(MULTICURRENCY--CROSS BORDER)
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of March 2004
BARCLAYS BANK PLC ("PARTY A") AND
PERPETUAL TRUSTEES VICTORIA LIMITED (ABN 47 004 027 258) IN ITS CAPACITY AS
TRUSTEE OF THE INTERSTAR MILLENNIUM SERIES 2004-2G TRUST ("PARTY B") AND
INTERSTAR SECURITISATION MANAGEMENT PTY LIMITED (ABN 56 100 346 898)
(THE "TRUST MANAGER")
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows:--
1. INTERPRETATION
(a) DEFINITIONS. The terms defined in Section 14 and in the Schedule will have
the meanings therein specified for the purpose of this Master Agreement.
(b) INCONSISTENCY. In the event of any inconsistency between the provisions of
the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.
(c) SINGLE AGREEMENT. All Transactions are entered into in reliance on the fact
that this Master Agreement and all Confirmations form a single agreement between
the parties (collectively referred to as this "Agreement"), and the parties
would not otherwise enter into any Transactions.
2. OBLIGATIONS
(a) GENERAL CONDITIONS.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for
value on that date in the place of the account specified in the
relevant Confirmation or otherwise pursuant to this Agreement, in
freely transferable funds and in the manner customary for payments in
the required currency. Where settlement is by delivery (that is, other
than by payment), such delivery will be made for receipt on the due
date in the manner customary for the relevant obligation unless
otherwise specified in the relevant Confirmation or elsewhere in this
Agreement.
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(iii) Each obligation of each party under Section 2(a)(i) is subject to
(1) the condition precedent that no Event of Default or Potential Event
of Default with respect to the other party has occurred and is
continuing, (2) the condition precedent that no Early Termination Date
in respect of the relevant Transaction has occurred or been effectively
designated and (3) each other applicable condition precedent specified
in this Agreement.
(b) CHANGE OF ACCOUNT. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) NETTING. If on any date amounts would otherwise be payable:--
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). This election may
be made separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.
(d) DEDUCTION OR WITHHOLDING FOR TAX.
(i) GROSS-UP. All payments under this Agreement will be made without any
deduction or withholding for or on account of any Tax unless such
deduction or withholding is required by any applicable law, as modified
by the practice of any relevant governmental revenue authority, then in
effect. If a party is so required to deduct or withhold, then that party
("X") will:--
(1) promptly notify the other party ("Y") of such requirement;
(2) pay to the relevant authorities the full amount required to
be deducted or withheld (including the full amount required to be
deducted or withheld from any additional amount paid by X to Y
under this Section 2(d)) promptly upon the earlier of determining
that such deduction or withholding is required or receiving
notice that such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified
copy), or other documentation reasonably acceptable to Y,
evidencing such payment to such authorities; and
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(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to
the payment to which Y is otherwise entitled under this
Agreement, such additional amount as is necessary to ensure that
the net amount actually received by Y (free and clear of
Indemnifiable Taxes, whether assessed against X or Y) will equal
the full amount Y would have received had no such deduction or
withholding been required. However, X will not be required to pay
any additional amount to Y to the extent that it would not be
required to be paid but for:--
(A) the failure by Y to comply with or perform any agreement
contained in Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to
Section 3(f) to be accurate and true unless such failure
would not have occurred but for (I) any action taken by a
taxing authority, or brought in a court of competent
jurisdiction, on or after the date on which a Transaction is
entered into (regardless of whether such action is taken or
brought with respect to a party to this Agreement) or (II) a
Change in Tax Law.
(ii) LIABILITY. If:--
(1) X is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, to make
any deduction or withholding in respect of which X would not be
required to pay an additional amount to Y under Section
2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly
against X,
then, except to the extent Y has satisfied or then satisfies the
liability resulting from such Tax, Y will promptly pay to X the amount
of such liability (including any related liability for interest, but
including any related liability for penalties only if Y has failed to
comply with or perform any agreement contained in Section 4(a)(i),
4(a)(iii) or 4(d)).
(e) DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.
3. REPRESENTATIONS
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered into
and, in the case of the representations in Section 3(f), at all times until the
termination of this Agreement) that:--
(a) BASIC REPRESENTATIONS.
(i) STATUS. It is duly organized and validly existing under the laws of
the jurisdiction of its organization or incorporation and, if relevant
under such laws, in good standing;
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(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 or any of its Affiliates any action, suit or proceeding at law or in
equity or before any court, tribunal, governmental body, agency or official or
any arbitrator that is likely to affect the legality, validity or enforceability
against it of this Agreement or any Credit Support Document to which it is a
party or its ability to perform its obligations under this Agreement or such
Credit Support Document.
(d) ACCURACY OF SPECIFIED INFORMATION. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material aspect.
(e) PAYER TAX REPRESENTATION. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(e) is accurate and true.
(f) PAYEE TAX REPRESENTATIONS. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(f) is accurate and true.
4. AGREEMENTS
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:--
(a) FURNISH SPECIFIED INFORMATION. It will deliver to the other party or, in
certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:--
(i) any forms, documents or certificates relating to taxation specified
in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any Confirmation;
and
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(iii) upon reasonable demand by such other party, any form or document
that may be required or reasonably requested in writing in order to
allow such other party or its Credit Support Provider to make a payment
under this Agreement or any applicable Credit Support Document without
any deduction or withholding for or on account of any Tax or with such
deduction or withholding at a reduced rate (so long as the completion,
execution or submission of such form or document would not materially
prejudice the legal or commercial position of the party in receipt of
such demand), with any such form or document to be accurate and
completed in a manner reasonably satisfactory to such other party and
to be executed and to be delivered with any reasonably required
certification,
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.
(b) MAINTAIN AUTHORIZATIONS. It will use all reasonable efforts to maintain in
full force and effect all consents of any governmental or other authority that
are required to be obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party and will use all reasonable efforts to
obtain any that may become necessary in the future.
(c) COMPLY WITH LAWS. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
(d) TAX AGREEMENT. It will give notice of any failure of a representation made
by it under Section 3(f) to be accurate and true promptly upon learning of such
failure.
(e) PAYMENT OF STAMP TAX. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated, organized, managed and
controlled, or considered to have its seat, or in which a branch or office
through which it is acting for the purpose of this Agreement is located ("Stamp
Tax Jurisdiction") and will indemnify the other party against any Stamp Tax
levied or imposed upon the other party or in respect of the other party's
execution or performance of this Agreement by any such Stamp Tax Jurisdiction
which is not also a Stamp Tax Jurisdiction with respect to the other party.
5. EVENTS OF DEFAULT AND TERMINATION EVENTS
(a) EVENTS OF DEFAULT. The occurrence at any time with respect to a party or, if
applicable, any Credit Support Provider of such party or any Specified Entity of
such party of any of the following events constitutes an event of default (an
"Event of Default") with respect to such party:--
(i) FAILURE TO PAY OR DELIVER. Failure by the party to make, when due,
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) required to be made by it if such failure is not remedied on or
before the third Local Business Day after notice of such failure is
given to the party;
(ii) BREACH OF AGREEMENT. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to make
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) or to give notice of a Termination Event or any agreement or
obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied
with or performed by the party in accordance with this Agreement if
such failure is not remedied on or before the thirtieth day after
notice of such failure is given to the party;
(iii) CREDIT SUPPORT DEFAULT.
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(1) Failure by the party or any Credit Support Provider of such
party to comply with or perform any agreement or obligation to
be complied with or performed by it in accordance with any
Credit Support Document if such failure is continuing after any
applicable grace period has elapsed;
(2) the expiration or termination of such Credit Support
Document or the failing or ceasing of such Credit Support
Document to be in full force and effect for the purpose of this
Agreement (in either case other than in accordance with its
terms) prior to the satisfaction of all obligations of such
party under each Transaction to which such Credit Support
Document relates without the written consent of the other party;
or
(3) the party or such Credit Support Provider disaffirms,
disclaims, repudiates or rejects, in whole or in part, or
challenges the validity of, such Credit Support Document;
(iv) MISREPRESENTATION. A representation (other than a representation
under Section 3(e) or (f)) made or repeated or deemed to have been made
or repeated by the party or any Credit Support Provider of such party
in this Agreement or any Credit Support Document proves to have been
incorrect or misleading in any material respect when made or repeated
or deemed to have been made or repeated;
(v) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit Support
Provider of such party or any applicable Specified Entity of such party
(1) defaults under a Specified Transaction and, after giving effect to
any applicable notice requirement or grace period, there occurs a
liquidation of, an acceleration of obligations under, or an early
termination of, that Specified Transaction, (2) defaults, after giving
effect to any applicable notice requirement or grace period, in making
any payment or delivery due on the last payment, delivery or exchange
date of, or any payment on early termination of, a Specified
Transaction (or such default continues for at least three Local
Business Days if there is no applicable notice requirement or grace
period) or (3) disaffirms, disclaims, repudiates or rejects, in whole
or in part, a Specified Transaction (or such action is taken by any
person or entity appointed or empowered to operate it or act on its
behalf);
(vi) CROSS DEFAULT. If "Cross Default" is specified in the Schedule as
applying to the party, the occurrence or existence of (1) a default,
event of default or other similar condition or event (however
described) in respect of such party, any Credit Support Provider of
such party or any applicable Specified Entity of such party under one
or more agreements or instruments relating to Specified Indebtedness of
any of them (individually or collectively) in an aggregate amount of
not less than the applicable Threshold Amount (as specified in the
Schedule) which has resulted in such Specified Indebtedness becoming,
or becoming capable at such time of being declared, due and payable
under such agreements or instruments, before it would otherwise have
been due and payable or (2) a default by such party, such Credit
Support Provider or such Specified Entity (individually or
collectively) in making one or more payments on the due date thereof in
an aggregate amount of not less than the applicable Threshold Amount
under such agreements or instruments (after giving effect to any
applicable notice requirement or grace period);
(vii) BANKRUPTCY. The party, any Credit Support Provider of such party
or any applicable Specified Entity of such party:--
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is unable to
pay its debts or fails or admits in writing its inability
generally to pay its debts as they become due; (3) makes a
general assignment, arrangement or composition with or for the
benefit of its creditors; (4) institutes or has instituted
against it a proceeding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy or
insolvency law or other similar law affecting creditors' rights,
or a petition is presented for its winding-up
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or liquidation, and, in the case of any such proceeding or
petition instituted or presented against it, such proceeding or
petition (A) results in a judgment of insolvency or bankruptcy or
the entry of an order for relief or the making of an order for
its winding-up or liquidation or (B) is not dismissed,
discharged, stayed or restrained in each case within 30 days of
the institution or presentation thereof; (5) has a resolution
passed for its winding-up, official management or liquidation
(other than pursuant to a consolidation, amalgamation or merger);
(6) seeks or becomes subject to the appointment of an
administrator, provisional liquidator, conservator, receiver,
trustee, custodian or other similar official for it or for all or
substantially all its assets; (7) has a secured party take
possession of all or substantially all its assets or has a
distress, execution, attachment, sequestration or other legal
process levied, enforced or sued on or against all or
substantially all its assets and such secured party maintains
possession, or any such process is not dismissed, discharged,
stayed or restrained, in each case within 30 days thereafter; (8)
causes or is subject to any event with respect to it which, under
the applicable laws of any jurisdiction, has an analogous effect
to any of the events specified in clauses (1) to (7) (inclusive);
or (9) takes any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the foregoing
acts; or
(viii) MERGER WITHOUT ASSUMPTION. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges with
or into, or transfers all or substantially all its assets to, another
entity and, at the time of such consolidation, amalgamation, merger or
transfer:--
(1) the resulting, surviving or transferee entity fails to
assume all the obligations of such party or such Credit
Support Provider under this Agreement or any Credit Support
Document to which it or its predecessor was a party by
operation of law or pursuant to an agreement reasonably
satisfactory to the other party to this Agreement; or
(2) the benefits of any Credit Support Document fail to
extend (without the consent of the other party) to the
performance by such resulting, surviving or transferee
entity of its obligations under this Agreement.
(b) TERMINATION EVENTS. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an Illegality if
the event is specified in (i) below, a Tax Event if the event is specified in
(ii) below or a Tax Event Upon Merger if the event is specified in (iii)
below, and, if specified to be applicable, a Credit Event Upon Merger if the
event is specified pursuant to (iv) below or an Additional Termination Event
if the event is specified pursuant to (v) below:--
(i) ILLEGALITY. Due to the adoption of, or any change in, any
applicable law after the date on which a Transaction is entered into,
or due to the promulgation of, or any change in, the interpretation by
any court, tribunal or regulatory authority with competent jurisdiction
of any applicable law after such date, it becomes unlawful (other than
as a result of a breach by the party of Section 4(b)) for such party
(which will be the Affected Party):--
(1) to perform any absolute or contingent obligation to make
a payment or delivery or to receive a payment or delivery in
respect of such Transaction or to comply with any other
material provision of this Agreement relating to such
Transaction; or
(2) to perform, or for any Credit Support Provider of such
party to perform, any contingent or other obligation which
the party (or such Credit Support Provider) has under any
Credit Support Document relating to such Transaction;
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(ii) TAX EVENT. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on
which a Transaction is entered into (regardless of whether such action
is taken or brought with respect to a party to this Agreement) or (y) a
Change in Tax Law, the party (which will be the Affected Party) will,
or there is a substantial likelihood that it will, on the next
succeeding Scheduled Payment Date (1) be required to pay to the other
party an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount is
required to be deducted or withheld for or on account of a Tax (except
in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) and no
additional amount is required to be paid in respect of such Tax under
Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A) or
(B));
(iii) TAX EVENT UPON MERGER. The party (the "Burdened Party") on the
next succeeding Scheduled Payment Date will either (1) be required to
pay an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has
been deducted or withheld for or on account of any Indemnifiable Tax in
respect of which the other party is not required to pay an additional
amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in
either case as a result of a party consolidating or amalgamating with,
or merging with or into, or transferring all or substantially all its
assets to, another entity (which will be the Affected Party) where such
action does not constitute an event described in Section 5(a)(viii);
(iv) CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity of
X consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and
such action does not constitute an event described in Section
5(a)(viii) but the creditworthiness of the resulting, surviving or
transferee entity is materially weaker than that of X, such Credit
Support Provider or such Specified Entity, as the case may be,
immediately prior to such action (and, in such event, X or its
successor or transferee, as appropriate, will be the Affected Party);
or
(v) ADDITIONAL TERMINATION EVENT. If any "Additional Termination Event"
is specified in the Schedule or any Confirmation as applying, the
occurrence of such event (and, in such event, the Affected Party or
Affected Parties shall be as specified for such Additional Termination
Event in the Schedule or such Confirmation).
(c) EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which would
otherwise constitute or give rise to an Event of Default also constitutes an
Illegality, it will be treated as an Illegality and will not constitute an Event
of Default.
6. EARLY TERMINATION
(a) RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an Event of
Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding 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).
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(b) RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT.
(i) NOTICE. If a Termination Event occurs, an Affected Party will,
promptly upon becoming aware of it, notify the other party, specifying
the nature of that Termination Event and each Affected Transaction and
will also give such other information about that Termination Event as
the other party may reasonably require.
(ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality under
Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected
Party, or if a Tax Event Upon Merger occurs and the Burdened Party is
the Affected Party, the Affected Party will, as a condition to its
right to designate an Early Termination Date under Section 6(b)(iv),
use all reasonable efforts (which will not require such party to incur
a loss, excluding immaterial, incidental expenses) to transfer within
20 days after it gives notice under Section 6(b)(i) all its rights and
obligations under this Agreement in respect of the Affected
Transactions to another of its Offices or Affiliates so that such
Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days
after the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be
subject to and conditional upon the prior written consent of the other
party, which consent will not be withheld if such other party's
policies in effect at such time would permit it to enter into
transactions with the transferee on the terms proposed.
(iii) TWO AFFECTED PARTIES. If an Illegality under Section 5(b)(i)(1)
or a Tax Event occurs and there are two Affected Parties, each party
will use all reasonable efforts to reach agreement within 30 days after
notice thereof is given under Section 6(b)(i) on action to avoid that
Termination Event.
(iv) RIGHT TO TERMINATE. If:--
(1) a transfer under Section 6(b)(ii) or an agreement under
Section 6(b)(iii), as the case may be, has not been effected with
respect to all Affected Transactions within 30 days after an
Affected Party gives notice under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon
Merger or an Additional Termination Event occurs, or a Tax Event
Upon Merger occurs and the Burdened Party is not the Affected
Party,
either party in the case of an Illegality, the Burdened Party in the
case of a Tax Event Upon Merger, any Affected Party in the case of a
Tax Event or an Additional Termination Event if there is more than one
Affected Party, or the party which is not the Affected Party in the
case of a Credit Event Upon Merger or an Additional Termination Event
if there is only one Affected Party may, by not more than 20 days
notice to the other party and provided that the relevant Termination
Event is then continuing, designate a day not earlier than the day such
notice is effective as an Early Termination Date in respect of all
Affected Transactions.
(c) EFFECT OF DESIGNATION.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the date
so designated, whether or not the relevant Event of Default or
Termination Event is then continuing.
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(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(e) 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 shall be determined pursuant to Section 6(e).
(d) CALCULATIONS.
(i) STATEMENT. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and will
provide to the other party a statement (1) showing, in reasonable
detail, such calculations (including all relevant quotations and
specifying any amount payable under Section 6(e)) and (2) giving
details of the relevant account to which any amount payable to it is to
be paid. In the absence of written confirmation from the source of a
quotation obtained in determining a Market Quotation, the records of
the party obtaining such quotation will be conclusive evidence of the
existence and accuracy of such quotation.
(ii) PAYMENT DATE. An amount calculated as being due in respect of any
Early Termination Date under Section 6(e) will be payable on the day
that notice of the amount payable is effective (in the case of an Early
Termination Date which is designated or occurs as a result of an Event
of Default) and on the day which is two Local Business Days after the
day on which notice of the amount payable is effective (in the case of
an Early Termination Date which is designated as a result of a
Termination Event). Such amount will be paid together with (to the
extent permitted under applicable law) interest thereon (before as well
as after judgment) in the Termination Currency, from (and including)
the relevant Early Termination Date to (but excluding) the date such
amount is paid, at the Applicable Rate. Such interest will be
calculated on the basis of daily compounding and the actual number of
days elapsed.
(e) PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.
(i) EVENTS OF DEFAULT. If the Early Termination Date results from an
Event of Default:--
(1) First Method and Market Quotation. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the
Non-defaulting Party the excess, if a positive number, of (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the
Termination Currency Equivalent of the Unpaid Amounts owing to
the Non-defaulting Party over (B) the Termination Currency
Equivalent of the Unpaid Amounts owing to the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply,
the Defaulting Party will pay to the Non-defaulting Party, if a
positive number, the Non-defaulting Party's Loss in respect of
this Agreement.
(3) Second Method and Market Quotation. If the Second Method and
Market Quotation apply, an amount will be payable equal to (A)
the sum of the Settlement Amount (determined by the
Non-defaulting Party) in respect of the Terminated Transactions
and the Termination Currency Equivalent of the Unpaid Amounts
owing to the Non-defaulting Party less (B) the Termination
Currency Equivalent of the Unpaid Amounts owing to the Defaulting
Party. If that amount is a positive
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number, the Defaulting Party will pay it to the Non-defaulting
Party; if it is a negative number, the Non-defaulting Party will
pay the absolute value of that amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss apply,
an amount will be payable equal to the Non-defaulting Party's
Loss in respect of this Agreement. If that amount is a positive
number, the Defaulting Party will pay it to the Non-defaulting
Party; if it is a negative number, the Non-defaulting Party will
pay the absolute value of that amount to the Defaulting Party.
(ii) TERMINATION EVENTS. If the Early Termination Date results from a
Termination Event:--
(1) One Affected Party. If there is one Affected Party, the
amount payable will be determined in accordance with Section
6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4),
if Loss applies, except that, in either case, references to the
Defaulting Party and to the Non-defaulting Party will be deemed
to be references to the Affected Party and the party which is not
the Affected Party, respectively, and, if Loss applies and fewer
than all the Transactions are being terminated, Loss shall be
calculated in respect of all Terminated Transactions.
(2) Two Affected Parties. If there are two Affected Parties:--
(A) if Market Quotation applies, each party will determine
a Settlement Amount in respect of the Terminated
Transactions, and an amount will be payable equal to (I)
the sum of (a) one-half of the difference between the
Settlement Amount of the party with the higher Settlement
Amount ("X") and the Settlement Amount of the party with
the lower Settlement Amount ("Y") and (b) the Termination
Currency Equivalent of the Unpaid Amounts owing to X less
(II) the Termination Currency Equivalent of the Unpaid
Amounts owing to Y; and
(B) if Loss applies, each party will determine its Loss in
respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in respect of all
Terminated Transactions) and an amount will be payable
equal to one-half of the difference between the Loss of the
party with the higher Loss ("X") and the Loss of the party
with the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X; if
it is a negative number, X will pay the absolute value of that
amount to Y.
(iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies
in respect of a party, the amount determined under this Section 6(e)
will be subject to such adjustments as are appropriate and permitted by
law to reflect any payments or deliveries made by one party to the
other under this Agreement (and retained by such other party) during
the period from the relevant Early Termination Date to the date for
payment determined under Section 6(d)(ii).
(iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies
an amount recoverable under this Section 6(e) is a reasonable
pre-estimate of loss and not a penalty. Such amount is payable for the
loss of bargain and the loss of protection against future risks and
except as otherwise provided in this Agreement neither party will be
entitled to recover any additional damages as a consequence of such
losses.
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7. TRANSFER
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that:--
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in any
amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be void.
8. CONTRACTUAL CURRENCY
(a) PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement will
be made in the relevant currency specified in this Agreement for that payment
(the "Contractual Currency"). To the extent permitted by applicable law, any
obligation to make payments under this Agreement in the Contractual Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual Currency, except to the extent such tender results in the actual
receipt by the party to which payment is owed, acting in a reasonable manner and
in good faith in converting the currency so tendered into the Contractual
Currency, of the full amount in the Contractual Currency of all amounts payable
in respect of this Agreement. If for any reason the amount in the Contractual
Currency so received falls short of the amount in the Contractual Currency
payable in respect of this Agreement, the party required to make the payment
will, to the extent permitted by applicable law, immediately pay such additional
amount in the Contractual Currency as may be necessary to compensate for the
shortfall. If for any reason the amount in the Contractual Currency so received
exceeds the amount in the Contractual Currency payable in respect of this
Agreement, the party receiving the payment will refund promptly the amount of
such excess.
(b) JUDGMENTS. To the extent permitted by applicable law, if any judgment or
order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange payable in connection with the purchase of or conversion into the
Contractual Currency.
(c) SEPARATE INDEMNITIES. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed and will not be affected by judgment being obtained
or claim or proof being made for any other sums payable in respect of this
Agreement.
(d) EVIDENCE OF LOSS. For the purpose of this Section 8, it will be sufficient
for a party to demonstrate that it would have suffered a loss had an actual
exchange or purchase been made.
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9. MISCELLANEOUS
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) AMENDMENTS. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.
(c) SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) COUNTERPARTS AND CONFIRMATIONS.
(i) This Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts (including
by facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of
each Transaction from the moment they agree to those terms (whether
orally or otherwise). A Confirmation shall be entered into as soon as
practicable and may be executed and delivered in counterparts
(including by facsimile transmission) or be created by an exchange of
telexes or by an exchange of electronic messages on an electronic
messaging system, which in each case will be sufficient for all
purposes to evidence a binding supplement to this Agreement. The
parties will specify therein or through another effective means that
any such counterpart, telex or electronic message constitutes a
Confirmation.
(f) NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power or
privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) HEADINGS. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. OFFICES; MULTIBRANCH PARTIES
(a) If Section 10(a) is specified in the Schedule as applying, each party that
enters into a Transaction through an Office other than its head or home office
represents to the other party that, notwithstanding the place of booking office
or jurisdiction of incorporation or organization of such party, the obligations
of such party are the same as if it had entered into the Transaction through its
head or home office. This representation will be deemed to be repeated by such
party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.
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11. EXPENSES
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document to
which the Defaulting Party is a party or by reason of the early termination of
any Transaction, including, but not limited to, costs of collection.
12. NOTICES
(a) EFFECTIVENESS. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--
(i) if in writing and delivered in person or by courier, on the date it
is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that transmission
is received by a responsible employee of the recipient in legible form
(it being agreed that the burden of proving receipt will be on the
sender and will not be met by a transmission report generated by the
sender's facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or
the equivalent (return receipt requested), on the date that mail is
delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that electronic
message is received,
unless the date of delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) CHANGE OF ADDRESSES. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
13. GOVERNING LAW AND JURISDICTION
(a) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) JURISDICTION. With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings"), each party irrevocably:--
(i) submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or to the
non-exclusive jurisdiction of the courts of the State of New York and
the United States District Court located in the Borough of Manhattan in
New York City, if this Agreement is expressed to be governed by the
laws of the State of New York; and
(ii) waives any objection which it may have at any time to the laying
of venue of any Proceedings brought in any such court, waives any claim
that such Proceedings have been brought in an inconvenient forum and
further waives the right to object, with respect to such Proceedings,
that such court does not have any jurisdiction over such party.
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Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent (if
any) specified opposite its name in the Schedule to receive, for it and on its
behalf, service of process in any Proceedings. If for any reason any party's
Process Agent is unable to act as such, such party will promptly notify the
other party and within 30 days appoint a substitute process agent acceptable to
the other party. The parties irrevocably consent to service of process given in
the manner provided for notices in Section 12. Nothing in this Agreement will
affect the right of either party to serve process in any other manner permitted
by law.
(d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest extent
permitted by applicable law, with respect to itself and its revenues and assets
(irrespective of their use or intended use), all immunity on the grounds of
sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
14. DEFINITIONS
As used in this Agreement:--
"ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b).
"AFFECTED PARTY" has the meaning specified in Section 5(b).
"AFFECTED TRANSACTIONS" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"AFFILIATE" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"APPLICABLE RATE" means:--
(a) in respect of obligations payable or deliverable (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
Rate; and
(d) in all other cases, the Termination Rate.
"BURDENED PARTY" has the meaning specified in Section 5(b).
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"CHANGE IN TAX LAW" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs on or after the date on which the
relevant Transaction is entered into.
"CONSENT" includes a consent, approval, action, authorization, exemption,
notice, filing, registration or exchange control consent.
"CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b).
"CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is specified as
such in this Agreement.
"CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule.
"DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
"DEFAULTING PARTY" has the meaning specified in Section 6(a).
"EARLY TERMINATION DATE" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.
"ILLEGALITY" has the meaning specified in Section 5(b).
"INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation authority imposing such
Tax and the recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such jurisdiction,
or being or having been organised, 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).
"LAW" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority) and
"LAWFUL" and "UNLAWFUL" will be construed accordingly.
"LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
with respect to such Specified Transaction.
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"LOSS" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case expressed as a negative number)
in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain resulting from
any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each
applicable condition precedent) on or before the relevant Early Termination Date
and not made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3)
or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and
out-of-pocket expenses referred to under Section 11. A party will determine its
Loss as of the relevant Early Termination Date, or, if that is not reasonably
practicable, as of the earliest date thereafter as is reasonably practicable. A
party may (but need not) determine its Loss by reference to quotations of
relevant rates or prices from one or more leading dealers in the relevant
markets.
"MARKET QUOTATION" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have been required after that date. For this
purpose, Unpaid Amounts in respect of the Terminated Transaction or group of
Terminated Transactions are to be excluded but, without limitation, any payment
or delivery that would, but for the relevant Early Termination Date, have been
required (assuming satisfaction of each applicable condition precedent) after
that Early Termination Date is to be included. The Replacement Transaction would
be subject to such documentation as such party and the Reference Market-maker
may, in good faith, agree. The party making the determination (or its agent)
will request each Reference Market-maker to provide its quotation to the extent
reasonably practicable as of the same day and time (without regard to different
time zones) on or as soon as reasonably practicable after the relevant Early
Termination Date. The day and time as of which those quotations are to be
obtained will be selected in good faith by the party obligated to make a
determination under Section 6(e), and, if each party is so obliged, after
consultation with the other. If more than three quotations are provided, the
Market Quotation will be the arithmetic mean of the quotations, without regard
to the quotations having the highest and lowest values. If exactly three such
quotations are provided, the Market Quotation will be the quotation remaining
after disregarding the highest and lowest quotations. For this purpose, if more
than one quotation has the same highest value or lowest value, then one of such
quotations shall be disregarded. If fewer than three quotations are provided, it
will be deemed that the Market Quotation in respect of such Terminated
Transaction or group of Terminated Transactions cannot be determined.
"NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting party (as certified by it) if
it were to fund the relevant amount.
"NON-DEFAULTING PARTY" has the meaning specified in Section 6(a).
"OFFICE" means a branch or office of a party, which may be such party's head or
home office.
"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.
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"REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.
"RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organized, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, from or through which such payment
is made.
"SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"SET-OFF" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
"SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination
Date, the sum of:--
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference to any
Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"SPECIFIED ENTITY" has the meaning specified in the Schedule.
"SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.
"SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.
"STAMP TAX" means any stamp, registration, documentation or similar tax.
"TAX" means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto) that is
imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax.
"TAX EVENT" has the meaning specified in Section 5(b).
"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).
- --------------------------------------------------------------------------------
Page 18
"TERMINATED TRANSACTIONS" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"TERMINATION CURRENCY" has the meaning specified in the Schedule.
"TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a rate
for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.
"TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.
"TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"UNPAID AMOUNTS" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market value of that which was (or would have been) required to be
- --------------------------------------------------------------------------------
Page 19
delivered as of the originally scheduled date for delivery, in each case
together with (to the extent permitted under applicable law) interest, in the
currency of such amounts, from (and including) the date such amounts or
obligations were or would have been required to have been paid or performed to
(but excluding) such Early Termination Date, at the Applicable Rate. Such
amounts of interest will be calculated on the basis of daily compounding and the
actual number of days elapsed. The fair market value of any obligation referred
to in clause (b) above shall be reasonably determined by the party obliged to
make the determination under Section 6(e) or, if each party is so obliged, it
shall be the average of the Termination Currency Equivalents of the fair market
values reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
Perpetual Trustees Victoria Limited
(ABN 47 004 027 258) in its capacity
as trustee of the Interstar Millennium
Barclays Bank PLC Series 2004-2G Trust
........................................ .......................................
(Party A) (Party B)
By:.................................... By:....................................
Name: Name:
Title: Title:
Date: Date:
Interstar Securitisation Management
Pty Limited (ABN 56 100 346 898)
........................................
(Trust Manager)
By:....................................
Name:
Title:
Date:
- --------------------------------------------------------------------------------
Page 20
SCHEDULE
TO THE
ISDA MASTER AGREEMENT
DATED AS OF MARCH 2004
Between
BARCLAYS BANK PLC ("PARTY A")
AND
PERPETUAL TRUSTEES VICTORIA LIMITED (ABN 47 004 027 258) IN ITS CAPACITY AS
TRUSTEE OF THE INTERSTAR MILLENNIUM SERIES 2004-2G TRUST ("PARTY B")
AND
INTERSTAR SECURITISATION MANAGEMENT PTY LIMITED (ABN 56 100 346 898)
(THE "TRUST MANAGER")
PART 1
TERMINATION PROVISIONS
(a) "SPECIFIED ENTITY" is not applicable in relation to Party A or Party B.
(b) "SPECIFIED TRANSACTION" is not applicable.
(c) (i) (A) Sections 5(a)(ii), (iii), (iv), (v), (vi), 5(b)(ii),
(iii) and (iv) will not apply to Party B.
(B) Sections 5(a)(ii), (iii), (iv), (v), (vi), 5(b)(ii),
(iii) and (iv) will not apply to Party A.
(ii) Replace Section 5(a)(i) with:
"(i) FAILURE TO PAY OR DELIVER. Failure by the party to make
when due any payment under this Agreement or delivery under
Section 2(a)(i) or 2(e) required to be made by it if such
failure is not remedied at or before 10:00am on the tenth
Local Business Day after the due date, except that:
(A) no Event of Default shall result from Party B's
failure to pay an amount due under this Agreement
where Party B has sufficient funds with its bankers
(as certified by the Trust Manager on behalf of Party
B in a written notice to Party A immediately upon the
Trust Manager becoming aware of Party B's inability
to pay such due amount) with which the bank accounts
of the Trust are held and has given instructions to
those bankers to make that payment, and that payment
would have been made but for temporary technical or
administrative difficulties outside the control of
Party B (as certified by the Trust Manager on behalf
of Party B in a
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Page 21
written notice to Party A within 10 Local Business
Days after the due date or immediately thereafter);
and
(B) in the event that sub-paragraph (A) applies,
Party A has no obligation to make a corresponding
payment under this Agreement until such time as it
actually receives funds from Party B;".
For the avoidance of doubt, there will be no failure to pay by Party B
to Party A for the purposes of Section 5(a)(i) to the extent that Party
B pays to Party A on each Payment Date the amounts available to Party B
on that Payment Date for payment to Party A under (in the case of the
Class A Currency Swap) clauses 6.5(a)(v)(C)(1), 6.5(a)(v)(D),
6.5(a)(xi)(B), 6.6(h)(i)(A) and 6.6(i)(i)(A) of the Series Notice, (in
the case of the Class AB Currency Swap) clauses 6.5(a)(vi)(A)(1),
6.5(a)(vi)(B), 6.5(a)(xi)(B), 6.6(h)(ii)(A) and 6.6(i)(ii)(A) and (in
the case of the Class B Currency Swap) clauses 6.5(a)(vii)(A)(1),
6.5(a)(vii)(B), 6.5(a)(xi)(B), 6.6(h)(iii)(A) and 6.6(i)(iii)(A)of the
Series Notice.
(d) Section 5(a)(vii) "BANKRUPTCY" is replaced with the following:
"An Insolvency Event has occurred in respect of Party A or Party B.
However, the occurrence of an Insolvency Event in respect of Party B in
its personal capacity will not constitute an Event of Default provided
that within thirty Business Days of that occurrence, Party B and the
Trust Manager are able to procure the novation of this Agreement and
all Transactions to a third party (who is notified to Party A) in
respect of which the Designated Rating Agencies confirm that the
novation will not cause a reduction or withdrawal of the rating of any
Notes."
(e) Section 5(b)(i) "ILLEGALITY" is amended by adding the following
paragraph at the end:
"This sub paragraph (i) does not apply to the imposition by the
Australian government or any agency of the Australian government of any
exchange control restrictions or prohibitions ("EXCHANGE CONTROLS").
For the avoidance of doubt:
(A) exchange controls do not constitute an Illegality or Event of
Default or Termination Event under this Agreement, and do not
entitle a party to terminate a Transaction or otherwise refuse
to make any payments it is obliged to make under a
Transaction; and
(B) to the extent permitted by law, delivery by Party B of
Australian dollar amounts required to be paid by it under any
relevant Confirmation to the bank account specified in that
Confirmation will constitute proper payment of those amounts
by Party B and Party A's obligations under this Agreement will
be unaffected by any such exchange controls."
(f) For the purpose of Section 5(b)(v), "ADDITIONAL TERMINATION EVENT"
means each of the following:
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Page 22
(i) Party B or a Paying Agent becomes obliged to make a
withholding or deduction for or on account of Tax in respect
of any Notes or any payment to Party A under any Transaction
or an Obligor becomes obliged to make a withholding or
deduction for or on account of Tax in respect of any payout
under a Purchased Loan and the Notes are redeemed as a result
in accordance with clause 6.6(d) of the Series Notice (in
which case Party A is the Affected Party only for the purpose
of termination) (but for the purposes of Section 6(e)(ii)(1),
Party A will be the Non-defaulting Party);
(ii) Party A fails to comply with the requirements of Section 18
(in which case Party A is the Affected Party); and
(iii) an Event of Default (as defined in the Security Trust Deed)
occurs and the Security Trustee enforces the security under
the Security Trust Deed (in which case Party B is the Affected
Party (unless the Event of Default results from a failure by
Party A to fulfil its obligations under this Agreement, in
which case Party A is the Affected Party)).
(g) The "AUTOMATIC EARLY TERMINATION" provisions of Section 6(a):
will not apply to Party A.
will not apply to Party B.
(h) Section 6(a) is amended by replacing "20 days" in line 3 with "10 Local
Business Days".
(i) Add a new Section 6(aa) after Section 6(a):
"(aa) RESTRICTED TERMINATION RIGHTS
(i) TERMINATION BY PARTY B: Subject to
Part 5(r) of this Schedule, Party B
must not designate an Early
Termination Date without the prior
written consent of the Note Trustee.
(ii) NOTIFICATION: Each Party may only
designate an Early Termination Date
following written notification to
the other Party as to the timing of
the Early Termination Date (which
must be a date not earlier than 2
Local Business Days after the
delivery of such notification) and,
in the case of Party B, after
consultation with the Note Trustee.
(iii) TRANSFER WHERE PARTY B DOES NOT
GROSS-UP: If any payment by Party B
to Party A under this Agreement is,
or is likely to be, made subject to
any deduction or withholding on
account of Tax, Party B will
endeavor to procure the substitution
as
- --------------------------------------------------------------------------------
Page 23
principal obligor under this
Agreement in respect of each
affected Transaction of a Party B
incorporated in another jurisdiction
approved by Party A and the Note
Trustee and in respect of which the
Designated Rating Agencies confirm
that the substitution will not cause
a reduction or withdrawal of the
rating of any Notes."
(j) In Section 6(b)(ii), add the words "or to any other person" after the
word "Affiliates" in the second last line of the first paragraph and
add the words "so long as the transfer in respect of that Transaction
would not lead to a downgrade or withdrawal of the rating of any Notes"
after the words "ceases to exist" at the end of the first paragraph.
(k) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e) of this
Agreement:
(i) Market Quotation will apply; and
(ii) the Second Method will apply.
(l) In Section 6(e), delete the sentence at the end of the first paragraph:
"The amount, if any, payable in respect of an Early Termination Date
and determined pursuant to this Section will be subject to any
Set-off."
(m) "TERMINATION CURRENCY" means United States Dollars.
(n) (i) Replace paragraph (a) of Section 7 with the following:
"(a) (i) (subject to sub-paragraph (ii)) Party A may make such
a transfer, without the prior consent of any Designated Rating
Agency or the other parties, pursuant to a consolidation,
amalgamation with, or merger with or into, or transfer of all
or substantially all of its assets to, or reorganisation,
incorporation, reincorporation or reconstitution into or as
another entity (but without prejudice to any other right or
remedy under this Agreement); and
(ii) the transfer referred to in sub-paragraph (i)
may only be made where the transferee of all of Party A's
interest or obligation in or under this Agreement has a short
term credit rating of A-1+ from S&P and a long term credit
rating of at least A2 and a short term credit rating of P-1
from Moody's; and"
(ii) Add a new paragraph to Section 7, immediately below paragraph
(b):
"(c) in the event that a trustee is appointed as a successor
to Party B under the Master Trust Deed and the Series Notice
(the "SUCCESSOR TRUSTEE"), Party A undertakes that it shall
(unless, at the time the Successor Trustee is so appointed,
Party A is entitled to terminate the Transaction under Section
6, in which case it may)
- --------------------------------------------------------------------------------
Page 24
execute a novation agreement novating to the Successor Trustee
the Transaction on the same terms or on other terms to be
agreed between Party A, Party B and the Successor Trustee, and
give written notice to each Designated Rating Agency of such
novation."
PART 2
TAX REPRESENTATIONS
(a) PAYER TAX REPRESENTATIONS
For the purpose of Section 3(e), each of Party A and Party B makes the
following representation:
It is not required by any current applicable law, as modified by the
practice of any relevant governmental revenue authority, of any
Relevant Jurisdiction to make any deduction or withholding for or on
account of any Tax from any payment (other than interest under Section
2(e), 6(d)(ii) or 6(e)) to be made by it to the other party under this
Agreement. In making this representation, it may rely on:
(i) the satisfaction of the agreement contained in Section 4(a)(i)
or 4(a)(iii) and the accuracy and effectiveness of any
document provided by the other party pursuant to Section
4(a)(i) or 4(a)(iii); and
(ii) the satisfaction of the agreement of the other party contained
in Section 4(d),
provided that it shall not be a breach of this representation where
reliance is placed on paragraph (i) and the other party does not
deliver a form or document under Section 4(a)(iii) by reason of
material prejudice to its legal or commercial position.
(b) PAYEE TAX REPRESENTATIONS
(i) For the purpose of Section 3(f), Party B makes the following
representations:
(A) It is an Australian resident and does not derive the payments under
this Agreement in part or in whole in carrying on business in a country
outside Australia at or through a permanent establishment of itself in
that country and;
(B) It is a non-United States branch of a foreign person for United
States Federal income tax purposes.
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Page 25
(ii) For the purpose of Section 3(f), Party A makes the following
representations:
(A) With respect to payments made to Party A which are not effectively
connected to the United States:
It is a non United States branch of a foreign person for United States
Federal income tax purposes; and
(B) With respect to payments made to Party A which are effectively
connected to the United States:
Each payment received or to be received by it in connection with this
Agreement will be effectively connected with its conduct of a trade or
business in the United States.
PART 3
DOCUMENTS TO BE DELIVERED
For the purposes of Section 4(a)(i) and (ii) each party agrees to deliver the
following documents as applicable:
(a) Tax forms, documents or certificates to be delivered are:
- ------------------------ ------------------------------- -------------------------------------------
PARTY REQUIRED TO DOCUMENT DATE BY WHICH TO BE DELIVERED
DELIVER
- ------------------------ ------------------------------- -------------------------------------------
Party A and Any document or certificate (i) On the execution of this Agreement;
Party B. reasonably required or and
reasonably requested by a
party in connection with its (ii) subsequently, upon demand.
obligations to make a payment
under this Agreement which
would enable that party to
make the payment free from
any deduction or withholding
for or on account of Tax or
as would reduce the rate at
which deduction or
withholding for or on account
of Tax is applied to that
payment.
- ------------------------ ------------------------------- -------------------------------------------
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Page 26
(b) Other documents to be delivered are:
- ------------------------ ------------------------------- ------------------------ ------------------
PARTY REQUIRED TO DOCUMENT DATE BY WHICH TO BE COVERED BY
DELIVER DELIVERED SECTION 3(D)
REPRESENTATIONS
- ------------------------ ------------------------------- ------------------------ ------------------
Party A, Party B and A copy of the power of On execution and Yes.
the Trust Manager. attorney authorising delivery of this
execution by the attorney of Agreement.
this Agreement.
- ------------------------ ------------------------------- ------------------------ ------------------
Party A, Party B and A list of authorised On execution of any Yes.
the Trust Manager. signatories for the party and relevant Confirmation.
evidence satisfactory in form
and substance to the other
parties of the authority of
the authorised signatories of
the party to execute each
Confirmation on behalf of
that party.
- ------------------------ ------------------------------- ------------------------ ------------------
Trust Manager. A copy of the Master Trust On execution and No.
Deed, the Series Notice, the delivery of this
Security Trust Deed, the Note Agreement or in the
Trust Deed, the Notice of case of a document not
Creation of Trust and the executed as at the
Agency Agreement. date of this
Agreement, upon
execution of that
document.
- ------------------------ ------------------------------- ------------------------ ------------------
Trust Manager. A copy of an Australian legal On or before the Note No.
opinion addressed to, among Issue Date.
others, Party A in form and
substance satisfactory to
Party A.
- ------------------------ ------------------------------- ------------------------ ------------------
Trust Manager. A copy of an Australian tax On or before the Note No.
opinion addressed to, among Issue Date.
others, Party A in form and
substance satisfactory to
Party A.
- ------------------------ ------------------------------- ------------------------ ------------------
Trust Manager. A copy of any notice provided At such time as the Yes.
by the Trust Manager to the relevant notice is
US$ Noteholders. provided by the Trust
Manager to the US$
Noteholders.
- ------------------------ ------------------------------- ------------------------ ------------------
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Page 27
PART 4
MISCELLANEOUS
(a) ADDRESS FOR NOTICES: For the purpose of Section 12(a) of this
Agreement:
ADDRESS FOR NOTICES TO PARTY A:
For notices regarding operation, payment and confirmation matters only,
notices should be sent to the branch set out in the relevant
Confirmation (as may be amended from time to time) with a copy, in the
case of notices or communications relating to Sections 5, 6, 7, 11 or
13, to:
Address: 5 The North Colonnade, Canary Wharf, London E14
Attention: Derivatives Director, Legal Division (marked urgent)
Facsimile: (+44) 207 773 4932
Telephone: (+44) 207 773 2224
ADDRESS FOR NOTICES TO PARTY B:
Level 7, 9 Castlereagh Street, Sydney, New South Wales, 2000
Attention: Manager Securitisation
Facsimile: 612 9221 7870
Telex: N/A
ADDRESS FOR NOTICES TO THE TRUST MANAGER:
Level 31, 367 Collins Street, Melbourne, Victoria, 3000, Australia
Attention: Managing Director
Facsimile: 613 9621 2368
Telex: N/A
(b) PROCESS AGENT: For the purposes of Section 13(c) of this Agreement:
Party A appoints as its Process Agent: Not applicable.
Party B appoints as its Process Agent:
Mallesons Stephen Jaques London
6th Floor
Alder Castle
10 Noble Street
London EC2V 7JX
OFFICES: The provisions of Section 10(a) will not apply to this
Agreement.
(c) MULTIBRANCH PARTY: For the purposes of Section 10(c) of this Agreement:
Party A is a Multibranch Party and may act through its Offices in
London, New York, Tokyo, Hong Kong, Singapore and Sydney.
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Page 28
Party B is not a Multibranch Party.
(d) CALCULATION AGENT: The Calculation Agent is Party A unless:
(i) otherwise specified in a Confirmation in relation to the
relevant Transaction; or
(ii) an Event of Default (where Party A is the Defaulting Party)
has occurred, in which case the Calculation Agent will be the
Trust Manager.
All calculations made by the Calculation Agent must be made in good
faith and through the exercise of the Calculation Agent's commercially
reasonable judgment. If any party objects in good faith to any
calculation made by the Calculation Agent, the parties must negotiate
in good faith to agree on an independent lead dealer to make such
calculation, and if they cannot so agree within three Business Days,
they will each promptly choose an independent leading dealer and
instruct such dealers to agree on another independent leading dealer to
make such calculation. The calculation of any such dealer so appointed
will be binding on the parties in the absence of manifest error and the
costs of such appointment will be shared equally between Party A and
Party B.
(e) CREDIT SUPPORT DOCUMENT: Details of any Credit Support Document:
(i) In relation to Party A: Nil.
(ii) In relation to Party B: Nil.
(f) CREDIT SUPPORT PROVIDER:
(i) In relation to Party A: Nil.
(ii) In relation to Party B: Nil.
(g) GOVERNING LAW: This Agreement will be governed by and construed in
accordance with the laws of England and Wales.
(h) NETTING OF PAYMENTS: Sub-paragraph (ii) of Section 2(c) will not apply.
(i) "AFFILIATE" will have the meaning specified in Section 14. For the
purposes of Section 3(c), Party B is deemed not to have any Affiliates.
PART 5
OTHER PROVISIONS
(a) In Section 2(a)(i) add the following sentence:
Each payment will be by way of exchange for the corresponding payment
or payments payable by the other party and, in the case of any payment
payable by Party A to Party B, will be discharged by Party A depositing
that payment by 10.00am (New York time) on the due date into the US$
Account."
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Page 29
(b) In Section 2(a)(ii), after "freely transferable funds" add "free of any
set-off, counterclaim, deduction or withholding (except as expressly
provided in this Agreement)".
(c) Add the following new sentence to Section 2(b):
"Each new account so designed must be in the same tax
jurisdiction as the original account."
(d) Delete the word "if" at the beginning of Section 2(d)(i)(4) and insert
the following words instead:
"if and only if X is Party A and".
(e) In Section 2(d)(ii) insert the words "(if and only if Y is Party A)"
after the word "then" at the beginning of the last paragraph. Party B
will have no obligation to pay any amount to Party A under Section
2(d)(ii), and may make any payment under or in connection with this
Agreement net of any deduction or withholding referred to in Section
2(d)(i).
(f) ADDITIONAL REPRESENTATIONS: In Section 3 add the following immediately
after paragraph (f):
"(g) NON ASSIGNMENT. It has not assigned (whether absolutely,
in equity or otherwise) or declared any trust over any of its
rights under this Agreement or any Transaction (other than, in
respect of Party B, the trust created pursuant to the Master
Trust Deed and the Series Notice) and has not given any charge
over its rights under this Agreement or any Transaction in the
case of Party A, or any charge over the assets of the Trust
(other than under the Security Trust Deed), in the case of
Party B."
(g) In Section 4 add a new paragraph as follows:
"(f) CONTRACTING AS PRINCIPAL. Party A will enter into all
Transactions as principal and not otherwise and Party B will
enter into all Transactions in its capacity as trustee of the
Trust and not otherwise. Any reference to Party B in this
Agreement is in its capacity as trustee of the Trust."
(h) CONFIRMATIONS. With respect to each Transaction entered into pursuant
to this Agreement and for the purposes of Section 9(e)(ii), Party A
will, on or promptly after the relevant Trade Date, send Party B (with
a copy to the Trust Manager) a Confirmation confirming that Transaction
and both Party B and the Trust Manager must promptly then confirm the
accuracy of or request the correction of such Confirmation.
Notwithstanding the provisions of Section 9(e)(ii), where a Transaction
is confirmed by means of facsimile or an electronic messaging system,
such message will constitute a Confirmation even where not so specified
in that Confirmation.
(i) Section 12 is amended as follows:
(i) In Section 12(a), delete the words "(except that a notice or
other communication under Section 5 or 6 may not be given by
facsimile transmission or electronic messaging system)" in
lines 2 and 3.
- --------------------------------------------------------------------------------
Page 30
(ii) Section 12(a)(iii) is replaced with:
"(iii) if sent by facsimile transmission, on the date a
transmission report is produced by the machine from which the
facsimile was sent which indicates that the facsimile was sent
in its entirety to the facsimile number of the recipient
notified for the purpose of this Section, unless the recipient
notifies the sender within one Local Business Day of the
facsimile being sent that the facsimile was not received in
its entirety and in legible form."
(iii) In Section 12(a)(v), replace the words "electronic message is
received" with "the facsimile transmission confirming the
electronic message is sent and deemed effective in accordance
with sub-paragraph (iii)".
(j) Section 14 of the Agreement is modified as follows:
(i) New definitions are inserted as follows:
"ACCEPTABLE ARRANGEMENT" means an arrangement which each
relevant Designated Rating Agency has confirmed in writing
will result in the avoidance or reversal of any Note
Downgrade.
"APPROVED BANK" means a Bank which has a short term credit
rating of A-1+ from S&P and P-1 from Moody's.
"DOWNGRADE" means the withdrawal or downgrade of Party A's
credit rating by a Designated Rating Agency resulting in Party
A not having the Required Rating.
"MASTER TRUST DEED" means that the Master Trust Deed dated 2
December 1999 between Perpetual Trustees Victoria Limited and
Interstar Securities (Australia) Pty Limited.
"MAJOR DOWNGRADE" means a Downgrade resulting in Party A
having:
(a) a short term credit rating of less than A-1 by S&P;
or
(b) a long term credit rating of less than A3 by Moody's.
"MINOR DOWNGRADE" means any Downgrade which is not a Major
Downgrade.
"MORTGAGED PROPERTY" has the meaning given in the Security
Trust Deed.
"NOTE DOWNGRADE" means any actual or proposed withdrawal or
downgrade of the rating assigned to any Class of Notes by a
Designated Rating Agency which results or would result in any
rating assigned to that Class of Notes being less than that
specified in clause 4.2(f) of the Series Notice.
- --------------------------------------------------------------------------------
Page 31
"REPLACEMENT CURRENCY SWAP PROVIDER" means, at any time, a
person that has agreed to replace Party A at that time and has
a credit rating not less than the Required Rating.
"REQUIRED RATING" means a credit rating of not less than:
(a) A-1+ (short term) by S&P;
(b) A2 (long term) by Moody's; and
(c) P-1 (short term) by Moody's.
"SERIES NOTICE" means the Series Notice dated on or about the
date of this Agreement in relation to the Trust.
"SWAP COLLATERAL ACCOUNT" means a US$ account in the name of
Party B with an Approved Bank.
"TRUST" means the Interstar Millennium Series 2004-2G Trust.
(ii) The definition of Tax is replaced with:
"TAX" has the meaning given in the Master Trust Deed.
(iii) Insert the following additional paragraph at the end
of Section 14:
"Words and expressions which are defined or
incorporated by reference in the Series Notice have
the same meanings when used in this Agreement unless
the context otherwise requires or unless otherwise
defined in this Agreement."
(k) MASTER TRUST DEED, SERIES NOTICE AND SECURITY TRUST DEED: The parties
acknowledge and agree and for the purposes of the Master Trust Deed,
the Series Notice and the Security Trust Deed:
(a) all Transactions under this Agreement are "Hedge Agreements";
and
(b) Party A is a "Support Facility Provider".
(l) ISDA DEFINITIONS: This Agreement, each Confirmation and each
Transaction are subject to the 2000 ISDA Definitions (as published by
the International Swap & Derivatives Association, Inc.) as amended from
time to time (the "ISDA DEFINITIONS"), and will be governed in all
respects by any provisions set forth in the ISDA Definitions. The ISDA
Definitions are incorporated by reference in, and shall be deemed to be
part of, this Agreement and each Confirmation.
(m) INCONSISTENCY: In the event of any inconsistency between any two or
more of the following documents, they shall take precedence over each
other in the following descending order:
(i) any Confirmation;
- --------------------------------------------------------------------------------
Page 32
(ii) the Schedule to the Master Agreement;
(iii) the other provisions of the Master Agreement; and
(iv) the ISDA Definitions.
(n) Any reference to a:
(i) "Swap Transaction" in the ISDA Definitions is deemed to be a
reference to a "Transaction" for the purpose of interpreting
this Agreement or any Confirmation; and
(ii) "Transaction" in this Agreement or any Confirmation is deemed
to be a reference to a "Swap Transaction" for the purposes of
interpreting the ISDA Definitions.
(o) Insert new Sections 15, 16 and 17 as follows:
"15. LIMITATION OF PARTY B'S LIABILITY
(a) Party B enters into this Agreement only in its capacity as
trustee of the Trust and in no other capacity. A liability
incurred by Party B acting in its capacity as trustee of the
Trust arising under or in connection with this Agreement is
limited to and can be enforced against Party B only to the
extent to which it can be satisfied out of the assets of the
Trust out of which Party B is actually indemnified for the
liability. This limitation of the Party B's liability applies
despite any other provision of this Agreement and extends to
all liabilities and obligations of Party B in any way
connected with any representation, warranty, conduct,
omission, agreement or transaction related to this Agreement.
(b) The parties other than Party B may not sue Party B in any
capacity other than as trustee of the Trust or seek the
appointment of a receiver (except in relation to the assets of
the Trust), liquidator, administrator or similar person to
Party B or prove in any liquidation, administration or
arrangements of or affecting Party B (except in relation to
the assets of the Trust).
(c) The provisions of this Section 15 do not apply to any
obligation or liability of Party B to the extent that it is
not satisfied because under a Transaction Document or by
operation of law there is a reduction in the extent of Party
B's indemnification out of the assets of the Trust as a result
of the Party B's fraud, negligence or wilful default.
(d) It is acknowledged that the Relevant Parties are responsible
under the Transaction Documents for performing a variety of
obligations relating to the Trust. No act or omission of Party
B (including any related failure to satisfy its obligations or
breach of representation or warranty under the Transaction
Documents) will be considered
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Page 33
fraud, negligence or wilful default of Party B for the purpose
of paragraph (c) of this Section 15 to the extent to which the
act or omission was caused or contributed to by any failure by
the Relevant Parties (other than a person whose acts or
omissions Party B is liable for in accordance with the
Transaction Documents) to fulfil its obligations relating to
the Trust or by any other act or omission of the Relevant
Parties (other than a person whose acts or omissions Party B
is liable for in accordance with the Transaction Documents)
regardless of whether or not that act or omission is purported
to be done on behalf of Party B.
(e) No attorney, agent, receiver or receiver and manager appointed
in accordance with a Transaction Document has authority to act
on behalf of Party B in a way which exposes Party B to any
personal liability and no act or omission of any such person
will be considered fraud, negligence or wilful default of
Party B for the purpose of paragraph (c) of this Section 15,
provided (in the case of any person selected and appointed by
Party B) that Party B has exercised reasonable care in the
selection of such persons.
(f) In this Section 15, "Relevant Party" means each of the Trust
Manager, the Servicer, the Calculation Agent, each Paying
Agent, the Note Registrar, the Approved Seller, the Note
Trustee and any Support Facility Provider (as those terms are
defined in the Master Trust Deed and the Series Notice).
16. REPLACEMENT CURRENCY SWAP
(a) If this Agreement is terminated, Party B must, at the
direction of the Trust Manager, enter into one or more
Currency Swaps which replace the Transactions under this
Agreement (in a form reasonably satisfactory to Party
B)(collectively a "REPLACEMENT CURRENCY SWAP") but only on the
following conditions:
(i) the Settlement Amount payable (if any) by Party B to
Party A upon termination of this Agreement will be
paid in full when due in accordance with the Series
Notice and this Agreement;
(ii) the Designated Ratings Agencies confirm that the
Replacement Currency Swap will not cause a Note
Downgrade; and
(iii) the liability of Party B under the Replacement
Currency Swap is limited to at least the same extent
that its liability is limited under this Agreement.
(b) If the conditions in Section 16(a) are satisfied, Party B
must, at the direction of the Trust Manager, enter into the
Replacement Currency Swap and if it does so it must direct the
Replacement Currency Swap provider to pay any upfront premium
to enter into
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Page 34
the Replacement Currency Swap due to Party B directly to Party
A in satisfaction of and to the extent of Party B's obligation
to pay the Settlement Amount to Party A as referred to in
Section 16(a) and to the extent that such premium is not
greater than or equal to the Settlement Amount, the balance
must be satisfied by Party B as an Expense of the Trust.
(c) If the conditions in Section 16(a) are satisfied and Party B
has entered into the Replacement Currency Swap, Party B must
direct Party A to pay any Settlement Amount payable by Party A
to Party B on termination of this Agreement directly to the
Replacement Currency Swap provider as payment and to the
extent of any premium payable by Party B to enter into the
Replacement Currency Swap, in satisfaction of and to the
extent of Party A's obligation to pay that part of the
Settlement Amount to Party B.
17. NOVATION
Party A may at any time novate its obligations under this Agreement to
any of its Affiliates (the "NEW COUNTERPARTY") provided that:
(a) the New Counterparty provides a legal opinion to Party B that
this Agreement, as novated, is valid, binding and enforceable
against it (subject to equitable doctrines and creditors'
rights generally); and
(b) the New Counterparty has the Required Rating.
Party B and the Trust Manager will execute all such documents (each in
a form reasonably satisfactory to Party B) as are reasonably necessary
to give effect to that novation."
(p) TELEPHONE RECORDING: Each party consents to the recording of the
telephone conversations of trading and marketing personnel in
connection with this Agreement or any potential Transaction and
consents to such recording being used as evidence in court proceedings.
(q) RELATIONSHIP BETWEEN PARTIES: Each party will be deemed to represent to
each other party on the date on which it enters into a Transaction
that:
(i) NON-RELIANCE. It is acting for its own account (or, in the
case of Party B, as trustee of the Trust), and it has made its
own independent decisions to enter into that Transaction and
as to whether that Transaction is appropriate or proper for it
based upon its own judgment (in the case of Party B, also on
the judgment of the Trust Manager) and upon advice from such
advisers as it has deemed necessary. It is not relying on any
communication (written or oral) of the other party as
investment advice or as a recommendation to enter into that
Transaction; it being understood that information and
explanations related to the terms and conditions of a
Transaction shall not be considered investment advice or a
recommendation to enter into that Transaction. No
communication (written or oral) received from the other party
shall be deemed to be an assurance or guarantee as to the
expected results of that Transaction.
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Page 35
(ii) EVALUATION AND UNDERSTANDING. It is capable of evaluating and
understanding (on its own behalf or through independent
professional advice), and understands and accepts, the terms,
conditions and risks of that Transaction. It is also capable
of assuming, and assumes, the financial and other risks of
that Transaction.
(iii) NON-FIDUCIARY. No other party is acting as a fiduciary for it
or as an advisor to it for the Transaction.
(r) Insert new Section 18 as follows:
18. RATING DOWNGRADE
(a) If, at any time, a Downgrade occurs and the downgrade
constitutes a Minor Downgrade, Party A shall, within 30 days
(or such greater period as agreed by the relevant Designated
Rating Agency), comply with Section 18(c)(i).
(b) If, at any time, a Downgrade occurs and the downgrade
constitutes a Major Downgrade, Party A shall:
(i) within 30 Business Days (or such greater period as
agreed by the relevant Designated Rating Agency)
comply with Sections 18(c)(ii), (c)(iii) or (c)(iv);
and
(ii) until such time as a Replacement Currency Swap has
been entered into in accordance with Section
18(c)(ii), a co-obligor has been procured in
accordance with Section 18(c)(iii) or an Acceptable
Arrangement has been entered into in accordance with
Section 18(c)(iv), comply or continue to comply with
Section 18(c)(i).
(c) Where Party A is required to comply with this Section 18(c) it
must, at its cost:
(i) either:
(A) within 5 Business Days (or such greater
period as agreed by the relevant Designated
Rating Agency) deposit into a Swap
Collateral Account and maintain in that Swap
Collateral Account (whilst the relevant
Downgrade subsists) sufficient funds to
ensure that the amount standing to the
credit of the Swap Collateral Account is
equal to the Credit Support Amount (or such
lesser amount as agreed with the relevant
Designated Rating Agency); or
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Page 36
(B) acquire in the name of Party B or transfer
to Party B Eligible Credit Support that
matures on or prior to the next Payment Date
with an aggregate face amount equal to the
Credit Support Amount (or such lesser amount
as agreed with the relevant Designated
Rating Agency);
(ii) procure a novation of its rights and obligations
under each Transaction to a Replacement Currency Swap
Provider;
(iii) procure another person to become co-obligor in
respect of the obligations of Party A under each
Transaction. Such co-obligor may be either:
(A) a person with the Required Rating domiciled
in the same legal jurisdiction as Party A or
Party B; or
(B) a person otherwise acceptable to each
Designated Rating Agency; or
(iv) enter, or procure entry, into an Acceptable
Arrangement.
(d) If, at any time, Party A's obligations under a Transaction are
novated in accordance with Section 18(c)(ii), a co-obligor is
procured in accordance with Section 18(c)(iii) or any
Acceptable Arrangement is entered into in accordance with
Section 18(c)(iv) which results in Party A being replaced as
Currency Swap Provider (the "REPLACED CURRENCY SWAP
PROVIDER"), the Replaced Currency Swap Provider shall be
immediately entitled to any Credit Support Amount which it has
deposited in a Swap Collateral Account.
(e) Where Party B has not established a Swap Collateral Account
and Party A is required to deposit monies into a Swap
Collateral Account, the Trust Manager must direct Party B to,
and Party B must, establish, as soon as practicable, and
maintain, in the name of Party B a US$ account with an
Approved Bank, which account shall be, for the purposes of
this Section 18, the "SWAP COLLATERAL ACCOUNT".
(f) Party B may only dispose of any Eligible Credit Support
acquired or transferred to it under Section 18(c)(i)(B) or
make withdrawals from the Swap Collateral Account if directed
to do so by the Trust Manager and then only for the purpose
of:
(i) novating the Replaced Currency Swap Provider's
obligations under each Transaction in accordance with
Section 18(c)(ii), enabling a co-obligor to be
procured in
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Page 37
accordance with Section 18(c)(iii) or entering into
any other Acceptable Arrangement in accordance with
18(c)(iv);
(ii) refunding to Party A the amount of any reduction in
the Credit Support Amount, from time to time, and
provided the Designated Rating Agencies have
confirmed in writing that such refund will not result
in a Note Downgrade;
(iii) withdrawing any amount which has been incorrectly
deposited into the Swap Collateral Account;
(iv) paying any bank accounts debit tax or other
equivalent Taxes payable in respect of the Swap
Collateral Account; or
(v) funding the amount of any payment due to be made by
Party A under this Agreement following the failure by
Party A to make that payment.
For the purposes of this Section 18 and the Series Notice, a
Downgrade will be deemed to "SUBSIST" until the earlier of the
following dates:
(i) the date on which the credit rating of Party A is
restored to the Required Rating;
(ii) the date on which a Replacement Currency Swap has
been entered into in accordance with Section
18(c)(ii);
(iii) the date on which a co-obligor has been procured in
accordance with Section 18(c)(iii); and
(iv) the date on which an Acceptable Arrangement has been
entered into in accordance with Section 18(c)(iv).
(g) Party B, at the direction of the Trust Manager, may only
invest any amounts standing to the credit of a Swap Collateral
Account in Eligible Credit Support that matures on or prior to
the next Payment Date.
(h) All interest accrued on and other income derived from the
acquisition or transfer to it of any Eligible Credit Support
under Section 18(c)(i)(B) or the investment of any amounts
credited to a Swap Collateral Account will be payable monthly
to the party that provided the relevant Eligible Credit
Support or Credit Support Amount, provided that any such
interest or income will only be payable to the extent that any
payment will not reduce the balance of the Swap Collateral
Account to less than the amount required to be maintained in
accordance with this Section 18.
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Page 38
(i) The Credit Support Amount must be denominated in US$ or in
such other currency as approved by each Designated Rating
Agency.
This Agreement may be executed in counterparts, each of which will be deemed an
original.
EXECUTED in London and Sydney.
Each attorney executing this Agreement states that he or she has no notice of
revocation or suspension of his or her power of attorney.
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Page 39
PARTY A
SIGNED on behalf of )
BARCLAYS BANK PLC )
------------------------------------
by its attorneys under power of attorney ) Signature
in the presence of: )
-----------------------------------
Print name
- ------------------------------------------
Witness
-----------------------------------
Signature
- ------------------------------------------
Print name
------------------------------------
Print name
PARTY B
SIGNED on behalf of )
PERPETUAL TRUSTEES VICTORIA LIMITED )
by its attorney under power of attorney )
in the presence of: )
- ------------------------------------------ -----------------------------------
Witness Signature
- ------------------------------------------ ------------------------------------
Print name Print name
TRUST MANAGER
SIGNED on behalf of )
INTERSTAR SECURITISATION MANAGEMENT
PTY LIMITED )
by its attorney under power of attorney )
in the presence of: )
- ------------------------------------------ -----------------------------------
Witness Signature
- ------------------------------------------ ------------------------------------
Print name Print name
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Page 40
ISDA(R)
INTERNATIONAL SWAPS AND DERIVATIVES ASSOCIATION, INC.
CREDIT SUPPORT ANNEX
to the Schedule to the
ISDA MASTER AGREEMENT
dated as of March 2004
between
Barclays Bank PLC and Perpetual Trustees Victoria Limited in its
("PARTY A") capacity as trustee of the Interstar Millennium
Series 2004-2G Trust
("PARTY B")
and
Interstar Securitisation Management Pty Limited (ABN 56 100 346 898)
(the "TRUST MANAGER")
This Annex supplements, forms part of, and is subject to, the ISDA Master
Agreement referred to above and is part of its Schedule. For the purposes of
this Agreement, including, without limitation, Sections 1(c), 2(a), 5 and 6, the
credit support arrangements set out in this Annex constitute a Transaction (for
which this Annex constitutes the Confirmation).
PARAGRAPH 1. INTERPRETATION
Capitalised terms not otherwise defined in this Annex or elsewhere in this
Agreement have the meanings specified pursuant to Paragraph 10, and all
references in this Annex to Paragraphs are to Paragraphs of this Annex. In the
event of any inconsistency between this Annex and the other provisions of this
Schedule, this Annex will prevail, and in the event of any inconsistency between
Paragraph 11 and the other provisions of this Annex, Paragraph 11 will prevail.
For the avoidance of doubt, references to "transfer" in this Annex mean, in
relation to cash, payment, and in relation to the assets, delivery.
PARAGRAPH 2. CREDIT SUPPORT OBLIGATIONS
(a) DELIVERY AMOUNT. Subject to Paragraphs 3 and 4, upon a demand made by the
Transferee on or promptly following a Valuation Date, if the Delivery Amount for
that Valuation Date equals or exceeds the Transferor's Minimum Transfer Amount,
then the Transferor will transfer to the Transferee Eligible Credit Support
having a Value as of the date of transfer at least equal to the applicable
Delivery Amount (rounded pursuant to Paragraph 11(b)(iii)(D)). Unless otherwise
specified in Paragraph 11(b), the "Delivery Amount" applicable to the Transferor
for any Valuation Date will equal the amount by which:
(i) the Credit Support Amount
exceeds
(ii) the Value as of that Valuation Date of the Transferor's Credit
Support Balance (adjusted to include any prior Delivery Amount and to
exclude any prior Return Amount, the transfer of which, in each
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Page 1
case, has not yet been completed and for which the relevant Settlement
Day falls on or after such Valuation Date).
(b) RETURN AMOUNT. Subject to Paragraphs 3 and 4, upon a demand made by the
Transferor on or promptly following a Valuation Date, if the Return Amount for
that Valuation Date equals or exceeds the Transferee's Minimum Transfer Amount,
then the Transferee will transfer to the Transferor Equivalent Credit Support
specified by the Transferor in that demand having a Value as of the date of
transfer as close as practicable to the applicable Return Amount (rounded
pursuant to Paragraph 11(b)(iii)(D)) and the Credit Support Balance will, upon
such transfer, be reduced accordingly. Unless otherwise specified in Paragraph
11(b), the "Return Amount" applicable to the Transferee for any Valuation Date
will equal the amount by which:
(i) the Value as of that Valuation Date of the Transferor's Credit
Support Balance (adjusted to include any prior Delivery Amount and to
exclude any prior Return Amount, the transfer of which, in each case,
has not yet been completed and for which the relevant Settlement Day
falls on or after such Valuation Date).
exceeds
(ii) the Credit Support Amount.
PARAGRAPH 3. TRANSFERS, CALCULATIONS AND EXCHANGES
(a) TRANSFERS. All transfers under this Annex of any Eligible Credit Support,
Equivalent Credit Support, Interest Amount or Equivalent Distributions shall be
made in accordance with the instructions of the Transferee or Transferor, as
applicable, and shall be made:
(i) in the case of cash, by transfer into one or more bank accounts
specified by the recipient;
(ii) in the case of certificated securities which cannot or which the
parties have agreed will not be delivered by book-entry, by delivery in
appropriate physical form to the recipient or its account accompanied
by any duly executed instruments of transfer, transfer tax stamps and
any other documents necessary to constitute a legally valid transfer of
the transferring party's legal and beneficial title to the recipient;
and
(iii) in the case of securities which the parties have agreed will be
delivered by book-entry, by the giving of written instructions
(including, for the avoidance of doubt, instructions given by telex,
facsimile transmission or electronic messaging system) to the relevant
depository institution or other entity specified by the recipient,
together with a written copy of the instructions to the recipient,
sufficient, if complied with, to result in a legally effective transfer
of the transferring party's legal and beneficial title to the
recipient.
Subject to Paragraph 4 and unless otherwise specified, if a demand for the
transfer of Eligible Credit Support or Equivalent Credit Support is received by
the Notification Time, then the relevant transfer will be made not later than
the close of business on the Settlement Day relating to the date such demand is
received; if a demand is received after the Notification Time, then the relevant
transfer will be made not later than the close of business on the Settlement Day
relating to the day after the date such demand is received.
(b) CALCULATIONS. All calculations of Value and Exposure for purposes of
Paragraphs 2 and 4(a) will be made by the relevant Valuation Agent as of the
relevant Valuation Time. The Valuation Agent will notify each party (or the
other party, if the Valuation Agent is a party) of its calculations not later
than the Notification Time on the Local Business Day following the applicable
Valuation Date (or, in the case of Paragraph 4(a), following the date of
calculation).
(c) EXCHANGES.
(i) Unless otherwise specified in Paragraph 11, the Transferor may on
any Local Business Day by notice inform the Transferee that it wishes
to transfer to the Transferee Eligible Credit Support specified in that
notice (the "New Credit Support") in exchange for certain Eligible
Credit Support (the "Original Credit Support") specified in that notice
comprised in the Transferor's Credit Support Balance.
(ii) If the Transferee notifies the Transferor that it has consented to
the proposed exchange, (A) the Transferor will be obliged to transfer
the New Credit Support to the Transferee on the first Settlement Day
following the date on which it receives notice (which may be oral
telephonic notice) from the Transferee
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Page 2
of its consent and (B) the Transferee will be obliged to transfer to
the Transferor Equivalent Credit Support in respect of the Original
Credit Support not later than the Settlement Day following the date on
which the Transferee receives the New Credit Support, unless otherwise
specified in Paragraph 11(d) (the "Exchange Date"); provided that the
Transferee will only be obliged to transfer Equivalent Credit Support
with a Value as of the date of transfer as close as practicable to, but
in any event not more than, the Value of the New Credit Support as of
that date.
PARAGRAPH 4. DISPUTE RESOLUTION
(a) DISPUTED CALCULATIONS OR VALUATIONS. If a party (a "Disputing Party")
reasonably disputes (I) the Valuation Agent's calculation of a Delivery Amount
or a Return Amount or (II) the Value of any transfer of Eligible Credit Support
or Equivalent Credit Support, then:
(1) the Disputing Party will notify the other party and the Valuation
Agent (if the Valuation Agent is not the other party) not later than
the close of business on the Local Business Day following, in the case
of (I) above, the date that the demand is received under Paragraph 2
or, in the case of (II) above, the date of transfer;
(2) in the case of (I) above, the appropriate party will transfer the
undisputed amount to the other party not later than the close of
business on the Settlement Day following the date that the demand is
received under Paragraph 2;
(3) the parties will consult with each other in an attempt to resolve
the dispute; and
(4) if they fail to resolve the dispute by the Resolution Time. then:
(i) in the case of a dispute involving a Delivery Amount or
Return Amount, unless otherwise specified in Paragraph 11(c),
the Valuation Agent will recalculate the Exposure and the
Value as of the Recalculation Date by:
(A) utilising any calculations of that part of the
Exposure attributable to the Transactions that the
parties have agreed are not in dispute;
(B) calculating that part of the Exposure
attributable to the Transactions in dispute by
seeking four actual quotations at mid-market from
Reference Market-makers for purposes of calculating
Market Quotation, and taking the arithmetic average
of those obtained; provided that if four quotations
are not available for a particular Transaction, then
fewer than four quotations may be used for that
Transaction, and if no quotations are available for a
particular Transaction, then the Valuation Agent's
original calculations will be used for the
Transaction; and
(C) utilising the procedures specified in Paragraph
11(e)(ii) for calculating the Value, if disputed, of
the outstanding Credit Support Balance;
(ii) in the case of a dispute involving the Value of any
transfer of Eligible Credit Support or Equivalent Credit
Support, the Valuation Agent will recalculate the Value as of
the date of transfer pursuant to Paragraph 11(e)(ii).
Following a recalculation pursuant to this Paragraph, the Valuation Agent will
notify each party (or the other party, if the Valuation Agent is a party) as
soon as possible but in any event not later than the Notification Time on the
Local Business Day following the Resolution Time. The appropriate party will,
upon demand following such notice given the Valuation Agent or resolution
pursuant to (3) above and subject to Paragraph 3(a), make the appropriate
transfer.
(b) NO EVENT OF DEFAULT. The failure by a party to make a transfer of any amount
which is the subject of a dispute to which Paragraph 4(a) applies will not
constitute an Event of Default for as long as the procedures set out in this
Paragraph 4 are being carried out. For the avoidance of doubt, upon completion
of those procedures, Section 5(a)(i) of this Agreement will apply to any failure
by a party to make a transfer required under the final sentence of Paragraph
4(a) on the relevant due date.
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Page 3
PARAGRAPH 5. TRANSFER OF TITLE, NO SECURITY INTEREST, DISTRIBUTIONS AND INTEREST
AMOUNT
(a) TRANSFER OF TITLE. Each party agrees that all right, title and interest in
and to any Eligible Credit Support, Equivalent Credit Support, Equivalent
Distributions or Interest Amount which it transfers to the other party under the
terms of this Annex shall vest in the recipient free and clear of any liens,
claims, charges or encumbrances or any other interest of the transferring party
or of any third person (other than a lien routinely imposed on all securities in
a relevant clearance system).
(b) NO SECURITY INTEREST. Nothing in this Annex is intended to create or does
create in favour of either party any mortgage, charge, lien, pledge, encumbrance
or other security interest in any cash or other property transferred by one
party to the other party under the terms of this Annex.
(c) DISTRIBUTIONS AND INTEREST AMOUNT.
(i) DISTRIBUTIONS. The Transferee will transfer to the Transferor not
later than the Settlement Day following each Distributions Date cash,
securities or other property of the same type, nominal value,
description and amount as the relevant Distributions ("Equivalent
Distributions") to the extent that a Delivery Amount would not be
created or increased by the transfer, as calculated by the Valuation
Agent (and the date of calculation will be deemed a Valuation Date for
this purpose).
(ii) INTEREST AMOUNT. Unless otherwise specified in Paragraph
11(f)(iii), the Transferee will transfer to the Transferor at the times
specified in Paragraph 11(f)(ii) the relevant Interest Amount to the
extent that a Delivery Amount would not be created or increased by the
transfer, as calculated by the Valuation Agent (and the date of
calculation will be deemed a Valuation Date for this purpose).
PARAGRAPH 6. DEFAULT
If any Early Termination Date is designated or deemed to occur as a result of an
Event of Default in relation to a party, an amount equal to the Value of the
Credit Support Balance, determined as though the Early Termination Date were a
Valuation Date, will be deemed to be an Unpaid Amount due to the Transferor
(which may or may not be the Defaulting Party) for purposes of Section 6(e). For
the avoidance of doubt, if Market Quotation is the applicable payment measure
for purposes of Section 6(e), then the Market Quotation determined under Section
6(e) in relation to the Transaction constituted by this Annex will be deemed to
be zero, and if Loss is the applicable payment measure for purposes of Section
6(e), then the Loss determined under Section 6(e) in relation to the Transaction
will be limited to the Unpaid Amount representing the Value of the Credit
Support Balance.
PARAGRAPH 7. REPRESENTATION
Each party represents to the other party (which representation will be deemed to
be repeated as of each date on which it transfers Eligible Credit Support,
Equivalent Credit Support or Equivalent Distributions) that is the sole owner of
or otherwise has the right to transfer all Eligible Credit Support, Equivalent
Credit Support or Equivalent Distributions it transfers to the other party under
this Annex, free and clear of any security interest, lien encumbrance or other
restriction (other than lien routinely imposed on all securities in a relevant
clearance system).
PARAGRAPH 8. EXPENSES
Each party will pay its own costs and expenses (including any stamp, transfer,
or similar transaction tax or duty payable on any transfer it is required to
make under this Annex) in connection with performing its obligations under this
Annex, and neither party will be liable for any such costs and expenses incurred
by the other party.
PARAGRAPH 9. MISCELLANEOUS
(a) DEFAULT INTEREST. Other than in the case of an amount which is the subject
of dispute under Paragraph 4(a), if a Transferee fails to make, when due, any
transfer of Equivalent Credit Support, Equivalent Distributions or the Interest
Amount, it will be obliged to pay the Transferor (to the extent permitted under
applicable law) an amount equal to interest at the Default Rate multiplied by
the Value on the relevant Valuation Date of the items of property that were
required to be transferred, from (and including) the date that the Equivalent
Credit Support, Equivalent Distributions or Interest Amount were required to be
transferred to (but excluding) the date of transfer
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Page 4
of the Equivalent Credit Support, Equivalent Distributions or Interest Amount.
This interest will be calculated on the basis of daily compounding and the
actual number of days elapsed.
(b) GOOD FAITH AND COMMERCIALLY REASONABLE MANNER. Performance of all
obligations under this Annex, including, but not limited to, all calculations,
valuations and determinations made by either party, will be made in good faith
and in a commercially reasonable manner.
(c) DEMANDS AND NOTICES. All demands and notices given by a party under this
Annex will be given as specified in Section 12 of this Agreement.
(d) SPECIFICATIONS OF CERTAIN MATTERS. Anything referred to in this Annex as
being specified in Paragraph 11 also may be specified in one or more
Confirmations or other documents and this Annex will be construed accordingly.
PARAGRAPH 10. DEFINITIONS
As used in this Annex:
"Base Currency" means the currency specified as such in Paragraph 11(a)(i).
"Base Currency Equivalent" means, with respect to an amount on a Valuation Date,
in the case of an amount denominated in the Base Currency, such Base Currency
and, in the case of an amount denominated in a currency other than the Base
Currency (the "Other Currency"), the amount of Base Currency required to
purchase such amount of the Other Currency at the spot exchange rate determined
by the Valuation Agent for value on such Valuation Date.
"Credit Support Amount" means, with respect to a Transferor on a Valuation Date,
(i) the Transferee's Exposure plus (ii) all Independent Amounts applicable to
the Transferor, if any, minus (iii) all Independent Amounts applicable to the
Transferee, if any, minus (iv) the Transferor's Threshold; provided, however,
that the Credit Support Amount will be deemed to be zero whenever the
calculation of Credit Support Amount yields a number less than zero.
"Credit Support Balance" means, with respect to a Transferor on a Valuation
Date, the aggregate of all Eligible Credit Support that has been transferred to
or received by the Transferee under this Annex, together with any Distributions
and all proceeds of any such Eligible Credit Support or Distributions, as
reduced pursuant to Paragraph 2(b), 3(c)(ii) or 6. Any Equivalent Distributions
or Interest Amount (or portion of either) not transferred pursuant to Paragraph
5(c)(i) or (ii) will form part of the Credit Support Balance.
"Delivery Amount" has the meaning specified in Paragraph 2(a).
"Disputing Party" has the meaning specified in Paragraph 4.
"Distributions" means, with respect to any Eligible Credit Support comprised in
the Credit Support Balance consisting of securities, all principal, interest and
other payments and distributions of cash or other property to which a holder of
securities of the same type, nominal value, description and amount as such
Eligible Credit Support would be entitled from time to time.
"Distribution Date" means, with respect to any Eligible Credit Support comprised
in the Credit Support Balance other than cash, each date on which a holder of
such Eligible Credit Support is entitled to receive Distributions or, if that
date is not a Local Business Day, the next following Local Business Day.
"Eligible Credit Support" means, with respect to a party, the items, if any,
specified as such for that party in Paragraph 11(b)(ii) including, in relation
to any securities, if applicable, the proceeds of any redemption in whole or in
party of such securities by the relevant issuer.
"Eligible Currency" means each currency specified as such in Paragraph
11(a)(ii), if such currency is freely available.
"Equivalent Credit Support" means, in relation to any Eligible Credit Support
comprised in the Credit Support Balance, Eligible Credit Support of the same
type, nominal value, description and amount as that Eligible Credit Support.
"Equivalent Distributions" has the meaning specified in Paragraph 5(c)(i).
"Exchange Date" has the meaning specified in Paragraph 11(d).
- --------------------------------------------------------------------------------
Page 5
"Exposure" means, with respect to a party on a Valuation Date and subject to
Paragraph 4 in the case of a dispute, the amount, if any, that would be payable
to that party by the other party (expressed as a positive number) or by that
party to the other party (expressed as a negative number) pursuant to Section
6(e)(ii)(1) of this Agreement if all Transactions (other than the Transaction
constituted by this Annex) were being terminated as of the relevant Valuation
Time, on the basis that (i) that party is not the Affected Party and (ii) the
Base Currency is the Termination Currency; provided that Market Quotations will
be determined by the Valuation Agent on behalf of that party using its estimates
at mid-market of the amounts that would be paid for Replacement Transactions (as
that term is defined in the definition of "Market Quotation").
"Independent Amount" means, with respect to a party, the Base Currency
Equivalent of the amount specified as such for that party in Paragraph
11(b)(iii)(A); if not amount is specified, zero.
"Interest Amount" means, with respect to an Interest Period, the aggregate sum
of the Base Currency Equivalents of the amounts of interest determined for each
relevant currency and calculated for each day in that Interest Period on the
principal amount of the portion of the Credit Support Balance comprised of cash
in such currency, determined by the Valuation Agent for each such day as
follows:
(x) the amount of cash in such currency on that day; multiplied by
(y) the relevant Interest Rate in effect for that day; divided by
(z) 360 (or, in the case of pounds sterling, 365).
"Interest Period" means the period from (and including) the last Local Business
Day on which an Interest Amount was transferred (or, if no Interest Amount has
yet been transferred, the Local Business Day on which Eligible Credit Support or
Equivalent Credit Support in the form of cash was transferred to or received by
the Transferee) to (but excluding) the Local Business Day on which the current
Interest Amount is transferred.
"Interest Rate" means with respect to an Eligible Currency, the rate specified
in Paragraph 11(f)(i) for that currency.
"Local Business Day" , unless otherwise specified in Paragraph 11(h), means:
(i) in relation to a transfer of cash or other property (other than
securities) under this Annex, a day on which commercial banks are open
for business (including dealings in foreign exchange and foreign
currency deposits) in the place where the relevant account is located
and, if different, in the principal financial centre, if any, of the
currency of such payment;
(ii) in relation to a transfer of securities under this Annex, a day on
which the clearance system agreed between the parties for delivery of
the securities is open for the acceptance and execution of settlement
instructions or, if delivery of the securities is contemplated by other
means, a day on which commercial banks are open for business (including
dealings in foreign exchange and foreign currency deposits) in the
place(s) agreed between the parties for this purpose.
(iii) in relation to a valuation under this Annex, a day on which
commercial banks are open for business (including dealings in foreign
exchange and foreign currency deposits) in the place of location of the
Valuation Agent and in the place(s) agreed between the parties for this
purpose; and
(iv) in relation to any notice or other communication under this Annex,
a day on which commercial banks are open for business (including
dealings in foreign exchange and foreign currency deposits) in the
place specified in the address for notice most recently provided by the
recipient.
"Minimum Transfer Amount" means, with respect to a party, the amount specified
as such for that party in Paragraph 11(b)(iii)(C); if no amount is specified,
zero.
"New Credit Support" has the meaning specified in Paragraph 3(c)(i).
"Notification Time" has the meaning specified in Paragraph 11(c)(iv).
"Recalculation Date" means the Valuation Date that gives rise to the dispute
under Paragraph 4; provided however, that if a subsequent Valuation Date occurs
under Paragraph 2 prior to the resolution of the dispute, then the
"Recalculation Date" means the most recent Valuation Date under Paragraph 2.
- --------------------------------------------------------------------------------
Page 6
"Resolution Time" has the meaning specified in Paragraph 11(c)(i).
"Return Amount" has the meaning specified in Paragraph 2(b).
"Settlement Day" means, in relation to a date, (i) with respect to a transfer of
cash or other property (other than securities), the next Local Business Day and
(ii) with respect to a transfer of securities, the first Local Business Day
after such date on which settlement of a trade in the relevant securities, if
effected on such date, would have been settled in accordance with customary
practice when settling through the clearance system agreed between the parties
for delivery of such securities or, otherwise, on the market in which such
securities are principally traded (or, in either case, if there is no such
customary practice, on the first Local Business Day after such date on which it
is reasonably practicable to deliver such securities).
"Threshold" means, with respect to a party, the Base Currency Equivalent of the
amount specified as such for that party in Paragraph 11(b)(iii)(B); if no amount
is specified, zero.
"Transferee" means, in relation to each Valuation Date, the party in respect of
which Exposure is a positive number and, in relation to a Credit Support
Balance, the party which, subject to this Annex, owes such Credit Support
Balance or, as the case may be, the Value of such Credit Support Balance to the
other party.
"Transferor" means, in relation to a Transferee, the other party.
"Valuation Agent" has the meaning specified in Paragraph 11(c)(i).
"Valuation Date" means each date specified in or otherwise determined pursuant
to Paragraph 11(c)(ii).
"Valuation Percentage" means, for any item of Eligible Credit Support, the
percentage specified in Paragraph 11(b)(ii).
"Valuation Time" has the meaning specified in Paragraph 11(c)(iii).
"Value" means, for any Valuation Date or other date for which Value is
calculated, and subject to Paragraph 4 in the case of a dispute, with respect
to:
(i) Eligible Credit Support comprised in a Credit Support Balance
that is:
(A) an amount of cash, the Base Currency Equivalent of such
amount multiplied by the applicable Valuation Percentage, if
any; and
(B) a security, the Base Currency Equivalent of the bid price
obtained by the Valuation Agent multiplied by the applicable
Valuation Percentage, if any; and
(ii) items that are comprised in a Credit Support Balance and are
not Eligible Credit Support, zero.
PARAGRAPH 11. ELECTIONS AND VARIABLES
(a) BASE CURRENCY AND ELIGIBLE CURRENCY.
(i) "Base Currency" means US$.
(ii) "Eligible Currency" means the Base Currency.
It is agreed by the parties that where the Credit Support Amount is
transferred in a currency other than the Base Currency, the Valuation
Percentage specified in Paragraph 11(b)(ii) shall be reduced by a
percentage agreed by the parties and approved by the relevant rating
agency ("ADDITIONAL VALUATION PERCENTAGE"), such Additional Valuation
Percentage being 6% or such lower percentage as agreed by the parties
and approved by the relevant rating agency. For the purpose of this
Annex, references to the "relevant rating agency" shall mean the rating
agency whose Ratings Criteria will be used to determine the amount of
Eligible Credit Support that Party A is required to transfer to Party B
following a credit ratings downgrade of Party A.
(b) CREDIT SUPPORT OBLIGATIONS.
(i) DELIVERY AMOUNT, RETURN AMOUNT AND CREDIT SUPPORT AMOUNT.
- --------------------------------------------------------------------------------
Page 7
(A) "DELIVERY AMOUNT": Paragraph 2(a) shall apply, except
that the words, "upon a demand made by the
Transferee" shall be deleted and the word "that" on
the second line of Paragraph 2(a) shall be replaced
with the word "a".
(B) "RETURN AMOUNT" has the meaning as specified in
Paragraph 2(b).
(C) "CREDIT SUPPORT AMOUNT" has the meaning specified
under the relevant definition of Ratings Criteria. In
circumstances where more than one of the Ratings
Criteria apply to Party A, the Credit Support Amount
shall be calculated by reference to the Ratings
Criteria which would result in Party A transferring
the greatest amount of Eligible Credit Support. Under
no circumstances will Party A be required to transfer
more Eligible Credit Support than the greatest amount
calculated in accordance with the Ratings Criteria
set out below.
(II) ELIGIBLE CREDIT SUPPORT. The following items will qualify as
"Eligible Credit Support" for Party A:
VALUATION
PERCENTAGE
(A) cash in an Eligible Currency. 100%
(B) negotiable debt obligations issued after 18 July 1984 99%
by the U.S. Treasury Department
having a residual maturity on such date of less than
1 year (with local and foreign currency long term
issuer ratings of Moody's Aa2 and S&P AA or above).
(C) negotiable debt obligations issued after 18 July 1984 97%
by the U.S. Treasury Department having a residual
maturity on such date equal to or greater than 1 year
but less than 5 years (with local and foreign
currency long term issuer ratings of Moody's Aa2 and
S&P AA or above).
(D) negotiable debt obligations issued after 18 July 1984 95%
by the U.S. Treasury Department having a residual
maturity on such date equal to or greater than 5
years but less than 10 years (with local and foreign
currency long term issuer ratings of Moody's Aa2 and
S&P AA or above).
(E) negotiable debt obligations of the Federal Republic 95%
of Germany (with local and foreign currency long term
issuer ratings of Moody's Aa2 and S&P AA or above)
with a residual maturity of less than 10 years at the
date of their transfer to Party B.
(F) negotiable debt obligations of the Republic of France 95%
(with local and foreign currency long term issuer
ratings of Moody's Aa2 and S&P AA or above) with a
residual maturity of less than 10 years at the date of
their transfer to Party B.
(G) negotiable debt obligations of Belgium (with local and 95%
foreign currency long term issuer ratings of Moody's
Aa2 and S&P AA or above) with a residual maturity of
less than 10 years at the date of their transfer to
Party B.
(H) negotiable debt obligations of the United Kingdom 95%
(with local and foreign currency long term issuer
ratings of Moody's Aa2 and S&P AA or above) with
- --------------------------------------------------------------------------------
Page 8
a residual maturity of less than 10 years at the date
of their transfer to Party B.
(I) negotiable debt obligations of Italy (with local and 95%
foreign currency long term issuer ratings of Moody's
Aa2 and S&P AA or above) with a residual Maturity of
less than 10 years at the date of their transfer to
Party B.
(J) negotiable debt obligations of the Netherlands (with 95%
local and foreign currency long term issuer ratings of
Moody's Aa2 and S&P AA or above) with a residual
maturity of less than 10 years at the date of their
transfer to Party B.
(K) negotiable debt obligations of Sweden (with local and 95%
foreign currency long term issuer ratings of Moody's
Aa2 and S&P AA or above) with a residual maturity of
less than 10 years at the date of their transfer to
Party B.
(L) negotiable debt obligations of the US Government 97%
National Mortgage Association, the US Federal
National Mortgage Association, the US Federal
Home Loan Mortgage Corporation,
the US Student Loans Marketing Association
or a US Federal Home Loan Bank (all entities rated
Moody's Aa1 (long term) and S&P AA+ (long term) or
above) with a residual maturity on such date equal to
or greater than 1 year but less than 3 years.
(M) negotiable debt obligations of the US Government 90%
National Mortgage Association, the US Federal
National Mortgage Association, the US Federal
Home Loan Mortgage Corporation,
the US Student Loans Marketing Association
or a US Federal Home Loan Bank (all entries rated
Moody's Aa1 (long term) and S&P AA+ (long term)
or above) with a residual maturity on such date equal
to or greater than 3 years but less than 5 years.
(N) negotiable debt obligations of the US Government 87%
National Mortgage Association, the US Federal
National Mortgage Association, the US Federal
Home Loan Mortgage Corporation,
the US Student Loans Marketing Association
or a US Federal Home Loan Bank (all entries rated
Moody's Aa1 (long term) and S&P AA+ (long term)
or above) with a residual maturity on such date equal
to or greater than 5 years but less than 7 years.
(O) negotiable debt obligations of the US Government 83%
National Mortgage Association, the US Federal
National Mortgage Association, the US Federal
Home Loan Mortgage Corporation,
the US Student Loans Marketing Association
or a US Federal Home Loan Bank (all entries rated
Moody's Aa1 (long term) and S&P AA+ (long term) or
above) with a residual maturity on such date equal to
or greater than 7 years but less than 10 years.
For the avoidance of doubt, where negotiable debt obligations
are rated by only one of the above relevant rating agencies,
the rating applied will be based on the rating of that agency.
- --------------------------------------------------------------------------------
Page 9
Where the ratings of the relevant rating agencies differ with
respect to the same negotiable debt obligation, the lower of
the ratings shall apply.
(iii) THRESHOLDS.
(A) "INDEPENDENT AMOUNT" means, for Party A and Party B,
with respect to each Transaction, zero.
(B) "THRESHOLD" means, for Party A:
1. infinity, unless: (i) Party A is Downgraded and the
downgrade constitutes a Minor Downgrade; AND (ii) it
has not otherwise complied with Section 18(c)(ii),
(iii) or (iv) of this Agreement, in which case its
Threshold shall be zero; or
2. in the event that Party A has complied with Section
18(c)(ii), (iii) or (iv) of this Agreement, its
Threshold shall continue to be infinity, unless it
(or its successor) is Downgraded and the downgrade
constitutes a Major Downgrade, in which case its
Threshold shall be zero until such time as it has
complied with Section 18(c)(ii), (iii) or (iv) of
this Agreement.
"THRESHOLD" means, for Party B: infinity.
(C) "MINIMUM TRANSFER AMOUNT" means, with respect to
Party A and Party B, US$10,000; provided that if: (1)
an Event of Default has occurred and is continuing
with respect to Party A; or (2) an Additional
Termination Event has occurred in respect of which
Party A is an Affected Party, the Minimum Transfer
Amount with respect to such party shall be zero.
(D) "ROUNDING". The Delivery Amount and the Return Amount
will be rounded up and down to the nearest integral
multiple of US$10,000 respectively, subject to the
maximum Return Amount being equal to the Credit
Support Balance.
(c) VALUATION AND TIMING.
(i) "VALUATION AGENT" means Party A in all circumstances.
(ii) "VALUATION DATE" means every day; provided that if such day is
not a Local Business Day then the Valuation Date shall be the
preceding day that is a Local Business Day.
(iii) "VALUATION TIME" means 5.00p.m. New York time on the Local
Business Day immediately preceding the Valuation Date or date
of calculation, as applicable; provided that the calculations
of Value and Exposure will be made at approximately the same
time on the same date.
(iv) "NOTIFICATION TIME" means by 2:00p.m., London time, on a Local
Business Day.
(d) EXCHANGE DATE. "Exchange Date" has the meaning specified in Paragraph
3(c)(ii).
(e) DISPUTE RESOLUTION.
(i) "RESOLUTION TIME" means 2:00 p.m., London time, on the Local
Business Day following the date on which notice is given that
gives rise to a dispute under Paragraph 4.
(ii) "VALUE". For the purpose of Paragraphs 4(a)(4)(i)(C) and
4(a)(4)(ii), the Value of the outstanding Credit Support
Balance or of any transfer of Eligible Credit Support or
Equivalent Credit Support, as the case may be, will be
calculated as follows:
For Eligible Credit Support comprised in a Credit Support
Balance that is an amount of cash, the Base Currency
Equivalent of such amount.
(iii) "ALTERNATIVE". The provisions of Paragraph 4 will apply.
(f) DISTRIBUTION AND INTEREST AMOUNT.
- --------------------------------------------------------------------------------
Page 10
(i) INTEREST RATE. The "INTEREST RATE" will be with respect to the
Base Currency, the Effective Federal funds rate in US$
published on Telerate Page 118 for the relevant day at the
close of business in New York on such day, or any successor
page and if for any reason Telerate Page 118 should be
unavailable the Interest Rate shall be such rate as agreed
between the parties reflecting the then prevailing market
rate. In the event that the parties agree that Eligible Credit
Support may include currencies other than the Base Currency,
the "INTEREST RATE" with respect to each such currency shall
be such rate as may be agreed between the parties at the time
that it is agreed that Eligible Credit Support may include
such currency.
(ii) "TRANSFER OF INTEREST AMOUNT". The transfer of the Interest
Amount will be made on the first Local Business Day following
the end of each calendar month to the extent that Party B has
earned and received such amount of interest and that a
Delivery Amount would not be created or increased by that
transfer, and on any other Local Business Day on which
Equivalent Credit Support is transferred to the Transferor
pursuant to Paragraph 2(b), provided that Party B shall only
be obliged to transfer any Interest Amount to Party A to the
extent that it has received such amount.
(iii) "ALTERNATIVE TO INTEREST AMOUNT". The provisions of Paragraph
5(c)(ii) will apply. For the purposes of calculating the
Interest Amount the amount of interest calculated for each day
of the Interest Period shall, with respect to any Eligible
Currency, be compounded daily.
(iv) INTEREST AMOUNT" The definition of "INTEREST AMOUNT" shall be
deleted and replaced with the following:
"INTEREST AMOUNT" means, with respect to an Interest Period
and each portion of the Credit Support Balance comprised of
cash in an Eligible Currency, the sum of the amounts of
interest determined for each day in that Interest Period by
the Valuation Agent as follows:
(x) the amount of such currency comprised in the Credit
Support Balance at the close of business for general
dealings in the relevant currency on such day (or, if
such day is not a Local Business Day, on the
immediately preceding Local Business Day); multiplied
by
(y) the relevant Interest Rate; divided by
(z) 360 (or in the case of pounds sterling, 365).
(g) ADDRESSES FOR TRANSFERS.
Party A:
----------------------------------- -------------------------------- --------------------------------
GBP Cash EUR Cash US$ Cash
-------- -------- --------
Barclays Bank London Barclays Bank London Barclays Bank PLC
Sort Code 20-00-00 A/c number 44295577 A/C 050035428
A/c number: 50654140 A/c name: Barclays Capital A/c name: Barclays Capital
A/c name: Barclays Capital Ref: Collateral Ref: Collateral
Ref: Collateral
----------------------------------- -------------------------------- --------------------------------
Party B: to be advised
(h) OTHER PROVISIONS.
(I) TRANSFER TIMING
(A) The final paragraph of Paragraph 3(a) shall be deleted and
replaced with the following:
- --------------------------------------------------------------------------------
Page 11
"Subject to Paragraph 4, and unless otherwise
specified, any transfer of Eligible Credit Support or
Equivalent Credit Support (whether by the Transferor
pursuant to Paragraph 2(a) or by the Transferee
pursuant to Paragraph 2(b)) shall be made not later
than the close of business on the Settlement Day."
(B) The definition of Settlement Day shall be deleted and
replaced with the following:
"SETTLEMENT DAY" means the next Local Business Day
after the Demand Date.
(C) For the purposes of this Paragraph 11(h)(i):
"DEMAND DATE" means, with respect to a transfer by a
party:
(i) in the case of a transfer pursuant to
Paragraph 2, Paragraph 3 or Paragraph
4(a)(2), the relevant Valuation Date. For
the avoidance of doubt, for the purposes of
Paragraph 2 and Paragraph 4(a)(2), the
Transferor will be deemed to receive notice
of the demand by the Transferee to make a
transfer of Eligible Credit Support; and
(ii) in the case of a transfer pursuant to
Paragraph 3(c)(ii)(A), the date on which the
Transferee has given its consent to the
proposed exchange.
For the avoidance of doubt, on each Demand Date the Transferor shall
deliver to the Transferee a statement showing the amount of Eligible
Credit Support to be delivered.
(ii) EARLY TERMINATION
The heading for Paragraph 6 shall be deleted and replaced with
"Early Termination" and the following shall be added after the
word "Default" in the first line of Paragraph 6, "or a
Termination Event in relation to all (but not less than all)
Transactions".
(iii) COSTS OF TRANSFER ON EXCHANGE
Notwithstanding Paragraph 8, the Transferor will be
responsible for, and will reimburse the Transferee for, all
transfer and other taxes and other costs involved in the
transfer of Eligible Credit Support either from the Transferor
to the Transferee or from the Transferee to the Transferor
hereto.
(iv) CUMULATIVE RIGHTS
The rights, powers and remedies of the Transferee under this
Annex shall be in addition to all rights, powers and remedies
given to the Transferee by this Agreement or by virtue of any
statute or rule of law, all of which rights, powers and
remedies shall be cumulative and may be exercised successively
or concurrently without impairing the rights of the Transferee
in the Credit Support Balance created pursuant to this Annex.
(v) SINGLE TRANSFEROR AND SINGLE TRANSFEREE
Party A and Party B agree that, notwithstanding anything to
the contrary in this Annex, (including, without limitation,
the recital hereto, Paragraph 2 or the definitions in
Paragraph 10), (a) the term "Transferee" as used in this Annex
means only Party B, (b) the term "Transferor" as used in this
Annex means only Party A, (c) only Party A will be required to
make Transfers of Eligible Credit Support hereunder; and (d)
in the calculation of any Credit Support Amount, where the
Transferee's Exposure would be expressed as a negative number,
such Exposure shall be deemed to be zero.
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Page 12
(vi) RATINGS CRITERIA
"RATINGS CRITERIA" means the criteria used by S&P ("S&P
CRITERIA") and the criteria used by Moody's ("MOODY'S
CRITERIA") for the purposes of determining the amount of
Eligible Credit Support Party A is required to transfer
hereunder following a credit ratings downgrade where Party A
has opted to or is required to transfer Eligible Credit
Support in support of its obligations under each Transaction
pursuant to Section 18 of this Agreement.
MOODY'S CRITERIA
"CREDIT SUPPORT AMOUNT" shall mean:
(A) the Transferee's Exposure multiplied by "A"; and
(B) the product of "B" and the sum of the Party A
Floating Rate Payer Currency Amount(s) (as defined in
the Confirmation for each outstanding Transaction
under this Agreement), where:
(i) "A" means 3% and "B" means 4.6% if the
short-term, unsecured and unsubordinated
debt obligations of Party A (or its
successor) and, if relevant, any Credit
Support Provider of Party A cease to be
rated as high as "Prime-1" and "A2" by
Moody's; and
(ii) "A" means 0% and "B" means 0% in all other
cases.
S&P CRITERIA
"CREDIT SUPPORT AMOUNT" shall mean, with respect to a
Transferor on a Valuation Date, the greater of:
(A) (i) MTM + VB = CR;
(ii) MTM + (VB x 0.1) = BRCR; or
(iii) CR x CM1 x CM2 = CCR,
where applicable; and
(B) 0.
If the Transaction under this Agreement is an Interest Rate
Swap, Basis Swap or Currency Swap (as defined in the
Confirmation (including by incorporation by reference) for
each outstanding Transaction under this Agreement), then
(A)(i), (ii) or (iii) will apply respectively.
Where:
-----
"MTM" means Transferee's Exposure;
"VB" means the Party A Floating Rate Payer Currency Amount (as
defined in the Confirmation for each outstanding Transaction
under this Agreement) times the relevant percentage set out in
Table A below;
"CM1" and "CM2" mean the multiplication factors set out in
Table B below. The currency of each leg of the Transaction
will determine which factor to use for each of CM1 and CM2.
- --------------------------------------------------------------------------------
Page 13
TABLE A
- ----------------------------------------------------------------------------------------------
VOLATILITY BUFFER
- ----------------------------------------------------------------------------------------------
Counterparty The Group 1, Remaining Term Remaining Term Remaining Term (as
Group 2 or (as defined in (as defined in defined in the 2000
Group 3 is the 2000 ISDA the 2000 ISDA ISDA Definitions)
dependent on Definitions) of Definitions) of of Transaction more
the currency Transaction up to Transaction up than 10 years
of the 5 years to 10 years,
Transaction. but greater
than 5 years
- ----------------- ---------------- ------------------- ----------------- ---------------------
The rating by Group 1 0.6% 1.05% 1.5%
S&P of Party
A's long-term ---------------- ------------------- ----------------- ---------------------
unsecured, Group 2 1.05% 1.75% 3.0%
unsubordinated
obligations is ---------------- ------------------- ----------------- ---------------------
at least equal Group 3 1.5% 2.45% 4.5%
to "A+"
- ----------------- ---------------- ------------------- ----------------- ---------------------
The rating by Group 1 0.9% 1.10% 1.9%
S&P of Party
A's long-term ---------------- ------------------- ----------------- ---------------------
unsecured, Group 2 1.35% 2.45% 4.5%
unsubordinated
obligations is ---------------- ------------------- ----------------- ---------------------
equal to "A" Group 3 1.8% 3.15% 6.0%
- ----------------- ---------------- ------------------- ----------------- ---------------------
The rating by Group 1 1.2% 2.25% 4.5%
S&P of Party
A's long-term ---------------- ------------------- ----------------- ---------------------
unsecured, Group 2 1.5% 3.15% 6.0%
unsubordinated
obligations is ---------------- ------------------- ----------------- ---------------------
less than "A" Group 3 2.1% 3.85% 7.5%
- ----------------------------------------------------------------------------------------------
Group 1 currencies are: Belgian francs, Deutschemarks, Dutch guilders, Euro, European
Currency Units, French franca, Japanese yen, Swiss francs and U.S. dollars.
- ----------------------------------------------------------------------------------------------
Group 2 currencies are: Australian dollars, British pounds sterling, Canadian dollars,
Danish kroner, New Zealand dollars and Swedish kroner.
- ----------------------------------------------------------------------------------------------
Group 3 currencies are: Hong Kong dollars, Italian lire and Spanish pesetas.
- ----------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Page 14
TABLE B
- --------------------------------------------------------------------------------
MULTIPLICATION FACTORS FOR CURRENCY SWAPS
- --------------------------------------------------------------------------------
U.S. dollars 1.000
- -------------------------------------------------- -----------------------------
Canadian dollars 1.020
- -------------------------------------------------- -----------------------------
New Zealand dollars 1.020
- -------------------------------------------------- -----------------------------
Australian dollars 1.030
- -------------------------------------------------- -----------------------------
Hong Kong dollars 1.030
- -------------------------------------------------- -----------------------------
Belgian dollars 1.040
- -------------------------------------------------- -----------------------------
British pounds sterling 1.040
- -------------------------------------------------- -----------------------------
Danish kroner 1.040
- -------------------------------------------------- -----------------------------
Dutch gilders 1.040
- -------------------------------------------------- -----------------------------
European Currency Units 1.040
- -------------------------------------------------- -----------------------------
Euro 1.040
- -------------------------------------------------- -----------------------------
French francs 1.040
- -------------------------------------------------- -----------------------------
German marks 1.040
- -------------------------------------------------- -----------------------------
Japanese yen 1.040
- -------------------------------------------------- -----------------------------
Italian lire 1.045
- -------------------------------------------------- -----------------------------
Spanish pesetas 1.045
- -------------------------------------------------- -----------------------------
Swedish kroner 1.045
- -------------------------------------------------- -----------------------------
Swiss francs 1.045
- -------------------------------------------------- -----------------------------
(vii) CALCULATIONS.
Paragraph 3(b) of this Annex shall be amended by inserting the words
"and shall provide each party (or the other party, if the Valuation
Agent is a party) with a description in reasonable detail of how such
calculations were made, upon request" after the word "calculations" in
the third line thereof.
(viii) DEMANDS AND NOTICES.
All demands, specifications and notices under this Annex will be made
pursuant to Section 12 of this Agreement.
(ix) EXPOSURE.
"EXPOSURE" means, with respect to a party on a Valuation Date and
subject to Paragraph 4 of this Annex in the case of a dispute, the
amount, if any, that would be payable to that party by the other party
(expressed as a positive number) or by that party to the other party
(expressed as a negative number) pursuant to Section 6(e)(ii)(1) of
this Agreement if all Transactions (other than the Transaction
constituted by this Annex) were being terminated as of the relevant
Valuation Time, on the basis that (i) that party is not the Affected
Party and (ii) the base currency, being US$, is the Termination
Currency; provided that Market Quotations will be determined by the
Valuation Agent on behalf of that party using the arithmetic mean of
three actual quotes at mid-market of the amounts that would be paid for
Replacement Transactions (as that term is defined in the definition of
"Market Quotation"). If three quotations are not available, then fewer
than three quotations may be used, and if no quotations are available
for a particular Transaction, then the Valuation Agent's calculations
as agreed with the Designated Rating Agencies under commercially
reasonable terms and assumptions will be used for the Transaction.
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