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DRAFT: 11/07!9`7
<br />Defaulting Party delivers notice) ("Early Termination Date") on which any or all Transactions
<br />selected by it shall terminate f individually a "Terminated Transaction" and collectively the
<br />"Terminated Tran Sactions") and (ii),withhold any payments due in respect of the Terminated
<br />Transactions; provided, however, upon the occurrence of any Event of Default listed in item (iv)
<br />of Section 4.1 as it may apply to any Party, all Transactions and this Agreement in respect thereof
<br />shall automatically terminate, without notice, and without any other action by either Party as if an
<br />Early Termination Date had been declared immediately prior to such event. If an Early
<br />Termination Date has been designated, the Non -Defaulting Party shall in good faith calculate its
<br />Gains, Losses and Costs resulting from the termination of the Terminated Transactions. The
<br />Gains, Losses and Costs shall be determined by comparing the value of the remaining term,
<br />Contract Quantities and Contract Prices under each Terminated Transaction had it not been
<br />terminated to the equivalent quantities and relevant market prices for the remaining term either
<br />quoted by a bona fide third -party offer or which are reasonably expected to be available in the
<br />market under a replacement contract for each TerminatedTransaction. To ascertain the market
<br />prices of a replacement contract, the Non -Defaulting Party may consider, among other valuations,
<br />any or all of the settlement prices of NYMEX Power futures contracts, quotations from leading
<br />dealers in energy swap contracts and other bona fide third party offers, all adjusted for the length
<br />of the remaining term and differences in transmission. It is expressly agreed that a Party shall not
<br />be required to enter into replacement transactions in order to determine the Termination Payment.
<br />The Non -Defaulting Party shall aggregate such Gains, Losses and Costs with respect to all
<br />Transactions into a single net amount ("Termination Payment") and notify the Defaulting Party. If
<br />the Non -Defaulting Party's aggregate Losses and Costs exceed its aggregate Gains, the Defaulting
<br />Party shall, within five (5) Business Days of receipt of such notice, pay the net amount to the non -
<br />Defaulting Party, which amount shall bear interest at the Interest Rate from the Early Termination
<br />Date until paid. If the Non -Defaulting Party's aggregate Gains exceed its aggregate Losses and
<br />Costs, if any, resulting from the termination of the Terminated Transactions, the Non -Defaulting
<br />Party shall pay such excess to the Defaulting Party on or before the later of (1) ten (10) days after
<br />the end of the month ending on or after the Early Termination Date and (2) the date five (5)
<br />Business Days after receipt by the Defaulting' Party of the Non -Defaulting Party's notice given
<br />above, which amount shall bear interest at the Interest Rate from the Early Termination Date until
<br />paid. If the Defaulting Party disagrees with the calculation of the Termination Payment, the issue
<br />shall be submitted to arbitration in accordance with the arbitration procedures set forth in Exhibit
<br />"C" and the resulting Termination Payment shall be due and payable within three (3) Business
<br />Days after the award.
<br />(b) As used herein with respect to each Party: (i) "Costs" shall mean, with respect to a Party,
<br />brokerage fees, commissions and other similar transaction costs and expenses reasonably incurred
<br />by such Party either in terminating any arrangement pursuant to which it has hedged its obligations
<br />or entering into new, arrangements which replace Terminated Transaction, and attorneys' fees, if
<br />any, incurred in connection with enforcing its rights under this Agreement; (ii) "Gains" shall mean,
<br />with respect to a Party, an amount equal to the present value of the economic benefit (exclusive of
<br />Costs), if any, to it resulting from the termination of its obligations with respect to a Terminated
<br />Transaction, determined in a commercially reasonable manner, and (iii) "Losses" shall mean, with
<br />respect to a Party, an amount equal to the present value of the economic loss (exclusive of Costs),
<br />if any, to it resulting from'the termination of its obligations with respect to a Terminated
<br />Transaction, determined in a commercially reasonable manner. In no event, however, shall a
<br />Party's Gains, Losses or Costs include any penalties, ratcheted demand or similar charges or any
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