Template:Nutshell EUA Annex (d)

(d) Terms
(d)(i) Physical Settlement
(d)(i)(1) Settlement

(A) Allowance Forward Transactions:

on the Payment Date, Buyer must pay Seller Allowance Purchase Price x Number of Allowances

on the Delivery Date Seller must deliver to Buyer Allowances to be Delivered.

(B) Allowance Option Transaction: for each Exercise Date:

on the Payment Date Receiving Party must pay Allowance Strike Price x Allowances to be Delivered

on the Delivery Date Delivering Party must deliver Allowances to be Delivered.

(d)(i)(2) Delivery

(A) Delivering Party will deliver Allowances under a Transaction by transferring them from its Holding Account in accordance with the Scheme into the Receiving Party’s Specified Holding Account.

(B) If Delivering Party has specified a Specified Holding Account for the Transaction, its obligation is limited to delivering from that Specified Holding Account to the Receiving Party’s Specified Holding Account.

(C) A Receiving Party with multiple Specified Holding Accounts will specified them in order of preference. Delivering Party must try to deliver to the first one, unless a Settlement Disruption Event or a Suspension Event affects that Specified Holding Account, in which case it must try the next one, and so on.

(D) Allowances transferred after 4:00 p.m., Central European Time, on a Delivery Business Day or on a non-Delivery Business Day, will be deemed delivered at 10:00 a.m. CET on the next Delivery Business Day. Allowances transferred before 10:00 a.m. CET, on a Delivery Business Day, will be deemed to have been delivered at 10:00 a.m., CET, on that day.

(d)(i)(3) Netting
If on any date parties would otherwise be due to deliver fungible Allowances to each other (and between the same pair of Holding Accounts) under separate Transactions then, on such date, parties’ respective delivery obligations will be automatically satisfied and discharged replaced by an obligation upon the party having the larger deliverable obligation to deliver the excess of its delivery obligation over the other party’s delivery obligation.
(d)(i)(4) Settlement Disruption Event

(A) Notification: Either party may notify the other party in writing of a Settlement Disruption Event and the impacted Transactions. If it is the affected party, it must also give details of the Settlement Disruption Event and a non-binding estimate of the extent and likely duration of the disruption on its obligations.

(B) Effect: Upon a Settlement Disruption Event both parties’ obligations will be suspended, subject to Continuing Settlement Disruption Event below, until the Settlement Disruption Event no longer prevents settlement. During the Settlement Disruption Event, the affected party must use all reasonable endeavours to settle.

(C) Delayed Performance: Subject to Continuing Settlement Disruption Event below, once the Settlement Disruption Event no longer prevents settlement, both parties must, promptly and within two Delivery Business Days, resume their obligations under the Transactions.

(D) Continuing Settlement Disruption Event: Where a Settlement Disruption Event continues:

(I) for 9 Delivery Business Days after the originally scheduled Delivery Date; or, if shorter:

(II) until a Reconciliation Deadline falling on or after the original Delivery Date; or, if shorter:

(III) until the day 3 Delivery Business Days before the End of Phase Reconciliation Deadline falling on or after the original Delivery Date:

then at that time there will be an Illegality where the affected Transaction is the sole Affected Transaction, both parties are Affected Parties, there is no Waiting Period and, if an Early Termination Date results, when determining the Early Termination Amount the suspended obligations will resume on the Early Termination Date, if “Payment on Termination for Settlement Disruption” applies, and if it does not the parties will have no further obligations after the Settlement Disruption Event other than for Unpaid Amounts and provided that (other than in respect of already-delivered Allowances)

(i) Delivering Party must promptly refund any amount Receiving Party it was paid under a Allowance Forward Transaction or Call; and

(ii) Receiving Party must promptly refund any amount Delivering Party it was paid under a Put

together with interest from the payment date until the termination date of the Transaction at the overnight deposit rate for the relevant currency.

(d)(i)(5) Suspension Event

(A) Notification: A party impacted by a Suspension Event must notify the other party in writing as soon as reasonably practicable. It must also give what details of the Suspension Event it has and a non-binding estimate of the extent and expected duration of its resultant inability to perform.

(B) Effect: Upon a Suspension Event both parties’ obligations will be suspended, subject to Continuing Suspension Event below, until the Suspension Event no longer prevents settlement. During the Suspension Event, the affected party must try reasonably to overcome it.

(C) Delayed Performance: Subject to Continuing Suspension Event below, once the Suspension Event ceases, both parties must promptly resume their obligations under the Transactions by the earlier of: (i) ten Delivery Business Days after the Suspension Event lifts; and (ii) 3 Delivery Business Days before the End of Phase Reconciliation Deadline (the “Delayed Delivery Date”). If Delivering Party has successfully delivered the Allowances to be Delivered by the Delayed Delivery Date, Receiving Party must pay Delivering Party, on the Delayed Payment Date:

(I) Allowance Forward Transactions: (Allowance Purchase Price x Number of Allowances delivered by the Delayed Delivery Date) + Cost of Carry Amount;

(II) Allowance Option Transactions: (Allowance Strike Price x Number of Allowances delivered by the Delayed Delivery Date) + Cost of Carry Amount.

(D) Continuing Suspension Event: Where a Suspension Event continues on the Long-Stop Date, then there will be an Illegality where the Transaction is the sole Affected Transaction, both parties are Affected Parties,no Waiting Period will apply and the Long-Stop Date will be the Early Termination Date. When determining the Early Termination Amount, if “Payment on Termination for Suspension” applies, the suspended obligations will resume on the Early Termination Date, and if it does not, the parties will have no further obligations after the Suspension Event (other than for any Unpaid Amounts); provided that:

(i) Delivering Party must promptly refund any amount Receiving Party paid it under any Allowance Forward Transaction or Call; and

(ii) Receiving Party must promptly refund any amount Delivering Party paid it under a Put

that was not paid for delivered Allowances, together with interest from the payment date until the Transaction termination date at the relevant overnight deposit rate.

(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.
(d)(iii) Partial Settlement
If Delivering Party delivers fewer Allowances to Receiving Party on the Delivery Date than the Allowances to be Delivered (an “Allowance Shortfall”), Receiving Party’s corresponding payment obligation will be reduced proportionately and the “Failure to Deliver” provisions of this Annex will apply mutatis mutandis to the Allowance Shortfall.
Template:Nutshell EUA Annex (d)(iv) Template:Nutshell EUA Annex (d)(ix) (d)(v) Invoicing: Following the Delivery Date, Delivering Party must send Receiving Party a valid invoice for applicable VAT (a “VAT Invoice”) stating the number of Allowances delivered, the Allowance Price, the total amount payable by Receiving Party and the amount of any VAT.
(d)(vi) Scheme Requirements: Each party must:

(1) ensure that on any Delivery Date it has at least one validly-registered Holding Account, and that all of its Specified Holding Accounts are validly registered, under the Registries Regulation and

(2) where it is Delivering Party, ensure that it has nominated each of Receiving Party’s Specified Holding Account as a “trusted account” in its “trusted account list” for its own Specified Holding Accounts under the Registries Regulation; and

(3) not give any Relevant Authority grounds to prevent the transfer of any Allowances required under any EU Emissions Allowance Transaction.

(d)(vii) No Encumbrances: Delivering Party must deliver all Allowances free of all encumbrances and competing interests (the “No Encumbrance Obligation”). If it does not:

(1) This Agreement and all Transactions will continue unaffected.

(2) Receiving Party must promptly given written notice of the Encumbrance Loss Amount to Delivering Party with reasonable calculation details.

(3) By close on the third Business Day of an invoice following the notice, Delivering Party must pay Receiving Party the Encumbrance Loss Amount, with interest at the Default Rate. Once paid, the parties will have no further obligations under that Transaction, and these are its exclusive remedies for breach of the No Encumbrance Obligation.

(4) Where transfering an Affected Allowance breaches the No Encumbrances Obligation, Delivering Party will only be liable for the Encumbrance Loss Amount if, when it acquired the Affected Allowance, it was not acting in good faith; or:

(A) Receiving Party, has used its best good faith effos to defend a claim from the Original Affected Party, but was unsuccessful; or

(B) Receiving Party, having acted in good faith when buying such Affected Allowance but still suffered a claim (from someone other than the Original Affected Party) for that Affected Allowance, has used all reasonable endeavours to mitigate the Encumbrance Loss Amount.

Template:Nutshell EUA Annex (d)(viii) Template:Nutshell EUA Annex (d)(x) (d)(xi) Failure to Deliver (Alternative Method) - EEP Applicable

(i) Obligation: If “Failure to Deliver (Alternative Method)” and “EEP” applies and Delivering Party’s failure causes Receiving Party to incur an Excess Emissions Penalty other than where Receiving Party did not comply with the Requirements under the Scheme or there was an Illegality, Settlement Disruption Event or Suspension Event (the “EEP Non-delivery” and such EEP the “Indemnifiable EEP”), Delivering Party must pay, in addition to the Receiving Party’s Replacement Cost, the Indemnifiable EEP (the “EEP Payment”), to a maximum of the product of the relevant RPRC Shortfall and the maximum prevailing per-Allowance rate of Excess Emissions Penalty.

(ii) Evidence of liability: Payment of the EEP Payment is conditional up Receiving Party demonstrating to Delivering Party’s reasonable satisfaction:

(a) that it has indeed incurred and paid the EEP Payment due to a shortfall of Allowances on the Reconciliation Deadline following the Delivery Date (the “Deadline Shortfall”);

(b) the extent to which:

(i) Delivering Party’s EEP Non-delivery caused its EEP Payment liability;

(ii) it would have incurred that liability regardless of Delivering Party’s EEP Non-delivery; and

(iii) any third party’s failure to deliver Allowances under another agreement contributed to its EEP Payment liability.

In this regard Receiving Party must provide Delivering Party with information it needs to make a commercially reasonable assessment of how far its EEP Non-delivery contributed to the Deadline Shortfall.

(iii) Third party contributions: If other parties’ failures contributed to the Deadline Shortfall, then Delivering Party is only obliged to pay its proportionate share of the EEP Payment as determined by the parties in a commercially reasonable manner. Receiving Party may not claim any part of an EEP Payment from Delivering Party such that its aggregate of claims against third parties relating to the EEP Payment would result in a windfall.

(iv) Disputes: Delivering Party may in good faith dispute any payment by notice to Receiving Party stating its reasons for the dispute. Pending resolution (which the parties must try to resolve as soon as they can) the EEP Payment obligation will be suspended.

(v) Invoice and payment: Once agreed, Delivering Party must pay the EEP Payment within two Business Days against Receiving Party’s VAT Invoice.

(d)(xii) Specified Holding Accounts and Modifications of Party’s Specified Holding Accounts:

(1) Receiving Party:

(A) must specify at least one validly registered Holding Account is specified as a Specified Holding Account in the Annex or in the Confirmation; and

(B) may, for any Transaction:

(a) amend the order of its Specified Holding Accounts

(b) add new Specified Holding Accounts, or

(c) remove a Specified Holding Account

As long as it notifies Delivering Party in writing at least thirty (30) calendar days before the next Delivery Date and provided that Delivering Party consents in writing to any amendment or removal within five (5) Delivery Business Days of such notice.

(2) Delivering Party may:

(A) specify at least one validly registered Holding Account as a Specified Holding Account in the Annex or the Confirmation; and

(B) add new Specified Holding Accounts by giving written notice to Receiving Party at least ten Delivery Business Days before the next Delivery Date.