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EXHIBIT 10.05
(MULTICURRENCY-CROSS BORDER)
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of ...........................................
DEUTSCHE BANK AG and XXXXXXXX ALTERNATIVE ASSET TRUST have entered and/or
anticipate entering into one or more transactions (each a "Transaction") that
are or will be governed by this Master Agreement, which includes the schedule
(the "Schedule"), and the documents and other confirming evidence (each a
"Confirmation") exchanged between the 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 are 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),
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
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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 for 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 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.
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(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.
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 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 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
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 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 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
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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.
(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 AUTHORIZATIONS. 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
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incorporated, organized, 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 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
be 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 (1) 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 of, that Specified Transaction, (2) defaults, after giving
effect to any applicable noticerequirement 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
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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
(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 fail 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
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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));
(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
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-
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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, (8).
(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.
(ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality
under Section 5(b)(i)(1) 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 to 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.
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(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(e) n respect of the Terminated 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(c)) 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.
(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
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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 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.
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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 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.
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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 be 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 purposes 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.
(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 Organization 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 make 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
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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
proving receipt will be on the sender and will not be met by a
transmission report generated by the sender's 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 delivery 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
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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 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 for 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 relevant Transaction is entered into.
"consent" includes a consent, approval, action, authorization,
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 I % per annum.
"Defaulting Party" has the meaning specified in Section 6(a).
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"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
organized, present or engaged in a trade or business in such jurisdiction,
or having or having bad 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(b), 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 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 refer-red to under Section I 1. 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
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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).
"Office" means a branch or office of a party, which may be such
party's bead 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, organized, 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
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(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 for 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 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) for 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.
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"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 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.
......................................... .........................................
(Name of Party) (Name of Party)
By: ..................................... By: .....................................
Name: Name:
Title: Title:
Date: Date:
By: .....................................
Name:
Title:
Date:
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19
SCHEDULE
TO THE
ISDA MASTER AGREEMENT
DATED AS OF
------------------------------
AMONG DEUTSCHE BANK AG ("PARTY A"), XXXXXXXX & COMPANY, INC., A CORPORATION
ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF MARYLAND (THE "AGENT") AND
XXXXXXXX ALTERNATIVE ASSET TRUST, A TRUST ORGANIZED AND EXISTING UNDER THE LAWS
OF THE STATE OF DELAWARE (THE "FUND" OR "PARTY B") (EXCEPT WHERE OTHERWISE
INDICATED HEREIN, CAPITALIZED TERMS USED HEREIN SHALL HAVE THE RESPECTIVE
MEANINGS SET FORTH IN PART 5 OF THIS SCHEDULE)
PART 1. TERMINATION PROVISIONS.
(a) "SPECIFIED ENTITY" means:
in relation to Party A: Not Applicable
and in relation to the Fund for the purpose of:
Section 5(a)(v): Not Applicable
Section 5(a)(vi): Not Applicable
Section 5(a)(vii): the Agent
Section 5(b)(iv): Not Applicable
(b) The definition of "SPECIFIED TRANSACTION" in Section 14 of this
Agreement is hereby amended by: (A) deleting in the second through the
fourth lines thereof the words "between one party...which is a" and
replacing them with the words "(i) in the case of Party A, between
Party A and the Fund (or any Credit Support Provider of such party or
any applicable Specified Entity of such party), and (ii) in the case of
the Fund, between the Fund (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and any other
person or entity, including without limitation Party A, including
without limitation any" and (B) adding the text "commodity transaction,
credit derivative transaction, repurchase or reverse repurchase
transaction, securities lending transaction, futures transaction, prime
brokerage or margin lending transaction" after the words "foreign
exchange transaction" in the sixth line thereof.
(c) The "CROSS DEFAULT" provisions of Section 5(a)(vi) will apply to Party
A and the Fund and is hereby amended by adding the following at the end
thereof:
, and in either case, the other party determines in good faith that
it has reasonable grounds to conclude that the performance by the
Defaulting Party of its financial obligations hereunder is
endangered.
With regard to Party A, "THRESHOLD AMOUNT" means, at any time, three
percent (3%) of the total capital and reserves of Deutsche Bank AG as
reported in the most recently published annual audited consolidated
financial statements of Deutsche Bank AG.
With regard to the Fund, any Credit Support Provider or any applicable
Specified Entity of the Fund, "THRESHOLD AMOUNT" means: three percent
(3%) of its Net Asset Value.
(d) The "CREDIT EVENT UPON MERGER" provision in Section 5(b)(iv), which
applies to both parties, is hereby amended to read as follows:
(iv) CREDIT EVENT UPON MERGER. "Credit Event Upon Merger" means that
a Designated Event (as defined below) occurs with respect to a
party, any Credit Support Provider of such party or any
applicable Specified Entity of such party (in each case, "X") and
such Designated Event does not constitute a Merger Without
Assumption under Section 5(a)(viii) hereof and, in the reasonable
opinion of the other party, the creditworthiness of X or, if
applicable, the successor, surviving or transferee entity of X,
after taking into account any applicable Credit Support Document,
is materially weaker than X immediately prior to such action,
(and, in such event, such party or its successor, surviving or
transferee
19
20
entity, as appropriate, will be the Affected Party). For purposes
hereof, a Designated Event with respect to X means that, after the
date of this Agreement:
(1) X consolidates or amalgamates with, or merges into, or
transfers all or substantially all of its assets (or any
substantial part of the assets comprising the business
conducted by X as of the date of this Agreement) to, or
receives all or substantially all the assets or obligations of,
another entity;
(2) any person or entity acquires directly or indirectly the
beneficial ownership of equity securities having the power to
elect a majority of the board of directors of X or otherwise
acquires directly or indirectly the power to control the
policy-making decisions of X;
(3) X effects any substantial change in its capital structure by
means of the issuance, incurrence or guarantee of debt or the
issuance of preferred stock or other securities convertible
into, or exchangeable for, debt or preferred stock; or
(4) X enters into any agreement providing for any of the
foregoing."
(e) The "BANKRUPTCY" provisions of Section 5(a)(vii) shall apply to Party
A and Party B, provided that in the case of Party B, such provisions
shall be amended by: (i) deleting in clause (4) thereof the number
"30" and substituting in lieu thereof the number "10" in such clause
(4); and (ii) deleting in clause (7) thereof the number "30" and
substituting in lieu thereof the number "10" in such clause (7).
(f) The "AUTOMATIC EARLY TERMINATION" provisions of Section 6(a) will not
apply to Party A or to the Fund.
(g) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e) of
this Agreement:
(i) Loss will apply.
(ii) The Second Method will apply.
(h) "TERMINATION CURRENCY" means United States Dollars.
(i) ADDITIONAL TERMINATION EVENTS. The occurrence of any of the following
events shall constitute a Termination Event:
(i) the Agent fails to notify Party A in writing of the Fund's Net
Asset Value in accordance with the terms of Part 3 of this
Schedule;
(ii) the Fund's Net Asset Value declines by (x) twenty percent (20%)
or more during any one-month period, (y) thirty percent (30%) or
more during any three month period or (z) fifty percent (50%) or
more within any twelve-month period, in each case calculated on
a rolling basis with respect to the immediately preceding
one-month, three-month or twelve-month period;
(iii) the Net Asset Value of the Fund declines below the Net Asset
Value Floor with respect to the Fund;
(iv) in the event that the Agent enters into a Transaction with Party
A on behalf of the Fund and the Other Funds, either (i) the
Agent fails to allocate such Transactions among the Fund and the
Other Funds on the same Business Day on which such Transactions
are entered into or (ii) after giving effect to such allocation,
any of such Transactions exceed the applicable Exposure Limit
for the Fund or the Other Funds;
(v) the Fund discharges the Agent as its sole trading advisor
("Trading Advisor") or reduces by any material amount the assets
of the Fund under the Agent's management or the Agent otherwise
fails to act on behalf of the Fund in principally the same or
similar capacity as that held as of the date of this Agreement;
(vi) the Trust Agreement dated January 2, 2001 (the "Investment
Management Agreement") between the Fund and the Agent or any
Operative Document is (a) terminated or ceases
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21
to be in full force and effect or (b) is amended or modified and
such amendment or modification may have a material adverse effect on
the rights of Party A under this Agreement, any Credit Support
Document or any Transaction or on the ability of the Fund to perform
its obligations under, or its authority to enter into, this
Agreement, any Credit Support Document or any Transaction;
(vii) any representation or warranty made or deemed made by the Agent
herein to Party A proves false or misleading when made or
deemed made, or if the Agent defaults in the fulfillment of any
obligation binding upon it hereunder whether in its individual
capacity or as Agent;
(viii) an Adverse Regulatory Change occurs and is continuing;
(ix) the Additional Termination Events set forth in the Credit
Support Annex; or
(x) Unless a confirmation of a Transaction otherwise provides Party A
with the right to elect to terminate a Transaction, the parties
agree that either party (the "Electing Party") may elect to
terminate any Transaction (which shall be the only Affected
Transaction) on the second anniversary of the Effective Date of
such Transaction and annually thereafter (which date shall be the
Early Termination Date with respect to such Transaction) by at
least five days' prior notice, provided that no other Event of
Default, Potential Event of Default or Termination Event shall
have occurred and then be continuing under this Agreement on such
Early Termination Date (any such termination, an "Elective
Termination").
For the purpose of the foregoing Termination Events specified in clauses
(i) through (ix) above, the Fund shall be deemed to be the Affected
Party and Party A shall not be an Affected Party. For purposes of the
Termination Event specified in clause (x) above, the Electing Party
shall be deemed to be the Affected Party and the other party shall not
be an Affected Party.
PART 2. TAX REPRESENTATIONS.
(a) PAYER REPRESENTATIONS. For the purpose of Section 3(e) of this
Agreement, Party A and the Fund make the following representations to
the other:
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, each party 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 of the other party 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 TAX REPRESENTATIONS.
For the purpose of Section 3(f) of this Agreement, Party A and Party B
each represent to the other that, in respect of each Transaction which
it enters into through an Office or discretionary agent in the United
States of America ("U.S."), each payment received or to be received by
it under that Transaction will be effectively connected with its conduct
of a trade or business in the U.S.
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22
PART 3. DOCUMENTS TO BE DELIVERED.
(a) For the purpose of Section 4(a)(i), the documents to be delivered are:
PARTY REQUIRED TO DELIVER SECTION 3(d)
DOCUMENT FORM/ DOCUMENT/ CERTIFICATE DATE BY WHICH TO BE DELIVERED REPRESENTATION
------------------------- --------------------------- ----------------------------- --------------
Party A An executed United States (i) Upon execution of this
Internal Revenue Service Agreement, (ii) promptly upon
Form W-8ECI (or any reasonable demand by Party B
successor thereto) and an and (iii) promptly upon
executed United States learning that any such form
Internal Revenue Service previously provided by Party
Form W-8BEN (or any A has become obsolete or
successor thereto). incorrect.
The Fund An executed United States (i) Upon execution of this
Internal Revenue Service Agreement, (ii) promptly upon
Form W-8ECI (or any reasonable demand by Party A
successor thereto), Form and (iii) promptly upon
W-8BEN (or any successor learning that any such form
thereto), or Form W-9 (or previously provided by Party
any successor thereto), as B has become obsolete or
applicable. incorrect.
(b) For the purposes of Section 4(a)(ii), the other documents to be
delivered are:
PARTY REQUIRED TO DELIVER SECTION 3(d)
DOCUMENT FORM/ DOCUMENT/ CERTIFICATE DATE BY WHICH TO BE DELIVERED REPRESENTATION
------------------------- --------------------------- ----------------------------- --------------
Party A, the Agent, the Evidence of the authority, Upon or prior to the Applicable
Fund incumbency and specimen execution and delivery of
signature of each person this Agreement and, with
executing this Agreement or respect to any Confirmation
any Confirmation, Credit upon request by the other
Support Document or other party.
document entered into in
connection with this
Agreement on its behalf or
on behalf of a Credit
Support Provider or
otherwise, as the case may
be.
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23
PARTY REQUIRED TO DELIVER SECTION 3(d)
DOCUMENT FORM/ DOCUMENT/ CERTIFICATE DATE BY WHICH TO BE DELIVERED REPRESENTATION
------------------------- --------------------------- ----------------------------- --------------
The Agent Evidence of the authority Upon execution of this Applicable
of the Agent to act on Agreement, any Confirmation
behalf of and to bind the and promptly upon demand by
Fund, including Powers of Party A.
Attorney, Trading
Authorizations or other
documents evidencing such
other actions taken by the
Fund to authorize the
Agent's execution of this
Agreement and each
Confirmation, and the
performance of its
obligations hereunder.
The Fund Its most recent Prospectus, As of execution of this Applicable
Private Placement or Agreement.
Offering Memorandum, the
Investment Management
Agreement and other
Operative Documents.
The Agent and the Fund The notices specified in As soon as available and in Applicable
Section 4 of this Agreement any event at the times
as added by Part 5 of this specified in such Section 4.
Schedule.
Party A A copy of its most recent Promptly after request by the Applicable
annual report containing other party and promptly
consolidated financial following the end of each
statements, certified fiscal year while there are
without qualification by obligations outstanding under
independent public this Agreement.
accountants, and such other
public information
respecting its condition or
operations, financial or
otherwise, as the other
party may reasonably
request from time to time.
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24
PARTY REQUIRED TO DELIVER SECTION 3(d)
DOCUMENT FORM/ DOCUMENT/ CERTIFICATE DATE BY WHICH TO BE DELIVERED REPRESENTATION
------------------------- --------------------------- ----------------------------- --------------
The Fund Copies of (i) its most Promptly after request by Applicable
recent annual financial Party A if available in
statements, certified writing or otherwise on a
without qualification by verbal basis, within five (5)
independent public days after the end of the
accountants, (ii) its most relevant calendar month,
recent quarterly financial within thirty (30) days after
statements, (iii) its most the end of the relevant
recent unaudited month-end quarter or within sixty (60)
balance sheet (such days after the end of the
financial statements relevant year, as the case
referred to in clauses (i) may be.
through (iii) shall include
as financial statement
items its Net Asset Value,
and (iv) such other
information respecting the
condition or operations,
financial or otherwise, of
the Agent and the Fund as
Party A may reasonably
request from time to time.
The Fund A duly executed and As of execution of this No
delivered copy of the Agreement.
Credit Support Document
PART 4. MISCELLANEOUS.
(a)ADDRESS FOR NOTICES. For the purpose of Section 12(a) of this
Agreement, the addresses for notices and communications to Party A and
the Fund shall be as follows:
TO PARTY A:
(i) All notices to Party A under Sections 5 or 6 of the Agreement
(other than notices under Section 5(a)(i)) shall be sent to:
Deutsche Bank AG, Head Office
Xxxxxxxxxxxx 00
00000 Xxxxxxxxx
XXXXXXX
Attention: Legal Department
Telex No: 411836 or 416731 or 41233
Answerback: DBF-D
(ii) All notices to Party A (other than those provided for in
paragraph (i) above) shall be sent directly to the office through
which Party A is acting for the relevant Transaction, using the
address and contact particulars specified in the Confirmation for
the purposes of confirming
24
25
that Transaction. If no such particulars are so specified, such
notices shall be sent to the address of the relevant office set out
below:
WHERE PARTY A IS ACTING THROUGH ITS WHERE PARTY A IS ACTING THROUGH ITS
FRANKFURT HEAD OFFICE: LONDON BRANCH:
Deutsche Bank AG, Head Office Deutsche Bank AG, London Branch
Taunusanlage 12 6, Bishopsgate
60262 Frankfurt Xxxxxx XX0X 0XX
XXXXXXX XXXXXX XXXXXXX
Attention: Trading & Sales/Evidenz Attn: OTC Derivatives
Tel: (49)(00) 000 00000 Tel: (44)(000) 000 0000 Fax:
Fax No: (49)(00) 000-00000 (44)(171) 545 4455 Telex: 94015555
Telex No: 00000-000 Xxxxxxxxxx: DBLN G
Answerback: 41730-702 FMD
WHERE PARTY A IS ACTING THROUGH ITS WHERE PARTY A IS ACTING THROUGH ITS
NEW YORK BRANCH: TOKYO BRANCH:
Deutsche Bank AG, New York Branch Deutsche Bank AG, Tokyo Branch
00 X. 00xx Xxxxxx Deutsche Xxxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000 00-0, Xxxxxxxxx 0-Xxxxx
XXX Xxxxxx-xx, Xxxxx 0000000
Attn: Swap Group JAPAN
Tel: (1)(000) 000 0000 Attn: Head of Derivatives
Fax: (1)(000) 000 0000 Tel: (81)(0) 0000 0000
Telex: 429166 Fax: (81)(0) 0000 0000
Answerback: DEUTNYK Telex: 24814
Answerback: DEUTBKTK J
WHERE PARTY A IS ACTING THROUGH ITS WHERE PARTY A IS ACTING THROUGH ITS
SINGAPORE BRANCH: PARIS BRANCH:
Deutsche Bank AG, Singapore Branch Deutsche Bank AG, Paris Branch
0 Xxxxxxx Xxxxxxxxx 0, Xxxxxx Xxxxxxxxx
#11-03 Suntec City Tower 75008 Xxxxx
XXXXXXXXX 000000 FRANCE
Attn: Derivatives Settlements Attn: Swap Group
Tel: (00) 000 0000 or 000 0000 Tel: (33)(0) 0000 0000
Fax: (00) 000 0000 Fax: (33)(0) 0000 0000
Telex: RS 21189 Telex: 644192
Answerback: DBA Answerback: DEUTBANK
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26
WHERE PARTY A IS ACTING THROUGH ITS WHERE PARTY A IS ACTING THROUGH ITS
SYDNEY BRANCH: BRUSSELS BRANCH:
Deutsche Bank AG, Sydney Branch Deutsche Bank AG, Brussels Branch
Xxxxx 00, Xxxxxxxxx Xxxxx 000 Xxxxxxxxx xx Xxxxxxxxx
000 Xxxxxx Xxxxxx 0000 Xxxxxxxx
Xxxxxx XXX 0000 BELGIUM
AUSTRALIA Attn: Corporate Department
Attn: Settlements Manager Tel: (32)(0) 000 0000
Treasury Division Fax: (32)(0) 000 0000
Tel: (61)(0) 0000 0000 Telex: 63798
Fax: (61)(0) 0000 0000
Telex: AA122258
Answerback: DBALFX
TO THE FUND: Xxxxxxxx & Company, Inc.
000 Xxxx Xxxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, CFO
Telephone 000-000-0000
No.:
Fax No.: 000-000-0000
(b)PROCESS AGENT. For the purpose of Section 13(c) of this Agreement:
Party A appoints as its Process Agent: Not applicable
The Fund and the Agent appoint as Process Agent: the Agent
(c) OFFICES. The provisions of Section 10(a) will apply to this Agreement.
(d)MULTIBRANCH PARTY. For the purpose of Section 10(c) of this Agreement:
Party A is a Multibranch Party and may act through the following
Offices: New York Branch, London Branch, Tokyo Branch, Singapore Branch,
Brussels Branch, Paris Branch, Sydney Branch and Head Office, Frankfurt.
The Fund is not a Multibranch Party.
(e) CALCULATION AGENT. The Calculation Agent shall be Party A.
(f)CREDIT SUPPORT DOCUMENT. Details of any Credit Support Document:
The ISDA Credit Support Annex and supplementary "Paragraph
13 -- Elections & Variables" in the form appended hereto shall
constitute a "Credit Support Document" in relation to each party,
respectively, with respect to all of the obligations of the parties and
for all purposes of this Agreement.
(g)CREDIT SUPPORT PROVIDER. Credit Support Provider means in relation to
Party B:
Not applicable.
(h)GOVERNING LAW. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York (without
reference to its choice of law doctrine).
(i)JURISDICTION. Section 13(b) is hereby amended by (i) deleting in the
second line of subparagraph (i) thereof the word "non-" and (ii)
deleting the final paragraph thereof.
(j)"AFFILIATE" will have the meaning specified in Section 14 of this
Agreement.
(k) NOTICES. Section 12(a) of this Agreement is amended by adding the
words "given to Party A" after the word "communication" in the second line
thereof.
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27
PART 5. OTHER PROVISIONS.
1. REPRESENTATIONS.
(a) REPRESENTATIONS OF ALL PARTIES. Each party will be deemed to
represent to the other party on the date that it enters into a Transaction
that (absent a written agreement between the parties that expressly imposes
affirmative obligations to the contrary for that Transaction):
(i) NON-RELIANCE. It is acting for its own account, and it has
made its own independent decisions to enter into that
Transaction and as to whether that Transaction is appropriate
or proper for it based upon its own judgment and upon advice
from such advisers as it has deemed necessary. It is not
relying on any communication (written or oral) of the other
party as investment advice or as a recommendation to enter
into that Transaction: it being understood that information
and explanations related to the terms and conditions of a
Transaction shall not be considered to be investment advice or
a recommendation to enter into that Transaction. No
communication (written or oral) received from the other party
shall be deemed to be an assurance or guarantee as to the
expected results of that Transaction.
(ii) ASSESSMENT AND UNDERSTANDING. It is capable of assessing the
merits of and understanding (on its own behalf or through
independent professional advice), and understands and accepts
the terms and conditions and risks of that Transaction. It is
also capable of assuming, and assumes, the risks of that
Transaction.
(iii) STATUS OF PARTIES. The other party is not acting as a
fiduciary for or adviser to it in respect of that
Transaction.
(iv) COMMODITY EXCHANGE ACT. Each Transaction is intended to be
exempt from, or otherwise not subject to regulation under,
the Commodity Exchange Act. Such party is an "eligible swap
participant" within the meaning of CFTC Regulation Section
35.1(b)(2); and is entering into each Transaction in
connection with its line of business.
(v) SECURITIES ACT REPRESENTATIONS.
(a) it acknowledges that certain Transactions under the
Agreement may involve the purchase or sale of "securities"
as defined under the U.S. Securities Act of 1933, as
amended, and understands that any such purchase or sale of
securities will not be registered under the Securities Act
and that any such securities may not be reoffered, resold,
pledged or otherwise transferred except (1) pursuant to an
effective registration statement under the Securities Act or
pursuant to an exemption from the registration requirements
of the Securities Act and (2) in accordance with any
applicable securities laws of any state of the United States
of America;
(b) it is a "qualified institutional buyer" as defined in Rule
144A under the Securities Act or an "accredited investor" as
defined under the Securities Act; and
(c) unless otherwise expressly provided in a Confirmation for a
Transaction, any securities it is required to deliver under
this Agreement and any Transaction will not at the time of
such delivery constitute "restricted securities" or be
subject to restriction or transfer (including so-called
"control securities") under the Securities Act or otherwise.
This representation will be deemed repeated at the time of
such delivery.
(b) ADDITIONAL REPRESENTATIONS OF THE FUND. The Fund represents to
Party A on and as of the date hereof and at all times until the termination
of this Agreement that:
(i) with respect to this Agreement and each Transaction, it will
maintain, and be in full compliance with, all Operative
Documents, and this Agreement and each Transaction is, and
will be, authorized and permissible transactions and
investments thereunder;
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28
(ii) each Transaction will comply in all respects with all
applicable laws, rules, regulations, interpretations,
guidelines, procedures, and policies of applicable
governmental and regulatory authorities affecting the Fund,
this Agreement, the Transactions, or the performance of its
obligations hereunder;
(iii) with respect to each source of funds to be used by it to
enter into such Transactions (each such source being referred
to herein as a "Source"), the Source is not the assets of any
"plan" (as such term is defined in Section 4975 of the Code)
subject to Section 4975 of the Code or any "employee benefit
plan" (as such term is defined in Section 3(3) of ERISA)
subject to Title I of ERISA, or otherwise out of "plan
assets" within the meaning of United States Department of
Labor regulation sec. 2510.3-101, 29CFR sec. 0000-0-000; and
(iv) the Fund represents that (i) it is entering into this
Agreement and each Transaction as principal (and not as agent
or in any other capacity, fiduciary or otherwise); (ii) the
persons executing this Agreement on its behalf have been
authorized to do so; and (iii) it has granted the Agent the
authority to execute and deliver this Agreement on its behalf
and to act on its behalf in all matters related to this
Agreement, including, without limitation, on a fully
discretionary basis in accordance with its Operative
Documents entering into Transactions on its behalf.
(c) AGENT'S REPRESENTATIONS. The Agent represents to, and covenants
and agrees with, Party A on and as of the date hereof and on each date on
which a Transaction is entered into and regardless of whether such
Transaction or any portion thereof has been finally allocated to the Fund
that:
(i) it is duly incorporated and validly existing under the laws of
its place of incorporation;
(ii) it is "commodity trading advisor" or a "commodity pool
operator" registered under the Commodity Exchange Act, as
amended, and all similar state laws under which it is
required to be registered or is exempt from any such
registration, and it maintains the records required by, and
complies in all other material respects with, all such laws;
(iii) the Agent represents (a) that it is entering into this
Agreement and each Transaction on behalf of the Fund as
agent; (b) the persons executing this Agreement on its
behalf have been authorized to do so; (c) that it has the
power and the authority to execute and deliver this
Agreement as agent for the Fund and to bind the Fund and to
act on its behalf in all matters related to this Agreement;
and (d) this Agreement is binding upon the Fund and
enforceable against the Fund in accordance with its terms
and does not and will not violate the terms of any agreement
by which the Fund is bound;
(iv) it will enter into a Transaction only when the assets in the
accounts of the Fund under its control are sufficient to meet
the obligations resulting from such Transaction;
(v) pursuant to the Investment Management Agreement the Fund
authorized it to take all action with respect to Transactions
on behalf of the Fund, including, without limitation, opening
accounts with Party A on behalf of the Fund; it has examined
all applicable trust instruments, corporate charters, by-laws
or authorizations, partnership agreements, trust indentures or
other authorizing documentation of the Fund and is satisfied
that the person or persons signing the Investment Management
Agreement were themselves properly authorized by the Fund;
(vi) Party A may rely on the representations of the Agent
respecting its authority to act on behalf of the Fund
contained herein until Party A shall have received written
notice of a change in, revocation or rescission of such
authority; no change in, revocation or rescission of such
authority shall affect in any manner the rights and
indemnities inuring to Party A with respect to the obligation
of the Fund hereunder arising prior to actual receipt by
Party A of written notice of such change in, revocation or
rescission; and
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(vii) it agrees to indemnify Party A and Party A's Affiliates, to
the fullest extent permitted by law, from and against any
loss, liability, cost, claim, action, demand or expense
(including, without limitation, the costs, expenses and
disbursements of legal counsel), whether direct, indirect,
incidental or consequential, resulting from, arising out of
or relating to (i) any claim by Party B that any Transaction
entered into by the Agent on Party B's behalf was not
suitable, (ii) any claim by Party B that any Transaction
entered into by the Agent on Party B's behalf was without
authority, and (iii) any breach by the Agent of any
representation, warranty, covenant or agreement contained
herein.
2. CONSENT TO RECORDING.
Each party (i) consents to the recording of the telephone conversations of
trading and marketing and/or other personnel of the parties and their Affiliates
in connection with this Agreement or any potential Transaction (ii) agrees to
obtain any necessary consent of and give notice of such recording to such
personnel of it and its Affiliates; and (iii) agrees that recordings may be
submitted in evidence in any Proceedings relating to this Agreement.
3. TAX PROVISIONS.
(a) The definition of Tax Event, Section 5 (b)(ii), is hereby modified
by adding the following provision at the end thereof:
"provided, however, that for purposes of clarification, the parties
acknowledge that the introduction or proposal of legislation, shall
not, in and of itself, give rise to a presumption that a Tax Event
has occurred."
(b) The definition of term "Indemnifiable Tax" is amended by adding
the following provisions at the end thereof:
"Notwithstanding the foregoing, "Indemnifiable Tax" also means any
Tax imposed in respect of a payment under this Agreement by reasons
of a Change in Tax Law by a government or taxing authority of a
Relevant Jurisdiction of the party making such payment, unless the
other party is incorporated, organized, managed and controlled or
considered to have its seat in such jurisdiction, or is acting for
purposes of this Agreement through a branch or office located in such
jurisdiction."
4. SET OFF.
Section 6 of this Agreement is amended by the addition of the
following Section 6(f):
"(f) Upon the designation of any Early Termination Date, the party that
is not the Defaulting Party or Affected Party ("X") may, without prior
notice to the Defaulting or Affected Party ("Y"), set off any sum or
obligation (whether or not arising under this Agreement, whether matured
or unmatured, whether or not contingent and irrespective of the
currency, place of payment or booking office of the sum or obligation)
owed by Y to X or any Affiliate of X (the "X Set Off Amount") against
any sum or obligation (whether or not arising under this Agreement,
whether matured or unmatured, whether or not contingent and irrespective
of the currency, place of payment or booking office of the sum or
obligation) owed by X or any Affiliate of X to Y (the "Y Set Off
Amount"). X will give notice to the other party of any set off effected
under this Section 6(f).
For this purpose, either the X Set Off Amount or the Y Set Off Amount
(or the relevant portion of such set off amounts) may be converted by X
into the currency in which the other set off amount is denominated at
the rate of exchange at which X would be able, acting in a reasonable
manner and in good faith, to purchase the relevant amount of such
currency.
If a sum or 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.
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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 rights to which any party is at any time otherwise entitled
(whether by operation of law, contract or otherwise)."
5. ESCROW.
On any date on which both parties are required to make payments
hereunder, either party may at its option and in its sole discretion
notify the other party that payments on that date are to be made in
escrow. In this case deposit of the payment due earlier on that date
shall be made by 2:00 p.m. (local time at the place for the earlier
payment if there is a time difference between the cities in which
payments are to be made) on that date with an escrow agent selected by
the party giving the notice and reasonably acceptable to the other
party, accompanied by irrevocable payment instructions (a) to release
the deposited payment to the intended recipient upon receipt by the
escrow agent of the required deposit of the corresponding payment from
the other party on the same date accompanied by irrevocable payment
instructions to the same effect or (b) if the required deposit of the
corresponding payment is not made on that same date, to return the
payment deposited to the party that paid it into escrow at such party's
request. The party that elects to have payments made in escrow shall pay
the costs of the escrow arrangements and shall cause those arrangements
to provide that the intended recipient of the payment due to be
deposited first shall be entitled to interest on that deposited payment
for each day in the period of its deposit at the rate offered by the
escrow agent for that day for overnight deposits in the relevant
currency in the office where it holds that deposited payment (at 11:00
a.m. local time on that day) if that payment is not released by 5:00
p.m. local time on the date it is deposited for any reason other than
the intended recipient's failure to make the escrow deposit it is
required to make hereunder in a timely fashion.
6. ADDITIONAL ACKNOWLEDGMENTS AND AGREEMENTS OF THE PARTIES. Section 4 is
hereby amended by adding the following new agreements:
(a) ADDITIONAL AGREEMENTS OF THE FUND, THE AGENT AND PARTY A.
(1) ACTIONS AFFECTING REPRESENTATIONS. The Fund, the Agent and
Party A each agree not to take any action during the term of
this Agreement or any Transaction hereunder that renders or
could render any of the representations and warranties in this
Agreement materially untrue, incorrect, or incomplete. If any
event or condition occurs that renders or could render any such
representation made by it untrue, incorrect, or incomplete, the
Fund and/or the Agent, as applicable, will immediately give
written notice thereof to Party A.
(2) NOTICE OF CERTAIN EVENTS. The Fund and the Agent will provide
Party A, promptly upon becoming aware of the same, with written
notice of (A) any proposed action, change, or modification to
any Operative Document, the Investment Management Agreement or
any investment guidelines, policies, procedures or restrictions
to which the Agent may be subject, or any action that causes or
could cause a Termination Event or Event of Default, or any
event or circumstance that might reasonably be expected to
directly or indirectly lead to a Termination Event or Event of
Default, (B) any Potential Event of Default, Event of Default
or Termination Event, or event or condition that, with the
giving of notice or the passage of time or both, could
constitute a Termination Event with respect to the Fund, (C)
any pending or threatened litigation, action, claim,
proceeding, or investigation which could adversely affect the
ability of the Fund or the Agent to perform its obligations
under this Agreement, any Credit Support Document or any
Transaction, and (D) the Agent's impending resignation or
termination as investment adviser to the Fund, or of any other
facts or developments which could adversely affect the status
of the Fund or the Agent with respect to this Agreement, any
Credit Support Document or any Transaction including, without
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limitation, any change which results in the Agent no longer
managing 100% of the assets of the Fund.
(b) DEUTSCHE BANK SECURITIES INC. Each party acknowledges and agrees
that (i) Deutsche Bank Securities Inc. or another designated
Affiliate of Party A (the "Designated Agent") will act as agent
for Party A in connection with certain Transactions when so
specified in the Transaction Confirmation; and (ii) the Designated
Agent is acting solely as agent and shall have no liability for
the performance of either party's obligations under this Agreement
or any Transaction, or for costs, expenses, damages or claims
arising out of the failure of either party to perform any such
obligation.
(c) BANKRUPTCY CODE. Without limiting the applicability if any, of
any other provision of the U.S. Bankruptcy Code as amended (the
"Bankruptcy Code") (including without limitation Sections 362,
546, 556, and 560 thereof and the applicable definitions in
Section 101 thereof), the parties acknowledge and agree that all
Transactions entered into hereunder will constitute "forward
contracts" or "swap agreements" as defined in Section 101 of the
Bankruptcy Code or "commodity contracts" as defined in Section 761
of the Bankruptcy Code, that the rights of the parties under
Section 6 of this Agreement will constitute contractual rights to
liquidate Transactions, that any margin or collateral provided
under any margin, collateral, security, pledge, or similar
agreement related hereto will constitute a "margin payment" as
defined in Section 101 of the Bankruptcy Code, and that the
parties are entities entitled to the rights under, and protections
afforded by, Sections 362, 546, 556, and 560 of the Bankruptcy
Code.
(d) WAIVER OF RIGHT TO TRIAL BY JURY. Each of the parties hereby
irrevocably waives any and all right to a trial by jury with
respect to any legal proceeding arising out of or relating to this
Agreement or any Transaction.
(e) LIABILITY AND OBLIGATIONS OF THE AGENT. Each of Party A and the
Fund agrees that (i) the Agent (x) is acting as agent for purposes
of this Agreement and any Transaction hereunder and (y) is not a
principal to this Agreement or any Transaction hereunder and is
executing this Agreement and any Confirmation solely in its
capacity as agent and (ii) if the representations and warranties
of the Agent under the Agreement and each Transaction are true and
correct in all material respects during the term of this Agreement
and each Transaction and the Agent otherwise complies with the
provisions of this Agreement and performs its obligations
hereunder, then the Agent's obligations under the Agreement shall
not include a guarantee of performance by the Fund under the
Agreement or any Transaction hereunder. In connection with the
Fund's entering into this Agreement and any Transactions
hereunder, the Fund agrees that Party A will be entitled to rely
conclusively upon any request, instruction, certificate, opinion,
or other document furnished to Party A by any employee or agent of
the Agent identified from time to time by the Fund or the Agent
whom Party A reasonably believes to be genuine in connection with
this Agreement and any Transaction hereunder as though such
request, instruction, certificate, opinion, or other document was
given by the Fund.
7. DEFINITIONS.
(i) "Adverse Regulatory Change" means the adoption of, or any change
in, any applicable law after the date on which a Transaction is
entered into, or issuance of any directive or the promulgation
of, or any change in, the interpretation of any law or directive
(or any requests, whether or not having the force of law) made
by any court, tribunal or regulatory authority with competent
jurisdiction after such date which, in respect of a Transaction
or any assets or hedge incidental thereto, has the effect with
regard to either party of: (A) imposing or adversely modifying,
in any material respect, any reserve, special deposit, or
similar requirement; or (B) materially affecting the amount of
regulatory capital to be maintained by such party.
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(ii) "Exposure Limit" means separate exposure limits established by
Party A for the Fund and each Other Fund.
(iii) "Other Funds" means each and every entity managed by the Agent
which engages in Specified Transactions with Party A.
(iv) "Net Asset Value" means with respect to the Fund, as applicable,
the aggregate net asset value of the Fund calculated in
accordance with U.S. generally accepted accounting principles.
(v) "Net Asset Value Floor" means, with respect to the Fund,
4,000,000, provided that in the event Net Asset Value based on
the most recent annual financial statement is greater than
8,000,000, "Net Asset Value Floor" shall mean 50% of Net Asset
Value as of the date of such statement.
(vi) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(vii) "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
(viii) "Operative Documents" means the trust indenture, corporate
charter, limited partnership agreement, and the by-laws or
other similar documents, instruments or other constituent
documents of the Fund as applicable, the investment policies,
procedures, restrictions, or guidelines of the Fund, the
then-current disclosure document of the Fund, if any, and the
power of attorney or trading authorization by the Fund issued
in favor of the Agent.
(ix) "Investment Management Agreement" means: The operating agreement
between the Agent and the Fund, whether such agreement is an
Advisory Agreement, Management Agreement or Trust Agreement, as
applicable.
(x) "Trading Advisor" means: The Agent, whether referred to as
Trading Advisor, General Partner or Managing Owner in the
Investment Management Agreement, as applicable.
8. CONFIRMATIONS FOR FOREIGN EXCHANGE TRANSACTIONS
(i) With effect from the date hereof, any FX Transaction or Currency
Option (as defined in the 1998 FX and Currency Option
Definitions, as published by the International Swaps and
Derivatives Association, Inc., the Emerging Markets Traders
Association and The Foreign Exchange Committee (the "FX
Definitions")) which the parties may enter, or may have entered
into prior to the date hereof, in respect of which the
Confirmation fails by its terms expressly to exclude the
application of this Agreement, shall (to the extent not otherwise
provided for in this Agreement) be deemed to incorporate the
terms of and shall be governed by and be subject to this
Agreement (in substitution for any existing terms, if any,
whether express or implied) and, for the purposes hereof, shall
be deemed to be a Transaction.
(ii) Where a Transaction is confirmed by means of exchange of
electronic messages on an electronic messaging system or other
document or other confirming evidence exchanged between the
parties confirming such Transaction such messages, document or
evidence will constitute a Confirmation for the purposes of this
Agreement even where not so specified therein.
(iii) Reference is made to the FX Definitions with respect to any FX
Transaction or Currency Option. Unless otherwise specified in a
Confirmation relating to a FX Transaction or a Currency Option,
any terms used in that Confirmation which are not otherwise
defined herein and which are contained in the FX Definitions
shall have the meaning set forth in those definitions. In the
event of any inconsistency between the provisions of this
Agreement and the FX Definitions, the provisions of this
Agreement shall prevail.
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9. PREMIUM PAYMENTS
If any Premium relating to a Currency Option is not received on the
Premium Payment Date, the Seller may elect: (1) to accept a late payment
of such Premium; (2) to give written notice of such non-payment and, if
such payment shall not be received within two (2) Local Business Days of
such notice, treat the related Currency Option as void; or (3) to give
written notice of such non-payment and, if such payment shall not be
received within two (2) Local Business Days of such notice, treat such
non-payment as an Event of Default under Section 5(a)(i). If the Seller
elects to act under either clause (1) or (2) of the preceding sentence,
the Buyer shall pay all out-of-pocket costs and actual damages incurred
in connection with such unpaid or late Premium or void Currency Option,
including, without limitation, interest on such Premium in the same
currency as such Premium at the then prevailing market rate and any
other costs or expenses incurred by the Seller in covering its
obligations (including, without limitation, any hedge) with respect to
such Currency Option.
DEUTSCHE BANK XX XXXXXXXX & COMPANY, INC.
By: By:
------------------------------------------ ------------------------------------------
Name: Name:
Title: Title:
By: XXXXXXXX ALTERNATIVE
------------------------------------------
Name: ASSET TRUST
Title:
By:
------------------------------------------
Name:
Title:
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34
(BILATERAL FORM) (ISDA AGREEMENTS SUBJECT TO NEW YORK LAW ONLY)
ISDA
INTERNATIONAL SWAPS AND DERIVATIVES ASSOCIATION, INC.
CREDIT SUPPORT ANNEX
TO THE SCHEDULE TO THE ISDA
MASTER AGREEMENT DATED AS
OF BETWEEN
------------------------
DEUTSHCE BANK AG
("PARTY A")
AND
XXXXXXXX ALTERNATIVE ASSET TRUST
("PARTY B")
This Annex supplements, forms part of, and is subject to, the
above-referenced Agreement, is part of its Schedule and is a Credit Support
Document under this Agreement with respect to each party.
Accordingly, the parties agree as follows:
PARAGRAPH 1. INTERPRETATION
(a) DEFINITIONS AND INCONSISTENCY. Capitalized terms not otherwise defined
herein or elsewhere in this Agreement have the meanings specified
pursuant to Paragraph 12, and all references in this Annex to
Paragraphs are to Paragraphs of this Annex. In the event of, any
inconsistency between this Annex and the other provisions of this
Schedule, this Annex will prevail, and in the event of any
inconsistency between Paragraph 13 and the other provisions of this
Annex, Paragraph 13 will prevail.
(b) SECURED PARTY AND PLEDGOR. All references in this Annex to the
"Secured Party" will be to either party when acting in that capacity
and all corresponding references to the "Pledgor" will be to the other
party when acting in that capacity; provided, however, that if Other
Posted Support is held by a party to this Annex, all references herein
to that party as the Secured Party with respect to that Other Posted
Support will be to that party as the beneficiary thereof and will not
subject that support or that party as the beneficiary thereof to
provisions of law generally relating to security interests and secured
parties.
PARAGRAPH 2. SECURITY INTEREST
Each party, as the Pledgor, hereby pledges to the other party, as the
Secured Party, as security for its Obligations, and grants to the Secured Party
a first priority continuing security interest in, lien on and right of Set-off
against all Posted Collateral Transferred to or received by the Secured Party
hereunder. Upon the Transfer by the Secured Party to the Pledgor of Posted
Collateral, the security interest and lien granted hereunder on that Posted
Collateral will be released immediately and, to the extent possible, without any
further action by either party.
PARAGRAPH 3. CREDIT SUPPORT OBLIGATIONS
(a) DELIVERY AMOUNT. Subject to Paragraphs 4 and 5, upon a demand made by
the Secured Party on or promptly following a Valuation Date, if the
Delivery Amount for that Valuation Date
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equals or exceeds the Pledgor's Minimum Transfer Amount, then the
Pledgor will Transfer to the Secured Xxxxx Eligible Credit Support
having a Value as of the date of Transfer at least equal to the
applicable Delivery Amount (rounded pursuant to Paragraph 13). Unless
otherwise specified in Paragraph 13, the "Delivery Amount" applicable
to the Pledgor for any Valuation Date will equal the amount by which:
(i) the Credit Support Amount exceeds
(ii) the Value as of that Valuation Date of all Posted Credit Support
held by the Secured Party.
(b) RETURN AMOUNT. Subject to Paragraphs 4 and 5, upon a demand made by
the Pledgor on or promptly following a Valuation Date, if the Return
Amount for that Valuation Date equals or exceeds the Secured Party's
Minimum Transfer Amount, then the Secured Party will Transfer to the
Pledgor Posted Credit Support specified by the Pledgor in that demand
having a Value as of the date of Transfer as close as practicable to
the applicable Return Amount (rounded pursuant to Paragraph 13). Unless
otherwise specified in Paragraph 13, the "Return Amount" applicable to
the Secured Party for any Valuation Date will equal the amount by
which:
(i) the Value as of that Valuation Date of all Posted Credit Support
held by the Secured Party exceeds
(ii) the Credit Support Amount.
"CREDIT SUPPORT AMOUNT" means, unless otherwise specified in Paragraph 13,
for any Valuation Date (i) the Secured Party's Exposure for that Valuation Date
plus (ii) the aggregate of all Independent Amounts applicable to the Pledgor, if
any, minus (iii) all Independent Amounts applicable to the Secured Party, if
any, minus (iv) the Pledgor's Threshold; provided, however, that the Credit
Support Amount will be deemed to be zero whenever the calculation of Credit
Support Amount yields a number less than zero.
PARAGRAPH 4. CONDITIONS PRECEDENT, TRANSFER TIMING, CALCULATIONS AND
SUBSTITUTIONS
(a) CONDITIONS PRECEDENT. Each Transfer obligation of the Pledgor under
Paragraphs 3 and 5 and of the Secured Party under Paragraphs 3,
4(d)(ii), 5 and 6(d) is subject to the conditions precedent that:
(i) no Event of Default, Potential Event of Default or Specified
Condition has occurred and is continuing with respect to the
other party; and
(ii) no Early Termination Date for which any unsatisfied payment
obligations exist has occurred or been designated as the result
of an Event of Default or Specified Condition with respect to the
other party.
(b) TRANSFER TIMING. Subject to Paragraphs 4(a) and 5 and unless otherwise
specified, if a demand for the Transfer of Eligible Credit Support or
Posted Credit Support is made by the Notification Time, then the
relevant Transfer will be made not later than the close of business on
the next Local Business Day; if a demand is made after the Notification
Time, then the relevant Transfer will be made not later than the close
of business on the second Local Business Day thereafter.
(c) CALCULATIONS. All calculations of Value and Exposure for purposes of
Paragraphs 3 and 6(d) will be made by the Valuation Agent as of the
Valuation Time. The Valuation Agent will notify each party (or the
other party, if the Valuation Agent is a party) of its calculations not
later than the Notification Time on the Local Business Day following
the applicable Valuation Date (or in the case of Paragraph 6(d),
following the date of calculation).
(d) SUBSTITUTIONS.
(i) Unless otherwise specified in Paragraph 13, upon notice to the
Secured Xxxxx specifying the items of Posted Credit Support to be
exchanged, the Pledgor may, on any Local Business Day, Transfer
to the Secured Party substitute Eligible Credit Support (the
"Substitute Credit Support"); and
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(ii) subject to Paragraph 4(a), the Secured Party will Transfer to the
Pledgor the items of Posted Credit Support specified by the
Plcdgor in its notice not later than the Local Business Day
following the date on which the Secured Party receives the
Substitute Credit Support, unless otherwise specified in
Paragraph 13 (the "Substitution Date"); provided that the Secured
Xxxxx will only be obligated to Transfer Posted Credit Support
with a Value as of the date of Transfer of that Posted Credit
Support equal to the Value as of that date of the Substitute
Credit Support.
PARAGRAPH 5. DISPUTE RESOLUTION
If a party (a "Disputing Party") disputes (1) the Valuation Agent's calculation
of a Delivery Amount or a Return Amount or (II) the Value of any Transfer of
Eligible Credit Support or Posted Credit Support, then (1) the Disputing Party
will notify the other party and the Valuation Agent (if the Valuation Agent is
not the other party) not later than the close of business on the Local Business
Day following (X) the date that the demand is made under Paragraph 3 in the case
of (I) above or (Y) the date of Transfer in the case of (II) above, (2) subject
to Paragraph 4(a), the appropriate party will Transfer the undisputed amount to
the other party not later than the close of business on the Local Business Day
following (X) the date that the demand is made under Paragraph 3 in the case of
(1) above or (Y) the date of Transfer in the case of (II) above, (3) the parties
will consult with each other in an attempt to resolve the dispute and (4) if
they fail to resolve the dispute by the Resolution Time, then:
(i) In the case of a dispute involving a Delivery Amount or Return
Amount, unless otherwise specified in Paragraph 13, the Valuation
Agent will recalculate the Exposure and the Value as of the
Recalculation Date by:
(A) utilizing any calculations of Exposure for the Transactions (or
Swap Transactions) that the parties have agreed are not in
dispute;
(B) calculating the Exposure for the Transactions (or Swap
Transactions) in dispute by seeking four actual quotations at
mid-market from Reference Market-makers for purposes of
calculating Market Quotation, and taking the arithmetic average
of those obtained; provided that if four quotations are not
available for a particular Transaction (or Swap Transaction),
then fewer than four quotations may be used for that
Transaction (or Swap Transaction); and if no quotations are
available for a particular Transaction (or Swap Transaction),
then the Valuation Agent's original calculations will be used
for that Transaction (or Swap Transaction); and
(C) utilizing the procedures specified in Paragraph 13 for
calculating the Value, if disputed, of Posted Credit Support.
(ii) In the case of a dispute involving the Value of any Transfer of
Eligible Credit Support or Posted Credit Support, the Valuation
Agent will recalculate the Value as of the date of Transfer
pursuant to Paragraph 13.
Following a recalculation pursuant to this Paragraph, the Valuation Agent will
notify each party (or the other party, if the Valuation Agent is a party) not
later than the Notification Time on the Local Business Day following the
Resolution Time. The appropriate party will, upon demand following that notice
by the Valuation Agent or a resolution pursuant to (3) above and subject to
Paragraphs 4(a) and 4(b), make the appropriate Transfer.
PARAGRAPH 6. HOLDING AND USING POSTED COLLATERAL
(a) CARE OF POSTED COLLATERAL. Without limiting the Secured Party's rights
under Paragraph 6(c), the Secured Party will exercise reasonable care
to assure the safe custody of all Posted Collateral to the extent
required by applicable law, and in any event the Secured Party will be
deemed to have exercised reasonable care if it exercises at least the
same degree of care as it would exercise with respect to its own
property. Except as specified in the preceding sentence, the Secured
Party will have no duty with respect to Posted Collateral, including,
without limitation, any duty to collect any Distributions, or enforce
or preserve any rights pertaining thereto.
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(b) ELIGIBILITY TO HOLD POSTED COLLATERAL; CUSTODIANS.
(i) GENERAL. Subject to the satisfaction of any conditions specified
in Paragraph 13 for holding Posted Collateral, the Secured Party
will be entitled to hold Posted Collateral or to appoint an agent
(a "Custodian") to hold Posted Collateral for the Secured Party.
Upon notice by the Secured Party to the Pledgor of the
appointment of a Custodian, the Pledgor's obligations to make any
Transfer will be discharged by making the Transfer to that
Custodian. The holding of Posted Collateral by a Custodian will
be deemed to be the holding of that Posted Collateral by the
Secured Party for which the Custodian is acting.
(ii) FAILURE TO SATISFY CONDITIONS. If the Secured Party or its
Custodian fails to satisfy any conditions for holding Posted
Collateral, then upon a demand made by the Pledgor, the Secured
Party will, not later than five Local Business Days after the
demand, Transfer or cause its Custodian to Transfer all Posted
Collateral held by it to a Custodian that satisfies those
conditions or to the Secured Party if it satisfies those
conditions.
(iii) LIABILITY. The Secured Party will be liable for the acts or
omissions of its Custodian to the same extent that the Secured
Party would be liable hereunder for its own acts or omissions.
(c) USE OF POSTED COLLATERAL. Unless otherwise specified in Paragraph 13
and without limiting the rights and obligations of the parties under
Paragraphs 3, 4(d)(ii), 5, 6(d) and 8, if the Secured Party is not a
Defaulting Party or an Affected Party with respect to a Specified
Condition and no Early Termination Date has occurred or been designated
as the result of an Event of Default or Specified Condition with
respect to the Secured Party, then the Secured Party will,
notwithstanding Section 9-207 of the New York Uniform Commercial Code,
have the right to:
(i) sell, pledge, rehypothecate, assign, invest, use, commingle or
otherwise dispose of, or otherwise use in its business any Posted
Collateral it holds, free from any claim or right of any nature
whatsoever of the Pledgor, including any equity or right of
redemption by the Pledgor; and
(ii) register any Posted Collateral in the name of the Secured Party,
its Custodian or a nominee for either.
For purposes of the obligation to Transfer Eligible Credit Support or Posted
Credit Support pursuant to Paragraphs 3 and 5 and any rights or remedies
authorized under this Agreement, the Secured Party will be deemed to continue to
hold all Posted Collateral and to receive Distributions made thereon, regardless
of whether the Secured Party has exercised any rights with respect to any Posted
Collateral pursuant to (i) or (ii) above.
(d) DISTRIBUTIONS AND INTEREST AMOUNT.
(i) DISTRIBUTIONS. Subject to Paragraph 4(a), if the Secured Party
receives or is deemed to receive Distributions on a Local
Business Day, it will Transfer to the Pledgor not later than the
following Local Business Day any Distributions it receives or is
deemed to receive to the extent that a Delivery Amount would not
be created or increased by that Transfer, as calculated by the
Valuation Agent (and the date of calculation will be deemed to be
a Valuation Date for this purpose).
(ii) INTEREST AMOUNT. Unless otherwise specified in Paragraph 13 and
subject to Paragraph 4(a), in lieu of any interest, dividends or
other amounts paid or deemed to have been paid with respect to
Posted Collateral in the form of Cash (all of which may be
retained by the Secured Party), the Secured Party will Transfer
to the Pledgor at the times specified in Paragraph 13 the
Interest Amount to the extent that a Delivery Amount would not be
created or increased by that Transfer, as calculated by the
Valuation Agent (and the date of calculation will be deemed to be
a Valuation Date for this purpose). The Interest Amount or
portion thereof not Transferred pursuant to this Paragraph will
constitute Posted Collateral in the form of Cash and will be
subject to the security interest granted under Paragraph 2.
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PARAGRAPH 7. EVENTS OF DEFAULT
For purposes of Section 5(a)(iii)(1) of this Agreement, an Event of Default
will exist with respect to a xxxxx if:
(i) that party fails (or fails to cause its Custodian) to make, when
due, any Transfer of Eligible Collateral, Posted Collateral or
the Interest Amount, as applicable, required to be made by it and
that failure continues for two Local Business Days after notice
of that failure is given to that party;
(ii) that party fails to comply with any restriction or prohibition
specified in this Annex with respect to any of the rights
specified in Paragraph 6(c) and that failure continues for five
Local Business Days after notice of that failure is given to
that party; or
(iii) that party fails to comply with or perform any agreement or
obligation other than those specified in Paragraphs 7(i) and
7(ii) and that failure continues for 30 days after notice of
that failure is given to that party.
PARAGRAPH 8. CERTAIN RIGHTS AND REMEDIES
(a) SECURED PARTY'S RIGHTS AND REMEDIES. If at any time (1) an Event of
Default or Specified Condition with respect to the Pledgor has occurred
and is continuing or (2) an Early Termination Date has occurred or been
designated as the result of an Event of Default or Specified Condition
with respect to the Pledgor, then, unless the Pledgor has paid in full
all of its Obligations that are then due, the Secured Party may
exercise one or more of the following rights and remedies:
(i) all rights and remedies available to a secured party under
applicable law with respect to Posted Collateral held by the
Secured Party;
(ii) any other rights and remedies available to the Secured Party
under the terms of Other Posted Support, if any;
(iii) the right to Set-off any amounts payable by the Pledgor with
respect to any Obligations against any Posted Collateral or the
Cash equivalent of any Posted Collateral held by the Secured
Party (or any obligation of the Secured Party to Transfer that
Posted Collateral); and
(iv) the right to liquidate any Posted Collateral held by the Secured
Party through one or more public or private sales or other
dispositions with such notice, if any, as may be required under
applicable law, free from any claim or right of any nature
whatsoever of the Pledgor, including any equity or right of
redemption by the Pledgor (with the Secured Party having the
right to purchase any or all of the Posted Collateral to be
sold) and to apply the proceeds (or the Cash equivalent thereof)
from the liquidation of the Posted Collateral to any amounts
payable by the Pledgor with respect to any Obligations in that
order as the Secured Party may elect.
Each party acknowledges and agrees that Posted Collateral in the form of
securities may decline speedily in value and is of a type customarily sold on a
recognized market, and, accordingly, the Pledgor is not entitled to prior notice
of any sale of that Posted Collateral by the Secured Party, except any notice
that is required under applicable law and cannot be waived.
(b) PLEDGOR'S RIGHTS AND REMEDIES. If at any time an Early Termination
Date has occurred or been designated as the result of an Event of Default or
Specified Condition with respect to the Secured Party, then (except in the case
of an Early Termination Date relating to less than all Transactions (or Swap
Transactions) where the Secured Party has paid in full all of its obligations
that are then due under Section 6(e) of this Agreement):
(i) the Pledgor may exercise all rights and remedies available to a
pledgor under applicable law with respect to Posted Collateral
held by the Secured Party;
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(ii) the Pledgor may exercise any other rights and remedies
available to the Pledgor under the terms of Other Posted
Support, if any;
(iii) the Secured Party will be obligated immediately to Transfer all
Posted Collateral and the Interest Amount to the Pledgor; and
(iv) to the extent that Posted Collateral or the Interest Amount is
not so Transferred pursuant to (iii) above, the Pledgor may:
(A) Set-off any amounts payable by the Pledgor with respect to any
Obligations against any Posted Collateral or the Cash
equivalent of any Posted Collateral held by the Secured Party
(or any obligation of the Secured Party to Transfer that
Posted Collateral); and
(B) to the extent that the Pledgor does not Set-off under (iv)(A)
above, withhold payment of any remaining amounts payable by
the Pledgor with respect to any Obligations, up to the Value
of any remaining Posted Collateral held by the Secured Party,
until that Posted Collateral is Transferred to the Pledgor.
(c) DEFICIENCIES AND EXCESS PROCEEDS. The Secured Party will Transfer to
the Pledgor any proceeds and Posted Credit Support remaining after liquidation,
Set-off and/or application under Paragraphs 8(a) and 8(b) after satisfaction in
full of all amounts payable by the Pledgor with respect to any Obligations; the
Pledgor in all events will remain liable for any amounts remaining unpaid after
any liquidation, Set-off and/or application under Paragraphs 8(a) and 8(b).
(d) FINAL RETURNS. When no amounts are or thereafter may become payable
by the Pledgor with respect to any Obligations (except for any potential
liability under Section 2(d) of this Agreement), the Secured Party will Transfer
to the Pledgor all Posted Credit Support and the Interest Amount, if any.
PARAGRAPH 9. REPRESENTATIONS
Each party represents to the other party (which representations will be
deemed to be repeated as of each date on which it, as the Pledgor, Transfers
Eligible Collateral) that:
(i) it has the power to grant a security interest in and lien on any
Eligible Collateral it Transfers as the Pledgor and has taken
all necessary actions to authorize the granting of that security
interest and lien;
(ii) it is the sole owner of or otherwise has the right to Transfer
all Eligible Collateral it Transfers to the Secured Party
hereunder, free and clear of any security interest, lien,
encumbrance or other restrictions other than the security
interest and Lien granted under Paragraph 2;
(iii) upon the Transfer of any Eligible Collateral to the Secured
Party under the terms of this Annex, the Secured Party will
have a valid and perfected first priority security interest
therein (assuming that any central clearing corporation or any
third-party financial intermediary or other entity not within
the control of the Pledgor involved in the Transfer of that
Eligible Collateral gives the notices and takes the action
required of it under applicable law for perfection of that
interest); and
(iv) the performance by it of its obligations under this Annex will
not result in the creation of any security interest, lien or
other encumbrance on any Posted Collateral other than the
security interest and lien granted under Paragraph 2.
PARAGRAPH 10. EXPENSES
(a) GENERAL. Except as otherwise provided in Paragraphs 10(b) and 10(c),
each party will pay its own costs and expenses in connection with performing its
obligations under this Annex and neither party will be liable for any costs and
expenses incurred by the other party in connection herewith.
(b) POSTED CREDIT SUPPORT. The Pledgor will promptly pay when due all
taxes, assessments or charges of any nature that are imposed with respect to
Posted Credit Support held by the Secured Party
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upon becoming aware of the same, regardless of whether any portion of that
Posted Credit Support is subsequently disposed of under Paragraph 6(c), except
for those taxes, assessments and charges that result from the exercise of the
Secured Party's rights under Paragraph 6(c).
(c) LIQUIDATIONL APPLICATION OF POSTED CREDIT SUPPORT ALL reasonable costs
and expenses incurred by or on behalf of the Secured Party or the Pledgor in
connection with the liquidation and/or application of any Posted Credit Support
under Paragraph 8 will be payable, on demand and pursuant to the Expenses
Section of this Agreement, by the Defaulting Party or, if there is no Defaulting
Party, equally by the patties.
PARAGRAPH 11. MISCELLANEOUS
(a) DEFAULT INTEREST. A Secured Party that fails to make, when due, any
Transfer of Posted Collateral or the Interest Amount will be obligated to pay
the Pledgor (to the extent permitted under applicable law) an amount equal to
interest at the Default Rate multiplied by the Value of the items of property
that were required to be Transferred, from (and including) the date that Posted
Collateral or Interest Amount was required to be Transferred to (but excluding)
the date of Transfer of that Posted Collateral or Interest Amount. This interest
will be calculated on the basis of daily compounding and the actual number of
days elapsed.
(b) FURTHER ASSURANCES. Promptly following a demand made by a party, the
other party will execute, deliver, file and record any financing statement,
specific assignment or other document and take any other action that may be
necessary or desirable and reasonably requested by that party to create,
preserve, perfect or validate any security interest or lien granted under
Paragraph 2, to enable that party to exercise or enforce its rights under this
Annex with respect to Posted Credit Support or an Interest Amount or to effect
or document a release of a security interest on Posted Collateral or an Interest
Amount.
(c) FURTHER PROTECTION. The Pledgor will promptly give notice to the
Secured Party of, and defend against, any suit, action, proceeding or lien that
involves Posted Credit Support Transferred by the Pledgor or that could
adversely affect the security interest and lien granted by it under Paragraph 2,
unless that suit, action, proceeding or lien results from the exercise of the
Secured Party's rights under Paragraph 6(c).
(d) GOOD FAITH AND COMMERCIALLY REASONABLE MANNER. Performance of all
obligations under this Annex, including, but not limited to, all calculations,
valuations and determinations made by either party, will be made in good faith
and in a commercially reasonable manner.
(e) DEMANDS AND NOTICES. All demands and notices made by a party under
this Annex will, be made as specified in the Notices Section of this Agreement,
except as otherwise provided in Paragraph 13.
(f) SPECIFICATIONS OF CERTAIN MATTERS. Anything referred to in this Annex
as being specified in Paragraph 13 also may be specified in one or more
Confirmations or other documents and this Annex will be construed accordingly.
PARAGRAPH 12. DEFINITIONS
As used in this Annex:
"CASH" means the lawful currency of the United States of America.
"CREDIT SUPPORT AMOUNT" has the meaning specified in Paragraph 3.
"CUSTODIAN" has the meaning specified in Paragraphs 6(b)(i) and 13.
"DELIVERY AMOUNT" has the meaning specified in Paragraph 3(a).
"DISPUTING PARTY" has the meaning specified in Paragraph 5.
"DISTRIBUTIONS" means with respect to Posted Collateral other than
Cash, all principal, interest and other payments and distributions of cash
or other property with respect thereto, regardless of whether the Secured
Xxxxx has disposed of that Posted Collateral under Paragraph 6(c).
Distributions WILL not include any item of property acquired by the Secured
Party upon any disposition or
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liquidation of Posted Collateral or, with respect to any Posted Collateral
in the form of Cash, any distributions on that collateral, unless otherwise
specified herein.
"ELIGIBLE COLLATERAL" means, with respect to a party, the items, if
any, specified as such for that party in Paragraph 13.
"ELIGIBLE CREDIT SUPPORT" means Eligible Collateral and Other Eligible
Support.
"EXPOSURE" means for any Valuation Date or other date for which
Exposure is calculated and subject to Paragraph 5 in the case of a dispute,
the amount, if any, that would be payable to a party that is the Secured
Party by the other party (expressed as a positive number) or by a party
that is the Secured Party to the other party (expressed as a negative
number) pursuant to Section 6(e)(ii)(2)(A) of this Agreement as if all
Transactions (or Swap Transactions) were being terminated as of the
relevant Valuation Time; provided that Market Quotation will be determined
by the Valuation Agent using its estimates at raid-market of the amounts
that would be paid for Replacement Transactions (as that term is defined in
the definition of "Market Quotation").
"INDEPENDENT AMOUNT" means, with respect to a party, the amount
specified as such for that party in Paragraph 13; if no amount is
specified, zero.
"INTEREST AMOUNT" means, with respect to an Interest Period, the
aggregate sum of the amounts of interest calculated for each day in that
Interest Period on the principal amount of Posted Collateral in the form of
Cash held by the Secured Party on that day, determined by the Secured Party
for each such day as follows:
(x) the amount of that Cash on that day; multiplied by
(y) the Interest Rate in effect for that day; divided by
(z) 360.
"INTEREST PERIOD" means the period from (and including) the last Local
Business Day on which an Interest Amount was Transferred (or, if no
Interest Amount has yet been Transferred, the Local Business Day on which
Posted Collateral in the form of Cash was Transferred to or received by the
Secured Party) to (but excluding) the Local Business Day on which the
current Interest Amount is to be Transferred.
"INTEREST RATE" means the rate specified in Paragraph 13.
"LOCAL BUSINESS DAY", unless otherwise specified in Paragraph 13, has
the meaning specified in the Definitions Section of this Agreement, except
that references to a payment in clause (b) thereof will be deemed to
include a Transfer under this Annex.
"MINIMUM TRANSFER AMOUNT" means, with respect to a party, the amount
specified as such for that xxxxx in Paragraph 13; if no amount is
specified, zero.
"NOTIFICATION TIME" has the meaning specified in Paragraph 13.
"OBLIGATIONS" means, with respect to a party, all present and future
obligations of that party under this Agreement and any additional
obligations specified for that party in Paragraph 13.
"OTHER ELIGIBLE SUPPORT" means, with respect to a party, the items, if
any, specified as such for that party in Paragraph 13.
"OTHER POSTED SUPPORT" means all Other Eligible Support Transferred to
the Secured Party that remains in effect for the benefit of that Secured
Party.
"PLEDGOR" means either party, when that xxxxx (i) receives a demand
for or is required to Transfer Eligible Credit Support under Paragraph 3(a)
or (ii) has Transferred Eligible Credit Support under Paragraph 3(a).
"POSTED COLLATERAL" means all Eligible Collateral, other property,
Distributions, and all proceeds thereof that have been Transferred to or
received by the Secured Party under this Annex and not Transferred to the
Pledgor pursuant to Paragraph 3(b), 4(d)(ii) or 6(d)(i) or released by the
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Secured Party under Paragraph 8. Any Interest Amount or portion thereof not
Transferred pursuant to Paragraph 6(d)(ii) will constitute Posted
Collateral in the form of Cash.
"POSTED CREDIT SUPPORT" means Posted Collateral and Other Posted
Support.
"RECALCULATION DATE" means the Valuation Date that gives rise to the
dispute under Paragraph S; provided, however, that if a subsequent
Valuation Date occurs under Paragraph 3 prior to the resolution of the
dispute, then the "Recalculation Date" means the most recent Valuation Date
under Paragraph 3.
"RESOLUTION TIME" has the meaning specified in Paragraph 13.
"RETURN AMOUNT" has the meaning specified in Paragraph 3(b).
"SECURED PARTY" means either party, when that party (i) makes a demand
for or is entitled Lo receive Eligible Credit Support under Paragraph 3(a)
or (ii) holds or is deemed to hold Posted Credit Support.
"SPECIFIED CONDITION" means, with respect to a party, any event
specified as such for that party in Paragraph 13.
"SUBSTITUTE CREDIT SUPPORT" has the meaning specified in Paragraph
4(d)(i).
"SUBSTITUTION DATE" has the meaning specified in Paragraph 4(d)(ii).
"THRESHOLD" means, with respect to a party, the amount specified as
such for that party in Paragraph 13; if no amount is specified, zero.
"TRANSFER" means, with respect to any Eligible Credit Support, Posted
Credit Support or Interest Amount, and in accordance with the instructions
of the Secured Party, Pledgor or Custodian, as applicable:
(i) in the case of Cash, payment or delivery by wire transfer
into one or more bank accounts specified by the recipient;
(ii) in the case of certificated securities that cannot be paid
or delivered by book-entry, payment or delivery in
appropriate physical form to the recipient or its account
accompanied by any duly executed instruments of transfer,
assignments in blank, transfer tax stamps and any other
documents necessary to constitute a legally valid transfer
to the recipient;
(iii) in the case of securities that can be paid or delivered by
book-entry, the giving of written instructions to the
relevant depository institution or other entity specified by
the recipient, together with a written copy thereof to the
recipient, sufficient if complied with to result in a
legally effective transfer of the relevant interest to the
recipient; and
(iv) in the case of Other Eligible Support or Other Posted
Support, as specified in Paragraph 13.
"VALUATION AGENT" has the meaning specified in Paragraph 13.
"VALUATION DATE" means each date specified in or otherwise determined
pursuant to Paragraph 13.
"VALUATION PERCENTAGE" means, for any item of Eligible Collateral, the
percentage specified in Paragraph 13.
"VALUATION TIME" has the meaning specified in Paragraph 13.
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"VALUE" means for any Valuation Date or other date for which Value is
calculated and subject to Paragraph S in the case of a dispute, with
respect to:
(i) Eligible Collateral or Posted Collateral that is:
(A) Cash, the amount thereof; and
(B) a security, the bid price obtained by the Valuation Agent
multiplied by the applicable Valuation Percentage, if any;
(ii) Posted Collateral that consists of items that are not
specified as Eligible Collateral, zero; and
(iii) Other Eligible Support and Other Posted Support, as
specified in Paragraph 13.
PARAGRAPH 13. ELECTIONS AND VARIABLES
(a) SECURITY INTEREST FOR "OBLIGATIONS". The term "OBLIGATIONS" as used
in this Annex includes the following additional obligations.
With respect to Party A: "Obligations" means any and all present and future
obligations of Party A under or in connection with this Agreement
(including all Credit Support Annexes hereto, including this Annex, and all
Transactions and Confirmations hereunder), or any other contract, or any
other transaction between the Party A and Party B.
With respect to Party B, "Obligations" means any and all present and future
obligations of Party B under or in connection with this Agreement
(including all Credit Support Annexes hereto, including this Annex, and all
Transactions and Confirmations hereunder), or any other contract, or any
other transaction between Party B and Party A.
(b) CREDIT SUPPORT OBLIGATIONS.
(i) DELIVERY AMOUNT, RETURN AMOUNT AND CREDIT SUPPORT AMOUNT.
(A) "DELIVERY AMOUNT" has the meaning specified in Paragraph 3(a),
except that each reference therein to "Valuation Date" is hereby amended
to be "Valuation Time".
(B) "RETURN AMOUNT" has the meaning specified in Paragraph 3(b),
except that each reference therein to "Valuation Date" is hereby amended
to be "Valuation Time".
(C) "CREDIT SUPPORT AMOUNT" means, for any Valuation Time, (i) the
Secured Party's Exposure for that Valuation Time plus (ii) the aggregate
of all Independent Amounts applicable to the Pledgor, if any, minus
(iii) the Pledgor's Threshold; provided, however, that the Credit
Support Amount will be deemed to be zero whenever the calculation of
Credit Support Amount yields an amount less than zero.
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44
(ii) ELIGIBLE COLLATERAL. The following items will qualify as
"ELIGIBLE COLLATERAL" for the party specified:
VALUATION
PARTY A PARTY B PERCENTAGE
(A) Cash [X] [X] 100%
(B) Negotiable debt obligations issued by [X] [X] 98%
the U.S. Treasury Department having a
remaining maturity of not more than 1
year ("TREASURY BILLS")
(C) negotiable debt obligations issued by [X] [X] 95%
the U.S. Treasury Department having a
remaining maturity of more than one year
but not more than 10 years ("TREASURY
NOTES")
(D) negotiable debt obligations issued by [X] [X] 90%
the U.S. Treasury Department having a
remaining maturity of more than 10
years("TREASURY BONDS")
(E) Such other collateral as Party A and [X] [X] As may be agreed.
Party B may agree.
(iii) OTHER ELIGIBLE SUPPORT. The following items will qualify as
"OTHER ELIGIBLE SUPPORT" for the party specified:
PARTY A PARTY B
------- -------
(A) Inapplicable [X] [X]
(B) Inapplicable [X] [X]
(iv) THRESHOLDS.
(A) "INDEPENDENT AMOUNT" means with respect to Party A:
Inapplicable
"INDEPENDENT AMOUNT" means, with respect to Party B: an amount
in the Base Currency equal to the sum of (1) for Derivatives
Transactions, the aggregate of the amounts specified in the
Confirmations for such Transactions or as otherwise agreed by
the parties, and (2) for Foreign Exchange Transactions, an
amount equal to the sum of (a) the product of the Standard Net
Open Position multiplied by the Standard Independent Amount
Ratio, (b) the product of the Exotic Net Open Position
multiplied by the Exotic Independent Amount Ratio and (c) the
Forward Risk Adjustment Amount.
(B) "THRESHOLD" means with respect to Party A: $250,000.
"THRESHOLD" means with respect to Party B: Zero.
(C) "MINIMUM TRANSFER AMOUNT" means with respect to Party A:
$250,000.
"MINIMUM TRANSFER AMOUNT" means with respect to Party B:
$250,000.
(D) ROUNDING. The Delivery Amount and the Return Amount will be
rounded up and down respectively to the nearest integral
multiple of $50,000.
(c) VALUATION AND TIMING.
(i) "VALUATION AGENT" means: Party A
(ii) "VALUATION DATE" means: any Local Business Day.
(iii) "VALUATION TIME" means: with respect to Foreign Exchange
Transactions, any time on any Valuation Date, and with respect
to Derivatives Transactions, the close of business on the Local
Business Day preceding any Valuation Date.
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(iv) "NOTIFICATION TIME" means 12:00 p.m., New York time, on any
Valuation Date.
(d) CONDITIONS PRECEDENT AND SECURED PARTY'S RIGHTS AND REMEDIES. Each
Termination Event specified below with respect to a party will be a "SPECIFIED
CONDITION" for that party (the specified party being the Affected Party if a
Termination Event occurs with respect to that party):
PARTY A PARTY B
Illegality [X] [X]
Tax Event [ ] [ ]
Tax Event Upon Merger [ ] [ ]
Credit Event Upon Merger [X] [X]
The Additional Termination Events specified in Part 1 (other [ ] [X]
than an Elective Termination) of the Schedule to this
Agreement or any event which, with the giving of notice or
the lapse of time or both, would constitute an Additional
Termination Event
(e) SUBSTITUTION.
(i) "SUBSTITUTION DATE" has the meaning specified in Paragraph
4(d)(ii).
(ii) CONSENT. If specified here as applicable, then the Pledgor must
obtain the Secured Party's consent for any substitution pursuant
to Paragraph 4(d): Applicable.
(f) DISPUTE RESOLUTION.
Paragraph 5 of this Annex is deleted in its entirety and thus is
inapplicable.
(g) HOLDING AND USING POSTED COLLATERAL.
(i) ELIGIBILITY TO HOLD POSTED COLLATERAL; CUSTODIANS.
Party A and its Custodian will be entitled to hold Posted
Collateral pursuant to Paragraph 6(b); provided that the
following conditions applicable to it are satisfied:
(A) Party A is not a Defaulting Party.
(B) Posted Collateral may be held only in the following
jurisdictions: Posted Collateral consisting of certificated
securities must be held in New York.
Initially, the Custodian for Party A is: Deutsche Bank AG, New
York Branch.
Party B and its Custodian will be entitled to hold Posted Collateral
pursuant to Paragraph 6(b); provided that the following conditions
applicable to it are satisfied:
(A) Party B is not a Defaulting Party.
(B) Posted Collateral consisting of certificated securities must
be held in New York.
(C) In the event that the Custodian holds Posted Collateral, the
long-term unsubordinated unsecured debt of the Custodian is
rated at least A by Standard & Poors, a division of The
XxXxxx-Xxxx Companies, Inc. (or any successor thereto) and at
least A2 by Xxxxx'x Investors Service, Inc. (or any successor
thereto).
Initially, the Custodian for Party B is [please advise].
(ii) USE OF POSTED COLLATERAL. The provisions of Paragraph 6(c)
will apply to Party A and Party B.
(h) DISTRIBUTIONS AND INTEREST AMOUNT.
(i) INTEREST RATE. The "INTEREST RATE" will be with respect to
Eligible Collateral in the form of Cash, for any day, the rate
opposite the caption "Federal Funds (Effective)" for such day as
published for such day in Federal Reserve Publication H.15(519)
or any successor publication as published by the Board of
Governors of the Federal Reserve System.
(ii) TRANSFER OF INTEREST AMOUNT. The Transfer of the Interest
Amount will be made on the first Local Business Day of each
calendar month and on any Local Business Day that
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Posted Collateral in the form of Cash is Transferred to the Pledgor
pursuant to Paragraph 3(b).
(iii) ALTERNATIVE TO INTEREST AMOUNT. The provisions of Paragraph
6(d)(ii) will apply.
(i) OTHER ELIGIBLE SUPPORT AND OTHER POSTED SUPPORT.
(i) "VALUE" with respect to Other Eligible Support and Other Posted
Support means: Inapplicable
(ii) "TRANSFER" with respect to Other Eligible Support and Other
Posted Support means: Inapplicable
(j) DEMANDS AND NOTICES. All demands, specifications and notices under
this Annex will be made pursuant to the Notices Section of this Agreement,
unless otherwise specified here:
Party A: Deutsche Bank AG,
New York Branch
000 Xxxxxxx Xxxxxx -- 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:Global Margin Management
Party B: Xxxxxxxx & Company, Inc.
000 Xxxx Xxxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxx, CFO
(k) ADDRESSES FOR TRANSFERS
Party A: For Cash: DBAG NY, ABA: 000000000, Ref: A / C# [to be
provided]
For Eligible Collateral: Bank of NY / [DBNYC], ABA:
000000000, Ref: GMM / Xxxxxxxx & Company, Inc.
Party B: [please advise]
(l) OTHER PROVISIONS.
(i) The following definitions are hereby inserted into Paragraph 12
in the appropriate alphabetical order:
(A) "AGGREGATE CEILING LIMIT" means USD 28,000,000.
(B) "AGGREGATE NET OPEN POSITION" means, at any time, the sum of
(i) the Standard Net Open Position and (ii) the Exotic Net
Open Position.
(C) "BASE CURRENCY" means U.S. Dollars.
(D) "BASE CURRENCY COUNTERVALUE" means, with respect to an amount
of currency at any time (i) if such currency is the Base
Currency, such amount and (ii) in all other cases, the amount
of Base Currency which could be purchased at the Market Rate
prevailing at such time against delivery of such amount of
currency.
(E) "DERIVATIVES TRANSACTION" means any Transaction other than a
Foreign Exchange Transaction.
(F) "ELIGIBLE CURRENCY" means each currency specified as such in
Paragraph 13(b)(ii)(A).
(G) "EXOTIC CEILING LIMIT" means USD 6,000,000.
(H) "EXOTIC CLOSE-OUT RATIO" means a number expressed as a
percentage representing the quotient of (A) the portion of
the Net Collateral Value attributable to all FX Transactions
and Currency Option Transactions involving Tier II
Currencies, divided by (B) the Exotic Net Open Position, such
number being determined and notified by Party A to Party B
from time to time, and initially being 6%.
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(I) "EXOTIC INDEPENDENT AMOUNT RATIO" means a number expressed as
a percentage representing the minimum proportion of (1) the
Net Collateral Value attributable to all FX Transactions and
Currency Option Transactions involving Tier II Currencies to
(2) the Exotic Net Open Position, which Party B must maintain
in respect of outstanding FX Transactions and Currency Option
Transactions involving Tier II Currencies, such number being
determined and notified by Party A to Party B from time to
time, and initially being 10%.
(J) "EXOTIC NET OPEN POSITION" at any given time, the amount
obtained by calculating the Net Open Position as it applies
to all FX Transactions and Currency Option Transactions
involving Tier II Currencies.
(K) "FOREIGN EXCHANGE TRANSACTIONS" means any Transaction that is
a FX Transaction or Currency Option Transaction as defined in
the FX Definitions (as defined below).
(L) "FORWARD RISK ADJUSTMENT AMOUNT" means an amount in the Base
Currency determined by Party A in a commercially reasonable
manner to account for the risk attributable to movements in
the yield curves of the underlying currencies of the FX
Transactions.
(M) "MARKET RATE" means, at any given time, the rate determined by
Party A (in good faith and in a commercially reasonable
manner) to be the market rate available to it at such time in
the New York foreign exchange market (or, at the sole option
of Party A, in the foreign exchange market of any other
financial center which is then open for business) for the spot
purchase or, as the case may be, sale of one currency against
another currency.
(N) "NET COLLATERAL VALUE" means an amount expressed in the Base
Currency equal to the difference of (1) the Value of Posted
Credit Support, minus (2) the Secured Party's Exposure, such
amount being determined and notified by Party A to Party B from
time to time, provided that if such difference shall be an
amount less than zero, the Net Collateral Value shall be zero.
(O) "NET OPEN POSITION" means: At any time at which no Currency
Option Transactions are outstanding under this Agreement, an
amount determined as follows:
(1) For each currency, determine the net of the currency
amounts owed by Party A and Party B under all FX
Transactions;
(2) Determine the Base Currency Countervalue of the net amounts
for each currency in which Party B owes the net amount to
Party A;
(3) Add the Base Currency Countervalues determined pursuant to
clause (2) above; and
At any time at which Currency Option Transactions are outstanding
under this Agreement, "NET OPEN POSITION" means an amount
determined as follows:
(1) For each currency pair in which there are outstanding
Currency Option Transactions, after giving effect to the
delta equivalent of each currency owed under a Currency
Option Transaction in such currency pair, determine the
maximum amount that could be owed by Party B to Party A
with respect to all FX Transactions and Currency Option
Transactions in such pair at all potential exchange rates;
(2) Determine the Base Currency Countervalue of the amounts
determined in clause (1) for each such currency pair;
(3) With respect to all FX Transactions in currency pairs that
do not include Currency Option Transactions, determine the
net of the currency amounts owed by Party A and Party B
under all FX Transactions for each currency in such pair;
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(4) Determine the Base Currency Countervalue of the net amount
determined pursuant to clause (3) for the currency in each
currency pair in which Party B owes the net amount to Party
A;
(5) Add the Base Currency Countervalues determined pursuant to
clauses (2) and (4) above.
(P) "STANDARD CEILING LIMIT" means USD 28,000,000.
(Q) "STANDARD CLOSE-OUT RATIO" means a number expressed as a
percentage representing the quotient of (A) the portion of
the Net Collateral Value attributable to all FX Transactions
and Currency Option Transactions not involving Tier II
Currencies, divided by (B) the Standard Net Open Position,
such number being determined and notified by Party A to Party
B from time to time, and initially being 4%.
(R) "STANDARD INDEPENDENT AMOUNT RATIO" means a number expressed
as a percentage representing the minimum proportion of (1)
the Net Collateral Value attributable to all FX Transactions
and Currency Option Transactions not involving Tier II
Currencies to (2) the Standard Net Open Position, which Party
B must maintain in respect of outstanding FX Transactions and
Currency Option Transactions not involving Tier II
Currencies, such number being determined and notified by
Party A to Party B from time to time, and initially being 5%.
(S) "STANDARD NET OPEN POSITION" means, at any given time, the
amount obtained by calculating the Net Open Position as it
applies to all FX Transactions and Currency Option
Transactions not involving Tier II currencies.
(T) "TIER I CURRENCIES" means Australian Dollars, Canadian
Dollars, Swiss Francs, Danish Kroner, Euros, British Pounds,
Hong Kong Dollar, Japanese Yen, Norwegian Kroner, New Zealand
Dollars, Swedish Krona, and U.S. Dollars
(U) "TIER II CURRENCIES" means Indonesian Rupiah, Mexican Pesos,
and South African Rand.
(ii) DEFINITIONS. Any terms used in this Credit Support Annex which
are not otherwise defined herein and which are defined in the
1998 FX and Currency Option Definitions (the "FX Definitions")
(published by the International Swaps and Derivatives
Association, Inc., the Emerging Markets Traders Association,
and the Foreign Exchange Committee) shall have the meaning set
forth in the FX Definitions (without regard to any amendments
thereto subsequent to the date hereof). Nothing in this Annex
shall affect the parties' agreement that this Agreement and all
Credit Support Annexes hereto (including this Annex) and all
Transactions and related Confirmations hereunder are entered
into in reliance on the fact that this Agreement, all Credit
Support Annexes and all Transactions and Confirmations form a
single agreement between the parties, the Posted Credit Support
under all Credit Support Annexes constitutes a pledge with
respect to and shall secure all Transactions and all
Obligations, and the parties would not otherwise enter into any
Transactions.
(iii) LIMIT ON SECURED PARTY'S LIABILITY. The Secured Party will
not be liable for any losses or damages that the Pledgor may
suffer as a result of any failure by the Secured Party to
perform, or any delay by it in performing, any of its
obligations under this Annex if the failure or delay results
from circumstances beyond the reasonable control of the
Secured Party or its Custodian, including but not limited to
interruption or loss of computer or communication services,
labor disturbance, natural disaster or local or national
emergency.
(iv) FURTHER ASSURANCES. If the Pledgor fails (A) to execute and
deliver to the Secured Party financing statements, assignments,
or other documents or (B) to do other things relating to the
Posted Credit Support as the Secured Party may reasonably
request in order to
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protect and maintain its security interest in the Posted Credit
Support and to protect, preserve, and realize upon the Posted
Credit Support, then the Secured Party is hereby authorized (but
not required) by the Pledgor to complete and execute such
financing statements, assignments, and other documents as the
Secured Party deems appropriate for such purposes. The Pledgor
hereby appoints the Secured Party, during the term of this
Agreement, as the Pledgor's agent and attorney-in-fact to complete
and execute such financing statements, assignments, and other
documents and to perform all other acts which the Secured Party
may deem appropriate to protect and maintain its security interest
in the Posted Credit Support and to protect, preserve, and realize
upon the Posted Credit Support. The power-of-attorney granted
herein to the Secured Party is coupled with an interest and is
irrevocable during the term of this Agreement.
(v) ADDITIONAL TERMINATION EVENTS.
Each of the following shall constitute an Additional
Termination Event with respect to Party B:
(A) the quotient of (I) the portion of Net Collateral Value
attributable to all FX Transactions and Currency Option
Transactions not involving Tier II Currencies, divided by (II)
the Standard Net Open Position is equal to or less than the
Standard Close Out Ratio;
(B) the quotient of (I) the portion of the Net Collateral Value
attributable to all FX Transactions and Currency Option
Transactions involving Tier II Currencies, divided by (II) the
Exotic Net Open Position is equal to or less than the Exotic
Close Out Ratio;
(C) the Aggregate Net Open Position is equal to or greater than
the Aggregate Ceiling Limit;
(D) the Standard Net Open Position is equal to or greater than the
Standard Ceiling Limit; or
(E) the Exotic Net Open Position is equal or greater than the
Exotic Ceiling Limit;
in each case irrespective of whether or not Eligible Credit Support
has been requested by Party A, or is being delivered to Party A,
pursuant to the terms of this Annex. For purposes of determining
whether such an Additional Termination Event has occurred, at the
discretion of Party A, Exposure and Net Collateral Value may be
calculated at any time on any calendar day and, if such day is not a
Valuation Date, the Value of Posted Credit Support may at the
discretion of Party A be calculated based on the Value on the
preceding Valuation Date. For purposes of each such Additional
Termination Event, Party B shall be the sole Affected Party.
Notwithstanding any provision of this Agreement that may be to the
contrary, if an Additional Termination Event specified in this Credit
Support Annex shall occur with respect to Party B, Party A shall be
entitled to designate an Early Termination Date with respect to all
Transactions with immediate effect. Without limiting such right,
Party A agrees to use reasonable efforts to deliver to Party B notice
of such designation in accordance with Section 12 of this Agreement.
(vi) NO ADDITIONAL AMOUNTS. Notwithstanding Section 2(d) of this
Agreement, Party A shall not be obliged to pay any additional
amount in respect of Tax in relation to any amount required to
be paid by it under this Annex.
(vii) TRANSFER TIMING. Paragraph 4(b) is hereby amended by: (A)
replacing "the next Local Business Day" in the third line
thereof with "that same Local Business Day"; and (B) replacing
"second Local Business Day thereafter" in the fifth line thereof
with "next Local Business Day".
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(viii) "GRACE PERIOD. Paragraph 7(i) is hereby amended in the last
line thereof by replacing "two Local Business Days" with "one
Local Business Day".
(ix) EXPOSURE. The definition of "Exposure" in Paragraph 12 is hereby
amended by:
(A) replacing "Valuation Date" in the first line thereof with
"Valuation Time"; and
(B) adding the following at the end thereof prior to the period:
, and provided further that for purposes of determining the Credit Support
Amount and the Net Collateral Value, if Party A's net Exposure for all Currency
Option Transactions is greater than zero, the amount determined as set forth
above shall be increased by reducing the value of Currency Option Transactions
owned by Party B by a factor determined and notified by Party A to Party B from
time to time.
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