Template:Nutshell EUA Annex (d)(ii)

(d)(ii) Failure to Deliver.
(d)(ii)(1) Failure to Deliver by Delivering Party
If Delivering Party fails to deliver other than due to Receiving Party’s breach of Scheme Requirements, Illegality, a Settlement Disruption Event, a Suspension Event or Abandonment of Scheme, the Payment Date will be postponed, Receiving Party may give notice requiring Delivering Party to remedy the failure and:

(A) Failure to Deliver Remedied: If Delivering Party remedies the failure by the Final Delivery Date:

(X) when determining the Payment Date, the Delivery Date will be the date of actual delivery:

(i) Allowance Forward Transactions: Receiving Party must pay Allowance Purchase Price x Number of Allowances on the Payment Date

(ii) Allowance Option Transactions: Receiving Party must pay Allowance Strike Price x number of Allowances to be Delivered on the Payment Date; and

(Y) On the same Payment Date, Delivering Party must pay interest at the Default Rate on number of undelivered Allowances on the Delivery Date x relevant Allowance Purchase Price/Allowance Strike Price from the original Delivery Date to the actual delivery date .

(B) Failure to Deliver Not Remedied: If the failure is not remedied:

(X) No Excess Emissions Penalty: If “Excess Emissions Penalty” does not apply, or the Delivery Date falls outside the EEP Risk Period, Receiving Party may by notice terminate the parties’ “Physical Settlement” obligations and Delivering Party must pay Receiving Party’s Replacement Cost (if positive) on the next Business Day, adjusted for any amounts it has already paid to Delivering Party (other than Premium on Allowance Option Transactions); or

(Y) Excess Emissions Penalty applies: If “Excess Emissions Penalty” applies and the Delivery Date falls within any specified EEP Risk Period, Receiving Party may by notice terminate the parties’ “Physical Settlement” obligations and Delivering Party must pay Receiving Party’s Replacement Cost (if positive, and where it applies) on the Business Day after Receiving Party can effect a Buy-In, or otherwise purchase Allowances, adjusted to account for amounts it has previously paid (other than Premium on Allowance Option Transactions); or

(Z) Failure to Deliver (Alternative Method): If “Failure to Deliver (Alternative Method)” applies:

(aa) on the next Business Day Delivering Party must pay Receiving Party’s Replacement Cost (if positive), adjusted to account for amounts previously paid (other than Premium on Allowance Option Transactions), and upon payment, Delivering Party’s delivery obligation will be fully discharged; and

(bb) if “Excess Emissions Penalty” applies, Delivering Party must pay any amount determined under “Failure to Deliver (Alternative Method) – EEP Applicable”.

(d)(ii)(2) Failure to Comply by Receiving Party: If Receiving Party fails to comply with the Requirements under the Scheme as specified below, the Payment Date will be postponed and Delivering Party may, by notice, require Receiving Party to comply, and:

(A) Failure to Comply Remedied: If Receiving Party complies by the Final Compliance Date:

(X) Delivering Party must deliver the Allowances to be Delivered and, on the Payment Date (where the Delivery Date will be the date of actual delivery) Receiving Party must pay:

(i) Allowance Forward Transactions: Allowance Purchase Price x Number of Allowances;

(ii) Allowance Option Transactions: Allowance Strike Price x number of Allowances to be Delivered; and

(Y) on same the Payment Date, Receiving Party must pay interest at the Default Rate on number of Allowances due but not delivered x relevant Allowance Purchase Price/Allowance Strike Price from the original Delivery Date to the date of actual delivery.

(B) Failure to Comply Not Remedied: If Receiving Party fails to comply by the Final Compliance Date, Delivering Party may, by written notice, terminate the parties’ “Physical Settlement” obligations and Receiving Party must pay Delivering Party’s Replacement Cost (if positive) on the next Business Day, adjusted for amounts previously paid (other than Premium by Receiving Party on the relevant EU Emissions Allowance Transaction.

(d)(ii)(3) EEP Amount: If “Excess Emissions Penalty” applies and, following Delivering Party’s failure to deliver, Receiving Party becomes liable for an EEP Amount, it must provide, upon Delivering Party’s request, reasonably satisfactory evidence that:

(A) it has incurred an EEP Amount consequent on Delivering Party’s failure; and

(B) the extent to which this results from Delivering Party’s failure; and

(C) that it could not have used other Allowances to which it had title to reduce its liability for the EEP Amount it claims from Delivering Party.

Delivering Party’s obligation to pay any EEP Amount under “Failure to Deliver” is subject to Receiving Party’s having used reasonable endeavours to avoid and mitigate its liability for EEP Amounts and to allocate them pro rata between all its counterparties who have failed to deliver Allowances to it provided, that the onus will be on Delivering Party to show that Receiving Party has failed to do so.