CONFIRMATION FOR U.S. DOLLAR TREASURY RATE-LOCK TRANSACTION TO BE
SUBJECT TO 1992 MASTER AGREEMENT
TO: Chugach Electric Association, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000-0000
ATTN: Xxxx X. Xxxxxxxx, Xx.
FAX: (000) 000-0000
FROM: Xxxxxx Brothers Financial Products Inc.
(the "Treasury Rate-Lock Provider")
DATE: March 17, 1999
Our Reference No. _________________
The purpose of this letter agreement is to confirm the terms and conditions
of the treasury rate lock transaction ("Treasury Rate Lock Transaction")
entered into between us on the Trade Date specified below.
This letter agreement constitutes a "Confirmation" as referred to in the
1992 Master Agreement specified below.
1. The definitions and provisions contained in the 1991 ISDA
Definitions as published by the International Swaps and Derivatives
Association, Inc. (the "Definitions") are incorporated into this
Confirmation. In the event of any inconsistency between the Definitions
and this Confirmation, this Confirmation will govern. Each party
represents and warrants to the other that (i) it is duly authorized to
enter into this Treasury Rate Lock Transaction and to perform its
obligations hereunderand (ii) the person executing this Confirmation is duly
authorized to execute and deliver it.
2. This Confirmation supplements, forms part of, and is subject to,
the 1992 Master Agreement dated as of March 17, 1999 (including the related
Schedule thereto (the "Schedule")) as amended and supplemented from time to
time (the "Agreement"), between Chugach Electric Association, Inc.
("Counterparty") and the undersigned Treasury Rate-Lock Provider.
All provisions contained in the Agreement shall govern this Confirmation
except as expressly modified below.
The terms of the Treasury Rate-Lock Transaction to which this Confirmation
relates are as follows:
Notional Amount: 10 year U.S. Treasury: $196,000,000
30 year U.S. Treasury: $18,700,000
Trade Date: March 17, 1999
Relavant Time: If the Transaction terminates on February 13, 2002,
the "Relevant Time" will be 1:00 PM New York Time.
Base Treasury
Securities: As of the Determination Date, the then current
10 year and 30 year U.S.Treasury Bond
Base Treasury
Rates: For each Base Treasury Security: the yield to
maturity of such Base Treasury Security on the
Determination Date (at the Relevant Time) as
shown on the Bloomberg Yield Analysis page
(street convention) If this page is no longer
available, then the Telerate 500 (offer price) on
the Determination Date and at the Relevant Time
shall be used.
Dollar Value of
an .01:
("DVBP") As of the Determination Date, the change in the
U.S. dollar price of one million dollars of the
Base Treasury Securities underlying the Treasury
Lock Transaction given a one basis point (.01%)
change in their respective yields to maturity,
determined separately for each Base Treasury
Security. The dollar amount per one million face
value will be determined by multiplying the relevant
Dollar Value of an .01 field on Bloomberg
Financial Market's Government Yield Analysis Page on
the Determination Date at the Relevant Time
by 10,000. If no Dollar Value of an .01 for the Base
Treasury Securities is available on the Bloomberg
Financial Market's Government Yield Analysis Page
(for either (or both) Base Treasury Securities),
the Treasury Rate-Lock Provider shall determine
the Dollar Value of an .01 for the affected Base
Treasury Security (ies) on the Determination Date
and at the Relevant Time on a basis consistent with
the manner in which it would determine the Dollar
Value of an .01 for a transaction in which it held no
financial interest.
Determination
Date: On or before (as determined by Chugach Electric
Association, Inc.) February 13, 2002.
Locked-In Treasury
Rates: 10 year: 5.653%
30 year: 5.838%
Early
Termination: This agreement shall be subject to early
termination (other than upon the occurrence of an
Early Termination Date under Section 6 of the ISDA
Master Agreement) only at the option of Chugach
Electric Association, Inc., upon at least one New
York Banking Day's notice. Any notice of termination
sent after 5:00 PM New York Time shall be deemed to
have been sent on the next succeeding New York
Banking Day.
New York
Banking Day: Any day other than a Saturday, a Sunday or a day on
which commercial banks in New York City are required
or authorized to be closed.
Payment Date: The first New York Banking Day 30 days after the
Determination Date (or, if an Early Termination
Event occurs, the date provided in Section 6(d)(ii)
of the Agreement).
Adjustment
Amount: If the Determination Date is February 13, 2002, the
Adjustment Amount will be determined as follows:
1) multiply (a) the DVBP for 10 year Treasury
Bonds, times (b) the Notional Amount applicable
to 10 year Treasury Bonds (expressed in
millions of dollars), times (c) the difference
in basis points of yield between the relevant
Base Treasury Rate and Locked-In Treasury Rate
(expressed as a positive number if the relevant
Base Treasury Rate exceeds the relevant
Locked-In Treasury Rate and as a negative number
otherwise);
2) multiply (a) the DVBP for 30 year Treasury
Bonds, times (b) the Notional Amount applicable
to 30 year Treasury Bonds (expressed in
millions of dollars), times (c) the difference
in basis points of yield between the relevant
Base Treasury Rate and Locked-In Treasury Rate
(expressed as a positive number if the relevant
Base Treasury Rate exceeds the relevant
Locked-In Treasury Rate and as a negative number
otherwise); and
3) add the results of the preceding calculations.
If the total is a negative number, the absolute
value of that number is the Adjustment Amount, and
shall be paid by Chugach to the Counterparty. If
the total is a positive number, that number is the
Adjustment Amount, and shall be paid by the
Counterparty to Chugach. If the total is zero,
then no payment shall be made by or to any party.
If the Determination Date is any date before
February 13, 2002 (for any reason whatsoever), the
Adjustment Amount shall be determined in accordance
with Part 4(d) of the Schedule.
Payment of Adjustment
Amount: Payment of the Adjustment Amount will be made on the
Payment Date.
Assignment: No assignment without the prior written consent of
the other party except as permitted by Section 7 of
the ISDA Master Agreement and except as provided in
the Schedule under the heading "Credit Assignment
Event".
Governing Law: New York.
Payment Instructions:
Chugach Electric Association, Inc.:as from time to time provided in
writing by Chugach Electric
Association, Inc.
Treasury Rate-Lock Provider: as from time to time provided in
writing by the Treasury Rate-
Lock Provider.
Placement Fee: Each of Chugach Electric Association, Inc. and the
Treasury Rate-Lock Provider acknowledges that the
Treasury Rate-Lock Provider is paying Xxxx Xxxxxxx a
fee of $1,386,116.00 in connection with the parties'
entry into the Treasury Rate-Lock Transaction
Each of the parties represents to the other as follows:
Its entry into the Treasury Rate-Lock Transaction has been duly
authorized by all necessary corporate action and does not violate any
law applicable to it or the terms of any agreement to which it is a
party;
It is not relying on the other party in connection with its decision
to enter into the Treasury Rate-Lock Transaction; and the other party
is not acting as an advisor to or fiduciary of such party in
connection with the Treasury Rate-Lock Transaction, regardless of
whether the other party has provided, or provides, it with market
information or the other party's views with respect to any aspect of the
Treasury Rate-Lock Transaction;
It understands the risks of the Treasury Rate-Lock Transaction and any
legal, regulatory, tax, accounting and economic consequences resulting
therefrom;
It has determined, based upon its own judgment and upon any advice
received from such of its own professional advisors as it has deemed
necessary to consult in connection with the Treasury Rate-Lock
Transaction, that entering into the Treasury Rate-Lock Transaction is
appropriate for it in light of its financial capabilities and objectives;
and
This Confirmation, when executed and delivered by such party, will
constitute a legal, valid and binding obligation of such party,
enforceable in accordance with its 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).
Please confirm that the foregoing correctly sets forth the terms and
conditions of our agreement by responding within three (3) Business Days by
returning via telecopier an executed copy of this Confirmation to the
attention of Xxxx Xxxxxxxx.
Failure to respond within such period shall not affect the validity or
enforceability of this letter agreement, and shall be deemed to be an
affirmation of the terms and conditions contained herein, absent manifest error.
Yours Sincerely,
XXXXXX BROTHERS FINANCIAL PRODUCTS INC.
By: /s/Xxxxxx Xxxxxxx
Authorized Signatory
Confirmed as of the date first written above:
CHUGACH ELECTRIC ASSOCIATION, INC.
By:/s/ Xxxx X. Xxxxxxxx, Xx.
Xxxx X. Xxxxxxxx, Xx.
Authorized Signatory
