(Multicurrency--Cross Border)
ISDA'r'
International Swap Dealers Association Inc.
MASTER AGREEMENT
dated as of December 3, 1997
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mitsui Marine Derivative Products, L.P. and Capital Equipment
Receivables Trust 1997-1 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 from a single agreement between
the parties (collectively referred to as this "Agreement"), and the parties
would not otherwise enter into any Transactions.
2. OBLIGATIONS
(a) GENERAL CONDITIONS.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for value on
that date in the place of the account specified in the relevant Confirmation
or otherwise pursuant to this Agreement, in freely transferable funds and in
the manner customary for payments in the required currency. Where settlement
is by delivery (that is, other than by payment), such delivery will be made
for receipt on the due date in the manner customary for the relevant
obligation unless otherwise specified in the relevant Confirmation or
elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to (1)
the condition precedent that no Event of Default or Potential Event of
Default with respect to the other party has occurred and is continuing, (2)
the condition precedent that no Early Termination Date in respect of the
relevant Transaction has occurred or been effectively designated and (3)
each other applicable condition precedent specified in this Agreement.
Copyright 'c' 1992 by International Swap Dealers Association, Inc.
(b) CHANGE OF ACCOUNT. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) NETTING. If on any date amounts would otherwise be payable:--
(i) in the same currency; and
(ii) in respect of the same Transaction.
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will
not, or will cease to, apply to such Transactions from such date). This election
may be made separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and
receive payments or deliveries.
(d) DEDUCTION OR WITHHOLDING FOR TAX.
(i) GROSS-UP. All payments under this Agreement will be made without any
deduction or withholding for or on account of any Tax unless such deduction
or withholding is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, then in effect. If
a party is so required to deduct or withhold, then that party ("X") will:--
(1) promptly notify the other party ("Y") of such requirement;
(2) pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be deducted
or withheld from any additional amount paid by X to Y under this Section
2(d)) promptly upon the earlier of determining that such deduction or
withholding is required or receiving notice that such amount has been
assessed against Y;
(3) promptly forward to Y an official receipt (or a certified copy), or
other documentation reasonably acceptable to Y, evidencing such payment
to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to the
payment to which Y is otherwise entitled under this Agreement, such
additional amount as is necessary to ensure that the net amount actually
received by Y (free and clear of Indemnifiable Taxes, whether assessed
against X or Y) will equal the full amount Y would have received had
not 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.
2
(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 organised and validly existing under the laws of the
jurisdiction of its organisation or incorporation and, if relevant under
such laws, in good standing;
(ii) POWERS. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to deliver
this Agreement and any other documentation relating to this Agreement that
it is required by this Agreement to deliver and to perform its obligations
under this Agreement and any obligations it has under any Credit Support
Document to which it is a party and has taken all necessary action to
authorise 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, reorganisation, 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)).
3
(b) ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of
Default, or, to its knowledge. Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.
(c) ABSENCE OF LITIGATION. There is not pending or, to its knowledge, threatened
against it or any of its Affiliates any action, suit or proceeding at law or in
equity or before any court, tribunal, governmental body, agency or official or
any arbitrator that is likely to affect the legality, validity or enforceability
against it of this Agreement or any Credit Support Document to which it is a
party or its ability to perform its obligations under this Agreement or such
Credit Support Document.
(d) ACCURACY OF SPECIFIED INFORMATION. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
(e) PAYER TAX REPRESENTATION. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(e) is accurate and true.
(f) PAYEE TAX REPRESENTATIONS. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(f) is accurate and true.
4. AGREEMENTS
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party: --
(a) FURNISH SPECIFIED INFORMATION. It will deliver to the other party or, in
certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs: --
(i) any forms, documents or certificates relating to taxation specified in
the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any Confirmation; and
(iii) upon reasonable demand by such other party, any form or document that
may be required or reasonably requested in writing in order to allow such
other party or its Credit Support Provider to make a payment under this
Agreement or any applicable Credit Support Document without any deduction or
withholding for or on account of any Tax or with such deduction or
withholding at a reduced rate (so long as the completion, execution or
submission of such form or document would not materially prejudice the legal
or commercial position of the party in receipt of such demand), with any
such form or document to be accurate and completed in a manner reasonably
satisfactory to such other party and to be executed and to be delivered with
any reasonably required certification,
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.
(b) MAINTAIN AUTHORISATIONS. 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,
4
organised, managed and controlled, or considered to have its seat, or in which a
branch or office through which it is acting for the purpose of this Agreement is
located ("Stamp Tax Jurisdiction") and will indemnify the other party against
any Stamp Tax levied or imposed upon the other party or in respect of the other
party's execution or performance of this Agreement by any such Stamp Tax
Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the
other party.
5. EVENTS OF DEFAULT AND TERMINATION EVENTS
(a) EVENTS OF DEFAULT. The occurrence at any time with respect to a party or, if
applicable, any Credit Support Provider of such party or any Specified Entity of
such party of any of the following events constitutes an event of default (an
"Event of Default") with respect to such party: --
(i) FAILURE TO PAY OR DELIVER. Failure by the party to make, when due, any
payment under this Agreement or delivery under Section 2(a)(i) or 2(e)
required to be made by it if such failure is not remedied on or before the
third Local Business Day after notice of such failure is given to the party;
(ii) BREACH OF AGREEMENT. Failure by the party to comply with or perform any
agreement or obligation (other than an obligation to make any payment under
this Agreement or delivery under Section 2(a)(i) or 2(e) or to give notice
of a Termination Event or any agreement or obligation under Section 4(a)(i),
4(a)(iii) or 4(d)) to be complied with or performed by the party in
accordance with this Agreement if such failure is not remedied on or before
the thirtieth day after notice of such failure is given to the party;
(iii) CREDIT SUPPORT DEFAULT.
(1) Failure by the party or any Credit Support Provider of such party to
comply with or perform any agreement or obligation to be complied with
or performed by it in accordance with any Credit Support Document if
such failure is continuing after any applicable grace period has
elapsed;
(2) the expiration or termination of such Credit Support Document or the
failing or ceasing of such Credit Support Document to be in full force
and effect for the purpose of this Agreement (in either case other than
in accordance with its terms) prior to the satisfaction of all
obligations of such party under each Transaction to which such Credit
Support Document relates without the written consent of the other party;
or
(3) the party or such Credit Support Provider disaffirms, disclaims,
repudiates or rejects, in whole or in part, or challenges the validity
of, such Credit Support Document;
(iv) MISREPRESENTATION. A representation (other than a representation under
Section 3(e) or (f)) made or repeated or deemed to have been made or
repeated by the party or any Credit Support Provider of such party in this
Agreement or any Credit Support Document proves to have been incorrect or
misleading in any material respect when made or repeated or deemed to have
been made or repeated;
(v) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit Support
Provider of such party or any applicable Specified Entity of such party (1)
defaults under a Specified Transaction and, after giving effect to any
applicable notice requirement or grace period, there occurs a liquidation
of, an acceleration of obligations under, or an early termination of, that
Specified Transaction, (2) defaults, after giving effect to any applicable
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 grade 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
5
described) in respect of such party, any Credit Support Provides 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 preceding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy or insolvency law or
other similar law affecting creditors' rights, or a petition is
presented for its winding-up or liquidation, and, in the case of any
such proceeding or petition instituted or presented against it, such
proceeding or petition (A) results in a judgment of insolvency or
bankruptcy or the entry of an order for relief or the making of an order
for its winding-up or liquidation or (B) is not dismissed, discharged,
stayed or restrained in each case within 30 days of the institution or
presentation thereof; (5) has a resolution passed for its winding-up,
official management or liquidation (other than pursuant to a
consolidation, amalgamation or merger); (6) seeks or becomes subject to
the appointment of an administrator, provisional liquidator, conservator
receiver, trustee, custodian or other similar official for it or for all
or substantially all its assets; (7) has a secured party take possession
of all or substantially all its assets or has a distress, execution,
attachment, sequestration or other legal process levied, enforced or
sued on or against all or substantially all its assets and such secured
party maintains possession, or any such process is not dismissed,
discharged, stayed or restrained, in each case within w 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) MERGE 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 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
6
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 or any applicable law
after such date, it becomes unlawful (other than as a result of a breach by
the party of Section 4(b)) for such party (which will be the Affected
Party):--
(1) to perform any absolute or contingent obligation to make a payment
or delivery or to receive a payment or delivery in respect of such
Transaction or to comply with any other material provision of this
Agreement relating to such Transaction,; or
(2) to perform, or for any Credit Support Provider of such party to
perform, any contingent or other obligation which the party (or such
Credit Support Provider) has under any Credit Support Document relating
to such Transaction;
(ii) TAX EVENT. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on which
a Transaction is entered into (regardless of whether such action is taken or
brought with respect to a party to this Agreement) or (y) a Change in Tax
Law, the party (which will be 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 (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)(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 of 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 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 that 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.
7
6. EARLY TERMINATION
(a) RIGHT OF 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 that the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the
extent analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the presentation of the relevant
petition upon the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4), or, to the extent analogous thereto, (8).
(b) RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT.
(i) NOTICE. If a Termination Event occurs, an Affected Party will, promptly
upon becoming aware of it, notify the other party, specifying the nature of
that Termination Event and each Affected Transaction and will also give such
other information about that Termination Event as the other party may
reasonably require.
(ii) TRANSFER TO AVOID TERMINATION EVENT. If either and 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) RIGHTS 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
8
continuing, designate a day not earlier than the day such notice if
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.
(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 Transaction 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 it 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 this
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
9
Non-defaulting Party) in respect of the Terminated Transactions and the
Termination Currency Equivalent of the Unpaid Amounts owing to the
Non-defaulting Party less (B) the Termination Currency Equivalent of the
Unpaid Amounts owing to the Defaulting Party. If that amount is a
positive number, the Defaulting Party will pay it to the Non-defaulting
Party; if it is a negative number, the Non-defaulting Party will pay the
absolute value of that amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss apply, an
amount will be payable equal to the Non-defaulting Party's Loss in
respect of this Agreement. If that amount is 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 Quotations applies, each party will determine a
Settlement Amount in respect of 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.
10
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) JUDGEMENTS. 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.
11
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 organisation of such party, the obligations
of such party are the same as if it had entered into the Transaction through its
head or home office. This representation will be deemed to be repeated by such
party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.
11. EXPENSES
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document
12
to which the Defaulting Party is a party or by reason of the early termination
of any Transaction, including, but not limited to, costs of collection.
12. NOTICES
(a) EFFECTIVENESS. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--
(i) if in writing and delivered in person or by courier, on the date it is
delivered;
(ii) if sent by telex, on the date the recipient's answerback is received;
(iii) if sent by facsimile transmission, on the date that transmission is
received by a responsible employee of the recipient in legible form (it
being agreed that the burden of proving receipt will be on the sender and
will not be met by a transmission report generated by the sender's
facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or the
equivalent (return receipt requested), on the date that mail is delivered
or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that electronic
message is received.
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Date, 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 of electronic messaging system details at
which notices or other communications are to be given to it.
13. GOVERNING LAW AND JURISDICTION
(a) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) JURISDICTION. With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings"), each party irrevocably:--
(i) submits to the jurisdiction of the English courts, if this Agreement is
expressed to be governed by English law, or to the non-exclusive
jurisdiction of the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New York City, if
this Agreement is expressed to be governed by the laws of the State of New
York; and
(ii) waives any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any claim that
such Proceedings have been brought in an inconvenient forum and further
waives the right to object, with respect to such Proceedings, that such
court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdicition and Judgments ▇▇▇ ▇▇▇▇ 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
13
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 the
service of process given in the manner provided for notices in Section 12.
Nothing in this Agreement will affect the right of either party to serve process
in any other manner permitted by law.
(d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest extent
permitted by applicable law, with respect to itself and its revenues and assets
(irrespective of their use or intended use), all immunity on the grounds of
sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
14. DEFINITIONS
As used in this Agreement:--
"ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b).
"AFFECTED PARTY" has the meaning specified in Section 5(b).
"AFFECTED TRANSACTIONS" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"AFFILIATE" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"APPLICABLE RATE" means:--
(a) in respect of obligations payable or deliverable (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
Rate; and
(d) in all other cases, the Termination Rate.
"BURDENED PARTY" has the meaning specified in Section 5(b).
"CHANGE IN TAX LAW" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs on or after the date on which the
relevant Transaction is entered into.
"CONSENT" includes a consent, approval, action, authorisation, 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.
14
"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 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, it not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
with respect to such Specified Transaction.
"LOSS" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case expressed as a negative number)
in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain resulting from
any of them). Loss incudes 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
15
been required after that date. For this purpose, Unpaid Amounts in respect of
the Terminated Transaction or group of Terminated Transactions are to be
excluded but, without limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required (assuming satisfaction
of each applicable condition precedent) after that Early Termination Date is to
be included. The Replacement Transaction would be subject to such documentation
as such party and the Reference Market-maker may, in good faith, agree. The
party making the determination (or its agent) will request each Reference
Market-maker to provide its quotation to the extent reasonably practicable as of
the same day and time (without regard to different time zones) on or as soon as
reasonably practicable after the relevant Early Termination Date. The day and
time as of which those quotations are to be obtained will be selected in good
faith by the party obliged to make a determination under Section 6(e), and, if
each party is so oblige, 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.
'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, organised, 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 an 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.
16
'SPECIFIED INDEBTEDNESS' means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.
'SPECIFIED TRANSACTION' means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into [between one party to this Agreement (or any Credit Support Provider of
such party or any applicable Specified Entity of such party) and the other party
to this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party)] which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.
'STAMP TAX' means any stamp, registration, documentation or similar tax.
'TAX' means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto) that is
imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax.
'TAX EVENT' has the meaning specified in Section 5(b).
'TAX EVENT UPON MERGER' has the meaning specified in Section 5(b).
'TERMINATED TRANSACTIONS' means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if 'Automatic Early Termination' applies, immediately
before that Early Termination Date).
'TERMINATION CURRENCY' has the meaning specified in the Schedule.
'TERMINATION CURRENCY EQUIVALENT' means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
'Other Currency'), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a rate
for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.
'TERMINATION EVENT' means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.
'TERMINATION RATE' means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
'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
17
value of that which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with (to the
extent permitted under applicable law) interest, in the currency of such
amounts, from (and including) the date such amounts or obligations were or would
have been required to have been paid or performed to (but excluding) such Early
Termination Date, at the Applicable Rate. Such amounts of interest will be
calculated on the basis of daily compounding and the actual number of days
elapsed. The fair market value of any obligation referred to in clause (b) above
shall be reasonably determined by the party obliged to make the determination
under Section 6(e) or, if each party is so obliged, it shall be the average of
the Termination Currency Equivalents of the fair market values reasonably
determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mitsui Marine Capita Equipment Receivables
Derivative Products, L.P. Trust 1997-1
..................................... ......................................
(Name of Party) (Name of Party)
By: /s/ David Vinia By: /s/ ▇▇▇▇▇▇ ▇. Laser
................................. ..................................
Name: David Vinia Name: ▇▇▇▇▇▇ ▇. Laser
Title: Treasurer-GSMMDPGP, Inc. Title: Assistant Vice President
Date: December 3, 1997 Date:
18
SCHEDULE
to the
ISDA MASTER AGREEMENT
dated as of December 3, 1997
between
▇▇▇▇▇▇▇ SACHS MITSUI MARINE
DERIVATIVE PRODUCTS, L.P.,
a limited partnership organized
under the laws of the State of Delaware
("Party A"),
and
CAPITA EQUIPMENT RECEIVABLES TRUST
1997-1,
a trust organized under the laws of the State of New York
("Party B" or the "Owner Trust")
The transaction ("Transaction") to be outstanding hereunder shall be
evidenced by a confirmation of even date herewith, as it may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof (as so amended, supplemented or modified, the
"Confirmation"). The Master Agreement to which this Schedule is attached, this
Schedule and the Confirmation, each as amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof and hereof (as
so amended, supplemented or modified, collectively, the "Agreement"), shall
constitute the "Class A-5 Swap Agreement", and Party A shall constitute the
Class A-5 Swap Counterparty, in each case as referred to in the Indenture, dated
as of November 1, 1997, as it may be amended, supplemented or otherwise modified
from time to time (the "Indenture"), between the Owner Trust, as issuer, and
Bankers Trust Company (the "Indenture Trustee"). Terms defined or referenced in
the Indenture and not otherwise defined or referenced in the Agreement are used
in the Agreement as defined or referenced in the Indenture. The Agreement and
the Transactions are also subject to the ISDA Definitions referred to (and to
the extent set forth in) Part 5(b) of this Schedule.
PART 1. TERMINATION PROVISIONS.
(a) "SPECIFIED ENTITY" means in relation to Party A for the
purpose of:
Section 5(a)(v), Not Applicable
Section 5(a)(vi), Not Applicable
2
Section 5(a)(vii), Not Applicable
Section 5(b)(iv), Not Applicable
and in relation to Party B for the purpose of:
Section 5(a)(v), Not Applicable
Section 5(a)(vi), Not Applicable
Section 5(a)(vii), Not Applicable
Section 5(b)(iv), Not Applicable
(b) "EVENTS OF DEFAULT". The following Events of Default will not
apply to Party A or Party B, and the definition of "Event of
Default" in Section 14 is deemed to be modified accordingly:
Section 5(a)(ii), (Breach of Agreement)
Section 5(a)(iii), (Credit Support Default)
Section 5(a)(iv), (Misrepresentation)
Section 5(a)(v), (Default under Specified Transaction)
Section 5(a)(vi), (Cross Default)
Section 5(a)(viii), (Merger Without Assumption)
(c) The following Termination Events will not apply to Party A or
Party B, and the definition of "Termination Event" in Section
14 is deemed to be modified accordingly:
Section 5(b)(ii), (Tax Event)
Section 5(b)(iii), (Tax Event Upon Merger)
Section 5(b)(iv), (Credit Event Upon Merger)
Section 5(b)(v), (Additional Termination Event)
(d) Section 5(a)(vii) (Bankruptcy) is hereby amended by: (i)
adding in Clause (1) thereof (first line) after the word
"merger" and before the closing parenthetical the words "or,
in the case of Party A, reconstitution, incorporation, or
admission or withdrawal of a partner"; and (ii) adding in
Clause (5) (twelfth line) thereof after the word "merger" and
before the closing parenthetical the words "or, in the case of
Party A, reconstitution or incorporation."
(e) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a)
will not apply to Party A or Party B.
3
(f) PAYMENTS ON EARLY TERMINATION. Notwithstanding any provision
to the contrary in the Agreement, upon the occurrence of an
Early Termination Date in respect of the Transaction:
(i) the provisions of Sections 6(d)(i) (to the extent
they relate to obtaining Market Quotations) and
Sections 6(e)(i) and (ii) shall not apply to the
Transaction, and, as a result, there will be no early
termination payment based on Market Quotation, Loss
or the replacement cost or value of such Transaction;
(ii) each reference in the Agreement to an amount
calculated as being due in respect of any Early
Termination Date under Section 6(e) shall be deemed
to refer to an amount calculated in accordance with
Part 1(f)(iii) of this Schedule;
(iii) the amount payable in respect of any Early
Termination Date will be the amount (determined by
the Calculation Agent and netted in accordance with
Section 2(c), as amended in Part 4(i) of this
Schedule) that is the Termination Currency Equivalent
of the result of (A) the sum of (1) all Unpaid
Amounts owing to the Owner Trust in respect of the
Transaction plus (2) all amounts that would be
payable to the Owner Trust if such Early Termination
Date were the next Payment Date in respect of the
Transaction, less (B) the sum of (1) all Unpaid
Amounts owing to Party A in respect of the
Transaction plus (2) all amounts that would be
payable to Party A if such Early Termination Date
were the next Payment Date in respect of the
Transaction; and
(iv) if the amount determined pursuant to clause (iii)
above is a positive number, Party A will pay it to
the Owner Trust on the Business Day immediately
following the Early Termination Date; if it is a
negative number, the Owner Trust will pay the
absolute value of that amount to Party A on the
Business Day immediately following the Early
Termination Date.
(g) "TERMINATION CURRENCY" means United States Dollars.
(h) "TRANSFER TO AVOID TERMINATION EVENT". Section 6(b)(ii) is
hereby amended by adding at the end thereof before the period
in the third paragraph the following condition:
4
, and the prior written confirmation from each Rating Agency
that the then current rating of the Class A-5 Notes will not
be withdrawn or reduced as a result of such transfer
PART 2. TAX REPRESENTATIONS.
(a) PAYER REPRESENTATIONS. For purposes of Section 3(e), each of
Party A and Party B represents as follows:
It is not required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, of
any Relevant Jurisdiction, to make any deduction or
withholding for or on account of any Tax from any payment
(other than interest under Section 2(e), 6(d)(ii) or 6(e)) to
be made by it to the other party under the Agreement. In
making this representation, it may rely on (i) the accuracy of
any representations, if any, made by the other party pursuant
to Section 3(f), (ii) 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 (iii) the
satisfaction of the agreement of the other party contained in
Section 4(d), provided that it shall not be a breach of this
representation where reliance is placed on Clause (ii) above
and the other party does not deliver a form, document or
certificate under Section 4(a)(iii) by reason of material
prejudice to its legal or commercial position.
(b) PAYEE REPRESENTATIONS. For the purpose of Section 3(f),
neither Party A nor Party B makes any representation.
PART 3. AGREEMENT TO DELIVER DOCUMENTS.
For the purpose of Sections 4(a)(i) and (ii), each of Party A
and Party B agrees to deliver the following documents, as
applicable:
(a) Tax forms, documents, or certificates to be delivered are:
Each of Party A and Party B agrees, promptly upon reasonable
demand by such other party, to complete, accurately and in a
manner reasonably satisfactory to the other party, and to
execute, arrange for any required certification of, and
deliver to the other party (or to such government or taxing
authority as the other party reasonably directs), any form or
document that may be required or reasonably requested in order
to allow the other party to make a payment under the Agreement
without any deduction or withholding
5
for or on account of any Tax or with such deduction or
withholding at a reduced rate.
(b) Other documents to be delivered are:
======================================================================================================================
Party required Covered by
to deliver Form/Document/ Date by which to Section 3(d)
document Certificate be delivered Representation
----------------------------------------------------------------------------------------------------------------------
Party A Power of Attorney with At execution of the Yes
respect to the corporate Agreement
general partner of Party A
----------------------------------------------------------------------------------------------------------------------
Party A Support Agreement dated At execution of the No
as of October 8, 1993 Agreement
among Party A, Mitsui
Marine and Fire
Insurance Co., Ltd., and
The ▇▇▇▇▇▇▇ ▇▇▇▇▇
Group, L.P. (the
"Support Agreement")
----------------------------------------------------------------------------------------------------------------------
Party B Certified incumbency At execution of the Yes
certificate or other Agreement
evidence of authority and
specimen signatures with
respect to Party B and its
signatories
----------------------------------------------------------------------------------------------------------------------
Party B Servicer's Certificate Monthly, on the fifth No
delivered to the Owner Business Day prior to
Trustee pursuant to the 15th day of each
Section 3.9 of the month, subject to
Transfer and Servicing adjustment in
Agreement. accordance with the
Following Business
Day Convention
----------------------------------------------------------------------------------------------------------------------
Party B Trust Agreement and At execution of the No
Indenture Agreement
----------------------------------------------------------------------------------------------------------------------
Party B Amendments, if any, to Upon execution thereof No
Trust Agreement and
Indenture
----------------------------------------------------------------------------------------------------------------------
6
----------------------------------------------------------------------------------------------------------------------
Party A and Opinions of counsel in At execution of the No
Party B form and substance Agreement
satisfactory to the other
party
----------------------------------------------------------------------------------------------------------------------
Party B Prospectus and At execution of the Yes
Supplement thereto Agreement
----------------------------------------------------------------------------------------------------------------------
Party B Rating Agency letters At execution of the No
Agreement
======================================================================================================================
PART 4. MISCELLANEOUS.
(a) ADDRESSES FOR NOTICES. For the purpose of Section 12(a):
Address for notices or communications to Party A:
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Swap Administration
Telex: 421344 Answerback: GOLSAX
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Electronic Messaging System Details: None
With a copy to:
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Treasury Administration
Telex: 421344 Answerback: GOLSAX
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Electronic Messaging System Details: None
Address for notices or communications to Party B:
7
Address: The Bank of New York, as Owner Trustee
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Floor: ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No: ▇▇▇-▇▇▇-▇▇▇▇
Electronic Messaging System: None
With a copy to:
Address: Bankers Trust Company, as Indenture Trustee
Four Albany Street, 10th Floor
New York, New York 10006
Attention: Corporate Trust & Agency Group
Structured Finance
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Electronic Messaging System Details: None
(b) PROCESS AGENT. For the purpose of Section 13(c):
Party A appoints as its Process Agent:
Address: ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
Telex: 421344 Answerback: GOLSAX
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇/3876
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Electronic Messaging System Details: None
Party B appoints as its Process Agent:
Name: Bankers Trust Company
8
Address: Bankers Trust Company, as Indenture Trustee
Four Albany Street, 10th Floor
New York, New York 10006
Attention: Corporate Trust & Agency Group
Structured Finance
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Electronic Messaging System Details: None
(c) OFFICES. The provisions of Section 10(a) will not apply to
Party A or Party B.
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c):
Party A is not a Multibranch Party.
Party B is not a Multibranch Party.
(e) CALCULATION AGENT. The Calculation Agent is Party A.
(f) CREDIT SUPPORT DOCUMENT. Details of any Credit Support
Document, each of which is incorporated by reference in,
constitutes part of, and is in connection with, the Agreement
and each Confirmation (unless provided otherwise in a
Confirmation) as if set forth in full in the Agreement or such
Confirmation:
(i) Support Agreement referenced in Part 3(b) of this
Schedule.
(g) CREDIT SUPPORT PROVIDER. Not applicable either to Party A or
to Party B.
(h) GOVERNING LAW. The Agreement (including the Schedule and the
Confirmation) will be governed by, and construed in accordance with, the law of
the State of New York (without reference to choice of law doctrine).
(i) NETTING OF PAYMENTS. Section 2(c) is hereby amended by adding
in the first line thereof after the word "date" the words "(including any
Payment Date or any Early Termination Date)". Subparagraph (ii) of Section 2(c)
will apply.
(j) "AFFILIATE" will have the meaning specified in Section 14;
provided, however, that, for purposes of Section 3(c), such term shall only
refer to any Credit Support Provider of the party and/or any party that is a
Specified Entity of the party for Bankruptcy.
9
PART 5. OTHER PROVISIONS.
(a) BASIC REPRESENTATIONS: POWERS. Section 3(a)(ii) is hereby
amended by: (i) deleting in the fifth line thereof after the word "party" the
word "and" and replacing it with ", it"; and (ii) adding in the fifth line
thereof after the word "performance" and before the semicolon the words ", the
individuals executing and delivering this Agreement and any other documentation
relating to this Agreement to which it is a party or that it is required to
deliver are duly empowered and authorized to do so, and it has duly executed and
delivered this Agreement and any other such documentation."
(b) ISDA DEFINITIONS. Unless otherwise specified in the first
paragraph of this Schedule or in the Confirmation, the Agreement and the
Transactions are subject to the 1991 ISDA Definitions as published by the
International Swaps and Derivatives Association, Inc. (the "ISDA Definitions"),
and will be governed in all relevant respects by the provisions set forth in the
ISDA Definitions, without regard to any amendment to the ISDA Definitions
subsequent to the date hereof. The provisions of the ISDA Definitions are
incorporated by reference in, and shall be deemed part of, the Agreement.
Subject to Section 1(b), in the event of any inconsistency between such first
paragraph or the provisions of the Agreement (on the one hand) and the ISDA
Definitions (on the other hand), such first paragraph and the Agreement will
govern.
(c) CHANGE OF ACCOUNT. Section 2(b) is hereby amended, except with
respect to transfers permitted by the Agreement, by the addition of the
following after the word "delivery" in the first line thereof:
to another account in the same legal, currency, and tax
jurisdiction as the original account.
(d) ABSENCE OF LITIGATION. Section 3(c) is hereby amended by: (i)
deleting in the first and second lines thereof the words "or any of its
Affiliates"; and (ii) adding in the second line thereof after the word
"governmental" the words "or regulatory."
(e) TRANSFER. Section 7 is hereby amended by: (i) adding in the
third line thereof after the word "party," the words "and provided that any
transfer of an obligation of Party A or Party B shall otherwise only be
effective if each Rating Agency provides written confirmation that its then
current rating of the Class A-5 Notes will not be reduced or withdrawn as a
result of such transfer"; (ii) adding in the second line of Subparagraph (a)
thereof after the words "assets to," the words "or reorganization,
incorporation, reincorporation, or reconstitution into or as,"; (iii) deleting
at the end of Subparagraph (a) thereof the word "and"; (iv) deleting in the
second line of Subparagraph (b) thereof the period and replacing it with ";
and"; (v) adding after Subparagraph (b) thereof the following Subparagraph (c):
10
(c) in addition to, and not in lieu of, the transfer
rights set forth in the other provisions of this Section 7,
Party A may, without recourse by Party B or Party A's
transferee against Party A, transfer this Agreement, all or
any part of its interests (including without limitation all or
any part of its interest in any amount payable to it by Party
B) or obligations in or under this Agreement, or one or more
Transactions to any of Party A's Affiliates or any of the
Affiliates of The ▇▇▇▇▇▇▇ ▇▇▇▇▇ Group, L.P., provided that:
(i) if any such transfer is of any obligations of Party A,
either (A) such transferee must have a long-term, unsecured,
unsubordinated debt obligation rating or financial program
rating (or other similar rating) by at least one U.S.
nationally recognized rating agency which is equal to or
greater than the comparable long-term, unsecured,
unsubordinated debt obligation rating or financial program
rating (or other similar rating) of Party A immediately prior
to such transfer, or (B) the obligations transferred to such
transferee must be guaranteed by Party A pursuant to a
guaranty or other agreement or instrument mutually agreed upon
by both parties acting reasonably; (ii) Party B will not, as a
result of such transfer, be required to pay to the transferee
on the next succeeding Scheduled Payment Date an 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)) greater than the amount in respect of which Party B
would have been required to pay to Party A in the absence of
such transfer; (iii) the transferee will not, as a result of
such transfer, be required to withhold or deduct on account of
a Tax under Section 2(d)(i) (except in respect of interest
under Section 2(e), 6(d)(ii), or 6(e)) on the next succeeding
Schedule Payment Date an amount in excess of that which Party
A would have been required to so withhold or deduct on the
next Scheduled Payment Date in the absence of such transfer,
unless the transferee would be required to make additional
payments pursuant to Section 2(d)(i)(4) corresponding to such
excess; and (iv) an Event of Default or a Termination Event
does not occur as a result of such transfer. With respect to
the results described in Clauses (ii) and (iii) above, Party A
will cause the transferee to make, and Party B will make, such
reasonable Payer Tax Representations and Payee Tax
Representations as may be mutually agreed upon by the
transferee and Party B in order to permit such parties to
determine that such results will not occur upon or after the
transfer;
and (vi) adding at the end thereof the following sentence:
Any transfer of all or part of the obligations of either party
made in compliance with, and which meets all of the
requirements of, this Section will constitute an acceptance
and assumption of such obligations by the transferee, a
novation of the transferee in place of the transferor with
respect to such obligations (and any related interests so
transferred), and a release and
11
discharge by the non-transferring party of the transferor
from, and an agreement by the non-transferring party not to
make any claim for payment, liability, or otherwise against
the transferor with respect to, such obligations from and
after the effective date of the transfer.
(f) LOCAL BUSINESS DAY. Notwithstanding any definition set forth
in Section 14: (i) "Local Business Day" shall mean any day (other than a
Saturday, a Sunday or legal holiday) on which commercial banking institutions in
New York, New York, or any other location of any successor Servicer or successor
Indenture Trustee, are open for regular business; and (ii) "Business Day" shall
have the same meaning as Local Business Day.
(g) SEVERABILITY. If any term, provision, covenant, or condition
of the Agreement, or the application thereof to any party or circumstance, shall
be held to be invalid or unenforceable (in whole or in part) for any reason, the
remaining terms, provisions, covenants, and conditions hereof shall continue in
full force and effect as if the Agreement had been executed with the invalid or
unenforceable portion eliminated, so long as the Agreement as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter of the Agreement and the deletion of such
portion of the Agreement will not substantially impair the respective benefits
or expectations of the parties to the Agreement; provided, however, that this
severability provision shall not be applicable if any provision of Section 2, 5,
6, or 13 (or any definition or provision in Section 14 to the extent it relates
to, or is used in or in connection with, any such Section) shall be so held to
be invalid or unenforceable.
(h) AGREEMENTS: FURNISH SPECIFIED INFORMATION. Section 4(a) is
hereby amended by adding at the end thereof the following paragraph:
Notwithstanding the foregoing provisions of this Section 4(a),
the parties agree that, pursuant to the terms of the Power of
Attorney of the corporate general partner of Party A referred
to in Part 3 hereof, any one or more of the attorneys-in-fact
of such corporate general partner under such Power of Attorney
(each a "Duly Authorized Representative") will deliver to
Party B or such governmental or taxing authority such forms,
documents, or certificates; provided, however, that (i) such
Duly Authorized Representative will not be required to provide
financial information not otherwise required under this
Agreement or any other information concerning the assets or
operations of Party A or any of its Affiliates which Party A,
in its reasonable judgment, views as proprietary in nature
other than the identity, residence, and the tax status of
Party A or any of its Affiliates, and (ii) in the event the
requested form, document, or certificate as delivered in the
manner set forth in this paragraph fails to satisfy the
requirements of law at any time, such failure will
12
not be deemed a breach or violation of this Section 4(a) or
any other provision of this Agreement.
(i) SETTLEMENT AMOUNT. The definition of "SETTLEMENT AMOUNT" in
Section 14 is hereby amended by deleting in the third and fourth lines of
Subparagraph (b) thereof the words "or would not (in the reasonable belief of
the party making the determination) produce a commercially reasonable result".
(j) RESIGNATION OR REMOVAL OF OWNER TRUSTEE. The Owner Trustee
agrees to give written notice to Party A 60 days prior to the Owner Trustee's
resignation from the Owner Trust. In no event shall the Owner Trustee resign or
be removed prior to appointment by the Depositor (in accordance with the Trust
Agreement) of a successor Owner Trustee or the liquidation of the Trust Assets.
Upon acceptance of appointment by a successor Owner Trustee,
Party B shall cause such successor Owner Trustee to give prompt notice to Party
A of such acceptance.
(k) RECEIPT OF REPORTS. Party B shall deliver to Party A, within
five Business Days of an event of noncompliance by the Owner Trust or the Owner
Trustee with the Trust Agreement or the Indenture or by the Indenture Trustee
with the Indenture known to Party B, a report setting forth a description of
such event of noncompliance.
(l) RESTRICTION ON AMENDMENTS TO THE TRUST AGREEMENT, THE
INDENTURE OR ANY RELATED DOCUMENT. The Owner Trustee agrees not to enter into
any amendment to the Trust Agreement, the Indenture or any other Related
Document that would impair the ability of Party B to perform its obligations
under the Agreement or would have a material adverse impact on Party A.
(m) AGREEMENT NOT TO PETITION. Party A agrees for the benefit of
the Class A-5 Noteholders that, until at least one year and one day after the
Owner Trust has been terminated in accordance with Article VII of the Trust
Agreement, it shall not file, or join in the filing of, a petition against the
Owner Trust under any bankruptcy, reorganization, arrangement, insolvency,
liquidation or other similar law (including, without limitation, the United
States Bankruptcy Code) (collectively, "Bankruptcy Laws") or otherwise join in
the commencement of any proceeding against the Owner Trust under any Bankruptcy
Law. In the event Party A takes action in violation of this paragraph (m),
Party B agrees, for the benefit of the Noteholders, that it shall file an
answer with the bankruptcy court or otherwise properly contest the filing of
such petition by Party A against the Owner Trust or the commencement of such
action and raise the defense that Party A has agreed in writing not to take
such action and should be stopped and precluded therefrom and such other
defenses, if any, as counsel for the Owner Trustee or the Owner Trust may
assert. The provisions of this paragraph (m) shall survive the termination of
this Agreement and the Trust Agreement.
13
(n) NO RECOURSE. Class A-5 Notes represent obligations of the
Owner Trust only, and do not represent interests in or obligations of Party A,
and no recourse may be had by the Class A-5 Noteholders against Party A or its
assets with respect to the Class A-5 Notes or the Agreement (provided that
this provision shall not affect Party B's rights under the Agreement). The
obligations, expenses and liabilities of Party B under the Agreement shall be
paid from, and are limited to, the assets of the Owner Trust (to the extent such
assets are allocated to such obligations, expenses and liabilities in accordance
with the terms of the Indenture or the Related Documents), and no recourse may,
in connection with the Agreement, be had by Party A against any other assets of
the Owner Trust or the assets of the Owner Trustee or of the Class A-5
Noteholders in their individual capacities.
Party A agrees that the representations and warranties
contained in the Agreement shall not be deemed to be made by the Owner Trustee
(except to the extent expressly provided for herein), and no recourse shall be
made against the Owner Trustee as a result of any breach or misrepresentation of
such representations and warranties, or for any reason relating to the Owner
Trustee's execution of the Agreement.
(o) REGARDING THE PARTIES. Party A acknowledges and agrees that
neither the Indenture Trustee nor the Owner Trustee had any involvement in, and
accordingly neither such person accepts any responsibility for, (i) the
establishment, selection, or structure of the Trust Assets, (ii) the selection
of Party A as the Class A-5 Swap Counterparty, (iii) the establishment of the
terms of the Agreement or the Class A-5 Notes or (iv) except for any information
relating to the Indenture Trustee and the Owner Trustee that is based on
information provided by the Indenture Trustee or the Owner Trustee,
respectively, the preparation of or passing on the disclosure contained in the
Prospectus and Prospectus Supplement distributed with respect to the Class A-5
Notes.
Party B and the Owner Trustee acknowledge and agree that Party
A had no involvement in, and accordingly accepts no responsibility for, (i) the
establishment, structure, or choice of the Trust Assets or any series of notes,
(ii) the selection of any person performing services for or acting on behalf of
the Owner Trust, (iii) the selection of Party A as a swap provider, (iv) the
terms of the any series of notes or the economic terms of any Transaction
entered into with the Owner Trust pursuant to the Agreement, (v) the preparation
of or passing on the disclosure and other information contained in the offering
circular, prospectus, series supplement, trust deed, or any other agreements or
documents used by the Owner Trust or any other party in connection with the
marketing and sale of any series of notes, (vi) the ongoing operations and
administration of the Owner Trust, including the furnishing of any information
to the Owner Trust which is not specifically required under the Agreement, or
(vii) any other aspect of the Owner Trust's existence except for those matters
specifically identified in the Agreement
14
(p) NOTICES ON TRUST ASSETS. Within five Business Days of receipt
or delivery of any reports, notices, requests, demands, certificates, financial
statements and other instruments furnished to the Owner Trustee with respect to
the Trust Assets, Party B shall deliver a copy of same to Party A.
(q) REPRESENTATIONS AND WARRANTIES OF OWNER TRUSTEE. The Owner
Trustee hereby represents and warrants, for the benefit of Party A, to each of
the representations and warranties set forth in Section 6.6 of the Trust
Agreement. Party B shall cause any successor Owner Trustee likewise to represent
and warrant as set forth in Section 6.6 of the Trust Agreement.
(r) ASSIGNMENT BY OWNER TRUSTEE. Except as provided in the Trust
Agreement, the Owner Trustee may not assign any of its duties or obligations
under the Trust Agreement without the prior written consent of Party A.
(s) Section 9(b) is hereby amended by: (i) adding "(i)" after the
word "unless" in the second line thereof; and (ii) the words ", and (ii) each
Rating Agency provides written confirmation that its then current rating of the
Class A-5 Notes will not be reduced or withdrawn as a result of such amendment,
modification or waiver" after the word "system" and before the period at end of
such Section.
(t) ADDITIONAL REPRESENTATIONS. Section 3 is hereby amended by
adding the following additional Subsections:
(g) ELIGIBLE SWAP PARTICIPANT. It is an "eligible swap
participant" as defined in the Part 35 Regulations of the U.S.
Commodity Futures Trading Commission.
(h) NO RELIANCE. In connection with the negotiation of,
the entering into, and the confirming of the execution of, the
Agreement and each Transaction: (1) the other party is not acting as a
fiduciary or financial or investment advisor for or to it; (2) it is
not relying upon any representations (whether written or oral) of the
other party other than the representations expressly set forth in the
Agreement; and (3) it has consulted with its own legal, regulatory,
tax, business, investment, financial, and accounting advisors to the
extent it has deemed necessary, and it has made its own investment,
hedging, and trading decisions based upon its own judgment and upon any
advice from such advisors as it has deemed necessary and not upon any
view expressed by the other party.
(i) NO AGENCY. It is entering into this Agreement and
each Transaction as principal (and not as agent or in any other
capacity, fiduciary or otherwise).
15
(j) LINE OF BUSINESS. It has entered into this Agreement
(including each Transaction evidenced hereby) in conjunction with its
line of business (including financial intermediation services) or the
financing of its business.
16
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.
Very truly yours,
▇▇▇▇▇▇▇ SACHS MITSUI MARINE
DERIVATIVE PRODUCTS, L.P.
By: GSMMDPGP, Inc.
General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Authorized Officer
Date: December 3, 1997
CAPITA EQUIPMENT RECEIVABLES
TRUST 1997-1
By: The Bank of New York, not in its
individual capacity but solely as
Owner Trustee
By: /s/ ▇▇▇▇▇▇ ▇. Laser
--------------------------------
Name: ▇▇▇▇▇▇ ▇. Laser
Title: Authorized Officer
Date: December 3, 1997
CAPITA EQUIPMENT RECEIVABLES TRUST 1997-1
CONFIRMATION
UNDER
CLASS A-5 SWAP AGREEMENT
DATE: December 3, 1997
To: Capita Equipment Receivables Trust 1997-1 (the "Owner Trust"
or "Party B"), represented by The Bank of New York, not in its
individual capacity, but solely as Owner Trustee (the "Owner
Trustee")
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration - Asset-
Backed Unit
FROM: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mitsui Marine Derivative Products, L.P.
("GSMMDP" or "Party A")
CC: ▇▇▇▇▇▇▇, Sachs & Co.
Swap Administration
SUBJECT: Interest Rate Swap Transaction under the Class A-5 Swap
Agreement Referred to below
REF. NO.: NUUS711720 (080000A00)
--------------------------------------------------------------------------------
Ladies and Gentlemen:
The purpose of this communication is to set forth the terms
and conditions of the above-referenced transaction entered into on the Trade
Date specified below (this "Transaction") between GSMMDP and the Owner Trust.
This communication constitutes the "Confirmation" with respect to the
Transaction as referred to in the Class A-5 Swap Agreement.
1. DEFINITIONS, ETC. (a) Terms defined or referenced
elsewhere in the Class A-5 Swap Agreement and not otherwise defined or
referenced in this Confirmation are used in this Confirmation as therein defined
or referenced. Further, this Confirmation is subject to, and incorporates, the
1991 ISDA Definitions (the "ISDA Definitions") published by the International
Swaps and Derivatives Association, Inc. ("ISDA"), except as otherwise provided
in the preceding sentence and except that, for purposes of this Confirmation,
all
2
references to "Swap Transactions" in the ISDA Definitions will be deemed to be
references to "Transactions".
(b) This Confirmation supplements, forms part of, and is
subject to, the ISDA Master Agreement, dated as of December 3, 1997, including
the Schedule thereto, as such ISDA Master Agreement and Schedule may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof (as so amended, supplemented or modified, the "Class A-5 Swap
Agreement"), between Party A and Party B. All provisions contained in, or
incorporated by reference to, the Class A-5 Swap Agreement shall govern this
Confirmation; provided, however, that, except as otherwise provided in paragraph
1(a) hereof, and subject to Section 1(b) of the ISDA Master Agreement, in the
event of any inconsistency between this Confirmation (on the one hand) and the
remainder of the Class A-5 Swap Agreement or the ISDA Definitions (on the other
hand), this Confirmation will govern.
(c) Party A and Party B will make each payment specified in
this Confirmation as being payable by it, no later than the due date for value
on that date in the place of the account specified below or otherwise specified
in writing, in freely transferable funds and in the manner customary for
payments in the required currency. If on any date amounts which would otherwise
be payable in the same currency by each party to the other in respect of this
Transaction are equal, 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, the parties' obligations will be automatically satisfied and discharged
and 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.
2. TERMS. The terms of this Transaction are as follows:
Trade Date: December 3, 1997.
Effective Date: December 3, 1997.
Termination Date: The first to occur of
(a) February 15, 2002, or
(b) the date on which the Notional Amount
equals zero.
3
Reference Securities: Capita Equipment Receivables Trust 1997-1,
Floating Rate Receivable-Backed Notes,
Class A-5 due February 15, 2002 (CUSIP:
▇▇▇▇▇▇▇▇▇).
Original Notional Amount: USD 105,000,000.
Notional Amount for initial
Calculation Period: USD 105,000,000 (which is equal to the
Original Notional Amount multiplied by a
Remaining Balance Factor of 1.00000000).
Notional Amount for all
Calculation Periods subsequent
to initial Calculation Period: The product of (a) the Original Notional
Amount, and (b) the Remaining Balance
Factor, determined as of the last day of
the applicable Calculation Period.
Remaining Balance Factor: A fraction with (i) the numerator equal to
the weighted average outstanding unpaid
principal amount of the Reference
Securities during the applicable
Calculation Period, and (ii) the
denominator equal to the original unpaid
principal amount of the Reference
Securities on the Effective Date, rounded
upward to eight decimal places. The
Remaining Balance Factor as of the
Effective Date and for the initial
Calculation Period is 1.00000000.
Settlement Amount; Early
Termination Payment;
Breakage Costs: No reduction in the Notional Amount in
accordance with the provisions of, or
incorporated into, this Confirmation
(including, without limitation, such as is
the result of the application of the
Remaining Balance Factor as set forth in
"Remaining Balance Factor" above) shall
give rise to a payment by either the Owner
Trust or GSMMDP of any settlement amount,
early termination payment, breakage costs
or other amounts representing the future
value of, or of
4
future payments in respect of, the portion
of the Notional Amount so reduced.
Calculation Agent: GSMMDP.
3. FIXED AMOUNTS.
Fixed Rate Payer: The Owner Trust.
Fixed Rate Payer Payment Dates: Monthly, on the 15th day of each month,
commencing on December 15, 1997 and ending
on the Termination Date, subject to
adjustment in accordance with the
Following Business Day Convention.
Fixed Rate: 6.25%.
Fixed Rate Day Count Fraction: 30/360.
Fixed Rate Period End Dates: Not adjusted.
4. FLOATING AMOUNTS.
Floating Rate Payer: GSMMDP.
Floating Rate Payer Payment Dates: Monthly, on the 15th day of each month,
commencing on December 15, 1997 and ending
on the Termination Date, subject to
adjustment in accordance with the
Following Business Day Convention.
Floating Rate for initial
Calculation Period: 6.09375% (inclusive of Floating Rate
Spread)
Floating Rate Option: USD-LIBOR-BBA.
Floating Rate Designated Maturity: One month.
Floating Rate Spread: Plus 0.125%.
5
Floating Rate Day Count Fraction: Actual/360.
Floating Rate Reset Dates: The first day of each Calculation Period
Floating Rate Period End Dates: Adjusted in accordance with the Following
Business Day Convention.
5. ACCOUNT DETAILS:
Payments to GSMMDP:
For the Account of: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mitsui Marine Derivative
Products, L.P.
Name of Bank: The Chase Manhattan Bank, New York
Account No.: ▇▇▇-▇-▇▇▇▇▇▇
Account Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mitsui Marine Derivative
Products, L.P.
Fed. ABA No.: ▇▇▇▇▇▇▇▇▇
GSMMDP Inquiries: ▇▇▇▇▇▇ ▇▇▇▇, Swap Operations
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
Telephone No: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No: ▇▇▇-▇▇▇-▇▇▇▇
Payments to Owner In accordance with the Owner Trust's
Trust: written instructions as set forth
below or otherwise delivered to
GSMMDP. GSMMDP shall make no payments
without having received (i) such
written instructions and (ii) a fully
executed facsimile copy of this
Confirmation or other written
acceptance of the terms hereof.
Name of Bank: Bankers Trust Company
Corporate Trust and Agency Group
Account No.: #014 19 647
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Colli
REF: Capita Equipment Receivables
Trust 1997-1
6
ABA No.: #021 001 033
6. OFFICES:
(a) The Office of GSMMDP for the Transaction is ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
(b) The Office of the Owner Trust for the Transaction
is ▇/▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, as Owner Trustee, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇: ▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇, Attention: Corporate Trust Department.
With a copy to: Bankers Trust Company
as Indenture Trustee
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Trust and
Agency Group Structured
Finance
GSMMDP is very pleased to have executed this Transaction with
the Owner Trust.
Very truly yours,
▇▇▇▇▇▇▇ SACHS MITSUI MARINE
DERIVATIVE PRODUCTS, L.P.
By: GSMMDPGP, Inc.
General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Authorized Officer
7
Agreed and Accepted By:
CAPITA EQUIPMENT RECEIVABLES TRUST 1997-1
By: The Bank of New York,
not in its individual capacity
but solely as Owner Trustee
By: /s/ ▇▇▇▇▇▇ ▇. Laser
-------------------------------
Name: ▇▇▇▇▇▇ ▇. Laser
Title: Authorized Officer