EXHIBIT 10.04
(MULTICURRENCY-CROSS BORDER)
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of December 19, 2000
ABN AMRO BANK N.V.
and
EACH COUNTERPARTY LISTED ON EXHIBIT A TO THE SCHEDULE ATTACHED HERETO 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.
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(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 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.
(ii) LIABILITY. IF:-
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(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 equitable principles of
general application (regardless of whether enforcement is sought in a
proceeding in equity or at law)).
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(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 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")
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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 notice requirement 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 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
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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 interpretation by any
court, tribunal or regulatory authority with competent jurisdiction of any
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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-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
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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.
(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.
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(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 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
9
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.
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.
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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.
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.
11
(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 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;
12
(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
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.
13
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).
"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
14
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 referred 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 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
15
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
(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
16
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 I 1:00 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.
"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
17
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.
ABN AMRO BANK N.V. XXXXXXXX & COMPANY, INC.
As Trading Advisor for Party B
By : /s/ XXXXX XXXXXXX By: /s/ XXXXXXX X. XXXXX
-------------------------------------------- --------------------------------------------
Name: Xxxxx Xxxxxxx Name: Xxxxxxx X. Xxxxx
Title: Treasury Officer Title: Chief Financial Officer
By: /s/ XXXXXX XXXXXX
--------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Assistant Vice President
18
SCHEDULE
to the
MASTER AGREEMENT dated as
of December 19, 2000 between
ABN AMRO Bank N.V.
("Party A")
and
EACH COUNTERPARTY LISTED ON EXHIBIT A ATTACHED HERETO,
severally and not jointly ("Party B")
It is understood and agreed that this document shall constitute a separate
agreement with each party listed on Exhibit A attached hereto, as if each such
party had executed a separate document naming only itself as Party B, and that
no party listed on Exhibit A shall have any liability under this document for
the obligations of any other party engaging in Transactions with Party A,
including any other party so listed. With respect to any one such party, (i)
only Confirmations of Transactions between Party A and such party shall be part
of this Agreement with such party, (ii) references in this Agreement (including
this Schedule) to Party B shall be deemed to refer only to such party, and (iii)
the term "this Agreement" shall be construed according to the foregoing
provisions.
PART 1
TERMINATION PROVISIONS
In this Agreement:
(a) SPECIFIED ENTITY" means in relation to Party A for the purpose of:-
Section 5(a)(v), Inapplicable
Section 5(a)(vi), Inapplicable
Section 5(a)(vii), Inapplicable
Section 5(b)(iv), Inapplicable
and in relation to Party B for the purpose of:
Section 5(a)(v), Inapplicable
Section 5(a)(vi), Inapplicable
Section 5(a)(vii), Trading Advisor
Section 5(b)(iv), Inapplicable
(b) "SPECIFIED TRANSACTION" will have the meaning as contained in Section
14 of this Agreement.
(c) The "CROSS DEFAULT" provisions of Section 5(a)(vi) will apply to Party
A and Party B; provided, however, that it shall not constitute an Event of
Default under this Section 5(a)(vi) if (A) such event, condition or failure
arises in the ordinary course of business by mistake, oversight or transfer
difficulties in the payment of money, (B) such event, condition or failure is
remedied on or before the third Business Day after the occurrence or existence
of such event, condition or failure, and (C) no Specified Indebtedness in an
aggregate amount equal to or in excess of the Threshold Amount is accelerated as
a result of such event, condition or failure.
"SPECIFIED INDEBTEDNESS" shall mean any obligation (whether present or
future, contingent or otherwise, as principal or surety or otherwise)
(i) in respect of borrowed money (which, for the avoidance of doubt,
shall include, without limitation, bonds, notes, commercial paper or
similar
19
instruments issued or guaranteed by the relevant party; and shall
exclude deposits received), and (ii) any amount due and payable in
respect of any Specified Transaction (except that, for this purpose
only, the words "and any other entity" shall be substituted for the
words "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)" where they appear in the definition of Specified
Transaction), any repo transaction, any reverserepo transaction and any
stock loan transaction.
Section 5(a)(vi) is amended by the insertion of the following words
after the words "due and payable" on line 8:
"or, in the case of Specified Indebtedness in respect of any Specified
Transaction, anyrepo transaction, any reverse repo transaction and any
stock loan transaction, which has resulted in such Specified
Indebtedness becoming due and payable as a result of the early
termination of the relevant Specified Transaction, repo transaction,
reverse repo transaction or stock lending transaction, as the case may
be".
"THRESHOLD AMOUNT" means with respect to Party A, an amount equal to
three percent (3%) of its total equity share capital (as specified from
time to time in its most recently published audited annual statement in
accordance with generally accepted accounting principles), or its
equivalent in any other currency and with respect to Party B, means the
lesser of percent (3%) of its Net Asset Value or Partnership Capital as
applicable or (in either case) its equivalent in any other currency.
(d) "TERMINATION CURRENCY" means United States Dollars.
(e) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv) will
apply to Party A and Party B; provided, however, that with respect to Party A
"Credit Event Upon Merger" shall not have its meaning as defined in Section
5(b)(iv), but shall mean, that (i) Party A consolidates or amalgamates with, or
merges into, or transfers all or substantially all its assets to, another entity
("Y") or Y merges into Party A, (ii) such action does not constitute an event
described in Section 5(a)(viii), and (iii) Standard & Poor's Ratings Group, a
division of XxXxxx-Xxxx, Inc. (or any successor thereto) ("S&P") or Xxxxx'x
Investor Services, Inc. (or any successor thereto) ("Moody's") rates the
creditworthiness of the resulting, surviving or transferee entity (which shall
be the Affected Party) immediately after such action below investment grade
(investment grade being at least BBB- for S&P and Baa3 for Xxxxx'x). With
respect to Party B, Credit Event Upon Merger shall have the meaning set forth in
Section 5(b)(iv).
(f) The "Automatic Early Termination" provision of Section 6(a) will not
apply to Party A and will not apply to Party B, provided however, Automatic
Early Termination shall apply to Party B, Xxxxxxxx Global Assets Fund Limited.
(g) Payments on Early Termination. For the purpose of Section 6(e) of this
Agreement:
(i) (a) Market Quotation will apply with respect to Transactions other
than FX Transactions and Currency Option Transactions
(b) Loss will apply with respect to FX Transactions and Currency
Options Transactions.
(ii) The Second Method will apply to all Transactions.
(h) Additional Termination Event will apply. The following shall constitute
Additional Termination Events pursuant to Section 5(b)(v).
1. DECLINE IN NET ASSET VALUE OR PARTNERSHIP CAPITAL AS APPLICABLE OF
PARTY B. The Net Asset Value or Partnership Capital (as defined in Part 5 of
this Schedule) of Party B as of any calendar month-end, has declined by 50% or
more from the Net Asset Value or Partnership Capital as of any previous calendar
month-end. In respect of the foregoing, Party B shall be the Affected Party.
2. CHANGE OF PARTY B'S TRADING ADVISOR. Xxxxxxxx & Company, Inc. (the
"Trading Advisor") shall cease to be the Trading Advisor to Party B or shall
cease to have the power and authority to bind Party B with respect to
Transactions. In respect of the foregoing, Party B shall be the Affected Party.
20
3. NOTICE OF WITHDRAWALS OR REDEMPTIONS RESULTING IN INSOLVENCY OF PARTY
B. The Trading Advisor shall receive notice of withdrawals, redemptions or
other re-allocations of assets such that the Net Asset Value or Partnership
Capital as applicable of Party B, which, after such withdrawals, redemptions or
re-allocations become effective, will result in the insolvency of Party B. In
respect of the foregoing, Party B shall be the Affected Party.
4. MATERIAL ADVERSE CHANGE IN CONSTITUENT DOCUMENTS OR INVESTMENT
POLICIES. Party B or any Plan amends (a) its investment advisory agreement or
other similar agreement, or (b) its investment policies or restrictions and such
amendment, in Party A's reasonable discretion, causes a material adverse effect
on (i) Party B's ability to perform its obligations under this Agreement or (ii)
the binding effect upon, or enforceability against, Party B of this Agreement
and Transactions hereunder. In respect of the foregoing, Party B shall be the
Affected Party.
5. FAILURE TO PROVIDE NOTICE OR DOCUMENT. A party fails to provide any
notice or document required by this Schedule [within three (3) Local Business
Days after receipt of notice from the other party that such notice or document
has not been provided in accordance with the Schedule.] In respect of the
foregoing, the party failing to provide the required notice or document shall be
the Affected Party.
PART 2
TAX REPRESENTATIONS
(a) PAYER TAX REPRESENTATION. For the purpose of Section 3(e), each of
Party A and Party B will make the following representation:
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 Sections 2(e),
6(d)(ii) or 6(e)) to be made by it to the other party under this
Agreement. In making this representation, it may rely on:
(i) the accuracy of any representation made by the other party
pursuant to Section 3(f);
(ii) the satisfaction of the agreement of the other party contained
in Sections 4(a)(i) and 4(a)(iii) and the accuracy and effectiveness of
any document provided by the other party pursuant to Sections 4(a)(i)
and 4(a)(iii); and
(iii) the satisfaction of the agreement of the other party
contained in Section 4(d);
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), Party A
makes the representations specified below:
The following representations will apply:
(i) It is a resident of The Netherlands for the purpose of the
application of the existing tax treaties between The Netherlands and
those countries where offices of Party B are located.
(ii) Each payment received or to be received by it in connection
with this Agreement will be effectively connected with its conduct of a
trade or business in the United States.
For the purpose of Section 3(f), Party B will make the following
representation:
The following representations will apply:
(i) It is the type of legal entity set forth opposite its
respective name on Exhibit A and it will act through the Office set
forth opposite its respective name on Exhibit A.
(ii) It is fully eligible for the benefits of the "Business
Profits" or "Industrial and Commerce Profits" provision, as the case may
be, the "Interest" provision or the "Other Income" provision, if any, of
the Specified Treaty with respect to any payment described in such
21
provisions and received or to be received by it in connection with this
Agreement and no such payment is attributed to a trade or business
carried on by it through a permanent establishment in the Netherlands.
PART 3
DOCUMENTS TO BE DELIVERED
For the purpose of Section 4(a):
(a) Tax form, documents or certificates to be delivered are:-
PARTY
REQUIRED TO
DELIVER FORM/DOCUMENT/
DOCUMENT CERTIFICATE DATE BY WHICH TO BE DELIVERED
------------ ------------- -----------------------------
Party B A duly completed and executed Internal (i) Before the first Payment Date
Revenue Form W-8 or W-9 (or any under this Agreement and (ii) promptly
successor thereto) as requested by upon learning that any such form
Party A with respect to any payments previously provided by Party B has
received by Party B become obsolete or incorrect
Party A A duly completed and executed Internal Promptly (i) upon request by Party B
Revenue Form 4224 (or any successor and (ii) upon learning that any such
thereto) as requested by Party B with form previously provided by Party A
respect to any payments received by has become obsolete or incorrect
Party A
(b) Other Documents to be delivered are:
PARTY
REQUIRED TO
DELIVER FORM/DOCUMENT/ COVERED BY
DOCUMENT CERTIFICATE DATE BY WHICH TO BE DELIVERED SECTION 3(d)
------------ ------------- ----------------------------- ------------
Party A Signature Authentication from upon the execution of this Yes
Party A's Signature Book Agreement and, if requested,
Upon execution of the
Confirmation of any subsequent
Transaction
Party B A certificate, reasonably Upon the execution of this Yes
satisfactory in form and Agreement and, if requested,
substance, of an authorized upon execution of the
officer for Party B certifying Confirmation of any subsequent
the authority, names and true Transaction
signatures of the officers
signing this Agreement and any
Credit Support Document and
the officers of other entities
or agents, including the
Trading Advisor, authorized to
sign any Confirmations or
approve any Transactions
22
PARTY
REQUIRED TO
DELIVER FORM/DOCUMENT/ COVERED BY
DOCUMENT CERTIFICATE DATE BY WHICH TO BE DELIVERED SECTION 3(d)
------------ ------------- ----------------------------- ------------
Party B Certified copy of (i) the Upon execution of this Yes
current Investment Management Agreement and promptly upon
Agreement and Limited any material amendment thereto
Partnership Agreement or (ii) relating to (i) the investment
if Party B is a registered policies of Party B or (ii)
investment company, the the power of the Trading
registration statement of Advisor to make discretionary
Party B investments on behalf of Party
B
Party B Copies of Certified Offering Upon the execution of this No
Memorandum, Partnership Agreement
Agreement and Disclosure
Documents.
Party B A duly executed letter from Upon the execution of this Yes
the Trading Advisor in the Agreement and, if requested,
form of Exhibit C. upon execution of any
Confirmation
Party A and Copy of the annual report of With respect to Party A, Yes
Party B the party containing audited promptly upon request by Party
or certified financial B and with respect to Party B,
statements for the most as soon as available and in
recently ended fiscal year any event within 120 days
prepared in accordance with after the end of each fiscal
generally accepted accounting year of Party B
principles, as applied in the
jurisdiction of such party's
organization
Party B Report of the Net Asset Value As soon as available and in Yes
or Partnership Capital as any event within ten business
applicable of Party B as of days after the end of the
each month-end month covered by the report
Party B Copy of the unaudited balance As soon as available and in Yes
sheet and income statement of any event within 45 days after
Party B for each fiscal the end of each fiscal quarter
quarter. of Party B
Party B Written notice to Party A of Promptly upon becoming aware Yes
the occurrence of any event of the occurrence of such
that would constitute an event
Additional Termination Event
with respect to Party B
PART 4
MISCELLANEOUS
(a) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of
New York without reference to choice of
law doctrine.
(b) "AFFILIATE" will have the meaning specified in Section 14.
23
(c) OFFICES. The provisions of Section 10(a) will apply to this Agreement.
(d) MULTIBRANCH PARTY. For the purpose of Section 10:
Party A is not a Multibranch Party and may act through its Chicago
office only.
Party B is not a Multibranch Party, and will act through the Office
specified in Exhibit A.
(e) CALCULATION AGENT. The Calculation Agent is PARTY A.
(d) ADDRESSES FOR NOTICES. For the purpose of Section 12(a):
Address for notices or communications to Party A:
Address: ABN AMRO Bank N.V., Chicago Branch
000 X. Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Treasury Operations
Telex No.: 62734 Answerback: ABN UW
Facsimile No.: 000-000-0000
Telephone No.: 000-000-0000
Electronic Messaging
System Details: ABN AUS 33a XXX
Account for payment: Account No. 026009580 at the Federal Reserve Bank of
New York for the account of ABN AMRO Bank N.V.,
New York Branch in favor of ABN
AMRO Bank N.V., Chicago.
Address for notices or communications to Party B as applicable:
Address: Xxxxxxxx Strategic Allocation Fund X.X.
Xxxxxxxx Financial Futures Fund L.P.
Institutional Futures Fund, X.X.
Xxxxxxxx Fund Trust
c/x Xxxxxxxx & Company, Inc.
000 Xxxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx, CPA
Chief Financial Officer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Xxxxxxxx Global Assets Fund Limited
Euro-Canadian Centre
Marlborough Street
PO Box 4901
Nassau, Bahamas
Telephone No: (000) 000-0000
Facsimile No.: (000) 000-0000
c/x Xxxxxxxx & Company, Inc.
000 Xxxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx, CPA
Chief Financial Officer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(e) CREDIT SUPPORT DOCUMENT: Inapplicable.
(f) CREDIT SUPPORT PROVIDER: Inapplicable.
24
(g) NETTING OF PAYMENTS. Subparagraph (ii) of Section 2(c) of this
Agreement will not apply to any Transactions.
(h) PROCESS AGENT. For the purpose of Section 13(c):
Party A: Inapplicable
Party B appoints: PLEASE ADVISE
PART 5
OTHER PROVISIONS
(a) ISDA DEFINITIONS. The 1991 ISDA Definitions, as amended by the 1998
Supplement to the 1991 ISDA Definitions ( the "1991 Definitions") and the 1998
FX and Currency Option Definitions (the "FX Definitions"), and the 1998 ISDA
Euro Definitions, collectively (the "Definitions"), each as published by the
International Swaps and Derivatives Association, Inc., shall be deemed a part of
this Agreement as if fully set forth herein. The Definitions and the provisions
of Section 14 of this Agreement shall be deemed a part of each Confirmation as
if set forth in full therein.
(b) INTERPRETATION. In the event of any inconsistency between the
provisions of this Schedule and the Definitions, this Schedule will prevail. In
the event of any inconsistency between the provisions of this Schedule and the
printed Agreement of which it forms a part, this Schedule will prevail. In the
event of any inconsistency between the provisions of any Confirmation and this
Schedule, such Confirmation will prevail for the purpose of the relevant
Transaction; provided, however, that with respect to FX Transactions and
Currency Options Transactions, Part 5 (p) hereof shall prevail.
(c) CONSENT TO RECORDING. Each party (i) consents to the recording of the
telephone conversations of trading, marketing and other relevant personnel of
the parties in connection with this Agreement or any potential Transaction and
(ii) agrees that such recording may be submitted in evidence to any court or in
any Proceeding with respect to this Agreement or any Transaction thereunder.
(d) TRANSFER. Exception to the Transfer provisions of Section 7 is that
consent to transfer shall not be unreasonably withheld.
(e) WAIVER OF JURY TRIAL. Each Party irrevocably waives any and all right
to trial by jury in any legal proceeding instituted in connection with this
Agreement or any Transaction to the fullest extent permitted by law. As to any
matter for which a jury trial cannot be waived, each party agrees not to assert
any such matter as a cross claim or counterclaim in, nor move to consolidate the
same with, any legal proceeding in which a jury trial is waived.
(f) SETOFF. Each party agrees that the following provision shall be added
as Section 6(f) of this Agreement:
"(f) SETOFF. Any amount (the "Early Termination Amount") payable to one
party (the "Payee") by the other party (the "Payer") under Section 6(e) of this
Agreement, in circumstances where there is a Defaulting Party or one Affected
Party in the case where a Termination Event under this Agreement has occurred,
will, at the option of the party ("X") other than the Defaulting Party or the
Affected Party (and without prior notice to the Defaulting Party or the Affected
Party), be reduced by its setoff against any amount(s) (the "Other Agreement
Amount") payable (whether at such time or in the future or upon the occurrence
of a contingency) by the Payee to the Payer (irrespective of the currency, place
of payment or booking office of the obligation) under any other agreement(s)
between the Payee and the Payer or instrument(s) or undertakings) issued or
executed by one party to, or in favor of, the other party (and the Other
Agreement Amount will be discharged promptly and in all respects to the extent
it is so setoff). X will give notice to the other party of any setoff effected
under this Section 6(f).
For this purpose, either the Early Termination Amount or the Other
Agreement Amount (or the relevant portion of such amounts) may be converted by X
into the currency in which the other amount subject to set-off is denominated,
at the rate of exchange at which such party would be able, acting in a
reasonable manner and in good faith, to purchase the relevant amount of such
currency. The term "rate of
25
exchange" includes, without limitation, any premiums and costs of exchange
payable in connection with the purchase of or conversion into the relevant
currency.
If an obligation is unascertained, X may in good faith estimate that
obligation and effect set-off in respect of the estimate, subject to the
relevant party accounting to the other when the obligation is ascertained.
Nothing in Section 6(f) shall be effective to create a charge or other
security interest. This Section shall be without prejudice and in addition to
any right of set-off, combination of accounts, lien or other right to which any
party is at any time otherwise entitled (whether by operation of law, contract
or otherwise)."
(g) RELATIONSHIP BETWEEN THE PARTIES. This Agreement is hereby amended by
the addition of a new Section 15 as follows:
"15. RELATIONSHIP BETWEEN THE PARTIES.
Each party will be deemed to represent to the other party on the date
on which it enters into a Transaction (absent a written agreement between
the parties that expressly imposes affirmative obligations to the contrary
for that Transaction):
(a) 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 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.
(b) 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, conditions
and risks of that Transaction.
(c) STATUS OF PARTIES. The other party is not acting as a fiduciary
for or an adviser to it in respect of that Transaction."
(h) REPRESENTATIONS.
(i) Section 3(a)(iii) of this Agreement is hereby amended by
inserting the words "or investment policies or restrictions" immediately
following the word "documents."
(ii) Section 3(a) of this Agreement is hereby amended by the deletion
of "and" at the end of subdause (iv), the substitution of a semi-colon for
the period at the end of sub-clause (v) and the addition of the following
at the end thereof
"(vi) ELIGIBLE SWAP PARTICIPANT. It is an "eligible swap
participant" under, and as defined in, 17 C.F.R. 35.1;
(vii) INVESTMENT DETERMINATIONS. Each party hereby acknowledges
and agrees that it is responsible (directly or through the Trading
Advisor) for making its own determination of the prudence and
suitability of any Transaction for it;
(viii) NO AGENCY. It is entering into this Agreement, any Credit
Support Document to which it is a party, each Transaction, and any other
documentation relating to this Agreement that it is required by the
Agreement to deliver as principal (and not as agent or in any other
capacity, fiduciary or otherwise);
(ix) COMPLIANCE WITH INVESTMENT POLICIES; INVESTMENT ADVISERS
ACT. In the case of Party B, (aa) the execution, delivery and
performance by Party B of this Agreement do not violate or conflict with
the investment policies and objectives of Party B set forth in the
offering materials and organizational documents of Party B from time to
time in effect, and (bb) the
26
Trading Advisor is not required to be registered as an Investment
Adviser under the Advisers Act.
(x) TRADING ADVISORY AGREEMENT. In the case of Party B, (aa) the
Trading Advisor has full power and authority under the Trading Advisory
Agreement to (i) cause Party B to enter into Transactions under this
Agreement (on such terms and conditions as the Trading Advisor may
determine in its sole discretion), (ii) take further actions in respect
of such Transactions including, without limitation, exercise of Options,
and (iii) if the Trading Advisor is executing and delivering this
Agreement on behalf of Party B, to execute and deliver this Agreement;
and (bb) it had full power, authority and legal right to enter into the
Trading Advisory Agreement, the Trading Advisory Agreement has been duly
executed by all parties thereto and is valid, binding and legally
enforceable in accordance with its terms.
(i) ADDITIONAL AGREEMENTS OF PARTY B. Party B additionally covenants to
Party A as follows:
(i) Unless previously notified in writing by Party B, Party A may
rely on all representations and warranties of and actions by the Trading
Adviser in relation to any Transaction hereunder. For these purposes, Party
B agrees to fully and unconditionally indemnify Party A for any and all
losses, damages, costs and expenses directly sustained by Party A in
relation to any Transaction hereunder (including those incurred in
unwinding any Transaction and any relevant hedging transaction) by reason
of (x) its bona fide reliance on the appointment by Party B of the Trading
Adviser as Party B's agent to enter into Transactions on its behalf,
irrespective of the invalidity, unenforceability, termination or revocation
of such appointment (unless previously notified in writing by Party B) or
breach by the Trading Adviser of the terms and obligations set forth in any
applicable advisory/management agreement entered into between Party B and
the Trading Adviser or (y) as a direct result of Party A's bona fide
reliance upon the instructions, actions or ostensible authority of the
Trading Adviser. Notwithstanding anything to the contrary herein, these
indemnification provisions shall survive any termination of this agreement.
(ii) If Party B provides credit support or credit enhancement to
counterparties to Derivative Transactions with Party B, Party B will notify
Party A of such credit support or credit enhancement and will provide
equivalent credit support or credit enhancement to Party A on terms equally
favorable to Party A as the terms under which such counterparties received
such credit support or enhancement.
(j) ADJUSTMENT FOR BANKRUPTCY. Section 6(e)(iii) of this Agreement is
hereby amended by the addition of the following at the end thereof:
"In addition, to, and notwithstanding anything to the contrary in the
preceding sentence of this Section 6(e)(iii), if an Early Termination Date
is deemed to have occurred under Section 6(a) as a result of Automatic
Early Termination, the Defaulting Party hereby agrees to indemnify the Non-
defaulting Party on demand against all loss or damage that the
Nondefaulting Party may sustain or incur in respect of each Transaction as
a result of movement in interest rates, currency exchange rates or market
quotations between the Early Termination Date and the date (the
"Determination Date") upon which the Non-defaulting Party first becomes
aware that the Early Termination Date has been deemed to have occurred
under Section 6(a).
If the Non-defaulting Party shall determine that it would gain or
benefit from the movement in interest rates, currency exchange rates or
market quotations between the Early Termination Date and the Determination
Date, the amount of such gain or benefit shall be deducted from the amount
payable by the Defaulting Party pursuant to Section 6(e)(i)(4).
The Determination Date shall be a date not later than the date upon
which creditors generally of the Defaulting Party are notified of the
occurrence of the Event of Default leading to the deemed Early Termination
Date."
(k) INCORPORATION OF ISDA EMU PROTOCOL. Party A and Party B agree that
the definitions and provisions contained in Annexes 1 to 5 and Section 6 of the
ISDA EMU Protocol published May 6, 1998 by ISDA (the "Protocol") are hereby
incorporated by reference and made a part of this Agreement.
27
(l) TRADING ADVISOR LETTER A MATERIAL INDUCEMENT. Party B acknowledges
and agrees that the Trading Advisor's Letter is a material inducement to Party A
in entering into this Agreement and any Transaction hereunder, that Party A
shall rely on the representations set forth in the Trading Advisor's Letter, and
that Party A would not enter into this Agreement or Transactions hereunder is
the Trading Advisor's Letter was not delivered by the Trading Advisor.
(m) ADDITIONAL AMENDMENTS TO SECTION 14: Section 14 of this
Agreement is hereby amended to add the following definitions thereto in the
appropriate alphabetical order:
"ADVISERS ACT" means the Investment Advisers Act of 1940, as
amended.
"TRADING ADVISOR" means Xxxxxxxx & Company, Inc.
"TRADING ADVISORY AGREEMENT" means the agreement conferring on the
Trading Advisor the power to make discretionary investments on behalf of
Party B.
"NET ASSET VALUE OR PARTNERSHIP CAPITAL" of Party B means as of any
date the Total Assets minus Total Liabilities of Party B, in each case
as of such date. As used herein, "Total Assets" means, at any date, all
assets of Party B which in accordance with generally accepted accounting
principles would be classified as assets upon a balance sheet of Party B
prepared as of such date. As used herein, "Total Liabilities" means, at
any date, all liabilities of Party B which in accordance with generally
accepted accounting principles would be classified as liabilities upon a
balance sheet of Party B prepared as of such date.
(m) SCOPE OF AGREEMENT. With effect from the date of the Agreement, all
Transactions (as defined in the Definitions) entered into prior to the date
hereof between the parties hereto shall be governed by and construed in
accordance with this Agreement, notwithstanding the terms of any agreement or
Confirmation which states otherwise. Each agreement or Confirmation governing
any Transaction entered into prior to the date hereof shall constitute a
supplement to, and form a part of, this Agreement, and will be read and
construed as one with this Agreement, and all such agreements and Confirmations
along with this Agreement constitute a single agreement.
(n) RESTATEMENT. This Agreement supercedes and replaces in its entirety
the International Foreign Exchange
Master Agreement with margin between Party A
and Party B ( as amended from time to time the "Previous Agreement") as noted
hereto; Xxxxxxxx Strategic Allocation Fund L.P. dated August 1, 1998, Xxxxxxxx
Financial Futures Fund L.P. dated August 10, 1999, Institutional Futures Fund,
L.P. dated August 1, 1998, Xxxxxxxx Fund Trust, dated July 30, 1999, Xxxxxxxx
Global Assets Fund Limited dated October 13, 1998, together with the
Confirmations (as defined in the Previous Agreement) relating thereto. All
Confirmations relating to the Previous Agreement shall be deemed part of this
Agreement and all references to the Agreement in all Confirmations to the
Previous Agreement (howsoever described) shall be deemed references to this
Agreement. All terms in the Confirmations shall be defined in accordance with
this Agreement mutatis mutandis.
(o) PAYMENT INSTRUCTIONS. All payments to be made hereunder in respect of
FX Transactions and Currency Option Transactions shall be made in accordance
with standing payment instructions provided by the parties (or as otherwise
specified in a Confirmation).
AMENDMENTS TO DEFINITIONS.
(i) Section 3.5(g) of the FX Definitions is amended by the deletion
of the word "facsimile," in the fourth line thereof.
(p) Section 3.4 of the FX Definitions is hereby amended by the addition of
the following subsection:
(ii) "(c) UNPAID PREMIUM. If any Premium is not received on the
Premium Payment Date, the Seller may elect: (i) to accept a late payment of
such Premium; (ii) 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 Transaction as void; or (iii) 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
28
elects to act under either clause (i) or (ii) 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
Transaction, 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, a delta hedge) with respect to such
Currency Option Transaction."
(q) CONFIRMATIONS. Where an FX Transaction or Currency Option Transaction
is confirmed by means of mail or an electronic messaging system that the parties
have elected to use to confirm such Transaction: (i) such confirmation will
constitute a "Confirmation" as referred to in this Agreement even where not so
specified in the Confirmation, (ii) such Confirmation will supplement, form part
of, and be subject to this Agreement and all provisions in this Agreement will
govern the Confirmation, and (iii) the definitions and provisions contained in
the FX Definitions will be incorporated into the Confirmation.
(r) CASH SETTLEMENT. Unless otherwise agreed by the parties, each forward
rate FX Transaction shall be cash settled in USD on the Settlement Date. The
parties further agree to determine by mutual agreement the Spot Rate for USD
with respect to such Currency on the Valuation Date for such forward rate FX
Transaction.
(s) DELIVERY VS. PAYMENT. In the event that the parties enter into any FX
Transactions in which settlement is to be made in two different Currencies,
Party B agrees to deliver payment to Party A in advance of Party A's obligation
to deliver payment to Party B.
(t) FURTHER AMENDMENTS. Section 3(d) of this Agreement is amended by the
following at the end thereof:
",or, in the case of audited or unaudited financial statements, a fair
presentation of the financial condition of the relevant person."
IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized officers as of the date hereof.
ABN AMRO BANK N.V. XXXXXXXX & COMPANY, INC.
As Trading Advisor for Party B
By: /s/ XXXXX XXXXXXX By: /s/ XXXXXXX X. XXXXX
------------------------------------------------- -------------------------------------------------
Name: Xxxxx Xxxxxxx Name: Xxxxxxx X. Xxxxx
Title: Treasury Officer Title: Chief Financial Officer
By: /s/ XXXXXX XXXXXX
-------------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Assistant Vice President
29
ANNEX A -- HEDGE FUNDS
This Annex shall apply to any party listed on Exhibit A that is a Fund.
1. Additional Documents to be Delivered. In addition to the Other Documents
to be delivered as specified in Part 2 of the Schedule, the following
documents are to be delivered and will be covered by the representation
of Section 3(d):
PARTY
REQUIRED TO
DELIVER FORM/DOCUMENT/
DOCUMENT CERTIFICATE DATE BY WHICH TO BE DELIVERED
------------ -------------- -----------------------------
Party B Any other information relating to its Promptly upon request
condition or operations, financial or
otherwise as Party A may reasonably
request from time to time
2. Additional Representation. In addition to the Representations made under
Section 3 of this Agreement, as amended in Part 5 of the Schedule, Party
B makes the following representation and warranty, which shall be deemed
to be made continuously at all times that one or more Transactions are
outstanding between Party A and Party B: There has been no material
adverse change in Party B's financial condition that is likely to affect
Party B's ability to perform its obligations under this Agreement since
the last day of the one year period covered by its most recently
prepared year end financial statement.
30
EXHIBIT A
LIST OF COUNTERPARTIES
LIST OF PARTIES
--------------------------------------------------------------------------------
OFFICE LOCATION NET ASSET VALUE OR NET
COUNTERPARTY NAME TYPE OF ENTITY STATE OR JURISDICTION MANAGED ASSETS
-------------------------------------------------------------------------------------------------
Xxxxxxxx Strategic Hedge Fund Delaware Partnership Capital
Allocation Fund L.P.
-------------------------------------------------------------------------------------------------
Xxxxxxxx Financial Futures Hedge Fund Maryland Partnership Capital
Fund L.P.
-------------------------------------------------------------------------------------------------
Institutional Futures Fund, Hedge Fund Maryland Partnership Capital
L.P.
-------------------------------------------------------------------------------------------------
Xxxxxxxx Fund Trust Hedge Fund Delaware Net Asset Value
-------------------------------------------------------------------------------------------------
Xxxxxxxx Global Assets Fund Hedge Fund The Commonwealth of the Net Asset Value
Limited Bahamas
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
31
EXHIBIT B
FORM OF TRADING ADVISOR LETTER
[Letterhead of TRADING ADVISOR
[Date]
ABN AMRO Bank N.V.
Chicago Branch
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Re: [NAME OF FUND] (OUR "CLIENT")
Ladies and Gentlemen:
Please be advised that our organization is a trading advisor. In the
foregoing capacity, we have entered into an agreement with our Client[, A COPY
OF WHICH IS ATTACHED,] which gives us full discretionary investment authority on
its behalf. Such investment authority includes, without limitations,
authorization to enter orders with brokers and dealers in futures, forwards and
swaps, including ABN AMRO Bank N.V. and any of its affiliates (collectively
"Counterparty"), to buy, sell, including sell short, and trade in all types of
futures, forwards and swaps, including options contracts, whether traded on an
exchange, in the over-the-counter market, or privately-negotiated, as well as to
enter into the forward delivery or when issued transactions, or swap
transactions of any kind, or options thereon, or any transaction involving a
combination of one or more of the foregoing. Such investment authority includes,
authorization to effect such transaction on a cash basis, on margin or to pledge
assets to secure our Client's performance of its obligations pursuant to any of
the foregoing transactions.
By executing this letter, our organization hereby assures you and
represents that, with respect to our Client on whose behalf we enter into a
transaction with or through Counterparty: (a) we have in our files a fully
executed agreement with our Client authorizing us to place such order or to
enter into such contract with or through Counterparty on a discretionary basis
and (b) that the person(s) who signed our agreement was (were) properly
authorized to do so by his/her (their) principal or employer.
It is understood and agreed that Counterparty may (i) decline to effect any
transaction hereunder for our Client, and (ii) require additional documentation
with respect to our Client if our Client wishes to effect options transactions,
commodities futures transaction, foreign exchange transaction, swap transactions
or options on swap transactions or any transactions on margin or requiring our
Client to pledge assets to secure its performance of any obligations it may have
to you pursuant to any of the foregoing transactions.
The foregoing assurances and representations shall be deemed to be renewed
and remade with respect to our Client on each occasion that we place an order in
securities or enter into a contract with or through Counterparty.
Very truly yours,
Xxxxxxxx & Co., Inc.
By:
Name:
Title:
32
(BILATERAL FORM) (ISDA AGREEMENTS SUBJECT TO
NEW YORK LAW ONLY)
ISDA(R)
International Swaps and Derivatives Association, Inc.
CREDIT SUPPORT ANNEX
to the Schedule to the ISDA
MASTER AGREEMENT dated as
of December 19, 2000 between
ABN AMRO BANK N.V.
("Party A")
and
EACH COUNTERPARTY LISTED ON EXHIBIT A TO THE SCHEDULE ATTACHED HERETO
("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.
33
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 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 Party specifying the items of Posted Credit Support to be
exchanged, the Pledgor may, on any Local Business Day,
34
Transfer to the Secured Party substitute Eligible Credit Support (the
"Substitute Credit Support"); and
(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 Party 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
35
to Posted Collateral, including, without limitation, any duty to collect any
Distributions, or enforce or preserve any rights pertaining thereto.
(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.
36
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 xxxxx 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;
(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
37
(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 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) LIQUIDATION/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
38
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 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.
39
"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
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.
40
"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.
"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 does not include any additional obligations with respect to Party
A or Party B.
(b) Credit Support Obligations.
(i) Delivery Amount, Return Amount and Credit Support Amount.
41
(A) "Delivery Amount" has the meaning specified in Paragraph 3(a).
In addition, Party B shall deliver to Party A an initial deposit of $
N/A, prior to execution of the first Transaction hereunder.
(B) "Return Amount" has the meaning specified in Paragraph 3(b).
(C) "Credit Support Amount" with respect to Party A, as Pledgor,
shall be inapplicable and, with respect to Party B, as Pledgor, has the
meaning specified in Paragraph 3. For purposes of certainty, Party A
will not be a Pledgor under this Agreement and will not be obligated to
deliver any Posted Credit Support under this Annex.
(ii) Eligible Collateral. The following items will qualify as
"Eligible Collateral":
VALUATION
PERCENTAGE
--------------------------------------------------------------------------
(A) USD cash 100%
--------------------------------------------------------------------------
(B) negotiable debt obligations issued by the
U.S. Treasury Department having a
remaining life of not more than one year 98%(I,I)
--------------------------------------------------------------------------
(C) negotiable debt obligations issued by the
U.S. Treasury Department having a
remaining life of more than one year but
not more than 10 years 95%
--------------------------------------------------------------------------
(D) negotiable debt obligations issued by the
U.S. Treasury Department having a
remaining life of more than 10 years 90%
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(iii) Other Eligible Support. The following items will qualify as
"Other Eligible Support": As determined from time to time in the sole
discretion of the Secured Party.
(iv) Thresholds.
(A) "Independent Amount" means, at any time, with respect to Party
A: Not applicable.
"Independent Amount" means, at any time with respect to Party B: (I
) 2'% of the "Net Open Position", converted to U.S. dollars, plus, (2)
the sum of any Independent Amounts specified as applicable to Party Bin
the Confirmations for Transactions outstanding at such tune. "Net Open
Position" means, at any time, the aggregate Notional Amount of all
outstanding Transactions, minus the aggregate Notional Amount of all
outstanding Transactions for which there is a matching Transaction by
maturity date and underlying Currencies in the opposite buy/sell
direction.
(B) "Threshold" for Party A means: Not applicable.
"Threshold" for Party B means: zero.
(C) "Minimum Transfer Amount" means with respect to Party A and
Party B: 10,000.
(D) Rounding. The Delivery Amount will, if a positive number but
not an integral multiple of USD 1,000, be rounded up to the nearest
integral multiple of USD 1,000, and the Return Amount, if a positive
number but not an integral multiple of USD 1,000, will be rounded down
to the nearest integral multiple of USD 1,000 or to zero, if the Return
Amount is less than USD 1,000.
(c) Valuation and Timing.
(i) "Valuation Agent" means Party A.
(ii) "Valuation Date" means each Local Business Day.
42
(iii) "Valuation Time" means any time and from time to time during
the Valuation Date or date of calculation, as applicable, provided that the
calculation of Value and Exposure will be made as of approximately the same
time on the same date.
(iv) "Notification Time" means 11:00 a.m.
New York time on a Local
Business Day.
(v) Paragraph 4(b) is hereby amended in its entirety to read as
follows:
"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 no later than 5:00 p.m.
New York time on
that Local Business Day. If a demand is made after the Notification Time,
then the relevant Transfer will be made no later than 9:00 New York time on
the next Local Business Day thereafter."
(d) Conditions Precedent and Secured Party's Rights and Remedies. The
following Termination Event(s) will be a "Specified Condition" for the Pledgor
(that party being the Affected Party if the Termination Event occurs with
respect to that party):
TERMINATION EVENT PARTY A PARTY B
Illegality No Yes
Tax Event No No
Tax Event Upon Merger No No
Credit Event Upon Merger Yes Yes
Additional Termination Event No Yes
(e) Substitution.
(i) "Substitution Date" has the meaning specified in Paragraph
4(d)(ii).
(ii) Consent. If specified here as applicable, then Pledgor must
obtain the Secured Party's consent for any substitution pursuant to
Paragraph 4(d): Not applicable to Party A or Party B.
(f) Dispute Resolution.
(i) "Resolution Time" means 2:00 p.m., New York time, on the
Valuation Date on which the notice of the dispute is given pursuant to
Paragraph 13(f)(iii) below.
(ii) Value. For the purpose of Paragraphs 5(i)(C) and 5(ii), in the
event of a dispute involving the Value of any Posted Credit Support and/or
Transfer of Eligible Credit Support or Posted Credit Support, Value shall
be calculated as provided in Paragraph 5; provide however that the
references in Paragraph 5(i)(B) to four mid-market quotations shall be
deemed to be replaced (for purposes of this subparagraph (ii) only) with
references to three bid quotations.
(iii) Alternative. The provisions of Paragraph 5 will apply.
(g) Holding and Using Posted Collateral.
(i) Eligibility to Hold Posted Collateral; Custodians. The Secured
Party 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) The Secured Party is not a Defaulting Party or an Affected
Party in connection with a Specified Condition, and neither a Specified
Condition nor an Event of Default with respect to the Secured Party has
led to the occurrence or effective designation of an Early Termination
Date.
(B) Posted Collateral may be held only in the following
jurisdictions: New York and Illinois.
(C) Any Custodian for the Secured Party must (i) be appointed
pursuant to a written custodial agreement between the Secured Party and
the Custodian, (ii) be a trust company or
43
commercial bank with trust powers, (iii) have a combined capital and
surplus of at least USD 500,000,000 and (iv) have unsecured,
unguaranteed general short-term obligations rated at least "P-I" by
Xxxxx'x Investor Service, Inc., or "A-I" by Standard and Poor's Rating
Group, a division of the XxXxxx-Xxxx Campames, Inc.
Initially, the CUSTODIAN FOR PARTY A IS: LaSalle Bank N.A.
Initially, the Custodian for Party B is: Not Applicable.
(ii) Use of Posted Collateral. The provisions of Paragraph 6(c) are
applicable; provided, however, that Paragraph 6(c) shall not apply to the
extent Posted Collateral consists of Other Eligible Support or Treasury
Securities. With respect to Treasury Securities, the Secured Party shall
not have the right to sell, pledge, rehypothecate, assign, invest, use,
commingle, or otherwise dispose of, or otherwise use in its business
(except as contemplated by this Agreement) any Posted Collateral, and the
Secured Party shall at all times hold all such Posted Collateral in a
separate account in the name of, or identified as for the benefit of, the
Pledgor.
(h) Distribution of Interest Amount.
(i) Interest Rate. The "Interest Rate" will be the federal funds
overnight rate as determined by Party A.
(ii) Alternative to Interest Amount. The provisions of Paragraph
6(d)(ii) will not apply.
(i) Additional Representation(s).
Party B represents to Party A (which representation(s) will be deemed
to be repeated as of each date on which Party B, as the Pled-or Transfers
Eligible Credit Support) that
"The Investment Advisor has the authority to cause Party B, as the
Pledgor, to Transfer Eligible Credit Support to the Secured Party."
(j) Other Eligible Support and Other Posted Support.
(i) "Value" with respect to Other Eligible Support and Other Posted
Support means: Not Applicable.
(ii) "Transfer" with respect to Other Eligible Support and Other
Posted Support means: Not Applicable.
(k) 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: As specified in Part 4 of the Schedule to the
Master
Agreement
Party B: As specified in Part 4 of the Schedule to the Master
Agreement
(I) Addresses for Transfers.
Party A: Securities:
LaSalle Chgo/CTR/BNF/AC2090067/RFB/[Your xxxx.xx. here]
Payments:
ABN AMRO NY
ABA 000000000
A/C 513082604900
Party B: Mercantile Safe Deposit & Trust Company
ABA No.: 0520-00618
Account No.: 000-000-0 (Xxxxxxxx Strategic Allocation Fund,
L.P.)
000-000-0 (Xxxxxxxx Financial Futures Fund,
L.P.)
000-000-0 (Institutional Futures Fund, L.P.)
44
000-000-0 (Xxxxxxxx Fund Trust)
000-000-0 (Xxxxxxxx Global Assets Fund Limited)
Reference:
(m) Other Provisions.
(i) Non-Reliance. The Pledgor acknowledges that it has the means to
monitor all material relating to all valuations, payments, defaults and
rights without need to rely on the Secured Party, and that, given the
provisions of this Annex on substitution, responsibility for the
preservation of the rights of the Pledgor with respect to all such matters
is reasonably allocated to the Pledgor.
(ii) Transfer. Without limiting the generality of the definition of
"Transfer" in Paragraph 12, any Transfer to a party to this Agreement of an
interest in securities required to be effected under this Annex will be
deemed to be effective only if such Transfer constitutes a "transfer" of
such interest to such party within the meaning of the New York Uniform
Commercial Code.
(iii) Negative Pledge. Each party, as Pledgor, agrees that it will
not (i) create, incur or suffer to exist any security interest, lien,
encumbrance or other restriction upon any Posted Collateral Transferred to
the Secured Party hereunder, except for the security interest, lien and
right of set-off in favor of the Secured Party granted by the Pledgor under
Paragraph 2 or by reason of the Secured Party's exercise of its rights
under Paragraph 6(c), or (ii) file or suffer to be on file any financing
statement or like instrument with respect to the Posted Collateral
Transferred by the Pledgor in which the Secured Party is not named as the
sole secured party.
(iv) Taxes in Connection with Interest Amounts. Notwithstanding
anything to the contrary in this Agreement, neither party makes any Payer
Tax Representation referred to in Section 3(e) of this Agreement with
respect to any Interest Amount it is required to Transfer under this Annex,
and neither party will be entitled to designate an Early Termination Date
by reason of any Tax Event resulting from such party's obligation to pay
additional amounts in respect of Indemnifiable Taxes imposed with respect
to any Interest Amount it is required to Transfer under this Annex.
(v) Settlement of Transactions. At the sole discretion of Party A,
Transactions shall not be settled in Cash but shall be settled by an
increase or decrease in the Credit Support Balance held as Cash.
(vi) Change in Initial Margin, Threshold Amount. Party A may change
Party B's Independent Amounts at any time and such change shall be
effective on the third Business Day after Party A has NOTIFIED Party B of
such change. However, in the event of adverse market conditions (as
determined by Party A), such changes shall be effective immediately. Any
such change shall apply to any outstanding or subsequent Transaction
entered into by the Parties.
(vii) Events of Default. Paragraph 7 is amended to replace
subparagraph (i) to read as follows: "(i) that party fails to make, when
due, any Transfer of Eligible Collateral;"
(viii) Agreement as to Single Secured Party and Pledgor. Party A and
Party B agree that, notwithstanding anything to the contrary in the recital
to this Annex, Paragraph 1(b) or Paragraph 2 or the definitions in
Paragraph 12, (a) the term "Secured Party" as used in this Annex means only
Party A, (b) the term "Pledgor" as used in this Annex means only Party B,
(c) only Party B makes the pledge and grant in Paragraph 2, the
acknowledgement in the final sentence of Paragraph 8(a) and the
representations in Paragraph 9, and (d) only Party B will be required to
provide Eligible Credit Support hereunder.
45
IN WITNESS WHEREOF the parties have executed this Credit Support Annex on the
respective dates specified below with effect from the date specified on the
first page of this Credit Support Annex.
ABN AMRO BANK N.V. XXXXXXXX & COMPANY, INC.
As Trading Advisor for Party B
By: /s/ XXXXX XXXXXXX By: /s/ XXXXXXX X. XXXXX
------------------------------------------ ------------------------------------------
Name: Xxxxx Xxxxxxx Name: Xxxxxxx X. Xxxxx
Title: Treasury Officer Title: Chief Financial Officer
By: /s/ XXXXXX XXXXXX
------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Assistant Vice President
46
AMENDMENT AGREEMENT
AMENDMENT AGREEMENT ("Amendment") dated as of and with effect from April
23, 2002 by and between ABN AMRO Bank N.V. ("Party A") and each counterparty
listed on Exhibit A attached to the ISDA Schedule, severally and not jointly
("Party B").
WITNESSETH
WHEREAS, Party A and Party B have entered into an ISDA Master Agreement dated as
of December 19, 2000, as the same may be amended, modified, or supplemented from
time to time (the "Agreement")
and
WHEREAS, Party A and Party B desire to modify and amend certain of the terms and
provisions of the Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein contained, the
parties hereto agree as follow:
1. Part 1(h)(1) of the Schedule to the Agreement is hereby deleted and replaced
with the following:
"Decline in Net Asset Value or Partnership Capital as applicable to Party B.
The Net Asset Value or Partnership Capital (as defined in Part 5 of this
Schedule) of Party B, per Unit as of the end of any Business Day has declined by
50% or more from either the prior year end or the prior month end Unit value. In
respect of the foregoing, Party B shall be the affected Party.
2. Part 5(m) of the Schedule to the Agreement is amended to include the
following:
"Unit" means, for each counterparty listed as Party B respectively, a unit
or a share as defined in the partnership agreement or an applicable
corporate organizational document or as determined by the Calculation Agent
of Party B.
3. This Amendment will be governed by and construed in accordance with New York
law.
4. Except as specifically modified by this Amendment, all of the terms and
provisions of the Agreement are hereby reaffirmed and shall remain in full
force and effect.
5. This Amendment may be signed in any number of counterparts, each of which
shall be an original.
6. Upon execution and delivery of this Amendment by the parties hereto, this
Amendment shall become effective as of the date first above written.
7. All references in the Agreement to "this Agreement" shall be deemed to be
references to the Agreement as amended hereby.
8. All capitalized terms in the Amendment shall have the meaning ascribed to
them in the Agrement.
9. This Amendment constitutes the entire Agreement and understanding of the
parties with respect to its subject matter and supersedes all oral
communications and writings with respect thereto.
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to
be executed and delivered by its respective authorized officer(s) as of the date
first above written.
ABN AMRO BANK N.V. XXXXXXXX & COMPANY, INC.
As Trading Advisor for Party B
By: /s/ XXXXX XXXXXXX By: /s/ XXXXXXX X. XXXXX
------------------------------------------------ ------------------------------------------------
Name: Xxxxx Xxxxxxx Name: Xxxxxxx X. Xxxxx
Title: Assistant Vice President Title: Chief Financial Officer
Xxxxxxxx & Company, Inc.
By: /s/ XXXXX X. XXXXXXX XXXXXXXX STRATEGIC ALLOCATION
------------------------------------------------ FUND L.P. as General Partner
Name: Xxxxx X. Xxxxxxx By: /s/ XXXXXXX X. XXXXX
Title: Assistant Vice President ------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Financial Officer
Xxxxxxxx & Company, Inc.
XXXXXXXX FINANCIAL FUTURES
FUND L.P. as Trading Advisor
By: /s/ XXXXXXX X. XXXXX
------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Financial Officer
Xxxxxxxx & Company, Inc.
INSTITUTIONAL FUTURES FUND, L.P.
as Trading Manager
By: /s/ XXXXXXX X. XXXXX
------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Financial Officer
Xxxxxxxx & Company, Inc.
XXXXXXXX FUND TRUST
as Managing Operator
By: /s/ XXXXXXX X. XXXXX
------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Financial Officer
Xxxxxxxx & Company, Inc.
XXXXXXXX GLOBAL ASSETS FUND
LIMITED as Trading Advisor
By: /s/ XXXXXXX X. XXXXX
------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Financial Officer
Xxxxxxxx & Company, Inc.
2
AMENDMENT AGREEMENT
AMENDMENT AGREEMENT ("Amendment") dated as of and with effect from April
25, 2002 by and between ABN AMRO Bank N.V. ("Party A") and each Counterparty
listed on Exhibit A, attached hereto, severally and not jointly ("Party B").
W I T N E S S E T H
-----------------------
WHEREAS, Party A and Party B have entered into an ISDA Master Agreement and the
Credit Support Annex dated as of December 19, 2000 and each Counterparty listed
on the Amended and Restated Exhibit A, attached hereto as the same may be
amended, modified, or supplemented from time to time (the "Agreement")
and
WHEREAS, Party A and Party B desire to modify and amend certain of the terms and
provisions of the Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
1. Exhibit A to the Agreement is hereby deleted in its entirety and replaced
with Amended and Restated Exhibit A, dated as of April 25, 2002, which is
attached hereto.
2. Part 4(d), Addresses for Notices is amended to add the following with
respect to Party B:
Address: Xxxxxxxx Strategic Allocation Fund X.X.
Xxxxxxxx Financial Futures Fund L.P.
Institutional Futures Fund, X.X.
Xxxxxxxx Fund Trust
Xxxxxxxx Alternative Asset Trust
c/x Xxxxxxxx & Company, Inc.
000 Xxxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, CPA
Chief Financial Officer
Telephone No: (000) 000-0000
Facsimile No: (000) 000-0000
Xxxxxxxx Global Assets Fund Limited
Euro-Canadian Centre
Marlborough Street
PO Box 4901
Nassau, Bahamas
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
c/x Xxxxxxxx & Company, Inc.
000 Xxxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, CPA
Chief Financial Officer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
3. This Amendment will be governed by and construed in accordance with New
York law.
4. Except as specifically modified by this Amendment, all of the terms and
provisions of the Agreement are hereby reaffirmed and shall remain in full
force and effect.
5. This Amendment may be signed in any number of counterparts, each of which
shall be an original.
6. Upon execution and delivery of this Amendment by the parties hereto, this
Amendment shall become effective as of the date first above written.
7. All references in the Agreement to "this Agreement" shall be deemed to be
references to the Agreement as amended hereby.
8. All capitalized terms in the Amendment shall have the meaning ascribed to
them in the Agreement.
9. This Amendment constitutes the entire agreement and understanding of the
parties with respect to its subject matter and supersedes all oral
communications and writings with respect thereto.
10. Each party represents to the other party that all representations contained
in the Agreement are true and accurate as of the date of this Amendment and
that such representations are deemed to be given or repeated by each party,
as the case may be, on the date of this Amendment.
IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized officers as of the date hereof.
ABN AMRO BANK N.V. XXXXXXXX & COMPANY, INC.
AS TRADING ADVISOR FOR PARTY B
By: /s/ XXXXX XXXXXXX
------------------------------------------------- By: /s/ XXXXXXX X. XXXXX
Name: Xxxxx Xxxxxxx -------------------------------------------------
Title: Assistant Vice President Name: Xxxxxxx X. Xxxxx
Title: CFO, Xxxxxxxx & Company, Inc.
By: /s/ XXXXX X. XXXXXXX
------------------------------------------------- XXXXXXXX STRATEGIC ALLOCATION FUND L.P. AS GENERAL
Name: Xxxxx X. Xxxxxxx PARTNER
Title: Assistant Vice President
By: /s/ XXXXXXX X. XXXXX
-------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: CFO, Xxxxxxxx & Company, Inc.
XXXXXXXX FINANCIAL FUTURES FUND, L.P.
AS TRADING ADVISOR
By: /s/ XXXXXXX X. XXXXX
-------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: CFO, Xxxxxxxx & Company, Inc.
INSTITUTIONAL FUTURES FUND, L.P.
AS TRADING MANAGER
By: /s/ XXXXXXX X. XXXXX
-------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: CFO, Xxxxxxxx & Company, Inc.
XXXXXXXX FUND TRUST
AS MANAGING OPERATOR
By: /s/ XXXXXXX X. XXXXX
-------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: CFO, Xxxxxxxx & Company, Inc.
XXXXXXXX GLOBAL ASSETS FUND LIMITED AS TRADING
ADVISOR
By: /s/ XXXXXXX X. XXXXX
-------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: CFO, Xxxxxxxx & Company, Inc.
XXXXXXXX ALTERNATIVE ASSET TRUST AS MANAGING OWNER
By: /s/ XXXXXXX X. XXXXX
-------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: CFO, Xxxxxxxx & Company, Inc.
AMENDED AND RESTATED EXHIBIT A DATED AS OF APRIL 25, 2002
LIST OF COUNTERPARTIES
LIST OF PARTIES
NET ASSET VALUE
OFFICE LOCATION OR
COUNTERPARTY NAME TYPE OF ENTITY (STATE OF JURISDICTION) NET MANAGED ASSETS
----------------- -------------- ----------------------- -------------------
Xxxxxxxx Strategic Allocation Fund
L.P................................ Hedge Fund Delaware Partnership Capital
Xxxxxxxx Financial Futures Fund
L.P................................ Hedge Fund Maryland Partnership Capital
Institutional Futures Fund, L.P...... Hedge Fund Maryland Partnership Capital
Xxxxxxxx Fund Trust.................. Hedge Fund Delaware Net Asset Value
Xxxxxxxx Global Assets Fund
Limited............................ Hedge Fund The Commonwealth of the Net Asset Value
Bahamas
Xxxxxxxx Alternative Asset Trust..... Hedge Fund Delaware Net Asset Value
