EXH 10.3
(MULTICURRENCY--CROSS BORDER)
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of April _____, 2001
▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL SERVICES, INC. MMCA AUTO OWNER TRUST 2001-1
AND
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 purposes of the relevant Transaction.
(c) SINGLE AGREEMENT. All Transactions are entered into in reliance on the
fact that this Master Agreement and all Confirmations form a single agreement
between the parties (collectively referred to as this "Agreement"), and the
parties would not otherwise enter into any Transactions.
2. OBLIGATIONS
(a) General Conditions.
(i) Each party will make each payment or delivery specified in
each Confirmation to be made by it, subject to the other provisions of
this Agreement.
(ii) Payments under this Agreement will be made on the due date for
value on that date in the place of the account specified in the
relevant Confirmation or otherwise pursuant to this Agreement, in
freely transferable funds and in the manner customary for payments in
the required currency. Where settlement is by delivery (that is, other
than by payment), such delivery will be made for receipt on the due
date in the manner customary for the relevant obligation unless
otherwise specified in the relevant Confirmation or elsewhere in this
Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject
to (1) the condition precedent that no Event of Default or Potential
Event of Default with respect to the other party has occurred and is
continuing, (2) the condition precedent that no Early Termination Date
in respect of the relevant Transaction has occurred or been effectively
designated and (3) each other applicable condition precedent specified
in this Agreement.
(b) Change of Account. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) Netting. If on any date amounts would otherwise be payable:--
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). This election may
be made separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.
(d) Deduction or Withholding for Tax.
(i) Gross-Up. All payments under this Agreement will be made
without any deduction or withholding for or on account of any Tax
unless such deduction or withholding is required by any applicable law,
as modified by the practice of any relevant governmental revenue
authority, then in effect. If a party is so required to deduct or
withhold, then that party ("X") will:--
(1) promptly notify the other party ("Y") of such
requirement;
(2) pay to the relevant authorities the full amount
required to be deducted or withheld (including the full amount
required to be deducted or withheld from any additional amount
paid by X to Y under this Section 2(d)) promptly upon the
earlier of determining that such deduction or withholding is
required or receiving notice that such amount has been
assessed against Y;
(3) promptly forward to Y an official receipt (or a
certified copy), or other documentation reasonably acceptable
to Y, evidencing such payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in
addition to the payment to which Y is otherwise entitled under
this Agreement, such additional amount as is necessary to
ensure that the net amount actually received by Y (free and
clear of Indemnifiable Taxes, whether assessed against X or Y)
will equal the full amount Y would have received had no such
deduction or
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withholding been required. However, X will not be required to
pay any additional amount to Y to the extent that it would not
be required to be paid but for:--
(A) the failure by Y to comply with or perform any
agreement contained in Section 4(a)(i), 4(a)(iii) or
4(d); or
(B) the failure of a representation made by Y
pursuant to Section 3(f) to be accurate and true
unless such failure would not have occurred but for
(I) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or
after the date on which a Transaction is entered into
(regardless of whether such action is taken or
brought with respect to a party to this Agreement) or
(II) a Change in Tax Law.
(ii) Liability. If:--
(1) X is required by any applicable law, as modified by
the practice of any relevant governmental revenue authority,
to make any deduction or withholding in respect of which X
would not be required to pay an additional amount to Y under
Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed
directly against X,
then, except to the extent Y has satisfied or then satisfies the
liability resulting from such Tax, Y will promptly pay to X the amount
of such liability (including any related liability for interest, but
including any related liability for penalties only if Y has failed to
comply with or perform any agreement contained in Section 4(a)(i),
4(a)(iii) or 4(d)).
(e) Default Interest; Other Amounts. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.
3. REPRESENTATIONS
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered into
and, in the case of the representations in Section 3(f), at all times until the
termination of this Agreement) that:--
(a) Basic Representations.
(i) Status. It is duly organized and validly existing under the
laws of the jurisdiction of its organization or incorporation and, if
relevant under such laws, in good standing;
(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
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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)).
(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 inequity 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
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(iii) upon reasonable demand by such other party, any form or
document that may be required or reasonably requested in writing in
order to allow such other party or its Credit Support Provider to make
a payment under this Agreement or any applicable Credit Support
Document without any deduction or withholding for or on account of any
Tax or with such deduction or withholding at a reduced rate (so long as
the completion, execution or submission of such form or document would
not materially prejudice the legal or commercial position of the party
in receipt of such demand), with any such form or document to be
accurate and completed in a manner reasonably satisfactory to such
other party and to be executed and to be delivered with any reasonably
required certification,
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.
(b) Maintain 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, 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;
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(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 (l) defaults under a Specified Transaction and, after giving
effect to any applicable notice requirement or grace period, there
occurs a liquidation of, an acceleration of obligations under, or an
early termination of, that Specified Transaction, (2) defaults, after
giving effect to any applicable notice requirement or grace period, in
making any payment or delivery due on the last payment, delivery or
exchange date of, or any payment on early termination of, a Specified
Transaction (or such default continues for at least three Local
Business Days if there is no applicable notice requirement or grace
period) or (3) disaffirms, disclaims, repudiates or rejects, in whole
or in part, a Specified Transaction (or such action is taken by any
person or entity appointed or empowered to operate it or act on its
behalf);
(vi) Cross Default. If "Cross Default" is specified in the Schedule
as applying to the party, the occurrence or existence of (l) a default,
event of default or other similar condition or event (however
described) in respect of such party, any Credit Support Provider of
such party or any applicable Specified Entity of such party under one
or more agreements or instruments relating to Specified Indebtedness of
any of them (individually or collectively) in an aggregate amount of
not less than the applicable Threshold Amount (as specified in the
Schedule) which has resulted in such Specified Indebtedness becoming,
or becoming capable at such time of being declared, due and payable
under such agreements or instruments, before it would otherwise have
been due and payable or (2) a default by such party, such Credit
Support Provider or such Specified Entity (individually or
collectively) in making one or more payments on the due date thereof in
an aggregate amount of not less than the applicable Threshold Amount
under such agreements or instruments (after giving effect to any
applicable notice requirement or grace period);
(vii) Bankruptcy. The party, any Credit Support Provider of such
party or any applicable Specified Entity of such party:--
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger);
(2) becomes insolvent or is unable to pay its debts or
fails or admits in writing its inability generally to pay its
debts as they become due; (3) makes a general assignment,
arrangement or composition with or for the benefit of its
creditors; (4) institutes or has instituted against it a
proceeding seeking a judgment of insolvency or bankruptcy or
any other relief under any bankruptcy or insolvency law or
other similar law affecting creditors' rights, or a petition
is presented for its winding-up 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,
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receiver, trustee, custodian or other similar official for it
or for all or substantially all its assets; (7) has a secured
party take possession of all or substantially all its assets
or has a distress, execution, attachment, sequestration or
other legal process levied, enforced or sued on or against all
or substantially all its assets and such secured party
maintains possession, or any such process is not dismissed,
discharged, stayed or restrained, in each case within 30 days
thereafter; (8) causes or is subject to any event with respect
to it which, under the applicable laws of any jurisdiction,
has an analogous effect to any of the events specified in
clauses (1) to (7) (inclusive); or (9) takes any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the foregoing acts; or
(viii) Merger Without Assumption. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges with
or into, or transfers all or substantially all its assets to, another
entity and, at the time of such consolidation, amalgamation, merger or
transfer:--
(1) the resulting, surviving or transferee entity fails
to assu me all the obligations of such party or such Credit
Support Provider under this Agreement or any Credit Support
Document to which it or its predecessor was a party by
operation of law or pursuant to an agreement reasonably
satisfactory to the other party to this Agreement; or
(2) the benefits of any Credit Support Document fail to
extend (without the consent of the other party) to the
performance by such resulting, surviving or transferee entity
of its obligations under this Agreement.
(b) Termination Events. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an Illegality if
the event is specified in (i) below, a Tax Event if the event is specified in
(ii) below, or a Tax Event Upon Merger if the event is specified in (iii) below,
and, if specified to be applicable, a Credit Event Upon Merger if the event is
specified pursuant to (iv) below, or an Additional Termination Event if the
event is specified pursuant to (v) below:--
(i) Illegality. Due to the adoption of, or any change in, any
applicable law after the date on which a Transaction is entered into,
or due to the promulgation of, or any change in, the interpretation by
any court, tribunal or regulatory authority with competent jurisdiction
of any applicable law after such date, it becomes unlawful (other than
as a result of a breach by the party of Section 4(b)) for such party
(which will be the Affected Party):--
(1) to perform any absolute or contingent obligation to
make a payment or delivery or to receive a payment or delivery
in respect of such Transaction or to comply with any other
material provision of this Agreement relating to such
Transaction; or
(2) to perform, or for any Credit Support Provider of
such party to perform, any contingent or other obligation
which the party (or such Credit Support Provider) has under
any Credit Support Document relating to such Transaction;
(ii) Tax Event. Due to (x) any action taken by a taxing authority,
or brought in a court of competent jurisdiction, on or after the date
on which a Transaction is entered into (regardless of whether such
action is taken or brought with respect to a party to this Agreement)
or (y) a Change in Tax Law, the party (which will be the Affected
Party) will, or there is a substantial likelihood that it will, on the
next succeeding Scheduled Payment Date (1) be required to pay to the
other party an additional amount in respect of an Indemnifiable Tax
under Section 2(d)(i)(4) (except in respect of interest under Section
2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount
is required to be deducted or withheld for or on account of a Tax
(except in respect of Interest under Section 2(e), 6(d)(ii) or 6(e))
and no additional amount is required to be paid in respect of such Tax
under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A)
or (B));
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(iii) Tax Event Upon Merger. The party (the "Burdened Party") on the
next succeeding Scheduled Payment Date will either (1) be required to
pay an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has
been deducted or withheld for or on account of an Indemnifiable Tax in
respect of which the other party is not required to pay an additional
amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in
either case as a result of a party consolidating or amalgamating with,
or merging with or into, or transferring all or substantially all its
assets to, another entity (which will be the Affected Party) where such
action does not constitute an event described in Section 5(a)(viii);
(iv) Credit Event Upon Merger. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity of
X consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and
such action does not constitute an event described in Section
5(a)(viii) but the creditworthiness of the resulting, surviving or
transferee entity is materially weaker than that of X, such Credit
Support Provider or such Specified Entity, as the case may be,
immediately prior to such action (and, in such event, X or its
successor or transferee, as appropriate, will be the Affected Party);
or
(v) Additional Termination Event. If any "Additional Termination
Event" is specified in the Schedule or any Confirmation as applying,
the occurrence of such event (and, in such event, the Affected Party or
Affected Parties shall be as specified for such Additional Termination
Event in the Schedule or such Confirmation).
(c) Event of Default and Illegality. If an event or circumstance which
would otherwise constitute or give rise to an Event of Default also constitutes
an Illegality, it will be treated as an Illegality and will not constitute an
Event of Default.
6. EARLY TERMINATION
(a) Right to Terminate Following Event of Default. If at any time an Event
of Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the
extent analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the presentation of the relevant
petition upon the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
(b) Right to Terminate Following Termination Event.
(i) Notice. If a Termination Event occurs, an Affected Party will,
promptly upon becoming aware of it, notify the other party, specifying
the nature of that Termination Event and each Affected Transaction and
will also give such other information about that Termination Event as
the other party may reasonably require.
(ii) Transfer to Avoid Termination Event. If either an Illegality
under Section 5(b)(i)(1) or a Tax Event occurs and there is only one
Affected Party, or if a Tax Event Upon Merger occurs and the Burdened
Party is the Affected Party, the Affected Party will, as a condition to
its right to designate an Early Termination Date under Section
6(b)(iv), use all reasonable efforts (which will not require such party
to incur a loss, excluding immaterial, incidental expenses) to transfer
within 20 days after it gives notice under Section 6(b)(i) all its
rights and obligations under this Agreement in respect of the Affected
Transactions to another of its Offices or Affiliates so that such
Termination Event ceases to exist.
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If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days
after the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be
subject to and conditional upon the prior written consent of the other
party, which consent will not be withheld if such other party's
policies in effect at such time would permit it to enter into
transactions with the transferee on the terms proposed.
(iii) Two Affected Parties. If an Illegality under Section
5(b)(i)(1) or a Tax Event occurs and there are two Affected Parties,
each party will use all reasonable efforts to reach agreement within 30
days after notice thereof is given under Section 6(b)(i) on action to
avoid that Termination Event.
(iv) Right to Terminate. If:--
(1) a transfer under Section 6(b)(ii) or an agreement
under Section 6(b)(iii), as the case may be, has not been
effected with respect to all Affected Transactions within 30
days after an Affected Party gives notice under Section
6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit
Event Upon Merger or an Additional Termination Event occurs,
or a Tax Event Upon Merger occurs and the Burdened Party is
not the Affected Party,
either party in the case of an Illegality, the Burdened Party in the
case of a Tax Event Upon Merger, any Affected Party in the case of a
Tax Event or an Additional Termination Event if there is more than one
Affected Party, or the party which is not the Affected Party in the
case of a Credit Event Upon Merger or an Additional Termination Event
if there is only one Affected Party may, by not more than 20 days
notice to the other party and provided that the relevant Termination
Event is then continuing, designate a day not earlier than the day such
notice is effective as an Early Termination Date in respect of all
Affected Transactions.
(c) Effect of Designation.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the date
so designated, whether or not the relevant Event of Default, or
Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(e) in respect of the Terminated Transactions will be
required to be made, but without prejudice to the other provisions of
this Agreement. The amount, if any, payable in respect of an Early
Termination Date shall be determined pursuant to Section 6(e).
(d) Calculations.
(i) Statement. On or as soon as reasonably practicable following
the occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and will
provide to the other party a statement (1) showing, in reasonable
detail, such calculations (including all relevant quotations and
specifying any amount payable under Section 6(e)) and (2) giving
details of the relevant account to which any amount payable to it is to
be paid. In the absence of written confirmation from the source of a
quotation obtained in determining a Market Quotation, the records of
the party obtaining such quotation will be conclusive evidence of the
existence and accuracy of such quotation.
(ii) Payment Date. An amount calculated as being due in respect of
any Early Termination Date under Section 6(e) will be payable on the
day that notice of the amount payable is effective (in the case of an
Early
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Termination Date which is designated or occurs as a result of an Event
of Default) and on the day which is two Local Business Days after the
day on which notice of the amount payable is effective (in the case of
an Early Termination Date which is designated as a result of a
Termination Event). Such amount will be paid together with (to the
extent permitted under applicable law) interest thereon (before as well
as after judgment) in the Termination Currency, from (and including)
the relevant Early Termination Date to (but excluding) the date such
amount, is paid, at the Applicable Rate. Such interest will be
calculated on the basis of daily compounding and the actual number of
days elapsed.
(e) Payments on Early Termination. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.
(i) Events of Default. If the Early Termination Date results from
an Event of Default:--
(1) First Method and Market Quotation. If the First
Method and Martet Quotation apply, the Defaulting Party will
pay to the Non-defaulting Party the excess, if a positive
number, of (A) the sum of the Settlement Amount (determined by
the Non-defaulting Party) in respect of the Terminated
Transactions and the Termination Currency Equivalent of the
Unpaid Amounts owing to the Non-defaulting Party over (B) the
Termination Currency Equivalent of the Unpaid Amounts owing to
the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss
apply, the Defaulting Party will pay to the Non-defaulting
Party, if a positive number, the Non-defaulting Party's Loss
in respect of this Agreement.
(3) Second Method and Market Quotation. If the Second
Method and Market Quotation apply, an amount will be payable
equal to (A) the sum of the Settlement Amount (determined by
the Non-defaulting Party) in respect of the Terminated
Transactions and the Termination Currency Equivalent of the
Unpaid Amounts owing to the Non-defaulting Party less (B) the
Termination Currency Equivalent of the Unpaid Amounts owing to
the Defaulting Party. If that amount is a positive number, the
Defaulting Party will pay it to the Non-defaulting Party; if
it is a negative number, the Non-defaulting Party will pay the
absointe 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:--
10
(A) if Market Quotation applies, each party will
determine a Settlement Amount in respect of the
Terminated Transactions, and an amount will be
payable equal to (I) the sum of (a) one-half of the
difference between the Settlement Amount of the party
with the higher Settlement Amount ("X") and the
Settlement Amount of the party with the lower
Settlement Amount ("Y") and (b) the Termination
Currency Equivalent of the Unpaid Amounts owing to X
less (II) the Termination Currency Equivalent of the
Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its
Loss in respect of this Agreement (or, if fewer than
all the Transactions are being terminated, in respect
of all Terminated Transactions) and an amount will be
payable equal to one-half of the difference between
the Loss of the party with the higher Loss ("X") and
the Loss of the party with the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to
X; if it is a negative number, X will pay the absolute value
of that amount to Y.
(iii) Adjustment for Bankruptcy. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies
in respect of a party, the amount determined under this Section 6(e)
will be subject to such adjustments as are appropriate and permitted by
law to reflect any payments or deliveries made by one party to the
other under this Agreement (and retained by such other party) during
the period from the relevant Early Termination Date to the date for
payment determined under Section 6(d)(ii).
(iv) Pre-Estimate. The parties agree that if Market Quotation
applies an amount recoverable under this Section 6(e) is a reasonable
pre-estimate of loss and not a penalty. Such amount is payable for the
loss of bargain and the loss of protection against future risks and
except as otherwise provided in this Agreement neither party will be
entitled to recover any additional damages as a consequence of such
losses.
7. TRANSFER
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that:--
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be void.
8. CONTRACTUAL CURRENCY
(a) Payment in the Contractual Currency. Each payment under this Agreement
will he 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
11
applicable law, immediately pay such additional amount in the Contractual
Currency as may be necessary to compensate for the shortfall. If for any reason
the amount in the Contractual Currency so received exceeds the amount in the
Contractual Currency payable in respect of this Agreement, the party receiving
the payment will refund promptly the amount of such excess.
(b) Judgments. To the extent permitted by applicable law, if any judgment
or order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange payable in connection with the purchase of or conversion into the
Contractual Currency.
(c) Separate Indemnities. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed and will not be affected by judgment being obtained
or claim or proof being made for any other sums payable in respect of this
Agreement.
(d) Evidence of Loss. For the purpose of this Section 8, it will he
sufficient for a party to demonstrate that it would have suffered a loss had an
actual exchange or purchase been made.
9. MISCELLANEOUS
(a) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) Amendments. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(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 he 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
12
may be executed and delivered in counterparts (including by facsimile
transmission) or be created by an exchange of telexes or by an exchange
of electronic messages on an electronic messaging system, which in each
case will be sufficient for all purposes to evidence a binding
supplement to this Agreement. The parties will specify therein or
through another effective means that any such counterpart, telex or
electronic message constitutes a Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right, power
or privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. OFFICES; MULTIBRANCH PARTIES
(a) If Section 10(a) is specified in the Schedule as applying, each party
that enters into a Transaction through an Office other than its head or home
office represents to the other party that, notwithstanding the place of booking
office or jurisdiction of incorporation or organization of such party, the
obligations of such party are the same as if it had entered into the Transaction
through its head or home office. This representation will be deemed to be
repeated by such party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.
11. EXPENSES
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document to
which the Defaulting Party is a party or by reason of the early termination of
any Transaction, including, but not limited to, costs of collection.
12. NOTICES
(a) Effectiveness. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--
(i) if in writing and delivered in person or by courier, on the
date it is delivered;
(ii) if sent by telex, on the date the recipient's answer back 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);
13
(iv) if sent by certified or registered mail (airmail, if overseas)
or the equivalent (return receipt requested), on the date that mail is
delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that
electronic message is received,
unless the date of that delivery (or attempted delivery) or that
receipt, as applicable, is not a Local Business Day or that
communication is delivered (or attempted) or received, as applicable,
after the close of business on a Local Business Day, in which case that
communication shall be deemed given and effective on the first
following day that is a Local Business Day.
(b) Change of Addresses. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
13. GOVERNING LAW AND JURISDICTION
(a) Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating
to this Agreement ("Proceedings"), each party irrevocably:--
(i) submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or to the
non-exclusive jurisdiction of the courts of the State of New York and
the United States District Court located in the Borough of Manhattan in
New York City, if this Agreement is expressed to be governed by the
laws of the State of New York; and
(ii) waives any objection which it may have at any time to the
laying of venue of any Proceedings brought in any such court, waives
any claim that such Proceedings have been brought in an inconvenient
forum and further waives the right to object, with respect to such
Proceedings, that such court does not have any jurisdiction over such
party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments ▇▇▇ ▇▇▇▇ or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) Service of Process. Each party irrevocably appoints the Process Agent
(if any) specified opposite its name in the Schedule to receive, for it and on
its behalf, service of process in any Proceedings. If for any reason any party*s
Process Agent is unable to act as such, such party will promptly notify the
other party and within 30 days appoint a substitute process agent acceptable to
the other party. The parties irrevocably consent to service of process given in
the manner provided for notices in Section 12. Nothing in this Agreement will
affect the right of either party to serve process in any other manner permitted
by law.
(d) Waiver of Immunities. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues and
assets (irrespective of their use or intended use), all immunity on the grounds
of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
14
14. DEFINITIONS
As used in this Agreement:--
"Additional Termination Event" has the meaning specified in Section 5(b).
"Affected Party" has the meaning specified the 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 Rate (determined in accordance with Section
6(d)(ii)) on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which
would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the
Non-default Rate; and
(d) in all other cases, the Termination Rate.
"Burdened Party" has the meaning specified in Section 5(b).
"Change in Tax Law" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs on or after the date on which the
relevant Transaction is entered into.
"consent" includes a consent, approval, action, authorization, exemption,
notice, filing, registration or exchange control consent.
"Credit Event Upon Merger" has the meaning specified in Section 5(b).
"Credit Support Document" means any agreement or instrument that is specified as
such in this Agreement.
"Credit Support Provider" has the meaning specified in the Schedule.
"Default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
"Defaulting Party" has the meaning specified in Section 6(a).
15
"Early Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"Event of Default" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.
"Illegality" has the meaning specified in Section 5(b).
"Indemnifiable Tax" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation authority imposing such
Tax and the recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such jurisdiction,
or being or having been organized, present or engaged in a trade or business in
such jurisdiction, or having or having had a permanent establishment or fixed
place of business in such jurisdiction, but excluding a connection arising
solely from such recipient, or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this
Agreement or a Credit Support Document).
"law" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority) and
"lawful" and "unlawful" will be construed accordingly.
"Local Business Day" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial center, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
with respect to such Specified Transaction.
"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case expressed as a negative number)
in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding, or at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain resulting from
any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each
applicable condition precedent) on or before the relevant Early Termination Date
and not made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3)
or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and out-
of-pocket expenses referred to under Section 11. A party will determine its Loss
as of the relevant Early Termination Date, or, if that is not reasonably
practicable, as of the earliest date thereafter as is reasonably practicable. A
party may (but need not) determine its Loss by reference to quotations of
relevant rates or prices from one or more leading dealers in the relevant
markets.
"Market Quotation" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have been required after that date. For this
purpose, Unpaid Amounts in respect of the Terminated Transaction or group of
Terminated Transactions are to
16
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 obliged, after consultation with the other. If more than three
quotations are provided, the Market Quotation will be the arithmetic mean of the
quotations, without regard to the quotations having the highest and lowest
values. If exactly three such quotations are provided, the Market Quotation will
be the quotation remaining after disregarding the highest and lowest quotations.
For this purpose, if more than one quotation has the same highest value or
lowest value, then one of such quotations shall he 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, organized, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, from or through which such payment
is made.
"Scheduled Payment Date" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"Set-off" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
"Settlement Amount" means, with respect to a party and any Early Termination
Date, the sum of:--
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
17
(b) such party*s Loss (whether positive or negative and without reference
to any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"Specified Entity" has the meaning specified in the Schedule.
"Specified Indebtedness" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.
"Specified Transaction" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basic 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 am. (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.
18
"Termination Rate" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"Unpaid Amounts" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market value of that which was (or would have been) required to be
delivered as of the originally scheduled date for delivery, in each case
together with (to the extent permitted under applicable law) interest, in the
currency of such amounts, from (and including) the date such amounts or
obligations were or would have been required to have been paid or performed to
(but excluding) such Early Termination Date, at the Applicable Rate. Such
amounts of interest will be calculated on the basis of daily compounding and the
actual number of days elapsed. The fair market value of any obligation referred
to in clause (b) above shall be reasonably determined by the party obliged to
make the determination 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.
19
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.
▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL SERVICES, INC. MMCA AUTO OWNER TRUST 2001-1
By: By:
----------------------------- ----------------------------
Name: Name:
Title: Title:
Date: Date:
20
SCHEDULE TO THE ISDA MASTER AGREEMENT
Dated as of April [ ], 2001
between
▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL SERVICES, INC. ("MLCS")
and
MMCA AUTO OWNER TRUST 2001-1 (THE "TRUST")
PART 1 TERMINATION PROVISIONS.
(a) "SPECIFIED ENTITY" means:
(i) in relation to MLCS: Not Applicable.
(ii) in relation to the Trust: Not Applicable.
(b) "SPECIFIED TRANSACTION" shall have the meaning specified in Section 14
of this Agreement.
(c) The "Breach of Agreement" provisions of Section 5(a)(ii) will not apply
to MLCS or to the Trust.
(d) The "Credit Support Default" provisions of Section 5(a)(iii), if
applicable, will apply to MLCS and will not apply to the Trust.
(e) The "Misrepresentation" provisions of Section 5(a)(iv) will not apply
to MLCS or to the Trust.
(f) The "Default under Specified Transaction" provisions of Section 5(a)(v)
will not apply to MLCS or to the Trust.
(g) The "Cross Default" provisions of Section 5(a)(vi) will not apply to
MLCS or to the Trust.
(h) The "Merger Without Assumptions" provisions of Section 5(a)(vii) will
not apply to MLCS or to the Trust.
(i) The "Credit Event Upon Merger" provision in Section 5(b)(iv), will not
apply to MLCS or to the Trust.
(j) The "Tax Event" provision of Section 5(b)(ii) will apply to the Trust
and will not apply to MLCS.
(k) The "Tax Event Upon Merger" provision of Section 5(b)(iii) will apply
to the Trust and to MLCS.
(l) The "Automatic Early Termination" provision of Section 6(a) will not
apply to MLCS or to the Trust.
(m) Payments on Early Termination. For the purpose of Section 6(e) of this
Agreement:
(i) Market Quotation will apply unless the Trust is the
Non-defaulting Party or the party which is not the Affected
Party, as the case may be, and the Trust enters into a
replacement Transaction on or prior to the Early Termination
Date, in which event Loss will apply.
(ii) The Second Method will apply.
1
(n) "TERMINATION CURRENCY" means United States Dollars.
(o) "ADDITIONAL TERMINATION EVENT". The following shall constitute an
Additional Termination Event:
(i) Acceleration or Liquidation of the Notes. It shall be an
Additional Termination Event with the Trust the sole Affected
Party if MLCS or the Trust elects to terminate the Transactions
(1) following an Event of Default as defined in Section 5.1(i)
or Section 5.1(ii) of the Indenture which has resulted in an
acceleration of the Notes, provided such acceleration has not
been rescinded and annulled pursuant to Section 5.2(b) of the
Indenture, or (2) upon a liquidation of the Trust Estate
pursuant to Section 5.4(a)(iv) of the Indenture. In such event,
either MLCS or the Trust may, by not more than 20 days notice
to the other party and provided such Additional Termination
Event is continuing, designate a day not earlier than the day
such notice is effective as an Early Termination Date in
respect of all Affected Transactions. If an event or
circumstance which would constitute an Event of Default by MLCS
under this Agreement gives rise to an Event of Default under
the Indenture, it will be treated as an Event of Default by
MLCS and not an Additional Termination Event.
(ii) Amendments Made Without Consent of MLCS. It shall be an
Additional Termination Event if any amendment or supplement to
the Indenture or to any of the Receivables Transfer and
Servicing Agreements which would adversely affect any of MLCS'
rights or obligations under this Agreement or modify the
obligations of, or impair the ability of the Trust to fully
perform any of the Trust's obligations under, this Agreement is
made without the consent of MLCS, which consent shall not be
unreasonably withheld (in which case the Trust will be the
Affected Party).
(iii) Downgrade of MLCS. It shall be an Additional Termination Event
with MLCS the Affected Party if (1) the long-term Credit Rating
of MLCS is downgraded below "A2" by ▇▇▇▇▇'▇ or below "A" by
Fitch, or is suspended or withdrawn by either Rating Agency or
(2) the short-term Credit Rating of MLCS is downgraded below a
rating of "A" by S&P, or is suspended or withdrawn by such
Rating Agency, and within 30 days of such downgrade,
suspension, withdrawal or notification, MLCS shall fail to
either (x) deliver or post collateral acceptable to the Trust
and acceptable to the Rating Agencies, in amounts sufficient or
in accordance with the standards of the Rating Agencies (as
such standards may be modified while any Transaction is still
outstanding), to secure its obligations under this Agreement,
(y) assign its rights and obligations under this Agreement to a
replacement counterparty acceptable to the Trust or (z)
establish other arrangements necessary, if any, in each case so
that the Rating Agencies confirm the ratings of the Notes that
were in effect immediately prior to such downgrade, suspension,
withdrawal or notification.
(iv) Failure to Maintain Security Interest. It shall be an
Additional Termination Event if the Trust fails to maintain
MLCS' first priority perfected security interest in the
Collateral under the Indenture.
(v) Representations. Section 3(a)(iii) is hereby amended by
inserting the words "or investment policies, guidelines,
procedures or restrictions" immediately following the words
"documents".
PART 2 TAX REPRESENTATIONS.
(a) Payer Tax Representations. For the purposes of Section 3(e) of this
Agreement, MLCS and the Trust will
2
each make the following representations to the other:
It is not required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account of
any Tax from any payment (other than interest under Section 2(e),
6(d)(ii) or 6(e) of this Agreement) to be made by it to the other party
under this Agreement. In making this representation, each party may
rely on:
(i) the accuracy of any representations made by the other party
pursuant to Section 3(f) of this Agreement;
(ii) the satisfaction of the agreement of the other party contained
in Section 4(a)(i) or 4(a)(iii) of this Agreement and the
accuracy and effectiveness of any document provided by the
other party pursuant to Section 4(a)(i) or 4(a)(iii) of this
Agreement, and
(iii) the satisfaction of the agreement of the other party contained
in Section 4(d) of this Agreement,
provided that it shall not be a breach of this representation where
reliance is placed on clause (ii) and the other party does not deliver
a form or document under Section 4(a)(iii) by reason of material
prejudice to its legal or commercial position.
(b) Payee Tax Representations.
(i) For the purpose of Section 3(f) of this Agreement, MLCS
represents to the Trust that it is a corporation organized
under the laws of the State of Delaware.
(ii) For the purpose of Section 3(f) of this Agreement, the Trust
represents to MLCS that it is a business trust organized and
existing under the laws of the State of Delaware.
(iii) MLCS represents that it is a "United States person" as defined
in Section 7701(a)(30) of the Internal Revenue Code of 1986, as
amended, and the Trust represents that it is wholly-owned by a
"United States person" and disregarded as an entity separate
from its owner for U.S. federal tax purposes.
3
PART 3 DOCUMENTS TO BE DELIVERED.
(a) For the purpose of Section 4(a)(i), the documents to be delivered are:
PARTY REQUIRED TO FORM/DOCUMENT/ DATE BY WHICH TO BE DELIVERED SECTION 3(d)
DELIVER DOCUMENT CERTIFICATE REPRESENTATION
MLCS and the Trust An executed United States (i) Upon execution of this Applicable
Internal Revenue Service Form Agreement, (ii) promptly upon
W-9 (or any successor reasonable demand by the
thereto). other party and (iii) promptly
upon learning that any such form
previously provided by such
party has become obsolete or
incorrect.
(b) For the purposes of Section 4(a)(ii), the other documents to be
delivered are as follows:
PARTY REQUIRED TO FORM/DOCUMENT/ DATE BY WHICH TO BE DELIVERED SECTION 3(d)
DELIVER DOCUMENT CERTIFICATE REPRESENTATION:
MLCS and the Trust Evidence of the Upon or prior to the execution Applicable
authority, incumbency and and delivery of this Agreement
specimen signature of and, with respect to any
each person executing Confirmation upon request by
this Agreement or any the other party.
Confirmation, Credit
Support Document or other
document entered into in
connection with this
Agreement on its behalf
or on behalf of a Credit
Support Provider or
otherwise, as the case
may be.
4
MLCS and the Trust Certified copies of Upon request by the other Applicable
documents evidencing each party.
Party's capacity to
execute and deliver this
Agreement, each
Confirmation and any
Credit Support Document
(if applicable), and to
perform its obligations
hereunder or thereunder
as may be reasonably
requested by the other
party.
MLCS Annual audited financial Promptly after request by the
statements of its Credit Trust. Applicable
Support Provider prepared
in accordance with
generally accepted
accounting principles in
the country in which its
Credit Support Provider
is organized.
Monthly reports to On or prior to each Monthly Applicable
The Trust noteholders and to Payment Date.
holders of the
certificate (and all
other such notices
required to be given to
noteholders and to
holders of the
certificate, as specified
in the Indenture).
MLCS and the Trust A legal opinion in form Not Applicable
and substance On or prior to the
satisfactory to the other Closing Date.
party.
The Trust A copy of the executed As soon as practical after the
Indenture and of each of Closing Date. The Trust
the Receivables Transfer
and Servicing Agreements.
5
MLCS An officer's certificate On or pior to the Applicable
affirming the information Closing Date
describing MLCS under
"Description of Swap
Counterparty" provided to
the Trust by MLCS for use
in the Trust's prospectus.
MLCS and the Trust Such other documents as Promptly upon request of the Not Applicable
the other party may other party.
reasonably request.
PART 4 MISCELLANEOUS.
(a) Address for Notices. For the purpose of Section 12(a) of this
Agreement, the addresses for notices and communications to MLCS and the
Trust shall be as follows:
TO PARTY A:
▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters
4 World Financial Center
New York, New York 10080
Attention: Swap Group
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Additionally, a copy of all notices pursuant to Sections 5, 6, and
7 as well as any changes to counterparty's address, telephone number or
facsimile number should be sent to:
CICG Counsel
▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters
4 World Financial Center
New York, New York 10080
Attention: Swaps Legal
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
TO PARTY B:
MMCA Auto Owner Trust 2001-1
c/o Wilmington Trust Company,
as Owner Trustee
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
6
(b) Process Agent. For the purposes of Section 13(c) of this Agreement:
MLCS appoints as its Process Agent: Not Applicable
The Trust appoints as its Process Agent: [ ]
(c) Offices. The provisions of Section 10(a) will apply to this Agreement.
(d) Multibranch Party. For purposes of Section 10(c) of this Agreement:
(i) MLCS is not a Multibranch Party.
(ii) The Trust is not a Multibranch Party.
(e) The CALCULATION AGENT shall be MLCS.
(f) Credit Support Documents.
MLCS: Guarantee of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. ("ML&CO.") in the form
attached hereto as Exhibit A.
The Trust: Not applicable
(g) Credit Support Provider.
Credit Support Provider means, in relation to MLCS, ML&Co. Credit
Support Provider means, in relation to the Trust, Not Applicable.
(h) Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York (without
reference to its choice of law doctrine).
(i) "AFFILIATE" will have the meaning specified in Section 14 of this
Agreement.
PART 5 OTHER PROVISIONS.
(a) Representations.
(i) Non-Reliance, Etc. Each party will be deemed to represent to
the other party on the date that it enters into a Transaction
that (absent a written agreement between the parties that
expressly imposes affirmative obligations to the contrary for
that Transaction):
(1) Non-Reliance. It is acting for its own account, and it
has made its own independent decisions to enter into that
Transaction and as to whether that Transaction is
appropriate or proper for it based upon its own judgment
and upon advice from such advisers as it has deemed
necessary. It is not relying on any communication
(written or oral) of the other party as investment advice
or as a recommendation to enter into that Transaction; it
being understood that information and explanations
related to the terms and conditions of a Transaction
shall not be considered to be investment advice or a
recommendation to enter into that Transaction. No
communication (written or oral) received from the other
party shall be deemed to be an assurance or guarantee as
to the expected results of that
7
Transaction.
(2) Assessment and Understanding. It is capable of assessing
the merits of and understanding (on its own behalf or
through independent professional advice), and understands
and accepts the terms and conditions and risks of that
Transaction. It is also capable of assuming, and assumes,
the risks of that Transaction.
(3) Status of Parties. The other party is not acting as a
fiduciary for or adviser to it in respect of that
Transaction.
(ii) Commodity Exchange Act. Each party represents to the other
party on and as of the date hereof and on each date on which a
Transaction is entered into between them that:
(1) each Transaction is intended to be exempt from, or
otherwise not subject to regulation under, the Commodity
Exchange Act;
(2) such party is an "eligible contract participant" within
the meaning of the United States Commodity Exchange Act;
and
(3) such party is entering into each Transaction in
connection with its line of business and not for purposes
of speculation.
(b) Consent to Recording.
Each party consents to the recording of the telephone conversations of
trading and marketing and/or other personnel of the parties and their
Affiliates in connection with this Agreement.
(c) Tax Provisions.
(i) The definition of Tax Event, Section 5 (b)(ii), is hereby
modified by adding the following provision at the end thereof:
"provided, however, that for purposes of clarification, the
parties acknowledge that the introduction or proposal of
legislation shall not, in and of itself, give rise to a
presumption that a Tax Event has occurred."
(ii) The Trust will not be required to pay additional amounts in
respect of an Indemnifiable Tax or be under any obligation to
pay to MLCS any amount in respect of any liability of MLCS for
or on account of any Tax.
(d) No Set Off.
Notwithstanding any setoff right contained in any other
agreement between the Trust or any Affiliate or Credit Support Provider
of the Trust, on the one hand, and MLCS or any Affiliate or Credit
Support Provider of the Trust, on the other, whether now in existence
or hereafter entered into unless such agreement shall specifically
refer to this paragraph (d), each party agrees that all payments
required to be made by it under this Agreement shall be made without
setoff or counterclaim for, and that it shall not withhold payment or
delivery under this Agreement in respect of, any default by the other
party or any Affiliate or Credit Support Provider of the other party
under any such other agreement or any amount relating to any such other
agreement. For purposes of this paragraph (d), "AFFILIATE" shall have
the
8
meaning specified in Section 14 of this Agreement.
(e) Additional Acknowledgments and Agreements of the Parties.
(i) Financial Statements. Notwithstanding Section 5(a)(ii), the
failure of either party to deliver any financial statement or
monthly report referenced in Part 3 of this Schedule shall not
constitute an Event of Default under Section 5(a)(ii).
(ii) Bankruptcy Code. Without limiting the applicability, if any, of
any other provision of the U.S. Bankruptcy Code as amended (the
"BANKRUPTCY CODE") (including without limitation Sections 362,
546, 556, and 560 thereof and the applicable definitions in
Section 101 thereof), the parties acknowledge and agree that
all Transactions entered into hereunder will constitute
"forward contracts" or "swap agreements" as defined in Section
101 of the Bankruptcy Code or "commodity contracts" as defined
in Section 761 of the Bankruptcy Code, that the rights of the
parties under Section 6 of this Agreement will constitute
contractual rights to liquidate Transactions, that any margin
or collateral provided under any margin, collateral, security,
pledge, or similar agreement related hereto will constitute a
"margin payment" as defined in Section 101 of the Bankruptcy
Code, and that the parties are entities entitled to the rights
under, and protections afforded by, Sections 362, 546, 556, and
560 of the Bankruptcy Code.
(iii) Non-Petition. MLCS covenants and agrees that it will not, prior
to the date which is one year and one day following the payment
in full of all of the Notes and the Certificate and the
expiration of all applicable preference periods under the
United States Bankruptcy Code or other applicable law relating
to any such payment, acquiesce, petition or otherwise invoke
the process of any governmental authority for the purpose of
commencing a case (whether voluntary or involuntary) against
the Trust under any bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Trust
or any substantial part of its property or ordering the winding
up or liquidation of the affairs of the Trust. MLCS agrees that
it has recourse against the Trust only to the extent of the
assets of the Trust and the proceeds thereof, and any claims
against the Trust shall be extinguished when the assets of the
Trust are exhausted.
(iv) Transfer. Notwithstanding the provisions of Section 7, MLCS may
assign its rights and delegate its obligations under any
Transaction, in whole or in part, to any Affiliate of ML&Co.
(an "ASSIGNEE"), effective (the "EFFECTIVE TRANSFER DATE") upon
delivery to Counterparty of both (a) an executed acceptance and
assumption by the Assignee of the transferred obligations of
MLCS under the Transaction(s) (the "TRANSFERRED OBLIGATIONS");
and (b) an executed guarantee of ML&Co., of the Transferred
Obligations, substantially identical to the Credit Support
Document with respect to MLCS; provided that no such transfer
to an Assignee shall occur if (i) Counterparty shall, as a
result of such transfer, be required to pay to MLCS or the
Assignee 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 Counterparty would have been required to pay to MLCS in
the absence of such transfer; (ii) MLCS or the Assignee shall,
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)) an amount in
excess of that which MLCS would have been required to withhold
or deduct in the absence of such transfer, unless the Assignee
would be required to make additional payments pursuant to
Section 2(d)(i)(4) corresponding to such excess; or (iii) an
Event of Default, Potential Event of Default or Termination
Event would occur hereunder as a result of such transfer; and,
provided, further, that MLCS shall pay any fees and expenses
incurred by or on the part of either party as a
9
result of such transfer.
On the Effective Transfer Date, (a) MLCS shall be released from
all obligations and liabilities arising under the Transferred
Obligations; and (b) the Transferred Obligations shall cease to
be Transaction(s) under this Agreement and shall be deemed to
be Transaction(s) under the ISDA Master Agreement between
Assignee and Counterparty, provided that, if, on the Effective
Transfer Date, Assignee and Counterparty have not entered into
an ISDA Master Agreement, Assignee and Counterparty shall be
deemed to have entered into an ISDA Master Agreement that is
substantially identical to this Agreement, including this
Schedule. At least 15 days prior to any such transfer MLCS
shall notify Counterparty in writing of its intent to transfer
its rights and delegate its obligations hereunder in accordance
with the terms hereof, and shall state in writing that such
transfer shall conform to the requirements of this Part
5(e)(iv), whereupon Counterparty shall promptly notify each
Rating Agency of such transfer.
(v) The Trust Pledge. Notwithstanding Section 7 of this Agreement
to the contrary, MLCS acknowledges that the Trust will pledge
its rights under this Agreement to the Indenture Trustee (as
defined in the Indenture) for the benefit of the Noteholders
(as defined in the Indenture) pursuant to the Indenture and
agrees to such pledge. The Indenture Trustee shall not be
deemed to be a party to this Agreement, provided, however, that
the Indenture Trustee, acting on behalf of the holders of the
Notes, shall have the right to enforce this Agreement against
MLCS. MLCS shall be entitled to rely on any notice or
communication from the Indenture Trustee to that effect. MLCS
acknowledges that the Trust will pledge substantially all its
assets to the Indenture Trustee for the benefit of the
Noteholders and MLCS and that all payments hereunder, including
payments on early termination, will be made in accordance with
the priority of payment provisions of the Indenture and the
Sale and Servicing Agreement and on the Payment Dates specified
therein.
(vi) Limited Recourse. The liability of the Trust in relation to
this Agreement and any Transaction hereunder is limited in
recourse to the assets of the Trust and proceeds thereof
applied in accordance with the Indenture and the Sale and
Servicing Agreement. Upon exhaustion of the assets of the Trust
and proceeds thereof in accordance with the Indenture and the
Sale and Servicing Agreement, MLCS shall not be entitled to
take any further steps against the Trust to recover any sums
due but still unpaid hereunder or thereunder, all claims in
respect of which shall be extinguished. No recourse may be
taken for the payment of any amount owing in respect of any
obligation of, or claim against, the Trust arising out of or
based upon this Agreement or any Transaction hereunder against
any holder of a beneficial interest, employee, officer or
Affiliate thereof and no recourse shall be taken for the
payment of any amount owing in respect of any obligation of, or
claim against, the Trust based upon or arising out of this
Agreement against the Administrator, the Seller, the Servicer,
the Indenture Trustee, the Owner Trustee, the Delaware Trustee
or any stockholder, holder of a beneficial interest, employee,
officer, director, incorporator or Affiliate thereof; provided,
however, that the foregoing shall not relieve any such person
or entity from any liability they might otherwise have as a
result of willful misconduct, bad faith or negligence.
In furtherance of and not in derogation of the foregoing, MLCS
acknowledges and agrees that it shall have no right, title or
interest in or to the Other Assets of the Seller. To the extent
that, notwithstanding the agreements and provisions contained
in the preceding paragraph, MLCS either (i) asserts an interest
or claim to, or benefit from, Other Assets, or (ii) is deemed
to have any such interest, claim to, or benefit in or from
Other Assets, whether by operation of law, legal process,
pursuant to applicable provisions of insolvency laws or
otherwise (including by virtue of Section 1111(b) of the
Bankruptcy Code or any successor provision having similar
effect under
10
the Bankruptcy Code), then MLCS further acknowledges and agrees
that any such interest, claim or benefit in or from Other
Assets is and shall be expressly subordinated to the
indefeasible payment in full, which, under the terms of the
relevant documents relating to the securitization or conveyance
of such Other Assets, are entitled to be paid from, entitled to
the benefits of, or otherwise secured by such Other Assets
(whether or not any such entitlement or security interest is
legally perfected or otherwise entitled to a priority of
distributions or application under applicable law, including
insolvency laws, and whether or not asserted against the
Seller), including the payment of post-petition interest on
such other obligations and liabilities. This subordination
agreement shall be deemed a subordination agreement within the
meaning of Section 510(a) of the Bankruptcy Code. The Trust
further acknowledges and agrees that no adequate remedy at law
exists for a breach of this Part 5(e)(vi) and the terms of this
Part 5(e)(vi) may be enforced by an action for specific
performance. The provisions of this Part 5(e)(vi) shall be for
the third party benefit of those entitled to rely thereon and
shall survive the termination of this Agreement.
(vii) No Amendment without Prior Confirmation by Rating Agencies.
Section 9(b) of this Agreement is hereby amended by adding the
following at the end of such Section: ", and unless the Rating
Agencies confirm that such amendment will not cause the
reduction, suspension or withdrawal of their then current
rating on any of the Notes or the Certificate, unless such
amendment clarifies any term or provision, corrects any
inconsistency, cures any ambiguity, or corrects any
typographical error in the Agreement."
(viii) Consent by MLCS to Amendments to Certain Documents. Before any
amendment or supplement is made to the Receivables Transfer and
Servicing Agreements or to the Indenture which would adversely
affect any of MLCS' rights or obligations under this Agreement
or modify the obligations of, or impair the ability of the
Trust to fully perform any of the Trust's obligations under,
this Agreement, the Trust shall provide MLCS with a copy of the
proposed amendment or supplement and shall obtain the consent
of MLCS to such amendment or supplement prior to its adoption,
which consent shall not be unreasonably withheld; provided that
MLCS' consent will be deemed to have been given if MLCS does
not object in writing within ten Business Days of receipt of a
written request for such consent.
(ix) Severability. If any term, provision, covenant, or condition of
this 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 this Agreement had been executed
with the invalid or unenforceable portion eliminated, so long
as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to
the subject matter of this Agreement and the deletion of such
portion of this Agreement will not substantially impair the
respective benefits or expectations of the parties to this
Agreement; provided, however, that this severability provision
shall not be applicable if any provision of Section 1, 2, 5, 6
or 13 (or any definition or provision in Section 14 to the
extent it relates to, or is used in connection with, any such
Section) shall be so held to be invalid or unenforceable.
(f) Waiver of Right to Trial by Jury. Each of the parties hereby
irrevocably waives any and all right to a trial by jury with respect to
any legal proceeding arising out of or relating to this Agreement or
any Transaction.
(g) Limited Transactions. MLCS and the Trust each agrees and acknowledges
that the only Transactions that are or will be governed by this
Agreement are the Transactions evidenced by the two Confirmations dated
the date hereof.
11
(h) Notices to Noteholders. The Trust shall provide MLCS with copies of all
notices required to be given to the holders of the Notes, and upon
request, shall provide MLCS with any other notices which could be
requested by the holders of the Notes.
(i) Further Representations of the Trust:
(i) The Notes are rated _____ by ▇▇▇▇▇'▇ Investor Services, Inc.,
_____ by Standard and Poor's, and _____ by Fitch as to the
timely payment of interest and principal and without regard to
third party credit enhancement.
(ii) All conditions precedent to the issuance of the Notes under the
Indenture have been satisfied.
(iii) Each of the Basic Documents to which it is a party has been
duly authorized, executed and delivered by it.
(iv) Assuming the due authorization, execution and delivery thereof
by the other parties thereto, the Indenture and the other Basic
Documents to which the Trust is a party constitutes the legal,
valid and binding obligations of the Trust, enforceable against
the Trust in accordance with the terms thereof, subject to
applicable bankruptcy, insolvency and similar laws or legal
principles affecting creditors' rights generally, and subject,
as to enforceability, to general principles of equity
regardless of whether enforcement is sought in a proceeding in
equity or at law.
(v) The Indenture and the other Basic Documents to which the Trust
is a party are in full force and effect on the date hereof and
there have been no amendments or waivers or modifications of
any of the terms thereof since the original execution and
delivery of the Indenture and the other Basic Documents to
which the Trust is a party, except such as may have been
delivered to the Trust.
(vi) To the best of its knowledge no event of default or event which
would with the passage of time or the giving of notice
constitute an event of default has occurred and is continuing
under any of the Basic Documents to which the Trust is a party.
(j) Additional Definitions.
"ADMINISTRATION AGREEMENT" shall mean the administration agreement
dated as of April [ ], 2001, as amended, supplemented or otherwise
modified and in effect, by and among the Trust, Mitsubishi Motors
Credit of America, Inc., and Bank of Tokyo-Mitsubishi Trust Company.
"ADMINISTRATOR" shall have the meaning assigned thereto in the
Administration Agreement.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions or trust companies in New York
or London are authorized or obligated by law, regulation or executive
order to remain closed.
"CERTIFICATE" means the Certificate issued by the Trust pursuant
to the Trust Agreement.
"CLASS A-2 NOTES" means the Class A-2 Notes issued by the Trust
pursuant to the Indenture.
"CLASS A-3 NOTES" means the Class A-3 Notes issued by the Trust
pursuant to the Indenture.
"CLOSING DATE" shall mean April [ ], 2001.
12
"CREDIT RATING" means, with respect to MLCS, the issuer rating of
the head office of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. Inc. without regard to whether
or not such rating is under review with positive or negative
implications.
"FITCH" shall mean Fitch IBCA.
"INDENTURE" shall mean the indenture dated as of April [ ], 2001,
as amended, supplemented or otherwise modified and in effect, between
the Trust and Bank of Tokyo-Mitsubishi Trust Company, as Indenture
Trustee.
"INDENTURE TRUSTEE" shall mean Bank of Tokyo-Mitsubishi Trust
Company, or any successor or replacement thereto pursuant to the
Indenture.
"MOODY'S" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"NOTES" shall mean the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes, the Class A-4 Notes and the Class B Notes issued by
the Trust pursuant to the Indenture.
"OTHER ASSETS" shall mean any assets (or interests therein) (other
than the receivables and related property conveyed to the Trust
pursuant to the Sale and Servicing Agreement) conveyed or purported to
be conveyed by the Seller to another Person or Persons other than MLCS,
whether by way of a sale, capital contribution or by virtue of the
granting of a lien.
"PERSON" shall mean any individual, corporation, estate,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof.
"PAYMENT DATE" shall mean the fifteenth (15th) day of each month
or, if such day is not a Business Day, the immediately following
Business Day, commencing [ ] 15, 2001.
"PURCHASE AGREEMENT" shall mean the purchase agreement dated as of
April [ ], 2001, as from time to time amended, supplemented or
otherwise modified and in effect, between Mitsubishi Motors Credit of
America, Inc. and MMCA Auto Receivables Trust.
"RATING AGENCIES" shall mean Fitch, Moody's or S&P, or any
substitute rating agency that the Seller (as defined in the Indenture)
requests to rate the Notes.
"RECEIVABLES TRANSFER AND SERVICING AGREEMENTS" shall mean
collectively the Purchase Agreement, the Sale and Servicing Agreement,
the Trust Agreement and the Administration Agreement.
"SALE AND SERVICING AGREEMENT" shall mean the sale and servicing
agreement dated as of April [ ], 2001, as amended, supplemented or
otherwise modified and in effect, by and among the Trust, MMCA Auto
Receivables Trust, as seller, and Mitsubishi Motors Credit of America,
Inc., as servicer.
"S&P" shall mean Standard & Poor's Rating Services, a division of
the ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"TRUST AGREEMENT" shall mean the Amended and Restated Trust
Agreement dated as of April [ ], 2001, as amended, supplemented or
otherwise modified and in effect, by and among MMCA Auto
13
Receivables Trust, as depositor, and Wilmington Trust Company, as
owner trustee.
"TRUST ESTATE" shall mean all money, instruments, rights and other
property that are subject or intended to be subject to the lien and
security interest of the Indenture for the benefit of the Noteholders
and the Swap Counterparties (including, without limitation, all
property and interests granted to the Indenture Trustee), including all
proceeds thereof.
14
IN WITNESS WHEREOF, the parties have executed this Schedule to the
Master Agreement on the respective dates specified below with effect from the
date specified on the first page of this document.
▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL SERVICES, INC. MMCA AUTO OWNER TRUST 2001-1
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By: By:
--------------------------------- ---------------------------------
Name: Name:
Title: Title:
Date: Date:
15
EXHIBIT A
[FORM OF GUARANTEE OF ▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO., INC.]
FOR VALUE RECEIVED, receipt of which is hereby acknowledged, ▇▇▇▇▇▇▇
▇▇▇▇▇ & CO., INC., a corporation duly organized and existing under the laws of
the State of Delaware ("ML & Co."), hereby unconditionally guarantees to MMCA
AUTO OWNER TRUST 2001-1 ("Company"), the due and punctual payment of any and all
amounts payable by ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital Services, Inc., a corporation organized
under the laws of the State of Delaware ("MLCS"), under the terms of the Master
Agreement between the Company and MLCS, dated as of _______________ ___, 2001
("Agreement"), including, in case of default, interest on any amount due, when
and as the same shall become due and payable, whether on the scheduled payment
dates, at maturity, upon declaration of termination or otherwise, according to
the terms thereof. In case of the failure of MLCS punctually to make any such
payment, ML & Co. hereby agrees to make such payment, or cause such payment to
be made, promptly upon demand made by the Company to ML & Co.; provided, however
that delay by the Company in giving such demand shall in no event affect ML &
Co.'s obligations under this Guarantee. This Guarantee shall remain in full
force and effect or shall be reinstated (as the case may be) if at any time any
payment guaranteed hereunder, in whole or in part, is rescinded or must
otherwise be returned by the Company upon the insolvency, bankruptcy or
reorganization of MLCS or otherwise, all as though such payment had not been
made.
ML & Co. hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Agreement; the absence of any action to enforce the same; any waiver or consent
by the Company concerning any provisions thereof; the rendering of any judgment
against MLCS or any action to enforce the same; or any other circumstances that
might otherwise constitute a legal or equitable discharge of a guarantor or a
defense of a guarantor. ML & Co. covenants that this guarantee will not be
discharged except by complete payment of the amounts payable under the
Agreement. This Guarantee shall continue to be effective if MLCS merges or
consolidates with or into another entity, loses its separate legal identity or
ceases to exist.
ML & Co. hereby waives diligence; presentment; protest; notice of
protest, acceleration, and dishonor; filing of claims with a court in the event
of insolvency or bankruptcy of MLCS; all demands whatsoever, except as noted in
the first paragraph hereof; and any right to require a proceeding first against
MLCS.
ML & Co. hereby certifies and warrants that this Guarantee constitutes
the valid obligation of ML & Co. and complies with all applicable laws.
This Guarantee shall be governed by, and construed in accordance with,
the laws of the State of New York.
This Guarantee may be terminated at any time by notice by ML & Co. to
the Company given in accordance with the notice provisions of the Agreement,
effective upon receipt of such notice by the Company or such later date as may
be specified in such notice; provided, however, that this Guarantee shall
continue in full force and effect with respect to any obligation of MLCS under
the Agreement entered into prior to the effectiveness of such notice of
termination.
A-1
This Guarantee becomes effective concurrent with the effectiveness of
the Agreement, according to its terms.
IN WITNESS WHEREOF, ML & Co. has caused this Guarantee to be executed
in its corporate name by its duly authorized representative.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO., INC.
By:
---------------------------------
Name:
Title:
Date:
A-2
EXHIBIT B
[Form of SWAP Confirmation]
[Date]
To: ▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL SERVICES, INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Swap Group
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
From: MMCA Auto Owner Trust 2001-1
c/o Wilmington Trust Company,
as Owner Trustee
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Corporate Trust Administration
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Re: Interest Rate Swap Reference No. [ ]
Ladies and Gentlemen:
The purpose of this letter agreement is to confirm the terms and
conditions of the Swap Transaction entered into between ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital
Services, Inc. ("MLCS") and MMCA Auto Owner Trust 2001-1 (the "TRUST") on the
Trade Date listed below (the "TRANSACTION"). This letter constitutes a
"CONFIRMATION" as referred to in the ISDA Agreement specified below.
The definitions and provisions contained in the 2000 ISDA Definitions,
together with the Annex to the 2000 ISDA Definitions, as published by the
International Swaps and Derivatives Association, Inc. (the "DEFINITIONS") are
incorporated into this Confirmation. For these purposes, all references in those
Definitions to a "TRANSACTION" shall be deemed to apply to the Transaction
referred to herein. In the event of any inconsistency between the Definitions
and this Confirmation, the terms of this Confirmation shall govern.
This Confirmation supplements, forms part of and is subject to the
Master Agreement dated as of [ ], as amended and supplemented from time to time
(the "AGREEMENT") between you and us. All provisions contained in or
incorporated by reference in the Agreement upon its execution will govern this
Confirmation except as expressly modified below. Other capitalized terms used
herein and not otherwise defined shall have the meanings given them in the
Indenture referred to in the Agreement. In the event of any inconsistency
between the provisions of that agreement and this Confirmation, this
Confirmation will prevail for the purpose of this Transaction.
B-1
The terms of the particular Transaction to which this Confirmation
relates are as follows:
Trade Date: [ ].
Effective Date: [ ].
Notional Amount: The Notional Amount initially shall equal
$[ ] and shall decrease by an amount
equal to the amount of the reduction in
the aggregate principal balance of the
Class [A- ] Notes on the fifteenth (15th)
day of each calendar month commencing on
[ ]. Decreases in the Notional Amount
with respect to the calculation of Fixed
Amounts shall take effect as of the
Period End Date occurring in the month of
the Distribution Date. The Trust shall
determine the Notional Amount and shall
inform MLCS of such determination by the
twelfth day of each calendar month.]
Termination Date: The date on which the aggregate
outstanding principal balance of the
Class [A- ] Notes has been reduced to
zero, or [ ] 15, [ ], whichever
is the earlier.
Fixed Amounts:
Fixed Rate Payer: The Trust.
Fixed Rate Payer
Payment Dates: The 15th day of each calendar month
commencing on [ ], subject to
adjustment in accordance with the
Following Business Day Convention.
Period End Date: The 15th day of each calendar month, with
No Adjustments.
Fixed Rate: [ ]%.
Fixed Rate
Day Count Fraction: 30/360.
Floating Amounts:
Floating Rate Payer: MLCS.
Floating Rate Payer
Payment Dates: The 15th day of each calendar month
commencing on [ ], subject to
adjustment in accordance with the
Following Business Day Convention.
Floating Rate for initial
Calculation Period: [One month.]
B-2
Floating Rate Option: [USD-LIBOR-BBA.]
Designated Maturity: [One month.]
Spread: [ ]%.
Floating Rate
Day Count Fraction: Actual/360.
Reset Dates: The first day of each Floating Rate Payer
Calculation Period.
Business Days: New York and London.
Account Details
Payments to MLCS: Bankers Trust Company
New York, NY
ABA: [ ]
Account #: [ ]
Ref: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital Services, Inc.
Dollar Swaps, New York, NY
Payments to the Trust: [ ]
Misc.
Calculation Agent: Mitsubishi Motors Credit of America, Inc.
Non-Reliance: Each party represents to the other party
that it is acting for its own account,
and has made its own independent
decisions to enter into this Transaction
and as to whether this Transaction is
appropriate or proper for it based on its
own judgment and upon advice from such
advisors as it has deemed necessary. It
is not relying on any communication
(written or oral) of the other party as
investment advice or as a recommendation
to enter into this Transaction, it being
understood that information and
explanations related to the terms and
conditions of this Transaction shall not
be considered investment advice or a
recommendation to enter into this
Transaction. No communication (written or
oral) received from the other party shall
be deemed to be an assurance or guarantee
as to the expected results of this
Transaction.
B-3
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation and returning it to us.
Best Regards,
MMCA AUTO OWNER TRUST 2001-1
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By:
-------------------------------------
Name:
Title:
▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL SERVICES, INC.
By:
-------------------------------------
Name:
Title:
B-4