EXHIBIT 99.1
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ISDA(R)
International Swaps and Derivatives Association, Inc.
2002 MASTER AGREEMENT
dated as of May 28, 2004
Deutsche Bank AG and Chesapeake Exploration Limited Partnership
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this 2002 Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties or otherwise
effective for the purpose of confirming or evidencing those Transactions. This
2002 Master Agreement and the Schedule are together referred to as this "Master
Agreement".
Accordingly, the parties agree as follows:--
1. INTERPRETATION
(a) DEFINITIONS. The terms defined in Section 14 and elsewhere in this Master
Agreement 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, 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 condition specified in this Agreement to be a condition
precedent for the purpose of this Section 2(a)(iii).
(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 Settlement 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 OF PAYMENTS. 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 which 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
and payment obligation will be determined in respect of all amounts payable on
the same date in the same currency in respect of those Transactions, regardless
of whether such amounts are payable in respect of the same Transaction. The
election may be made in the Schedule or any Confirmation by specifying that
"Multiple Transaction Payment Netting" applies to the Transactions identified as
being subject to the election (in which case clause (ii) above will not apply to
such Transactions). If Multiple Transaction Payment Netting is applicable to
Transactions, it will apply to those Transactions with effect from the starting
date specified in the Schedule or such Confirmation, or, if a starting date is
not specified in the Schedule or such Confirmation, the starting date otherwise
agreed by the parties in writing. 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, after a
Transaction is entered into (regardless of whether
such action is taken or brought with respect to a
party to this Agreement) or (II) a Change in Tax Law.
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(ii) LIABILITY. If:--
(1) X is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, to
make any deduction or withholding in respect of which X would
not be required to pay an additional amount to Y under Section
2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly
against X,
then, except to the extent Y has satisfied or then satisfies the liability
resulting from such Tax, Y will promptly pay to X the amount of such liability
(including any related liability for interest, but including any related
liability for penalties only if Y has failed to comply with or perform any
agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).
3. REPRESENTATIONS
Each party makes the representations contained in Sections 3(a), 3(b), 3(c),
3(d), 3(e) and 3(f) and, if specified in the Schedule as applying, 3(g) 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). If any "Additional Representation" is specified in the Schedule or
any Confirmation as applying, the party or parties specified for such Additional
Representation will make and, if applicable, be deemed to repeat such Additional
Representation at the time or times specified for such Additional
Representation.
(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)).
(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, any of its Credit Support Providers or any of its
applicable Specified Entities 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.
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(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.
(g) NO AGENCY. It is entering into this Agreement, including each Transaction,
as principal and not as agent of any person or entity.
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 clause (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 where an Office through which
it is acting for the purpose of this Agreement is located ("Stamp Tax
Jurisdiction"), and will indemnify the other party against any Stamp Tax levied
or imposed upon the other party or in respect of the other party's execution or
performance of this Agreement by any such Stamp Tax Jurisdiction which is not
also a Stamp Tax Jurisdiction with respect to the other party.
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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 (subject to
Sections 5(c) and 6(e)(iv)) 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
9(h)(i)(2) or (4) required to be made by it if such failure is not remedied
on or before the first Local Business Day in the case of any such payment
or the first Local Delivery Day in the case of any such delivery after, in
each case, notice of such failure is given to the party;
(ii) BREACH OF AGREEMENT; REPUDIATION OF AGREEMENT.
(1) 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 9(h)(i)(2) or (4) 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 within 30 days after notice of such failure
is given to the party; or
(2) the party disaffirms, disclaims, repudiates or rejects, in whole
or in part, or challenges the validity of, this Master Agreement, any
Confirmation executed and delivered by that party or any Transaction
evidenced by such a Confirmation (or such action is taken by any
person or entity appointed or empowered to operate it or act on its
behalf);
(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, or any
security interest granted by such party or such Credit Support
Provider to the other party pursuant to any such Credit Support
Document, to be in full force and effect for the purpose of this
Agreement (in each 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 (or such action is taken by
any person or entity appointed or empowered to operate it or act on
its behalf);
(iv) MISREPRESENTATION. A representation (other than a representation under
Section 3(e) or 3(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 (other than by failing to make a delivery) under a
Specified Transaction or any credit support arrangement relating to a
Specified Transaction and, after giving effect to any applicable
notice requirement or grace period, such default results in 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 due on the last
payment or exchange date of, or any payment on early termination of,
a Specified Transaction (or, if there is no applicable notice
requirement or grace period, such default continues for at least one
Local Business Day);
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(3) defaults in making any delivery due under (including any delivery
due on the last delivery or exchange date of) a Specified Transaction
or any credit support arrangement relating to a Specified Transaction
and, after giving effect to any applicable notice requirement or
grace period, such default results in a liquidation of, an
acceleration of obligations under, or an early termination of, all
transactions outstanding under the documentation applicable to that
Specified Transaction; or
(4) disaffirms, disclaims, repudiates or rejects, in whole or in
part, or challenges the validity of, a Specified Transaction or any
credit support arrangement relating to a Specified Transaction that
is, in either case, confirmed or evidenced by a document or other
confirming evidence executed and delivered by that party, Credit
Support Provider or Specified Entity (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)
where the aggregate principal amount of such agreements or
instruments, either alone or together with the amount, if any,
referred to in clause (2) below, is not less than the applicable
Threshold Amount (as specified in the Schedule) which has resulted in
such Specified Indebtedness becoming, or becoming capable at such
time of being declared, due and payable under such agreements or
instruments before it would otherwise have been due and payable; or
(2) a default by such party, such Credit Support Provider or such
Specified Entity (individually or collectively) in making one or more
payments under such agreements or instruments on the due date for
payment (after giving effect to any applicable notice requirement or
grace period) in an aggregate amount, either alone or together with
the amount, if any, referred to in clause (1) above, of not less than
the applicable Threshold Amount;
(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)(A) institutes or has instituted against it, by a regulator,
supervisor or any similar official with primary insolvency,
rehabilitative or regulatory jurisdiction over it in the jurisdiction
of its incorporation or organization or the jurisdiction of its head
or home office, 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 by it or such regulator,
supervisor or similar official, or (B) 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 such proceeding or petition is
instituted or presented by a person or entity not described in clause
(A) above and either (I) 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 (II) is not dismissed,
discharged, stayed or restrained in each case within 15 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 15 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) above (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
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(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, or reorganizes,
reincorporates or reconstitutes into or as, another entity and, at the time
of such consolidation, amalgamation, merger, transfer, reorganization,
reincorporation or reconstitution:--
(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; 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 (subject to Section 5(c))
an Illegality if the event is specified in clause (i) below, a Force Majeure
Event if the event is specified in clause (ii) below, a Tax Event if the event
is specified in clause (iii) below, a Tax Event Upon Merger if the event is
specified in clause (iv) below, and, if specified to be applicable, a Credit
Event Upon Merger if the event is specified pursuant to clause (v) below or an
Additional Termination Event if the event is specified pursuant to clause (vi)
below:--
(i) ILLEGALITY. After giving effect to any applicable provision,
disruption fallback or remedy specified in, or pursuant to, the relevant
Confirmation or elsewhere in this Agreement, due to an event or
circumstance (other than any action taken by a party or, if applicable, any
Credit Support Provider of such party) occurring after a Transaction is
entered into, it becomes unlawful under any applicable law (including
without limitation the laws of any country in which payment, delivery or
compliance is required by either party or any Credit Support Provider, as
the case may be), on any day, or it would be unlawful if the relevant
payment, delivery or compliance were required on that day (in each case,
other than as a result of a breach by the party of Section 4(b)):--
(1) for the Office through which such party (which will be the
Affected Party) makes and receives payments or deliveries with
respect to such Transaction to perform any absolute or contingent
obligation to make a payment or delivery in respect of such
Transaction, 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) for such party or any Credit Support Provider of such party
(which will be the Affected Party) to perform any absolute or
contingent obligation to make a payment or delivery which such party
or Credit Support Provider has under any Credit Support Document
relating to such Transaction, to receive a payment or delivery under
such Credit Support Document or to comply with any other material
provision of such Credit Support Document;
(ii) FORCE MAJEURE EVENT. After giving effect to any applicable provision,
disruption fallback or remedy specified in, or pursuant to, the relevant
Confirmation or elsewhere in this Agreement, by reason of force majeure or
act of state occurring after a Transaction is entered into, on any day:--
(1) the Office through which such party (which will be the Affected
Party) makes and receives payments or deliveries with respect to such
Transaction is prevented from performing any absolute or contingent
obligation to make a payment or delivery in respect of such
Transaction, from receiving a payment or delivery in respect of such
Transaction or from complying with any other material provision of
this Agreement relating to such Transaction (or would be so prevented
if such payment, delivery or compliance were required on that day),
or it becomes impossible or impracticable for such Office so to
perform, receive or comply (or it would be impossible or
impracticable for such Office so to perform, receive or comply if
such payment, delivery or compliance were required on that day); or
(2) such party or any Credit Support Provider of such party (which
will be the Affected Party) is prevented from performing any absolute
or contingent obligation to make a payment or delivery which such
party or Credit Support Provider has under any Credit Support
Document relating to such Transaction, from receiving a payment or
delivery under such Credit Support Document or from complying with
any other material provision of such Credit Support Document (or
would be so prevented if such payment, delivery or compliance were
required on that day), or it becomes impossible or impracticable for
such party or Credit Support Provider so to perform, receive or
comply (or it would be impossible or impracticable for such party or
Credit Support Provider so to perform, receive or comply if such
payment, delivery or compliance were required on that day),
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so long as the force majeure or act of state is beyond the control of such
Office, such party or such Credit Support Provider, as appropriate, and such
Office, party or Credit Support Provider could not, after using all reasonable
efforts (which will not require such party or Credit Support Provider to incur a
loss, other than immaterial, incidental expenses), overcome such prevention,
impossibility or impracticability;
(iii) TAX EVENT. Due to (1) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, after a Transaction is
entered into (regardless of whether such action is taken or brought with
respect to a party to this Agreement) or (2) 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 Settlement Date
(A) 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 9(h)) or (B) 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 9(h)) 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));
(iv) TAX EVENT UPON MERGER. The party (the "Burdened Party") on the next
succeeding Scheduled Settlement 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 9(h)) or (2)
receive a payment from which an amount has been deducted or withheld for or
on account of any 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 (or any substantial part of the assets
comprising the business conducted by it as of the date of this Master
Agreement) to, or reorganizing, reincorporating or reconstituting into or
as, another entity (which will be the Affected Party) where such action
does not constitute a Merger Without Assumption;
(v) CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is specified
in the Schedule as applying to the party, a Designated Event (as defined
below) occurs with respect to such party, any Credit Support Provider of
such party or any applicable Specified Entity of such party (in each case,
"X") and such Designated Event does not constitute a Merger Without
Assumption, and the creditworthiness of X or, if applicable, the successor,
surviving or transferee entity of X, after taking into account any
applicable Credit Support Document, is materially weaker immediately after
the occurrence of such Designated Event than that of X immediately prior to
the occurrence of such Designated Event (and, in any such event, such party
or its successor, surviving or transferee entity, as appropriate, will be
the Affected Party). A "Designated Event" with respect to X means that:--
(1) X consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets (or any substantial
part of the assets comprising the business conducted by X as of the
date of this Master Agreement) to, or reorganizes, reincorporates or
reconstitutes into or as, another entity;
(2) any person, related group of persons or entity acquires directly
or indirectly the beneficial ownership of (A) equity securities
having the power to elect a majority of the board of directors (or
its equivalent) of X or (B) any other ownership interest enabling it
to exercise control of X; or
(3) X effects any substantial change in its capital structure by
means of the issuance, incurrence or guarantee of debt or the
issuance of (A) preferred stock or other securities convertible into
or exchangeable for debt or preferred stock or (B) in the case of
entities other than corporations, any other form of ownership
interest; or
(vi) 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 will be as specified for such Additional Termination
Event in the Schedule or such Confirmation).
8
(c) HIERARCHY OF EVENTS.
(i) An event or circumstance that constitutes or gives rise to an
Illegality or a Force Majeure Event will not, for so long as that is the
case, also constitute or give rise to an Event of Default under Section
5(a)(i), 5(a)(ii)(l) or 5(a)(iii)(1) insofar as such event or circumstance
relates to the failure to make any payment or delivery or a failure to
comply with any other material provision of this Agreement or a Credit
Support Document, as the case may be.
(ii) Except in circumstances contemplated by clause (i) above, if an event
or circumstance which would otherwise constitute or give rise to an
Illegality or a Force Majeure Event also constitutes an Event of Default or
any other Termination Event, it will be treated as an Event of Default or
such other Termination Event, as the case may be, and will not constitute
or give rise to an Illegality or a Force Majeure Event.
(iii) If an event or circumstance which would otherwise constitute or give
rise to a Force Majeure Event also constitutes an Illegality, it will be
treated as an Illegality, except as described in clause (ii) above, and not
a Force Majeure Event.
(d) DEFERRAL OF PAYMENTS AND DELIVERIES DURING WAITING PERIOD. If an Illegality
or a Force Majeure Event has occurred and is continuing with respect to a
Transaction, each payment or delivery which would otherwise be required to be
made under that Transaction will be deferred to, and will not be due until:--
(i) the first Local Business Day or, in the case of a delivery, the first
Local Delivery Day (or the first day that would have been a Local Business
Day or Local Delivery Day, as appropriate, but for the occurrence of the
event or circumstance constituting or giving rise to that Illegality or
Force Majeure Event) following the end of any applicable Waiting Period in
respect of that Illegality or Force Majeure Event, as the case may be; or
(ii) if earlier, the date on which the event or circumstance constituting
or giving rise to that Illegality or Force Majeure Event ceases to exist
or, if such date is not a Local Business Day or, in the case of a delivery,
a Local Delivery Day, the first following day that is a Local Business Day
or Local Delivery Day, as appropriate.
(e) INABILITY OF HEAD OR HOME OFFICE TO PERFORM OBLIGATIONS OF BRANCH. If (i)
an Illegality or a Force Majeure Event occurs under Section 5(b)(i)(1) or
5(b)(ii)(1) and the relevant Office is not the Affected Party's head or home
office, (ii) Section 10(a) applies, (iii) the other party seeks performance of
the relevant obligation or compliance with the relevant provision by the
Affected Party's head or home office and (iv) the Affected Party's head or home
office fails so to perform or comply due to the occurrence of an event or
circumstance which would, if that head or home office were the Office through
which the Affected Party makes and receives payments and deliveries with respect
to the relevant Transaction, constitute or give rise to an Illegality or a Force
Majeure Event, and such failure would otherwise constitute an Event of Default
under Section 5(a)(i) or 5(a)(iii)(l) with respect to such party then, for so
long as the relevant event or circumstance continues to exist with respect to
both the Office referred to in Section 5(b)(i)(1) or 5(b)(ii)(l), as the case
may be, and the Affected Party's head or home office, such failure will not
constitute an Event of Default under Section 5(a)(i) or 5(a)(iii)(1).
9
6. EARLY TERMINATION; CLOSE-OUT NETTING
(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 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 other than a Force Majeure 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 the other party such other
information about that Termination Event as the other party may reasonably
require. If a Force Majeure Event occurs, each party will, promptly upon
becoming aware of it, use all reasonable efforts to notify the other party,
specifying the nature of that Force Majeure Event, and will also give the
other party such other information about that Force Majeure Event as the
other party may reasonably require.
(ii) TRANSFER TO AVOID TERMINATION EVENT. If 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, other than 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 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 of such occurrence is given under
Section 6(b)(i) to avoid that Termination Event.
(iv) RIGHT TO TERMINATE.
(1) If:--
(A) 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
(B) 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,
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 are two Affected Parties, or the
Non-affected Party in the case of a Credit Event Upon Merger or an
Additional Termination Event if there is only one Affected Party may,
if the relevant Termination Event is then continuing, by not more
than 20 days notice to the other party, designate a day not earlier
than the day such notice is effective as an Early Termination Date in
respect of all Affected Transactions.
10
(2) If at any time an Illegality or a Force Majeure Event has
occurred and is then continuing and any applicable Waiting Period has
expired:--
(A) Subject to clause (B) below, either party may, by not more
than 20 days notice to the other party, designate (I) a day
not earlier than the day on which such notice becomes
effective as an Early Termination Date in respect of all
Affected Transactions or (II) by specifying in that notice the
Affected Transactions in respect of which it is designating
the relevant day as an Early Termination Date, a day not
earlier than two Local Business Days following the day on
which such notice becomes effective as an Early Termination
Date in respect of less than all Affected Transactions. Upon
receipt of a notice designating an Early Termination Date in
respect of less than all Affected Transactions, the other
party may, by notice to the designating party, if such notice
is effective on or before the day so designated, designate
that same day as an Early Termination Date in respect of any
or all other Affected Transactions.
(B) An Affected Party (if the Illegality or Force Majeure
Event relates to performance by such party or any Credit
Support Provider of such party of an obligation to make any
payment or delivery under, or to compliance with any other
material provision of, the relevant Credit Support Document)
will only have the right to designate an Early Termination
Date under Section 6(b)(iv)(2)(A) as a result of an Illegality
under Section 5(b)(i)(2) or a Force Majeure Event under
Section 5(b)(ii)(2) following the prior designation by the
other party of an Early Termination Date, pursuant to Section
6(b)(iv)(2)(A), in respect of less than all Affected
Transactions.
(c) EFFECT OF DESIGNATION.
(i) If notice designating an Early Termination Date is given under Section
6(a) or 6(b), the Early Termination Date will occur on the date so
designated, whether or not the relevant Event of Default or Termination
Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early Termination
Date, no further payments or deliveries under Section 2(a)(i) or 9(h)(i) in
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 will be determined
pursuant to Sections 6(e) and 9(h)(ii).
(d) CALCULATIONS; PAYMENT DATE.
(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 any quotations, market data or information
from internal sources used in making such calculations), (2) specifying
(except where there are two Affected Parties) any Early Termination Amount
payable and (3) 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 or market data obtained in determining a
Close-out Amount, the records of the party obtaining such quotation or
market data will be conclusive evidence of the existence and accuracy of
such quotation or market data.
(ii) PAYMENT DATE. An Early Termination Amount due in respect of any Early
Termination Date will, together with any amount of interest payable
pursuant to Section 9(h)(ii)(2), be payable (1) on the day on which 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 (2) on
the day which is two Local Business Days after the day on which notice of
the amount payable is effective (or, if there are two Affected Parties,
after the day on which the statement provided pursuant to clause (i) above
by the second party to provide such a statement is effective) in the case
of an Early Termination Date which is designated as a result of a
Termination Event.
11
(e) PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs, the
amount, if any, payable in respect of that Early Termination Date (the "Early
Termination Amount") will be determined pursuant to this Section 6(e) and will
be subject to Section 6(f).
(i) EVENTS OF DEFAULT. If the Early Termination Date results from an Event
of Default, the Early Termination Amount will be an amount equal to (1) the
sum of (A) the Termination Currency Equivalent of the Close-out Amount or
Close-out Amounts (whether positive or negative) determined by the
Non-defaulting Party for each Terminated Transaction or group of Terminated
Transactions, as the case may be, and (B) the Termination Currency
Equivalent of the Unpaid Amounts owing to the Non-defaulting Party less (2)
the Termination Currency Equivalent of the Unpaid Amounts owing to the
Defaulting Party. If the Early Termination 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
the Early Termination Amount to the Defaulting Party.
(ii) TERMINATION EVENTS. If the Early Termination Date results from a
Termination Event:--
(1) ONE AFFECTED PARTY. Subject to clause (3) below, if there is one
Affected Party, the Early Termination Amount will be determined in
accordance with Section 6(e)(i), except that references to the
Defaulting Party and to the Non-defaulting Party will be deemed to be
references to the Affected Party and to the Non-affected Party,
respectively.
(2) TWO AFFECTED PARTIES. Subject to clause (3) below, if there are
two Affected Parties, each party will determine an amount equal to
the Termination Currency Equivalent of the sum of the Close-out
Amount or Close-out Amounts (whether positive or negative) for each
Terminated Transaction or group of Terminated Transactions, as the
case may be, and the Early Termination Amount will be an amount equal
to (A) the sum of (I) one-half of the difference between the higher
amount so determined (by party 'T') and the lower amount so
determined (by party "Y") and (II) the Termination Currency
Equivalent of the Unpaid Amounts owing to X less (B) the Termination
Currency Equivalent of the Unpaid Amounts owing to Y. If the Early
Termination Amount is a positive number, Y will pay it to X; if it is
a negative number, X will pay the absolute value of the Early
Termination Amount to Y.
(3) MID-MARKET EVENTS. If that Termination Event is an Illegality or
a Force Majeure Event, then the Early Termination Amount will be
determined in accordance with clause (1) or (2) above, as
appropriate, except that, for the purpose of determining a Close-out
Amount or Close-out Amounts, the Determining Party will:--
(A) if obtaining quotations from one or more third parties (or
from any of the Determining Party's Affiliates), ask each
third party or Affiliate (I) not to take account of the
current creditworthiness of the Determining Party or any
existing Credit Support Document and (II) to provide
mid-market quotations; and
(B) in any other case, use mid-market values without regard to
the creditworthiness of the Determining Party.
(iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early
Termination Date occurs because Automatic Early Termination applies in
respect of a party, the Early Termination Amount will be subject to such
adjustments as are appropriate and permitted by applicable 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) ADJUSTMENT FOR ILLEGALITY OR FORCE MAJEURE EVENT. The failure by a
party or any Credit Support Provider of such party to pay, when due, any
Early Termination Amount will not constitute an Event of Default under
Section 5(a)(i) or 5(a)(iii)(1) if such failure is due to the occurrence of
an event or circumstance which would, if it occurred with respect to
payment, delivery or compliance related to a Transaction, constitute or
give rise to an Illegality or a Force Majeure Event. Such amount will (1)
accrue interest and otherwise be treated as an Unpaid Amount owing to the
other party if subsequently an Early Termination Date results from an Event
of Default, a Credit Event Upon Merger or an Additional Termination Event
in respect of which all outstanding Transactions are Affected Transactions
and (2) otherwise accrue interest in accordance with Section 9(h)(ii)(2).
(v) PRE-ESTIMATE. The parties agree that 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 the termination of the Terminated Transactions.
12
(f) SET-OFF. Any Early Termination Amount payable to one party (the "Payee")
BY the other party (the "Payer"), in circumstances where there is a Defaulting
Party or where there is one Affected Party in the case where either a Credit
Event Upon Merger has occurred or any other Termination Event in respect of
which all outstanding Transactions are Affected Transactions has occurred, will,
at the option of the Non-defaulting Party or the Non-affected Party, as the case
may be ("X") (and without prior notice to the Defaulting Party or the Affected
Party, as the case may be), be reduced by its set-off against any other amounts
("Other Amounts") payable by the Payee to the Payer (whether or not arising
under this Agreement, matured or contingent and irrespective of the currency,
place of payment or place of booking of the obligation). To the extent that any
Other Amounts are so set off, those Other Amounts will be discharged promptly
and in all respects. X will give notice to the other party of any set-off
effected under this Section 6(f).
For this purpose, either the Early Termination Amount or the Other Amounts (or
the relevant portion of such amounts) may be converted by X into the currency in
which the other is denominated at the rate of exchange at which such party would
be able, in good faith and using commercially reasonable procedures, to purchase
the relevant amount of such currency.
If an obligation is unascertained, X may in good faith estimate that obligation
and set off in respect of the estimate, subject to the relevant party accounting
to the other when the obligation is ascertained.
Nothing in this Section 6(f) will be effective to create a charge or other
security interest. This Section 6(f) will be without prejudice and in addition
to any right of set-off, offset, combination of accounts, lien, right of
retention or withholding or similar right or requirement to which any party is
at any time otherwise entitled or subject (whether by operation of law, contract
or otherwise).
7. TRANSFER
Subject to Section 6(b)(ii) and to the extent permitted by applicable law,
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
Early Termination Amount payable to it by a Defaulting Party, together with any
amounts payable on or with respect to that interest and any other rights
associated with that interest pursuant to Sections 8, 9(h) and 11.
Any purported transfer that is not in compliance with this Section 7 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 good faith and using
commercially reasonable procedures 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 clause (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 purpose of such
judgment or order and the rate of exchange at which such party is able, acting
in good faith and using commercially reasonable procedures 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.
(c) SEPARATE INDEMNITIES. To the extent permitted by applicable law, the
indemnities in this Section 8 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. Each of the
parties acknowledges that in entering into this Agreement it has not relied on
any oral or written representation, warranty or other assurance (except as
provided for or referred to in this Agreement) and waives all rights and
remedies which might otherwise be available to it in respect thereof, except
that nothing in this Agreement will limit or exclude any liability of a party
for fraud.
(b) AMENDMENTS. An amendment, modification or waiver in respect of this
Agreement will only be effective if 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 by an exchange of electronic messages on an electronic
messaging system.
(c) SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
14
(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 and by electronic messaging system), 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 will 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, by an exchange of
electronic messages on an electronic messaging system or by an exchange of
e-mails, 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,
electronic message or e-mail 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.
(h) INTEREST AND COMPENSATION.
(i) PRIOR TO EARLY TERMINATION. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant
Transaction:--
(1) INTEREST ON DEFAULTED PAYMENTS. If a party defaults in the
performance of any payment obligation, it will, to the extent
permitted by applicable law and subject to Section 6(c), pay interest
(before as well as after judgment) on the overdue amount to the other
party on demand in the same currency as the overdue amount, for the
period from (and including) the original due date for payment to (but
excluding) the date of actual payment (and excluding any period in
respect of which interest or compensation in respect of the overdue
amount is due pursuant to clause (3)(B) or (C) below), at the Default
Rate.
(2) COMPENSATION FOR DEFAULTED DELIVERIES. If a party defaults in the
performance of any obligation required to be settled by delivery, it
will on demand (A) compensate the other party to the extent provided
for in the relevant Confirmation or elsewhere in this Agreement and
(B) unless otherwise provided in the relevant Confirmation or
elsewhere in this Agreement, to the extent permitted by applicable
law and subject to Section 6(c), pay to the other party interest
(before as well as after judgment) on an amount equal to the fair
market value of that which was required to be delivered in the same
currency as that amount, for the period from (and including) the
originally scheduled date for delivery to (but excluding) the date of
actual delivery (and excluding any period in respect of which
interest or compensation in respect of that amount is due pursuant to
clause (4) below), at the Default Rate. The fair market value of any
obligation referred to above will be determined as of the originally
scheduled date for delivery, in good faith and using commercially
reasonable procedures, by the party that was entitled to take
delivery.
(3) INTEREST ON DEFERRED PAYMENTS. If:--
(A) a party does not pay any amount that, but for Section
2(a)(iii), would have been payable, it will, to the extent
permitted by applicable law and subject to Section 6(c) and
clauses (B) and (C) below, pay interest (before as well as
after judgment) on that amount to the other party on demand
(after such amount becomes payable) in the same currency as
that amount, for the period from (and including) the date the
amount would, but for Section 2(a)(iii), have been payable to
(but excluding) the date the amount actually becomes payable,
at the Applicable Deferral Rate;
15
(B) a payment is deferred pursuant to Section 5(d), the party
which would otherwise have been required to make that payment
will, to the extent permitted by applicable law, subject to
Section 6(c) and for so long as no Event of Default or
Potential Event of Default with respect to that party has
occurred and is continuing, pay interest (before as well as
after judgment) on the amount of the deferred payment to the
other party on demand (after such amount becomes payable) in
the same currency as the deferred payment, for the period from
(and including) the date the amount would, but for Section
5(d), have been payable to (but excluding) the earlier of the
date the payment is no longer deferred pursuant to Section
5(d) and the date during the deferral period upon which an
Event of Default or Potential Event of Default with respect to
that party occurs, at the Applicable Deferral Rate; or
(C) a party fails to make any payment due to the occurrence of
an Illegality or a Force Majeure Event (after giving effect to
any deferral period contemplated by clause (B) above), it
will, to the extent permitted by applicable law, subject to
Section 6(c) and for so long as the event or circumstance
giving rise to that Illegality or Force Majeure Event
continues and no Event of Default or Potential Event of
Default with respect to that party has occurred and is
continuing, pay interest (before as well as after judgment) on
the overdue amount to the other party on demand in the same
currency as the overdue amount, for the period from (and
including) the date the party fails to make the payment due to
the occurrence of the relevant Illegality or Force Majeure
Event (or, if later, the date the payment is no longer
deferred pursuant to Section 5(d)) to (but excluding) the
earlier of the date the event or circumstance giving rise to
that Illegality or Force Majeure Event ceases to exist and the
date during the period upon which an Event of Default or
Potential Event of Default with respect to that party occurs
(and excluding any period in respect of which interest or
compensation in respect of the overdue amount is due pursuant
to clause (B) above), at the Applicable Deferral Rate.
(4) COMPENSATION FOR DEFERRED DELIVERIES. If:--
(A) a party does not perform any obligation that, but for
Section 2(a)(iii), would have been required to be settled by
delivery;
(B) a delivery is deferred pursuant to Section 5(d); or
(C) a party fails to make a delivery due to the occurrence of
an Illegality or a Force Majeure Event at a time when any
applicable Waiting Period has expired,
the party required (or that would otherwise have been required) to
make the delivery will, to the extent permitted by applicable law and
subject to Section 6(c), compensate and pay interest to the other
party on demand (after, in the case of clauses (A) and (B) above,
such delivery is required) if and to the extent provided for in the
relevant Confirmation or elsewhere in this Agreement.
(ii) EARLY TERMINATION. Upon the occurrence or effective designation of
an Early Termination Date in respect of a Transaction:--
(1) UNPAID AMOUNTS. For the purpose of determining an Unpaid
Amount in respect of the relevant Transaction, and to the
extent permitted by applicable law, interest will accrue on
the amount of any payment obligation or the amount equal to
the fair market value of any obligation required to be settled
by delivery included in such determination in the same
currency as that amount, for the period from (and including)
the date the relevant obligation was (or would have been but
for Section 2(a)(iii) or 5(d)) required to have been performed
to (but excluding) the relevant Early Termination Date, at the
Applicable Close-out Rate.
(2) INTEREST ON EARLY TERMINATION AMOUNTS. If an Early
Termination Amount is due in respect of such Early Termination
Date, that amount will, to the extent permitted by applicable
law, be paid together with interest (before as well as after
judgment) on that amount in the Termination Currency, for the
period from (and including) such Early Termination Date to
(but excluding) the date the amount is paid, at the Applicable
Close-out Rate.
(iii) INTEREST CALCULATION. Any interest pursuant to this Section 9(h) will
be calculated on the basis of daily compounding and the actual number of
days elapsed.
16
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 and agrees with the other party that, notwithstanding the place of
booking or its jurisdiction of incorporation or organization, its obligations
are the same in terms of recourse against it as if it had entered into the
Transaction through its head or home office, except that a party will not have
recourse to the head or home office of the other party in respect of any payment
or delivery deferred pursuant to Section 5(d) for so long as the payment or
delivery is so deferred. This representation and agreement will be deemed to be
repeated by each party on each date on which the parties enter into a
Transaction.
(b) If a party is specified as a Multibranch Party in the Schedule, such party
may, subject to clause (c) below, enter into a Transaction through, book a
Transaction in and make and receive payments and deliveries with respect to a
Transaction through any Office listed in respect of that party in the Schedule
(but not any other Office unless otherwise agreed by the parties in writing).
(c) The Office through which a party enters into a Transaction will be the
Office specified for that party in the relevant Confirmation or as otherwise
agreed by the parties in writing, and, if an Office for that party is not
specified in the Confirmation or otherwise agreed by the parties in writing, its
head or home office. Unless the parties otherwise agree in writing, the Office
through which a party enters into a Transaction will also be the Office in which
it books the Transaction and the Office through which it makes and receives
payments and deliveries with respect to the Transaction. Subject to Section
6(b)(ii), neither party may change the Office in which it books the Transaction
or the Office through which it makes and receives payments or deliveries with
respect to a Transaction without the prior written consent of the other party.
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,
execution 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 described below (except that a notice or
other communication under Section 5 or 6 may not be given by electronic
messaging system or e-mail) to the address or number or in accordance with the
electronic messaging system or e-mail details provided (see the Schedule) and
will be deemed effective as indicated:--
(i) if in writing and delivered in person or by courier, on the date it is
delivered;
(ii) if sent by telex, on the date the recipient's answerback is received;
(iii) if sent by facsimile transmission, on the date it 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 it is delivered or its
delivery is attempted;
(v) if sent by electronic messaging system, on the date it is received; or
(vi) if sent by e-mail, on the date it is delivered,
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 will be deemed given and
effective on the first following day that is a Local Business Day.
(b) CHANGE OF DETAILS. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system or e-mail
details at which notices or other communications are to be given to it.
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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
any dispute arising out of or in connection with this Agreement ("Proceedings"),
each party irrevocably:--
(i) submits:--
(1) if this Agreement is expressed to be governed by English law, to
(A) the non-exclusive jurisdiction of the English courts if the
Proceedings do not involve a Convention Court and (B) the exclusive
jurisdiction of the English courts if the Proceedings do involve a
Convention Court; or
(2) if this Agreement is expressed to be governed by the laws of the
State of New York, 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;
(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; and
(iii) agrees, to the extent permitted by applicable law, that the bringing
of Proceedings in any one or more jurisdictions will not 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 l2(a)(i), l2(a)(iii) or 12(a)(iv).
Nothing in this Agreement will affect the right of either party to serve process
in any other manner permitted by applicable law.
(d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the 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 or order for specific performance or
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
14. DEFINITIONS
As used in this Agreement:--
"ADDITIONAL REPRESENTATION" has the meaning specified in Section 3.
"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, Force Majeure Event, Tax Event or Tax Event Upon
Merger, all Transactions affected by the occurrence of such Termination Event
(which, in the case of an Illegality under Section 5(b)(i)(2) or a Force Majeure
Event under Section 5(b)(ii)(2), means all Transactions unless the relevant
Credit Support Document references only certain Transactions, in which case
those Transactions and, if the relevant Credit Support Document constitutes a
Confirmation for a Transaction, that Transaction) and (b) with respect to any
other Termination Event, all Transactions.
18
"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.
"AGREEMENT" has the meaning specified in Section 1(c).
"APPLICABLE CLOSE-OUT RATE" means:--
(a) in respect of the determination of an Unpaid Amount:--
(i) 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;
(ii) in respect of obligations payable or deliverable (or which would have
been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
Rate;
(iii) in respect of obligations deferred pursuant to Section 5(d), if there
is no Defaulting Party and for so long as the deferral period continues,
the Applicable Deferral Rate; and
(iv) in all other cases following the occurrence of a Termination Event
(except where interest accrues pursuant to clause (iii) above), the
Applicable Deferral Rate; and
(b) in respect of an Early Termination Amount:--
(i) for the period from (and including) the relevant Early Termination
Date to (but excluding) the date (determined in accordance with Section
6(d)(ii)) on which that amount is payable:--
(1) if the Early Termination Amount is payable by a Defaulting Party,
the Default Rate;
(2) if the Early Termination Amount is payable by a Non-defaulting
Party, the Non-default Rate; and
(3) in all other cases, the Applicable Deferral Rate; and
(ii) for the period from (and including) the date (determined in accordance
with Section 6(d)(ii)) on which that amount is payable to (but excluding)
the date of actual payment:--
(1) if a party fails to pay the Early Termination Amount due to the
occurrence of an event or circumstance which would, if it occurred
with respect to a payment or delivery under a Transaction, constitute
or give rise to an Illegality or a Force Majeure Event, and for so
long as the Early Termination Amount remains unpaid due to the
continuing existence of such event or circumstance, the Applicable
Deferral Rate;
(2) if the Early Termination Amount is payable by a Defaulting Party
(but excluding any period in respect of which clause (I) above
applies), the Default Rate;
(3) if the Early Termination Amount is payable by a Non-defaulting
Party (but excluding any period in respect of which clause (1) above
applies), the Non-default Rate; and
(4) in all other cases, the Termination Rate.
"APPLICABLE DEFERRAL RATE" means:--
(a) for the purpose of Section 9(h)(i)(3)(A), the rate certified by the relevant
payer to be a rate offered to the payer by a major bank in a relevant interbank
market for overnight deposits in the applicable currency, such bank to be
selected in good faith by the payer for the purpose of obtaining a
representative rate that will reasonably reflect conditions prevailing at the
time in that relevant market;
(b) for purposes of Section 9(h)(i)(3)(B) and clause (a)(iii) of the definition
of Applicable Close-out Rate, the rate certified by the relevant payer to be a
rate offered to prime banks by a major bank in a relevant interbank market for
overnight deposits in the applicable currency, such bank to be selected in good
faith by the payer after consultation with the other party, if practicable, for
the purpose of obtaining a representative rate that will reasonably reflect
conditions prevailing at the time in that relevant market; and
19
(c) for purposes of Section 9(h)(i)(3)(C) and clauses (a)(iv), (b)(i)(3) and
(b)(ii)(1) of the definition of Applicable Close-out Rate, a rate equal to the
arithmetic mean of the rate determined pursuant to clause (a) above and 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.
"AUTOMATIC EARLY TERMINATION" has the meaning specified in Section 6(a).
"BURDENED PARTY" has the meaning specified in Section 5(b)(iv).
"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 after the parties enter into the relevant
Transaction.
"CLOSE-OUT AMOUNT" means, with respect to each Terminated Transaction or each
group of Terminated Transactions and a Determining Party, the amount of the
losses or costs of the Determining Party that are or would be incurred under
then prevailing circumstances (expressed as a positive number) or gains of the
Determining Party that are or would be realized under then prevailing
circumstances (expressed as a negative number) in replacing, or in providing for
the Determining Party the economic equivalent of, (a) the material terms of that
Terminated Transaction or group of Terminated Transactions, including the
payments and deliveries by the parties under Section 2(a)(i) in respect of that
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 (assuming satisfaction of the conditions precedent in Section
2(a)(iii)) and (b) the option rights of the parties in respect of that
Terminated Transaction or group of Terminated Transactions.
Any Close-out Amount will be determined by the Determining Party (or its agent),
which will act in good faith and use commercially reasonable procedures in order
to produce a commercially reasonable result. The Determining Party may determine
a Close-out Amount for any group of Terminated Transactions or any individual
Terminated Transaction but, in the aggregate, for not less than all Terminated
Transactions. Each Close-out Amount will be determined as of the Early
Termination Date or, if that would not be commercially reasonable, as of the
date or dates following the Early Termination Date as would be commercially
reasonable.
Unpaid Amounts in respect of a Terminated Transaction or group of Terminated
Transactions and legal fees and out-of-pocket expenses referred to in Section 11
are to be excluded in all determinations of Close-out Amounts.
In determining a Close-out Amount, the Determining Party may consider any
relevant information, including, without limitation, one or more of the
following types of information:--
(i) quotations (either firm or indicative) for replacement transactions
supplied by one or more third parties that may take into account the
creditworthiness of the Determining Party at the time the quotation is
provided and the terms of any relevant documentation, including credit
support documentation, between the Determining Party and the third party
providing the quotation;
(ii) information consisting of relevant market data in the relevant market
supplied by one or more third parties including, without limitation,
relevant rates, prices, yields, yield curves, volatilities, spreads,
correlations or other relevant market data in the relevant market; or
(iii) information of the types described in clause (i) or (ii) above from
internal sources (including any of the Determining Party's Affiliates) if
that information is of the same type used by the Determining Party in the
regular course of its business for the valuation of similar transactions.
The Determining Party will consider, taking into account the standards and
procedures described in this definition, quotations pursuant to clause (i) above
or relevant market data pursuant to clause (ii) above unless the Determining
Party reasonably believes in good faith that such quotations or relevant market
data are not readily available or would produce a result that would not satisfy
those standards. When considering information described in clause (i), (ii) or
(iii) above, the Determining Party may include costs of funding, to the extent
costs of funding are not and would not be a component of the other information
being utilized. Third parties supplying quotations pursuant to clause (i) above
or market data pursuant to clause (ii) above may include, without limitation,
dealers in the relevant markets, end-users of the relevant product, information
vendors, brokers and other sources of market information.
Without duplication of amounts calculated based on information described in
clause (i), (ii) or (iii) above, or other relevant information, and when it is
commercially reasonable to do so, the Determining Party may in addition consider
in calculating a Close-out Amount any loss or cost incurred in connection with
its terminating, liquidating or re-establishing any hedge related to a
Terminated Transaction or group of Terminated Transactions (or any gain
resulting from any of them).
20
Commercially reasonable procedures used in determining a Close-out Amount may
include the following:--
(1) application to relevant market data from third parties pursuant
to clause (ii) above or information from internal sources pursuant to
clause (iii) above of pricing or other valuation models that are, at
the time of the determination of the Close-out Amount, used by the
Determining Party in the regular course of its business in pricing or
valuing transactions between the Determining Party and unrelated
third parties that are similar to the Terminated Transaction or group
of Terminated Transactions; and
(2) application of different valuation methods to Terminated
Transactions or groups of Terminated Transactions depending on the
type, complexity, size or number of the Terminated Transactions or
group of Terminated Transactions.
"CONFIRMATION" has the meaning specified in the preamble.
"CONSENT" includes a consent, approval, action, authorization, exemption,
notice, filing, registration or exchange control consent.
"CONTRACTUAL CURRENCY" has the meaning specified in Section 8(a).
"CONVENTION COURT" means any court which is bound to apply to the Proceedings
either Article 17 of the 0000 Xxxxxxxx Convention on Jurisdiction and the
Enforcement of Judgments in Civil and Commercial Matters or Article 17 of the
1988 Lugano Convention on Jurisdiction and the Enforcement of Judgments in Civil
and Commercial Matters.
"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.
"CROSS-DEFAULT" means the event specified in Section 5(a)(vi).
"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 1% per annum.
"DEFAULTING PARTY" has the meaning specified in Section 6(a).
"DESIGNATED EVENT" has the meaning specified in Section 5(b)(v).
"DETERMINING PARTY" means the party determining a Close-out Amount.
"EARLY TERMINATION AMOUNT" has the meaning specified in Section 6(e).
"EARLY TERMINATION DATE" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"ELECTRONIC MESSAGES" does not include e-mails but does include documents
expressed in markup languages, and "ELECTRONIC MESSAGING SYSTEM" will be
construed accordingly.
"ENGLISH LAW" means the law of England and Wales, and "ENGLISH" will be
construed accordingly.
"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.
"FORCE MAJEURE EVENT" has the meaning specified in Section 5(b).
"GENERAL BUSINESS DAY" means a day on which commercial banks are open for
general business (including dealings in foreign exchange and foreign currency
deposits).
"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 had a permanent establishment or fixed
place of business in such jurisdiction, but excluding a connection arising
solely from such recipient or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this
Agreement or a Credit Support Document).
21
"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 "UNLAWFUL" will be construed accordingly.
"LOCAL BUSINESS DAY" means (a) in relation to any obligation under Section
2(a)(i), a General Business Day in the place or places specified in the relevant
Confirmation and a day on which a relevant settlement system is open or
operating as specified in the relevant Confirmation or, if a place or a
settlement system is 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) for the purpose of determining when a Waiting
Period expires, a General Business Day in the place where the event or
circumstance that constitutes or gives rise to the Illegality or Force Majeure
Event, as the case may be, occurs, (c) in relation to any other payment, a
General Business Day in the place where the relevant account is located and, if
different, in the principal financial center, if any, of the currency of such
payment and, if that currency does not have a single recognized principal
financial center, a day on which the settlement system necessary to accomplish
such payment is open, (d) in relation to any notice or other communication,
including notice contemplated under Section 5(a)(i), a General Business Day (or
a day that would have been a General Business Day but for the occurrence of an
event or circumstance which would, if it occurred with respect to payment,
delivery or compliance related to a Transaction, constitute or give rise to an
Illegality or a Force Majeure Event) in the place 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
(e) in relation to Section 5(a)(v)(2), a General Business Day in the relevant
locations for performance with respect to such Specified Transaction.
"LOCAL DELIVERY DAY" means, for purposes of Sections 5(a)(i) and 5(d), a day on
which settlement systems necessary to accomplish the relevant delivery are
generally open for business so that the delivery is capable of being
accomplished in accordance with customary market practice, in the place
specified in the relevant Confirmation or, if not so specified, in a location as
determined in accordance with customary market practice for the relevant
delivery.
"MASTER AGREEMENT" has the meaning specified in the preamble.
"MERGER WITHOUT ASSUMPTION" means the event specified in Section 5(a)(viii).
"MULTIPLE TRANSACTION PAYMENT NETTING" has the meaning specified in Section
2(c).
NON-AFFECTED PARTY" means, so long as there is only one Affected Party, the
other party.
"NON-DEFAULT RATE" means the rate certified by the Non-defaulting Party to be a
rate offered to the Non-defaulting Party by a major bank in a relevant interbank
market for overnight deposits in the applicable currency, such bank to be
selected in good faith by the Non-defaulting Party for the purpose of obtaining
a representative rate that will reasonably reflect conditions prevailing at the
time in that relevant market.
"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 head or
home office.
"OTHER AMOUNTS" has the meaning specified in Section 6(f).
"PAYEE" has the meaning specified in Section 6(f).
"PAYER" has the meaning specified in Section 6(f).
"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.
"PROCEEDINGS" has the meaning specified in Section 13(b).
"PROCESS AGENT" has the meaning specified in the Schedule.
22
"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.
"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.
"SCHEDULE" has the meaning specified in the preamble.
"SCHEDULED SETTLEMENT DATE" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"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 to any such transaction) 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 not
a Transaction under this Agreement but (i) which is a rate swap transaction,
swap option, 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, credit protection transaction, credit swap,
credit default swap, credit default option, total return swap, credit spread
transaction, repurchase transaction, reverse repurchase transaction,
buy/sell-back transaction, securities lending transaction, weather index
transaction or forward purchase or sale of a security, commodity or other
financial instrument or interest (including any option with respect to any of
these transactions) or (ii) which is a type of transaction that is similar to
any transaction referred to in clause (i) above that is currently, or in the
future becomes, recurrently entered into in the financial markets (including
terms and conditions incorporated by reference in such agreement) and which is a
forward, swap, future, option or other derivative on one or more rates,
currencies, commodities, equity securities or other equity instruments, debt
securities or other debt instruments, economic indices or measures of economic
risk or value, or other benchmarks against which payments or deliveries are to
be made, (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.
"STAMP TAX JURISDICTION" has the meaning specified in Section 4(e).
"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 an Illegality or a Force Majeure Event, all Affected
Transactions specified in the notice given pursuant to Section 6(b)(iv), (b) if
resulting from any other Termination Event, all Affected Transactions and (c) if
resulting from an Event of Default, all Transactions in effect either
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" means (a) if a Termination Currency is specified in the
Schedule and that currency is freely available, that currency, and (b)
otherwise, euro if this Agreement is expressed to be governed by English law or
United States Dollars if this Agreement is expressed to be governed by the laws
of the State of New York.
23
"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 Close-out Amount is determined as of a later date, that later date,
with the Termination Currency at the rate equal to the spot exchange rate of the
foreign exchange agent (selected as provided below) for the purchase of such
Other Currency with the Termination Currency at or about 11:00 a.m. (in the city
in which such foreign exchange agent is located) on such date as would be
customary for the determination of such a rate for the purchase of such Other
Currency for value on the relevant Early Termination Date or that later date.
The foreign exchange agent will, if only one party is obliged to make a
determination under Section 6(e), be selected in good faith by that party and
otherwise will be agreed by the parties.
"TERMINATION EVENT" means an illegality, a Force Majeure Event, a Tax Event, 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.
"THRESHOLD AMOUNT" means the amount, if any, specified as such in the Schedule.
"TRANSACTION" has the meaning specified in the preamble.
"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) or due but for Section 5(d)) to such party under Section 2(a)(i) or
2(d)(i)(4) on or prior to such Early Termination Date and which remain unpaid as
at such Early Termination Date, (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) or 5(d)) 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 and (c) if the Early
Termination Date results from an Event of Default, a Credit Event Upon Merger or
an Additional Termination Event in respect of which all outstanding Transactions
are Affected Transactions, any Early Termination Amount due prior to such Early
Termination Date and which remains unpaid as of such Early Termination Date, in
each case together with any amount of interest accrued or other compensation in
respect of that obligation or deferred obligation, as the case may be, pursuant
to Section 9(h)(ii)(1) or (2), as appropriate. The fair market value of any
obligation referred to in clause (b) above will be determined as of the
originally scheduled date for delivery, in good faith and using commercially
reasonable procedures, by the party obliged to make the determination under
Section 6(e) or, if each party is so obliged, it will be the average of the
Termination Currency Equivalents of the fair market values so determined by both
parties.
"WAITING PERIOD" means:--
(a) in respect of an event or circumstance under Section 5(b)(i), other than in
the case of Section 5(b)(i)(2) where the relevant payment, delivery or
compliance is actually required on the relevant day (in which case no Waiting
Period will apply), a period of three Local Business Days (or days that would
have been Local Business Days but for the occurrence of that event or
circumstance) following the occurrence of that event or circumstance; and
(b) in respect of an event or circumstance under Section 5(b)(ii), other than in
the case of Section 5(b)(ii)(2) where the relevant payment, delivery or
compliance is actually required on the relevant day (in which case no Waiting
Period will apply), a period of eight Local Business Days (or days that would
have been Local Business Days but for the occurrence of that event or
circumstance) following the occurrence of that event or circumstance.
24
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.
Deutsche Bank AG Chesapeake Exploration Limited Partnership
----------------------------------- ------------------------------------------
(Name of Party) (Name of Party)
By: Chesapeake Operating, Inc., its
general Partner
By: /s/ XXXXXXX XXXXXXX By: /S/ XXXXXX X. XXXXXX
-------------------------------- --------------------------------------
Name: Xxxxxxx Xxxxxxx Name: Xxxxxx X. Xxxxxx
Title: Vice President and Counsel Title: Treasurer
Date: Date:
By: /s/ XXXXX XXXXXXX
--------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President and Counsel
Date:
25
