reduced or offset by any costs that NIAGARA may incur,
including, without limitation, costs for ancillary services, transmission
services or transition (or stranded) costs.
Proxy-Market Price Period: Shall mean the period commencing on the date of
this Agreement and ending on the first day of the calendar month following
the calendar month in which the ISO/PE power market satisfies the following
conditions for each of the previous six months:
(i) the volumes (in GWh) of energy sales and purchases transacted
through the ISO/PE in the day ahead market based upon the day
ahead pricing mechanism adopted by the FERC for the ISO/PE for
the Upstate Market shall be at least equal to those corresponding
with the months listed in the following table (which GWh shall
include the aggregate contract quantities of energy during such
period under all physical delivery Restated Contracts with Gas
IPPs and all physical delivery contracts
Page -6-
between NIAGARA and any IPP party to the Master Restructuring
Agreement entered into in lieu of Fixed Price Swap Contracts,
regardless of whether the IPPs parties thereto actually effected
such sales, and all sales on up to a monthly basis of energy
(other than sales through the ISO/PE) by the IPPs parties to the
Master Restructuring Agreement which are effectuated by NIAGARA
acting as agent for any such IPP);
--------------------------
Month GWh
--------------------------
January 4,611
--------------------------
February 4,136
--------------------------
March 4,327
--------------------------
April 3,827
--------------------------
May 3,788
--------------------------
June 3,974
--------------------------
July 4,278
--------------------------
August 4,160
--------------------------
September 3,793
--------------------------
October 3,856
--------------------------
November 3,896
--------------------------
December 4,361
--------------------------
and
(ii) only if a separate market for capacity then exists, a minimum of
5,700 MW of the capacity sales and purchases within the Upstate
Market have been transacted through the ISO/PE capacity auction
(which MW shall include the aggregate capacity associated with
the aggregate contract quantities of energy during such period
under all physical delivery Restated Contracts with Gas IPPs and
all physical delivery Contracts between NIAGARA and any IPP party
to the Master Restructuring Agreement entered into in lieu of
Fixed Price Swap Contracts, regardless of whether the IPPs
parties thereto actually effected such sales, and all sales on up
to a monthly basis of capacity (other than sales through the
ISO/PE) by the IPPs parties to the Mastering Restructuring
Agreement
Page -7-
which are effectuated by NIAGARA acting as agent for
any such IPP).
Notwithstanding the foregoing, the Proxy-Market Price Period may be
extended or terminated upon the mutual agreement of the Parties.
PSC: Shall mean the New York Public Service Commission.
PUHCA: Shall mean the Public Utility Holding Company Act of 1935, as
amended.
PURPA: Shall mean the Public Utility Regulatory Policies Act of 1978, as
amended.
Reasonable Best Efforts: Shall mean, with respect to any party, such
party's diligent pursuance of the course of action or result stated as
determined by such party itself in good faith, but shall not require such
party to pay any sum or other consideration or incur or assume any
liability or obligation that is not otherwise expressly required to be
paid, incurred or assumed pursuant to this Transaction, excluding (i)
normal and customary incidental out-of-pocket costs and expenses and (ii)
attorneys' fees.
Settlement Date: Shall be the last day of each calendar month during the
Term of this Transaction, commencing on the Commencement Date.
Term: The term of this Agreement shall commence at 11:59:59 p.m. on the
Consummation Date and end at 11:59:59 p.m. on the tenth anniversary of the
last day of the month in which the Consummation Date occurs.
Upstate Market: Shall mean collectively (i) the service territory retail
loads in the regions currently served by NIAGARA, New York State Electric &
Gas Corporation, Rochester Gas & Electric Corporation and Central Xxxxxx
Gas and Electric Corporation (collectively, the "Utilities") and (ii)
wholesale sales transactions by any of the Utilities to third parties
outside the regions currently serviced by such Utility, excluding any such
sales which are effectuated pursuant to contracts having a term of at least
one year existing as of July 9, 1997 to the extent such contracts remain in
effect thereafter.
III. ASSIGNMENTS
3.1 Assignment by PROJECT ORANGE: Notwithstanding Section 5(b)(iv) and
Section 7 of the Agreement, upon delivery to NIAGARA of an
Acknowledgment of Assignment (as such term is defined below), PROJECT
ORANGE may assign or transfer this Agreement in whole or in part,
without the consent of NIAGARA (a) as collateral security for purposes
of securing indebtedness, or (b) to any Approved Assignee. PROJECT
ORANGE may split and assign the Notional Quantities of electricity and
Intervals to Approved Assignees, each in respect of a lesser Notional
Quantity and/or Intervals than the full amounts thereof hereunder,
Page -8-
provided that (a) each such assignment is for 50,000 MWh of
electricity per year or any integral multiples thereof and to the
extent that the remaining unassigned balance of the Notional Quality
of electricity hereunder for any such year is less than 50,000 MWh,
then for such remaining balance, (b) each such assignment is for a
period of at least one year, and (c) the sum of all assigned and
retained Notional Quantities of electricity and Intervals does not
exceed the total Notional Quantities of electricity and Intervals
hereunder. In connection with any assignment or transfer to an
Approved Assignee pursuant to clause (b) above, such Approved Assignee
must (1) execute and deliver to NIAGARA an acknowledgment of such
assignment or transfer in the form attached hereto as Schedule 3 (an
"Acknowledgment of Assignment"), which includes representations by
such Approved Assignee to NIAGARA comparable in scope to those
contained in Section 3 of the Agreement and Part 2 of the Schedule to
the Agreement, and (2) provide to NIAGARA an opinion of counsel with
respect to such Approved Assignee (and any Credit Support Provider for
it, if applicable) and the acknowledgment of such assignment
comparable in scope to that delivered by PROJECT ORANGE pursuant to
Part 3 of the Schedule to the Agreement. Except to the extent
expressly provided in any applicable guarantee, upon any such
assignment or transfer, PROJECT ORANGE shall be released and have no
further obligations to NIAGARA hereunder with respect to the assigned
or transferred Notional Quantities and/or Intervals. No assignments in
compliance with Section 3.1 shall be deemed to be a Credit Event Upon
Merger under Section 5(b)(iv) of the Master Agreement. NIAGARA shall
be entitled to rely in good faith upon any Acknowledgment of
Assignment delivered pursuant hereto.
3.2 Assignment by NIAGARA: Notwithstanding Section 5(b)(iv) and Section 7
of this Agreement, NIAGARA shall not assign its rights and obligations
hereunder except as expressly authorized under this Section 3.2. In
connection with any assignment to an authorized assignee pursuant to
this Section 3.2, such assignee must (1) execute and deliver to
PROJECT ORANGE an acknowledgment of such assignment which shall
include representations by such assignee to PROJECT ORANGE comparable
in scope to those contained in Section 3 of the Agreement and Part 2
of the Schedule to the Agreement, and (2) provide to PROJECT ORANGE an
opinion of counsel with respect to such assignee and the
acknowledgment of such assignment comparable in scope to that
delivered by PROJECT ORANGE pursuant to Part 3 of the Schedule to the
Agreement. No assignments in compliance with this Section 3.2 shall be
deemed to be a Credit Event Upon Merger under Section 5(b)(iv) of the
Master Agreement.
(a) NIAGARA Restructuring: In the event that NIAGARA restructures its
corporate structure or assets, including by creating any new
entities that hold significant assets, whether in connection with
the NIAGARA
Page -9-
Restructuring or otherwise, upon notice to PROJECT ORANGE (or its
assignee hereunder), this Agreement will be assigned to and
assumed by the entity or entities owning all or substantially all
of NIAGARA's electric transmission and distribution assets or, if
separated from NIAGARA's electric transmission assets pursuant to
such a restructuring, NIAGARA's electric distribution assets,
provided that, upon the effective date of the restructuring (i)
such assignee's performance under this Transaction is
unconditionally guaranteed, pursuant to a guarantee in form and
substance reasonably satisfactory to PROJECT ORANGE (or its
assignee hereunder), by each of the other entities arising out of
the restructuring, including any entity spun-off to NIAGARA's
shareholders or any Affiliate of NIAGARA holding significant
assets that were held by NIAGARA (or any subsidiary of NIAGARA)
prior to the restructuring, unless such assignee has a long-term
unsecured debt credit rating issued by Moody's, S&P or another
nationally recognized rating agency that is at least as favorable
as NIAGARA's long-term unsecured debt credit rating immediately
prior to the effective date of the restructuring, and (ii) if
such assignee is not the entity which will collect from customers
the Competitive Transition Charge approved by the PSC in
connection with the NIAGARA Restructuring, such assignee's
performance under this Transaction is unconditionally guaranteed,
pursuant to a guarantee in form and substance reasonably
satisfactory to PROJECT ORANGE (or its assignee hereunder), by
each of the entities which will collect from customers the
Competitive Transition Charge approved by the PSC.
(b) Third Party Assignment: Upon notice to PROJECT ORANGE (or its
assignee hereunder), NIAGARA may assign its rights and
obligations under this Agreement to any third party (ANIAGARA
Assignee") (except those parties referenced in Section 3.2(a)
above), provided that the NIAGARA Assignee has (i) received a
long-term unsecured debt credit rating by Xxxxx'x or S&P of at
least Investment Grade or the equivalent of such rating from
another nationally recognized rating agency, as of the date of
consummation of the assignment; or (ii) furnished PROJECT ORANGE
with such collateral security as may be reasonably acceptable to
PROJECT ORANGE in order to limit PROJECT ORANGE's credit risk in
connection with such assignment.
IV. FURTHER ASSURANCES
Subject to the terms and conditions contained herein, upon the request from
time to time of either party hereto, the other party shall promptly execute
and deliver or use its reasonable best efforts to cause to be executed and
delivered, such consents, approvals and other instruments, including,
without limitation, assignments of this Agreement as
Page -10-
collateral, estoppel certificates and utility certificates, in form and
substance reasonably satisfactory to both parties and their respective
counsel to implement any financing or other material business transaction
undertaken by the requesting party.
V. QUALIFYING FACILITY MONITORING AND STATUS
5.1 Qualifying Facility Monitoring: NIAGARA shall have no contractual
right and hereby waives any other right which it might have under
state or federal law to demand information from PROJECT ORANGE, or any
other person, including but not limited to any Governmental Authority,
with respect to PROJECT ORANGE's status as a qualifying facility ("QF
Status") under state and/or federal law.
5.2 Qualifying Facility Status: NIAGARA acknowledges and agrees that
PROJECT ORANGE is not required to maintain a generating facility
pursuant to the terms hereof for the performance of its obligations
hereunder. Notwithstanding the foregoing, PROJECT ORANGE shall have
the right, but not the obligation, in its sole discretion to obtain
and/or maintain its QF Status. NIAGARA's rights and obligations
hereunder shall continue as a matter of contractual right, regardless
of whether PROJECT ORANGE maintains its QF Status. Any failure by
PROJECT ORANGE to comply with the requirements applicable to QF Status
under New York law (including compliance with NYPSL (S) 2(2-a)) shall
have no adverse impact on PROJECT ORANGE under this Transaction. In
the event PROJECT ORANGE wishes to qualify or perform as an Exempt
Wholesale Generator (as defined under Section 32 of PUHCA and FERC's
regulations promulgated thereunder, as the same may be amended,
modified or restated from time to time), NIAGARA shall cooperate with
(including, without limitation, by providing consents and affidavits),
and shall not take any action to oppose, impede or subvert, PROJECT
ORANGE's efforts to obtain appropriate regulatory exemptions and
approvals including market-based rate approval. Except to the extent
that the contract prices under this Transaction are or may be based
thereon, during the Term hereof, PROJECT ORANGE (i) shall waive any
statutory right it may have under Section 66-c of NYPSL pursuant to
which PROJECT ORANGE may demand a 6c per kWh minimum power purchase
rate from NIAGARA and (ii) shall waive, for itself and for the
successors and assigns of its Project with respect to such Project,
any statutory right PROJECT ORANGE may have under PURPA or NYPSL to
require NIAGARA to enter into a power purchase contract or otherwise
take the output of PROJECT ORANGE's Project; provided, however, that
until the end of the Proxy-Market Price Period, NIAGARA agrees, at
PROJECT ORANGE's request, to act as agent for PROJECT ORANGE (or, if
necessary to effectuate such sales to the New York Power Pool, by
purchase and resale of PROJECT ORANGE's capacity and energy, at no
cost to NIAGARA), for the sale on up to a monthly basis, of the
PROJECT ORANGE's Project's capacity and energy to the New York Power
Pool or any third party, in each case
Page -11-
on a nondiscriminatory basis with respect to NIAGARA's or any third
party's capacity and energy, at no cost to PROJECT ORANGE. NIAGARA
agrees to use its Reasonable Best Efforts to effect such sales on the
most favorable terms, including price, to PROJECT ORANGE giving
consideration to the quantity, term and market conditions prevailing
at the time of sale. Nothing contained herein shall be construed to
constitute a waiver by PROJECT ORANGE of any other rights it may have
under PURPA, NYPSL or applicable law, including rights with respect to
back-up services, interconnection, reactive power or other similar
rights, whether or not a contract is required or desirable.
VI. CURTAILMENT
NIAGARA agrees that the performance of any of its obligations hereunder
shall in no event be subject to any curtailment of electricity under the
provisions of 18 C.F.R.(S)292.304 (f) (1997), or any subsequent or similar
rule or regulation adopted by the PSC or the FERC, or any order of the
PSC, the FERC, or any Governmental Authority interpreting or applying
those provisions of authorizing NIAGARA to reserve any rights under those
provisions.
VII. AMENDMENTS
In the event that NIAGARA restructures its corporate structure or assets,
including by creating any new entities that hold significant assets,
whether in connection with the NIAGARA Restructuring or otherwise, PROJECT
ORANGE (or its assignee hereunder) shall have the right to replace this
Agreement, as applicable, with power purchase and/or hedging contractual
arrangements substantially equivalent to those that are entered into
between the entity(ies) holding the transmission and/or distribution
assets of NIAGARA or which will collect from customers the Competitive
Transition Charge approved by the PSC and the entity(ies) holding the non-
nuclear generating assets of NIAGARA, whether or not such assets are spun-
off to NIAGARA's shareholders (a "Genco Contract"), provided that the
term, price and quantity under this Transaction shall not be altered
thereby, unless any of such terms are materially and expressly conditioned
by certain provisions in the Genco Contract, in which case appropriate and
equitable adjustments in such terms shall be mutually agreed upon by
NIAGARA or its assignee, as the case may be, and PROJECT ORANGE.
VIII. ACCOUNT DETAILED
Account for payments to NIAGARA:
Bank name: Citibank
Address: 000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA #: 000000000
Page -12-
Account name: Niagara Mohawk Power Corporation
Account #: 00000000
Account for payments to PROJECT ORANGE:
Bank name: ABN LaSalle National Bank
Address: 000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
ABA #: 000000000
Account name: POA Operating Account
Account #: 22-64153
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us.
Sincerely,
NIAGARA MOHAWK POWER CORPORATION
By: _______________________
Name:
Title:
Confirmed as of the date first above written:
PROJECT ORANGE ASSOCIATES, L.P.
By: NCP Syracuse, Inc.
Its: General Partner
By: NCP Energy
Its: Attorney-In-Fact
By: ____________________________
Name: Xxxxx Xxxx
Title: President
Page -13-
FORM OF
ACKNOWLEDGMENT OF ASSIGNMENT
This Acknowledgment of Assignment, dated as of _______________ (this
"Assignment"), is made by _______________ ("Assignee") in favor of Niagara
Mohawk Power Corporation ("Party A" or "NIAGARA") and is acknowledged by
______________ ("Party B" or "Counterparty").
W I T N E S S E T H:
WHEREAS, NIAGARA has entered into a certain ISDA Master Agreement,
including a Schedule thereto and an Indexed Price Swap Confirmation, each dated
as of ______________ (collectively, the "Agreement"), between NIAGARA and Party
B);
WHEREAS, capitalized terms used herein which are not otherwise defined
shall have the meanings given to such terms in the Agreement; and
WHEREAS, in accordance with Section 3.1 of the Confirmation, Party B has
assigned to assignee, and assignee has assumed from Party B, the obligations of
Party B under the Agreement relating to certain Notional Quantities of
electricity and Intervals subject of the Agreement (the "Assigned Obligations").
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Assignee hereby agrees as follows:
1. Assumption. Assignee hereby assumes and agrees to be solely liable
----------
for and to pay, honor and discharge when due, all Assigned Obligations of Party
B under the Agreement relating to the following Notional Quantities of
electricity and Intervals:
Notional Quantities Intervals
------------------- ---------
[to be supplied] [to be supplied]
2. Tax Representations. Assignee represents to NIAGARA as follow:
-------------------
(a) Payer Tax Representations. For the purpose of Section 3(e) of the
-------------------------
Agreement, it is not required by any applicable law, as modified
by the practice of any relevant governmental revenue authority,
of any Relevant Jurisdiction to make any deduction or withholding
for or on account of any Tax from any payment (other than
interest under Sections 2(e), 6 (d)(ii) and 6 (e) of the
Agreement) to be made by it to the other party under the
Agreement. In making this representation, it may rely on (i) the
accuracy of any representation made by the other party pursuant
to Section
Page -1-
3(f) of the Agreement, (ii) the satisfaction of the agreement of
the other party contained in Section 4(a)(i) or 4(a)(iii) of the
Agreement and the accuracy and effectiveness of any document
provided by the other party pursuant to Section 4(a)(i) and
4(a)(iii) of the Agreement; and (iii) the satisfaction of the
agreement of the other party contained in Section 4(d) of the
Agreement, provided that it shall not be a breach of this
representation where reliance is placed on clause (a)(ii) of this
Section 2 and the other party does not deliver a form or document
under Section 4(a)(iii) of the Agreement by reason of material
prejudice to its legal or commercial position.
(b) Payee Tax Representation. For the purpose of Section 3(f) of the
------------------------
Agreement, Assignee represents that it is a
__________________________.
3. Other Representations. Assignee represents to NIAGARA on the date
---------------------
hereof (and in the case of the representations in Section 3(f) hereof, at all
times until the termination of the Agreement) that:
(a) Basic Representations.
---------------------
(i) Status. It is duly organized and validly existing under
the laws of the jurisdiction of its organization or
incorporation and, if relevant under such laws, in good
standing;
(ii) Powers. It has the power to execute this Assignment and
any other documentation relating to this Assignment to
which it is a party, to deliver this Assignment and any
other documentation relating to this Assignment that it is
required by this Assignment to deliver and to perform its
obligation under this Assignment and has taken all
necessary action to authorize such execution, delivery and
performance;
(iii) No Violation or Conflict. Such execution, delivery and
performance do not violate or conflict with any law
applicable to it, any provision of its constitutional
documents, any order or judgment of any court or other
agency of government applicable to it or any of its assets
or any contractual restriction binding on or affecting it
or any of its assets;
(iv) Consents. All governmental and other consents that are
required to have been obtained by it with respect to this
Assignment have been obtained and are in full force and
effect and all conditions of any
Page -2-
such consents have been complied with; and
(v) Obligations Binding. Its obligations under
this Assignment constitute its legal, valid
and binding obligations, enforceable in
accordance with their respective terms
(subject to applicable bankruptcy,
reorganization, insolvency, moratorium or
similar laws affecting creditors' rights
generally and subject, as to enforceability,
to equitable principles of general
application (regardless of whether
enforcement is sought in a proceeding in
equity or at law)).
(b) Absence of Certain Events. No Event of Default or
Potential Event of Default or, to its knowledge,
Termination Event with respect to it has occurred and
is continuing and no such event or circumstance would
occur as a result of its entering into or performing
its obligations under this Assignment.
(c) Absence of Litigation. There is not pending or, to its
knowledge, threatened against it or any of its
Affiliates any action, suit or proceeding at law or in
equity or before any court, tribunal, governmental
body, agency or official or any arbitrator that is
likely to affect the legality, validity or
enforceability against it of this Assignment or its
ability to perform its obligations under this
Assignment.
(d) Accuracy of Specified Information. All applicable
information that is furnished in writing by or on
behalf of it to the other party and is identified for
the purpose of this Section 3(d) in the Schedule is, as
of the date of the information, true, accurate and
complete in every material aspect.
(e) Payer Tax Representation. Each representation specified
in Section 2 of this Assignment as being made by it for
the purpose of this Section 3(e) is accurate and true.
(f) Payee Tax Representations. Each representation
specified in Section 2 of this Assignment as being made
by it for the purpose of this Section 3(f) is accurate
and true.
(g) Non-reliance. In connection with this Assignment and
any other documentation relating to the Agreement to
which it is a party or that it is required to deliver:
(i) it has consulted with its own legal, regulatory,
tax, business, investment, financial and
accounting advisors to the extent it has
Page -3-
deemed necessary, and it has made its own
investment, hedging and trading decisions
(including decisions regarding the suitability of
any Transaction made pursuant to the Agreement)
based upon its own judgment and upon any advice
from such advisors as it has deemed necessary and
not upon any view expressed by the other party;
(ii) it is not relying on any representations (whether
written or oral) of the other party other than the
representations expressly set forth in the
Agreement and in any Conformation;
(iii) it has a full understanding of all the terms,
conditions and risks (economic and otherwise) of
the Agreement and each Transaction and is capable
of assuming and is willing to assume those risks;
(iv) it is entering into this Assignment, each
transaction and such other documentation as
principal, and not as agent or in any other
capacity, fiduciary or otherwise; and
(v) the other party is not acting as fiduciary or
financial, investment or commodity trading advisor
for it.
(h) Eligible Swap Participant. It is an Aeligible swap
participant" as defined in Rule 35.1(b) of the regulations
of the Commodity Futures Trading Commission, 17 C.F.R. (S)
35.1 (b) (2) (1993).
4. Notices. For purposes of Section 12(a) of the Agreement:
-------
Except as otherwise specified in a Notice, all notices or
communications to assignee shall be sent to:
[Name]
[Address]
Facsimile: [ ]
Attention:
5. Account Details. Accounts for payments to Assignee:
---------------
[to be supplied]
Page -4-
IN WITNESS WHEREOF, Assignee has duly executed this Assignment as of the date
first written above.
[ASSIGNEE]
By:______________________________
Name:
Title:
Acknowledged as of the date
first written above.
[PARTY B]
By:______________________________
Name:
Title:
Page -5-
SCHEDULE 1
PROJECT ORANGE ASSOCIATES, L.P.
INDEXING FORMULA
______________________________________________________________________________
ICP = CP * [(15% * (GC/GC\\o\\)) + (41% * (INF/INF\\o\\))] + CN
Where: ICP = The Indexed Contract Price.
CP = The Contract Price in the reference year (CP = $53.84/MWh).
GC = The average Niagara Border Spot Price for natural gas
(delivered to pipe as stated in U.S. dollars ) published by
Natural Gas Week in its Canadian Price Report first issue of
month.
GC\\o\\ = The average Niagara Border Spot Price for natural gas
(delivered to pipe as stated in U.S. dollars) published by
Natural Gas Week in its weekly Canadian Price Report for the
month in which the Consummation Date occurs.
INF = The Consumer Price Index - All Urban Consumers for New York
- Northern New Jersey - Long Island, All items, available on the
first day of the month from the US Department of Labor, Bureau of
Labor Statistics (base year 1982-84=100).
INF\\o\\ = The Consumer Price Index - All Urban Consumers for New
York - Northern New Jersey - Long Island, All items, available on
the first day of the month in which the Consummation Date occurs
from the US Department of Labor, Bureau of Labor Statistics (base
year 1982-84=100).
CN = as indicated below in $/MWh:
Contract Year CN
------------- -----
1 n/a
2 n/a
3 23.56
4 23.99
5 24.67
6 25.28
7 25.93
Page -6-
SCHEDULE 1, Continued
PROJECT ORANGE ASSOCIATES, L.P.
INDEXING FORMULA
________________________________________________________________________________
Contract Year CN
------------- -----
8 26.77
9 27.42
10 27.70
Page -7-
SCHEDULE 2A
-----------------------------------------------------------------------------------------------------------------------------------
Contract Quantity Proxy Market Period (MWh/hr)
---------------------------------------------------------------------------------------
Annual
Contract Contract
Contract Quantity Price
Year (MWh) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ($/MWh)
---------------------------------------------------------------------------------------
1 663,000 77.80 77.60 77.80 77.74 68.20 76.30 75.40 75.30 68.90 77.80 77.70 77.80 53.84
---------------------------------------------------------------------------------------
2 663,000 77.80 77.60 77.80 77.74 68.20 76.30 75.40 75.30 68.90 77.80 77.70 77.80 54.62
---------------------------------------------------------------------------------------
3 663,000 77.80 77.60 77.80 77.74 68.20 76.30 75.40 75.30 68.90 77.80 77.70 77.80 I
---------------------------------------------------------------------------------------
4 663,000 77.80 77.60 77.80 77.74 68.20 76.30 75.40 75.30 68.90 77.80 77.70 77.80 I
---------------------------------------------------------------------------------------
5 663,000 77.80 77.60 77.80 77.74 68.20 76.30 75.40 75.30 68.90 77.80 77.70 77.80 I
---------------------------------------------------------------------------------------
6 663,000 77.80 77.60 77.80 77.74 68.20 76.30 75.40 75.30 68.90 77.80 77.70 77.80 I
---------------------------------------------------------------------------------------
7 663,000 77.80 77.60 77.80 77.74 68.20 76.30 75.40 75.30 68.90 77.80 77.70 77.80 I
---------------------------------------------------------------------------------------
8 663,000 77.80 77.60 77.80 77.74 68.20 76.30 75.40 75.30 68.90 77.80 77.70 77.80 I
---------------------------------------------------------------------------------------
9 663,000 77.80 77.60 77.80 77.74 68.20 76.30 75.40 75.30 68.90 77.80 77.70 77.80 I
---------------------------------------------------------------------------------------
10 663,000 77.80 77.60 77.80 77.74 68.20 76.30 75.40 75.30 68.90 77.80 77.70 77.80 I
-----------------------------------------------------------------------------------------------------------------------------------
For each Contract Year which is a leap year the Contract Quantity for the month
of February will be adjusted by a factor of 28 divided by 29.
I = Indexed Contract Price
Page -8-
SCHEDULE 2B
------------------------------------------------------------------------------------------------------------------------------------
Contract Quantity for Contract Years Following the Proxy Market Period (MWh/hr)
---------------------------------------------------------------------------------------
Annual
Contract Contract
Contract Quantity Price
Year (MWh) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ($/MWh)
---------------------------------------------------------------------------------------
1 663,000 75.69 75.68 75.68 75.68 75.68 75.68 75.68 75.68 75.69 75.69 75.69 75.69 53.84
---------------------------------------------------------------------------------------
2 663,000 75.69 75.68 75.68 75.68 75.68 75.68 75.68 75.68 75.69 75.69 75.69 75.69 54.62
---------------------------------------------------------------------------------------
3 663,000 75.69 75.68 75.68 75.68 75.68 75.68 75.68 75.68 75.69 75.69 75.69 75.69 I
---------------------------------------------------------------------------------------
4 663,000 75.69 75.68 75.68 75.68 75.68 75.68 75.68 75.68 75.69 75.69 75.69 75.69 I
---------------------------------------------------------------------------------------
5 663,000 75.69 75.68 75.68 75.68 75.68 75.68 75.68 75.68 75.69 75.69 75.69 75.69 I
---------------------------------------------------------------------------------------
6 663,000 75.69 75.68 75.68 75.68 75.68 75.68 75.68 75.68 75.69 75.69 75.69 75.69 I
---------------------------------------------------------------------------------------
7 663,000 75.69 75.68 75.68 75.68 75.68 75.68 75.68 75.68 75.69 75.69 75.69 75.69 I
---------------------------------------------------------------------------------------
8 663,000 75.69 75.68 75.68 75.68 75.68 75.68 75.68 75.68 75.69 75.69 75.69 75.69 I
---------------------------------------------------------------------------------------
9 663,000 75.69 75.68 75.68 75.68 75.68 75.68 75.68 75.68 75.69 75.69 75.69 75.69 I
---------------------------------------------------------------------------------------
10 663,000 75.69 75.68 75.68 75.68 75.68 75.68 75.68 75.68 75.69 75.69 75.69 75.69 I
----------------------------------------------------------------------------------------------------------------------------------
For each Contract Year which is a leap year the Contract Quantity for the month
of February will be adjusted by a factor of 28 divided by 29.
I = Indexed Contract Price
Page -9-
