(Multicurrency--Cross Border)
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of August 10, 2000
▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL SERVICES, INC. ML SSG DELAWARE, LLC
("Party A") ("Party B")
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows:-
1. Interpretation
(a) Definitions. The terms defined in Section 14 and in the Schedule will
have the meanings therein specified for the purpose of this Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the provisions
of the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on the
fact that this Master Agreement and all Confirmations form a single agreement
between the parties (collectively referred to as this "Agreement"), and the
parties would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions.
(i) Each party will make each payment or delivery specified in
each Confirmation to be made by it, subject to the other provisions of
this Agreement.
(ii) Payments under this Agreement will be made on the due date for
value on that date in the place of the account specified in the
relevant Confirmation or otherwise pursuant to this Agreement, in
freely transferable funds and in the manner customary for payments in
the required currency. Where settlement is by delivery (that is, other
than by payment), such delivery will be made for receipt on the due
date in the manner customary for the relevant obligation unless
otherwise specified in the relevant Confirmation or elsewhere in this
Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject
to (1) the condition precedent that no Event of Default or Potential
Event of Default with respect to the other party has occurred and is
continuing, (2) the condition precedent that no Early Termination Date
in respect of the relevant Transaction has occurred or been effectively
designated and (3) each other applicable condition precedent specified
in this Agreement.
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(b) Change of Account. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) Netting. If on any date amounts would otherwise be payable:--
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). This election may
be made separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.
(d) Deduction or Withholding for Tax.
(i) Gross-Up. All payments under this Agreement will be made
without any deduction or withholding for or on account of any Tax
unless such deduction or withholding is required by any applicable law,
as modified by the practice of any relevant governmental revenue
authority, then in effect. If a party is so required to deduct or
withhold, then that party ("X") will:--
(1) promptly notify the other party ("Y") of such
requirement;
(2) pay to the relevant authorities the full amount
required to be deducted or withheld (including the full amount
required to be deducted or withheld from any additional amount
paid by X to Y under this Section 2(d)) promptly upon the
earlier of determining that such deduction or withholding is
required or receiving notice that such amount has been
assessed against Y;
(3) promptly forward to Y an official receipt (or a
certified copy), or other documentation reasonably acceptable
to Y, evidencing such payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in
addition to the payment to which Y is otherwise entitled under
this Agreement, such additional amount as is necessary to
ensure that the net amount actually received by Y (free and
clear of Indemnifiable Taxes, whether assessed against X or Y)
will equal the full amount Y would have received had no such
deduction or withholding been required. However, X will not be
required to pay any additional amount to Y to the extent that
it would not be required to be paid but for:--
(A) the failure by Y to comply with or perform any
agreement contained in Section 4(a)(i), 4(a)(iii) or
4(d); or
(B) the failure of a representation made by Y
pursuant to Section 3(f) to be accurate and true
unless such failure would not have occurred but for
(I) any action taken by a taxing
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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 obligations it has
under any Credit Support Document to which it is a party and has taken
all necessary action to authorize such execution, delivery and
performance;
(iii) No Violation or Conflict. Such execution, delivery and
performance do not violate or conflict with any law applicable to it,
any provision of its constitutional documents, any order or judgment of
any court or other agency of government applicable to it or any of its
assets or any contractual restriction binding on or affecting it or any
of its assets;
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(iv) Consents. All governmental and other consents that are
required to have been obtained by it with respect to this Agreement or
any Credit Support Document to which it is a party have been obtained
and are in full force and effect and all conditions of any such
consents have been complied with; and
(v) Obligations Binding. Its obligations under this Agreement and
any Credit Support Document to which it is a party constitute its
legal, valid and binding obligations, enforceable in accordance with
their respective terms (subject to applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting
creditors' rights generally and subject, as to enforceability, to
equitable principles of general application (regardless of whether
enforcement is sought in a proceeding in equity or at law)).
(b) Absence of Certain Events. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding at
law or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.
(d) Accuracy of Specified Information. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
(e) Payer Tax Representation. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(e) is accurate
and true.
(f) Payee Tax Representations. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(f) is accurate
and true.
4. Agreements
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:--
(a) Furnish Specified Information. It will deliver to the other party or,
in certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:--
(i) any forms, documents or certificates relating to taxation
specified in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any
Confirmation; and
(iii) upon reasonable demand by such other party, any form or
document that may be required or reasonably requested in writing in
order to allow such other party or its Credit Support Provider to make
a payment under this Agreement or any applicable Credit Support
Document without any deduction or withholding for or on account of any
Tax or with such deduction or withholding at a reduced rate (so long as
the completion, execution or submission of such form or document would
not materially prejudice the legal or commercial position of the party
in receipt of such demand), with any such form or document to be
accurate and completed in a manner reasonably satisfactory to such
other party and to be executed and to be delivered with any reasonably
required certification,
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in each case by the date specified in the Schedule or such Confirmation
or, if none is specified. as soon as reasonably practicable.
(b) Maintain Authorizations. It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other authority
that are required to be obtained by it with respect to this Agreement or any
Credit Support Document to which it is a party and will use all reasonable
efforts to obtain any that may become necessary in the future.
(c) Comply with Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
(d) Tax Agreement. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon learning of
such failure.
(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated, organized, managed and
controlled, or considered to have its seat, or in which a branch or office
through which it is acting for the purpose of this Agreement is located ("Stamp
Tax Jurisdiction") and will indemnify the other party against any Stamp Tax
levied or imposed upon the other party or in respect of the other party's
execution or performance of this Agreement by any such Stamp Tax Jurisdiction
which is not also a Stamp Tax Jurisdiction with respect to the other party.
5. Events of Default and Termination Events
(a) Events of Default. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an "Event of Default") with respect to such party:--
(i) Failure to Pay or Deliver. Failure by the party to make, when
due, any payment under this Agreement or delivery under Section 2(a)(i)
or 2(e) required to be made by it if such failure is not remedied on or
before the third Local Business Day after notice of such failure is
given to the party;
(ii) Breach of Agreement. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to make
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) or to give notice of a Termination Event or any agreement or
obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied
with or performed by the party in accordance with this Agreement if
such failure is not remedied on or before the thirtieth day after
notice of such failure is given to the party;
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider
of such party to comply with or perform any agreement or
obligation to be complied with or performed by it in
accordance with any Credit Support Document if such failure is
continuing after any applicable grace period has elapsed;
(2) the expiration or termination of such Credit Support
Document or the failing or ceasing of such Credit Support
Document to be in full force and effect for the purpose of
this Agreement (in either case other than in accordance with
its terms) prior to the satisfaction of all obligations of
such party under each Transaction to which such Credit Support
Document relates without the written consent of the other
party; or
(3) the party or such Credit Support Provider disaffirms,
disclaims, repudiates or rejects, in whole or in part, or
challenges the validity of, such Credit Support Document;
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(iv) Misrepresentation. A representation (other than a
representation under Section 3(e) or (f)) made or repeated or deemed to
have been made or repeated by the party or any Credit Support Provider
of such party in this Agreement or any Credit Support Document proves
to have been incorrect or misleading in any material respect when made
or repeated or deemed to have been made or repeated;
(v) Default under Specified Transaction. The party, any Credit
Support Provider of such party or any applicable Specified Entity of
such party (1) defaults under a Specified Transaction and, after giving
effect to any applicable notice requirement or grace period, there
occurs a liquidation of, an acceleration of obligations under, or an
early termination of, that Specified Transaction, (2) defaults, after
giving effect to any applicable notice requirement or grace period, in
making any payment or delivery due on the last payment, delivery or
exchange date of, or any payment on early termination of, a Specified
Transaction (or such default continues for at least three Local
Business Days if there is no applicable notice requirement or grace
period) or (3) disaffirms, disclaims, repudiates or rejects, in whole
or in part, a Specified Transaction (or such action is taken by any
person or entity appointed or empowered to operate it or act on its
behalf);
(vi) Cross Default. If "Cross Default" is specified in the Schedule
as applying to the party, the occurrence or existence of (1) a default,
event of default or other similar condition or event (however
described) in respect of such party, any Credit Support Provider of
such party or any applicable Specified Entity of such party under one
or more agreements or instruments relating to Specified Indebtedness of
any of them (individually or collectively) in an aggregate amount of
not less than the applicable Threshold Amount (as specified in the
Schedule) which has resulted in such Specified Indebtedness becoming,
or becoming capable at such time of being declared, due and payable
under such agreements or instruments, before it would otherwise have
been due and payable or (2) a default by such party, such Credit
Support Provider or such Specified Entity (individually or
collectively) in making one or more payments on the due date thereof in
an aggregate amount of not less than the applicable Threshold Amount
under such agreements or instruments (after giving effect to any
applicable notice requirement or grace period);
(vii) Bankruptcy. The party, any Credit Support Provider of such
party or any applicable Specified Entity of such party:--
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is unable to
pay its debts or fails or admits in writing its inability
generally to pay its debts as they become due; (3) makes a
general assignment, arrangement or composition with or for the
benefit of its creditors; (4) institutes or has instituted
against it a proceeding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy or
insolvency law or other similar law affecting creditors'
rights, or a petition is presented for its winding-up or
liquidation, and, in the case of any such proceeding or
petition instituted or presented against it, such proceeding
or petition (A) results in a judgment of insolvency or
bankruptcy or the entry of an order for relief or the making
of an order for its winding-up or liquidation or (B) is not
dismissed, discharged, stayed or restrained in each case
within 30 days of the institution or presentation thereof; (5)
has a resolution passed for its winding-up, official
management or liquidation (other than pursuant to a
consolidation, amalgamation or merger); (6) seeks or becomes
subject to the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee, custodian or other
similar official for it or for all or substantially all its
assets; (7) has a secured party take possession of all or
substantially all its assets or has a distress, execution,
attachment, sequestration or other legal process levied,
enforced or sued on or against all or substantially all its
assets and such secured party maintains possession, or any
such process is not dismissed, discharged, stayed or
restrained, in each case within 30 days thereafter; (8) causes
or is subject to any event with respect to it which, under the
applicable laws of any jurisdiction, has an analogous effect
to any of the events specified in clauses (1) to (7)
(inclusive); or (9) takes any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in,
any of the foregoing acts; or
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(viii) Merger Without Assumption. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges with
or into, or transfers all or substantially all its assets to, another
entity and, at the time of such consolidation, amalgamation, merger or
transfer:--
(1) the resulting, surviving or transferee entity fails
to assume all the obligations of such party or such Credit
Support Provider under this Agreement or any Credit Support
Document to which it or its predecessor was a party by
operation of law or pursuant to an agreement reasonably
satisfactory to the other party to this Agreement; or
(2) the benefits of any Credit Support Document fail to
extend (without the consent of the other party) to the
performance by such resulting, surviving or transferee entity
of its obligations under this Agreement.
(b) Termination Events. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an Illegality if
the event is specified in (i) below, a Tax Event if the event is specified in
(ii) below or a Tax Event Upon Merger if the event is specified in (iii) below,
and, if specified to be applicable, a Credit Event Upon Merger if the event is
specified pursuant to (iv) below or an Additional Termination Event if the event
is specified pursuant to (v) below:--
(i) Illegality. Due to the adoption of, or any change in, any
applicable law after the date on which a Transaction is entered into,
or due to the promulgation of, or any change in, the interpretation by
any court, tribunal or regulatory authority with competent jurisdiction
of any applicable law after such date, it becomes unlawful (other than
as a result of a breach by the party of Section 4(b)) for such party
(which will be the Affected Party):--
(1) to perform any absolute or contingent obligation to
make a payment or delivery or to receive a payment or delivery
in respect of such Transaction or to comply with any other
material provision of this Agreement relating to such
Transaction; or
(2) to perform, or for any Credit Support Provider of
such party to perform, any contingent or other obligation
which the party (or such Credit Support Provider) has under
any Credit Support Document relating to such Transaction;
(ii) Tax Event. Due to (x) any action taken by a taxing authority,
or brought in a court of competent jurisdiction, on or after the date
on which a Transaction is entered into (regardless of whether such
action is taken or brought with respect to a party to this Agreement)
or (y) a Change in Tax Law, the party (which will be the Affected
Party) will, or there is a substantial likelihood that it will, on the
next succeeding Scheduled Payment Date (1) be required to pay to the
other party an additional amount in respect of an Indemnifiable Tax
under Section 2(d)(i)(4) (except in respect of interest under Section
2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount
is required to be deducted or withheld for or on account of a Tax
(except in respect of interest under Section 2(e), 6(d)(ii) or 6(e))
and no additional amount is required to be paid in respect of such Tax
under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A)
or (B));
(iii) Tax Event Upon Merger. The party (the "Burdened Party") on the
next succeeding Scheduled Payment Date will either (1) be required to
pay an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has
been deducted or withheld for or on account of any Indemnifiable Tax in
respect of which the other party is not required to pay an additional
amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in
either case as a result of a party consolidating or amalgamating with,
or merging with or into, or transferring all or substantially all its
assets to, another entity (which will be the Affected Party) where such
action does not constitute an event described in Section 5(a)(viii);
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(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.
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.
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(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 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.
9
(e) Payments on Early Termination. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss," and a payment method,
either the "First Method" or the "Second Method." If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method," as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.
(i) Events of Default. If the Early Termination Date results from
an Event of Default:--
(1) First Method and Market Quotation. If the First
Method and Market Quotation apply, the Defaulting Party will
pay to the Non-defaulting Party the excess, if a positive
number, of (A) the sum of the Settlement Amount (determined by
the Non-defaulting Party) in respect of the Terminated
Transactions and the Termination Currency Equivalent of the
Unpaid Amounts owing to the Non-defaulting Party over (B) the
Termination Currency Equivalent of the Unpaid Amounts owing to
the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss
apply, the Defaulting Party will pay to the Non-defaulting
Party, if a positive number, the Non-defaulting Party's Loss
in respect of this Agreement.
(3) Second Method and Market Quotation. If the Second
Method and Market Quotation apply, an amount will be payable
equal to (A) the sum of the Settlement Amount (determined by
the Non-defaulting Party) in respect of the Terminated
Transactions and the Termination Currency Equivalent of the
Unpaid Amounts owing to the Non-defaulting Party less (B) the
Termination Currency Equivalent of the Unpaid Amounts owing to
the Defaulting Party. If that amount is a positive number, the
Defaulting Party will pay it to the Non-defaulting Party; if
it is a negative number, the Non-defaulting Party will pay the
absolute value of that amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss
apply, an amount will be payable equal to the Non-defaulting
Party's Loss in respect of this Agreement. If that amount is a
positive number, the Defaulting Party will pay it to the
Non-defaulting Party; if it is a negative number, the
Non-defaulting Party will pay the absolute value of that
amount to the Defaulting Party.
(ii) Termination Events. If the Early Termination Date results
from a Termination Event:--
(1) One Affected Party. If there is one Affected Party,
the amount payable will be determined in accordance with
Section 6(e)(i)(3), if Market Quotation applies, or Section
6(e)(i)(4), if Loss applies, except that, in either case,
references to the Defaulting Party and to the Non-defaulting
Party will be deemed to be references to the Affected Party
and the party which is not the Affected Party, respectively,
and, if Loss applies and fewer than all the Transactions are
being terminated, Loss shall be calculated in respect of all
Terminated Transactions.
(2) Two Affected Parties. If there are two Affected
Parties:--
(A) if Market Quotation applies, each party will
determine a Settlement Amount in respect of the
Terminated Transactions, and an amount will be
payable equal to (I) the sum of (a) one-half of the
difference between the Settlement Amount of the party
with the higher Settlement Amount ("X") and the
Settlement Amount of the party with the lower
Settlement Amount ("Y") and (b) the Termination
Currency Equivalent of the Unpaid Amounts owing to X
less (II) the Termination Currency Equivalent of the
Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its
Loss in respect of this Agreement (or, if fewer than
all the Transactions are being terminated, in respect
of all Terminated
10
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 be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable law,
any obligation to make payments under this Agreement in the Contractual Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual Currency, except to the extent such tender results in the actual
receipt by the party to which payment is owed, acting in a reasonable manner and
in good faith in converting the currency so tendered into the Contractual
Currency, of the full amount in the Contractual Currency of all amounts payable
in respect of this Agreement. If for any reason the amount in the Contractual
Currency so received falls short of the amount in the Contractual Currency
payable in respect of this Agreement, the party required to make the payment
will, to the extent permitted by applicable law, immediately pay such additional
amount in the Contractual Currency as may be necessary to compensate for the
shortfall. If for any reason the amount in the Contractual Currency so received
exceeds the amount in the Contractual Currency payable in respect of this
Agreement, the party receiving the payment will refund promptly the amount of
such excess.
(b) Judgments. To the extent permitted by applicable law, if any judgment
or order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or
11
order, will be entitled to receive immediately from the other party the amount
of any shortfall of the Contractual Currency received by such party as a
consequence of sums paid in such other currency and will refund promptly to the
other party any excess of the Contractual Currency received by such party as a
consequence of sums paid in such other currency if such shortfall or such excess
arises or results from any variation between the rate of exchange at which the
Contractual Currency is converted into the currency of the judgment or order for
the purposes of such judgment or order and the rate of exchange at which such
party is able, acting in a reasonable manner and in good faith in converting the
currency received into the Contractual Currency, to purchase the Contractual
Currency with the amount of the currency of the judgment or order actually
received by such party. The term "rate of exchange" includes, without
limitation, any premiums and costs of exchange payable in connection with the
purchase of or conversion into the Contractual Currency.
(c) Separate Indemnities. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed and will not be affected by judgment being obtained
or claim or proof being made for any other sums payable in respect of this
Agreement.
(d) Evidence of Loss. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss had an
actual exchange or purchase been made.
9. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) Amendments. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts (including
by facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of
each Transaction from the moment they agree to those terms (whether
orally or otherwise). A Confirmation shall be entered into as soon as
practicable and may be executed and delivered in counterparts
(including by facsimile transmission) or be created by an exchange of
telexes or by an exchange of electronic messages on an electronic
messaging system, which in each case will be sufficient for all
purposes to evidence a binding supplement to this Agreement. The
parties will specify therein or through another effective means that
any such counterpart, telex or electronic message constitutes a
Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right, power
or privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
12
(g) Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. Offices; Multibranch Parties
(a) If Section 10(a) is specified in the Schedule as applying, each party
that enters into a Transaction through an Office other than its head or home
office represents to the other party that, notwithstanding the place of booking
office or jurisdiction of incorporation or organization of such party, the
obligations of such party are the same as if it had entered into the Transaction
through its head or home office. This representation will be deemed to be
repeated by such party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.
11. Expenses
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document to
which the Defaulting Party is a party or by reason of the early termination of
any Transaction, including, but not limited to, costs of collection.
12. Notices
(a) Effectiveness. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--
(i) if in writing and delivered in person or by courier, on the
date it is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that
transmission is received by a responsible employee of the recipient in
legible form (it being agreed that the burden of proving receipt will
be on the sender and will not be met by a transmission report generated
by the sender's facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas)
or the equivalent (return receipt requested), on the date that mail is
delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that
electronic message is received, unless the date of that delivery (or
attempted delivery) or that receipt, as applicable, is not a Local
Business Day or that communication is delivered (or attempted) or
received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given
and effective on the first following day that is a Local Business Day.
(b) Change of Addresses. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
13
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. Definitions
As used in this Agreement:--
"Additional Termination Event" has the meaning specified in Section 5(b).
"Affected Party" has the meaning specified in Section 5(b).
"Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"Affiliate" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under
14
common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"Applicable Rate" means:--
(a) in respect of obligations payable or deliverable (or which would have
been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of
either party from and after the date (determined in accordance with Section
6(d)(ii)) on which that amount is payable, the Default Rate;
(c) is 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).
"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.
15
"Local Business Day" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
with respect to such Specified Transaction.
"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case expressed as a negative number)
in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain resulting from
any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each
applicable condition precedent) on or before the relevant Early Termination Date
and not made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3)
or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and
out-of-pocket expenses referred to under Section 11. A party will determine its
Loss as of the relevant Early Termination Date or, if that is not reasonably
practicable, as of the earliest date thereafter as is reasonably practicable. A
party may (but need not) determine its Loss by reference to quotations of
relevant rates or prices from one or more leading dealers in the relevant
markets.
"Market Quotation" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have been required after that date. For this
purpose, Unpaid Amounts in respect of the Terminated Transaction or group of
Terminated Transactions are to be excluded but, without limitation, any payment
or delivery that would, but for the relevant Early Termination Date, have been
required (assuming satisfaction of each applicable condition precedent) after
that Early Termination Date is to be included. The Replacement Transaction would
be subject to such documentation as such party and the Reference Market-maker
may, in good faith, agree. The party making the determination (or its agent)
will request each Reference Market-maker to provide its quotation to the extent
reasonably practicable as of the same day and time (without regard to different
time zones) on or as soon as reasonably practicable after the relevant Early
Termination Date. The day and time as of which those quotations are to be
obtained will be selected in good faith by the party obliged to make a
determination under Section 6(e), and, if each party is so obliged, after
consultation with the other. If more than three quotations are provided, the
Market Quotation will be the arithmetic mean of the quotations, without regard
to the quotations having the highest and lowest values. If exactly three such
quotations are provided, the Market Quotation will be the quotation remaining
after disregarding the highest and lowest quotations. For this purpose, if more
than one quotation has the same highest value or lowest value, then one of such
quotations shall be disregarded. If fewer than three quotations are provided, it
will be deemed that the Market Quotation in respect of such Terminated
Transaction or group of Terminated Transactions cannot be determined.
16
"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
(b) such party's Loss (whether positive or negative and without reference
to any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"Specified Entity" has the meaning specified in the Schedule.
"Specified Indebtedness" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.
"Specified Transaction" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.
"Stamp Tax" means any stamp, registration, documentation or similar tax.
17
"Tax" means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto) that is
imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax.
"Tax Event" has the meaning specified in Section 5(b).
"Tax Event Upon Merger" has the meaning specified in Section 5(b).
"Terminated Transactions" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"Termination Currency" has the meaning specified in the Schedule.
"Termination Currency Equivalent" means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a rate
for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.
"Termination Event" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.
"Termination Rate" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"Unpaid Amounts" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market 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.
18
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. ML SSG DELAWARE, LLC
By: By:
------------------------------------ -------------------------------
Name: Name:
Title: Title:
Date: Date:
19
SCHEDULE
to the
Master Agreement
dated as of August 10, 2000
between
▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL SERVICES, INC., a corporation
organized under the laws of the State of Delaware
("Party A")
and
ML SSG DELAWARE, LLC
a limited liability company organized
under the laws of the State of Delaware
("Party B")
Part 1
Termination Provisions
In this Agreement:-
(a) "Specified Entity" means in relation to Party A for the purpose of:-
Section 5(a)(v), Not Applicable
Section 5(a)(vi), Not Applicable
Section 5(a)(vii), Not Applicable
Section 5(b)(iv), Not Applicable
in relation to Party B for the purpose of:-
Section 5(a)(v), Not Applicable
Section 5(a)(vi), Not Applicable
Section 5(a)(vii), Not Applicable
Section 5(b)(iv), Not Applicable
(b) "Specified Transaction" will have the meaning specified in Section 14
of this Agreement.
(c) The "Cross Default" provisions of Section 5(a)(vi) will apply to
Party A and to Party B.
If such provisions apply:-
1
"Specified Indebtedness" will have the meaning specified in Section 14 of this
Agreement.
"Threshold Amount" means, in respect of Party A, USD $100,000,000 or its
equivalent in other currencies, and in respect of Party B, USD $1,000,000 or its
equivalent in other currencies.
(d) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will
apply to Party A and Party B. Section 5(b)(iv) of this Agreement shall be
amended to read as follows: "Credit Event Upon Merger" means that a Designated
Event (as defined below) occurs with respect to a party, any Credit Support
Provider of such party, or any Specified Entity of such party and such action
does not constitute an event described in Section 5(a)(viii) but, in the
reasonable opinion of the other party, the creditworthiness of the successor,
surviving or transferee entity, taking into account any applicable Credit
Support Document (except any applicable Credit Support Annex or other agreement
providing for the pledge of collateral or any similar agreement) (in which case
the party or its successor or transferee, as appropriate, will be the Affected
Party) is materially weaker than that of its predecessor, immediately prior to
the occurrence of the Designated Event. For purposes hereof, a Designated Event
means that, after the Trade Date of any Transaction:
(i) the party, any Credit Support Provider of the party or any
Specified Entity of the party consolidates or amalgamates
with, or merges with or into, or transfers all or
substantially all its assets (or any substantial part of the
assets comprising the business of that party) to, or
reorganizes, incorporates, reincorporates, or reconstitutes
into or as, another entity, or another entity consolidates or
amalgamates with, or merges with or into, or transfers all or
substantially all its assets to, or reorganizes, incorporates,
reincorporates, reconstitutes into or as, such party; or
(ii) any person or entity acquires directly or indirectly the
beneficial ownership of equity securities having the power to
elect a majority of the board of directors of the party, any
Credit Support Provider of the party or any applicable
Specified Entity of the party; or
(iii) the party, any Credit Support Provider of the party, or any
applicable Specified Entity of the party enters into any
agreement providing for any of the foregoing.
(e) The "Automatic Early Termination" provision of Section 6(a) will not
apply to either Party A or to Party B.
(f) Payments on Early Termination. For the purpose of Section 6(e) of this
Agreement:-
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(g) "Termination Currency" means United States Dollars.
(h) Additional Termination Event will apply.
(i) Decline in Net Assets. The net assets of Party B, as measured
by the gross assets of Party B less the aggregate amount of those
liabilities of Party B (including all absolute and contingent
liabilities of any kind, including without limitation all outstanding
Specified
2
Transactions and Specified Indebtedness and transactions similar in
nature to Specified Transactions and Specified Indebtedness) that rank
senior to, or pari passu with, the obligations owed by Party B to Party
A under this Agreement (the "NAV"), decline by more than 40% from any
time during the immediately preceding twelve months, in which case
Party B will be the Affected Party and all Transactions will be
Affected Transactions.
(ii) Material Amendment or Action. Any Operative Document, or the
nature of Party B's business, is amended or modified in any manner
that, in the reasonable judgment of Party A, may have a materially
adverse effect on Party A under this Agreement or the ability or
authority of Party B to perform its obligations under this Agreement
and Party A has not consented to or voted (or abstained or withheld
from voting) in favor of such amendment or modification or waived its
right to do so, in each case whether in or pursuant to this Agreement
or in or pursuant to any other Agreement. In any such event, Party B
shall be the Affected Party.
(iii) Change in Management or Control. At any time at which Party B
has engaged an investment manager, investment adviser or an
administrator (the "Manager"), the Manager: (a) merges or consolidates
with another entity or sells or otherwise transfers its advisory
business, or all or a material portion of its assets and the surviving
or transferee entity is not reasonably acceptable to Party A; (b)
becomes bankrupt; (c) has any of its registrations, authorizations,
licenses, or memberships with any federal or state governmental or
regulatory authority necessary for purposes of performing its services
as Manager revoked, suspended, terminated, or limited or qualified in
any material way; or (d) ceases to serve as Manager, and, in any of
such events, a replacement Manager acceptable to Party A is not
appointed within thirty business days; provided, however, that this
paragraph (ii) shall not apply at any time at which the Manager is
Party A or any Affiliate of Party A. In any such event, Party B shall
be the Affected Party.
(iv) Prohibited Transaction. If Party B becomes an "investment
company" required to be registered under the 1940 Act and as a result
of (i) a transfer or proposed transfer of this Agreement pursuant to
Sections 7 or 6(b); (ii) any merger or sale of assets or securities, or
proposed merger or sale of assets or securities, of either party or of
any "affiliated person" of either party or, in respect of Party B, any
"principal underwriter" of Party B, or any "affiliated person" of any
such "affiliated person" or, in respect of Party B, any such "principal
underwriter"; or (iii) any change or proposed change in the persons
serving as an investment adviser or "principal underwriter" of Party B,
this Agreement or any Transaction would, in the sole judgment of Party
A, be prohibited by the 1940 Act (including without limitation Sections
17(a) and 12(d)(3) of the 1940 Act) (in which case Party B shall be the
Affected Party and all Transactions hereunder shall be Affected
Transactions). For purposes of this Part 1(h)(vi) the terms "affiliated
person" and "principal underwriter" shall have the meanings specified
in Section 2(a)(3) and 2(a)(29) for the 1940 Act, respectively.
3
Part 2
Tax Representations
(a) Payer Representations. For the purpose of Section 3(e) of this
Agreement, Party A and Party B make the following representation:-
It is not required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account of
any Tax from any payment (other than interest under 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, it 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 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 Representations. For the purpose of Section 3(f) of this
Agreement, Party A and Party B make the representations specified below:-
(i) The following representation applies to Party A:-
Party A is a corporation organized under the laws of the State
of Delaware.
(ii) The following representation applies to Party B:-
Party B is a limited liability company organized under the
laws of the State of Delaware.
4
Part 3
Documents to be delivered
(a) Tax forms, documents or certificates to be delivered are:-
-----------------------------------------------------------------------------------------------------------------------
Party Required to deliver
Document Form/Document/Certificate Date by which to Delivered
=======================================================================================================================
Party B. An executed U.S. Internal Revenue (i) Before the first Payment Date
Service Form W-9 (or any successor under this Agreement, (ii) promptly
thereto). upon reasonable demand by Party A,
and (iii) promptly upon learning that
any such form previously provided by
Party B has become obsolete or in
correct.
-----------------------------------------------------------------------------------------------------------------------
(b) Other documents to be delivered are:-
-----------------------------------------------------------------------------------------------------------------------
Party Required to deliver Form/Document/ Date by which to be Covered by Section 3(d)
Document Certificate Delivered Representation
=======================================================================================================================
Party A/Party B. Annual audited financial Promptly after request. Yes.
statements (or, in the case of
Party A, of its Credit Support
Provider) prepared in
accordance with generally
accepted accounting principles
in the country in which the
party (or, in the case of
Party A, its Credit Support
Provider) is organized.
-----------------------------------------------------------------------------------------------------------------------
Party A. Quarterly unaudited financial Promptly after request. Yes.
statements (or, in the case of
Party A, of its Credit Support
Provider) prepared in
accordance with generally
accepted accounting principles
in the country in which the
party (or, in the case of
Party A, its Credit Support)
is organized.
-----------------------------------------------------------------------------------------------------------------------
5
-----------------------------------------------------------------------------------------------------------------------------
Party Required to deliver Form/Document/ Date by which to be Covered by Section 3(d)
Document Certificate Delivered Representation
=============================================================================================================================
Party B. Semiannual audited financial Promptly after request. Yes.
statements prepared in
accordance with generally
accepted accounting principles
in the country in which the
party is organized.
----------------------------------------------------------------------------------------------------------------------------
Party B. Monthly calculation of NAV of Within ten (10) Business Yes.
the assets of Party B under Days following the end of
management by Investment the relevant calculation
Adviser. period.
----------------------------------------------------------------------------------------------------------------------------
Party B. Compliance Certificate as Promptly upon request. Yes.
defined in Part 5 of this
Schedule.
----------------------------------------------------------------------------------------------------------------------------
Party A/Party B. Credit Support Document, if Concurrently with the No.
any, specified in Part 4 of execution of this Agreement.
the Schedule, such Credit
Support Document being duly
executed if required.
----------------------------------------------------------------------------------------------------------------------------
Party A/Party B. Certified copies of the Concurrently with the Yes.
resolution(s) of its board of execution of this Agreement.
directors or other documents
authorizing the execution and
delivery of this Agreement.
----------------------------------------------------------------------------------------------------------------------------
Party A/Party B. Incumbency certificate or Concurrently with the Yes.
other documents evidencing the execution of this Agreement
authority of the party or of any other documents
entering into this Agreement executed in connection with
or any other document executed this Agreement.
in connection with this
Agreement.
----------------------------------------------------------------------------------------------------------------------------
Party B. Certificate of authority and At execution of this Yes.
Trading Authorization issued Agreement.
in favor of the Investment
Adviser.
----------------------------------------------------------------------------------------------------------------------------
Party B. Prospectus and Statement of Promptly after request. Yes.
Additional Information, and
any revisions thereto.
----------------------------------------------------------------------------------------------------------------------------
6
Part 4
Miscellaneous
(a) Addresses for Notices: For the purpose of Section 12(a) of this
Agreement:-
Address for notices or communications to Party A:-
Address: ▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters, World
Financial Center, North Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Swap Group
Facsimile No.: ▇▇▇ ▇▇▇-▇▇▇▇ Telephone No.: ▇▇▇ ▇▇▇-▇▇▇▇
(For all purposes)
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, World
Financial Center, North Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Swaps Legal
Facsimile No.: ▇▇▇ ▇▇▇-▇▇▇▇
Address for notices or communications to Party B:-
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Manager
Facsimile No.: .................... Telephone No.: .................
(For all purposes)
(b) Process Agent. For the purpose of Section 13(c):-
Party A appoints as its Process Agent: Not Applicable.
Party B appoints as its Process Agent: Not Applicable.
(c) Offices. The provisions of Section 10(a) will apply to this Agreement.
(d) Multibranch Party. For the purpose of Section 10(c) of this Agreement:
Party A is not a Multibranch Party.
Party B is not a Multibranch Party.
7
(e) Calculation Agent. The Calculation Agent is Party A, unless otherwise
specified in a Confirmation in relation to the relevant Transaction.
(f) Credit Support Document. Details of any Credit Support Document:-
Party A:- Guarantee of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. ("ML & Co.") in the
form attached hereto as Exhibit A.
Party B:- Not Applicable.
(g) Credit Support Provider.
Credit Support Provider means in relation to Party A, ML & Co.
Credit Support Provider means in relation to Party B, Not Applicable.
(h) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York without reference to choice of
law doctrine.
(i) Netting of Payments. Subparagraph (ii) of Section 2(c) of this
Agreement will apply, unless one party provides at least fifteen days' prior
notice to the other that subparagraph (ii) will not apply.
(j) "Affiliate" will have the meaning specified in Section 14 of this
Agreement.
8
Part 5
Other Provisions
(1) Obligations. Section 2(a)(iii) is hereby amended by deleting it in its
entirety and replacing it with the following:
"(iii) Each obligation of each party under Section 2(a)(i) is subject
to (1) the condition precedent that no Event of Default,
Potential Event of Default with respect to the other party or,
in the case of payments by Party A to Party B, Incipient
Illegality 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."
(2) Representations.
(a) Section 3(a)(ii) of this Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:-
"(ii) Powers. It has the power to execute and deliver this
Agreement and any other documentation relating to this
Agreement to which it is a party (including without
limitation, in the case of Party B, pursuant to the Operative
Documents, the Investment Company Act of 1940 (the "1940
Act"), and the applicable rules, regulations, interpretations,
and policies of applicable regulatory authorities and their
staffs affecting Party B); to deliver this Agreement and any
other documentation relating to this Agreement that it is
required by this Agreement and, in the case of Party B, the
Operative Documents, to deliver; and to perform its
obligations under this Agreement and any obligations it has
under any Credit Support Document to which it is a party. It
has taken all necessary action and made all necessary
determinations and findings to authorize such execution,
delivery, and performance; the individual(s) executing and
delivering this Agreement and any other documentation
(including any Credit Support Document) relating to this
Agreement to which it is a party or that it is required to
deliver are duly empowered and authorized to do so; and it has
duly executed and delivered this Agreement and any Credit
Support Document to which it is a party;"
(b) Section 3(a)(iii) is hereby amended by inserting the words
"Operative Documents, investment policies or guidelines, procedures, or
restrictions" immediately following the word "documents,".
(c) Section 3(d) is hereby amended by adding in the third line
thereof after the word "respect" and before the period:
"or, in the case of financial statements, a fair presentation
of the financial condition of the relevant party".
9
(d) For purposes of Section 3 the following shall be added
immediately following paragraph (f) thereto:
(g) It is an "eligible swap participant" within the
meaning of CFTC Regulation 35.1(b)(2).
(h) It has entered into this Agreement (including each
Transaction evidenced hereby) in conjunction with its line of
business (including financial intermediation services) or the
financing of its business.
(i) It is entering into this Agreement, any Credit
Support Document to which it is a party, each Transaction and
any other documentation relating to this Agreement or any
Transaction as principal (and not as agent or in any other
capacity, fiduciary or otherwise).
In addition, the party specified below represents to the other party
(which representations will be deemed to be repeated by the party on
each date on which a Transaction is entered into that):
(j) Party B acknowledges and agrees that (i) Party A is
acting solely in the capacity of an arm's-length contractual
counterparty with respect to this Agreement, any Credit
Support Document to which it is a party, and any Transaction
hereunder, (ii) Party A is not acting as a financial advisor
or fiduciary of Party B (or in any similar capacity) with
respect to this Agreement, any Credit Support Document to
which it is a party, and any Transaction hereunder, and (iii)
any advice given by Party A under or in connection with this
Agreement, any Credit Support Document to which it is a party,
or any Transaction is and will not serve as a primary basis of
any investment decision by Party B. Party B represents to
Party A that its decision to enter into each Transaction has
been based solely on the independent evaluation of Party B and
its representatives."
(3) Additional Representations of Party B. If Party B becomes an
"investment company" required to register under the 1940 Act, Party B represents
to Party A (which representations will be deemed to be made on the date it
becomes an investment company and shall be deemed to be repeated at all times
thereafter until the termination of this Agreement):
(a) With respect to this Agreement and each Transaction, it will
maintain, and be in full compliance with, all Operative Documents; and
this Agreement and each Transaction is, and will be, authorized and
permissible transactions and investments thereunder.
(b) It is, and will be, entering into this Agreement and each
Transaction exclusively for bona fide portfolio management and hedging
purposes; and this Agreement and each Transaction will comply in all
respects with all applicable laws (including without limitation the
▇▇▇▇ ▇▇▇) and with rules, regulations, interpretations, guidelines,
procedures, and policies of applicable regulatory authorities and their
staffs affecting Party B, this Agreement, the Transactions, or the
performance of Party B's obligations hereunder (including without
limitation those relating to diversification and investments in
illiquid securities).
10
(c) It will comply with all applicable provisions of the 1940
Act, and any applicable rules, regulations, interpretations,
guidelines, procedures and policies of the Securities and Exchange
Commission.
(d) No proposal has been made and no actions taken by Party B, the
Manager or the holders of Party B's outstanding voting securities to
submit to the holders of Party B's outstanding voting securities any
proposed change to or modification of (i) Party B's classification
under Section 5 of the 1940 Act; (ii) Party B's investment
restrictions, policies or guidelines or any Operative Document; (iii)
the nature of Party B's business; or (iv) any matter requiring the vote
of the holders of Party B's voting securities under Section 13 of the
1940 Act which could adversely materially affect this Agreement, any
Transaction hereunder, or the authority of Party B to enter into this
Agreement, any Transaction, or any transaction similar in nature to a
Specified Transaction.
(4) Additional Agreements of Party B.
(a) Notice of Certain Events. Party B will provide Party A,
promptly upon becoming aware of the same, with written notice of: (i)
any Potential Event of Default, Event of Default, Termination Event, or
event or condition that, with the giving of notice or the passage of
time or both, could constitute an Event of Default or Termination Event
with respect to Party B; (ii) any pending or threatened litigation,
action, claim, or proceeding which could adversely affect the ability
of Party B to perform its obligations under this Agreement, any
Transaction, or any Operative Document; (iii) the Manager's impending
resignation or termination as investment manager, investment adviser or
administrator to Party B; or (iv) any other facts or developments which
could adversely affect the status of Party B or the Manager with
respect to this Agreement.
(b) Notice of Incipient Illegality. If an Incipient Illegality
occurs, Party B will, promptly upon becoming aware of it, notify Party
A thereof, specifying the nature of the Incipient Illegality and giving
such other information about the Incipient Illegality as Party A may
reasonably require.
(5) Obligations Relating to Representations.
(a) Party B covenants that it will not take any action during the
term of this Agreement that might render any of the representations and
warranties in this Agreement (including this Schedule) untrue,
incorrect or incomplete, and if any event or condition should occur
that would render any of such representations and warranties untrue,
incorrect or incomplete, Party B will immediately give written notice
thereof to Party A.
(6) Transfer. Notwithstanding the provisions of Section 7, Party A may
assign its rights and delegate its obligations under any Transaction, in whole
or in part, to any affiliate (an "Assignee") of ML & Co., effective (the
"Effective Date") upon delivery to Party B of both (a) an executed acceptance
and assumption by the Assignee of the transferred obligations of Party A under
the Transaction(s) (the "Transferred Obligations"); and (b) an executed
guarantee of ML & Co., of the Transferred Obligations, substantially in the form
of Exhibit A hereto. On the Effective Date, (a) Party A 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
11
deemed to be Transaction(s) under the master agreement between Assignee and
Party B, provided that, if at such time Assignee and Party B have not entered
into a master agreement, Assignee and Party B shall be deemed to have entered
into an ISDA form of Master Agreement (Multicurrency-CrossBorder) without any
Schedule attached thereto.
(7) Method of Notice. Section 12(a)(ii) of the Master Agreement is deleted
in its entirety.
(8) Definitions. Section 14 is hereby amended by adding the following
definitions in their appropriate alphabetical order:
"Incipient Illegality" means, with respect to Party B only, (a) (1) the
enactment by any legislative body with competent jurisdiction over
Party B of legislation which, if adopted as law, would render unlawful,
or (2) a proposed amendment, change, or modification to any Operative
Document that could, in the sole judgment of Party A, have a material
adverse effect on (i) the performance by Party B of any absolute or
contingent obligation to make a payment or to receive a payment in
respect of a Transaction or the compliance by Party B with any other
material provision of this Agreement relating to such Transaction, or
(ii) the performance by Party B or any Credit Support Provider of Party
B of any contingent or other obligation which Party B (or such Credit
Support Provider) has under any Credit Support Document relating to
such Transaction, (b) any assertion in any proceeding, forum, or action
by Party B, in respect of Party B, or in respect of any entity located
or organized under the laws of the jurisdiction in which Party B is
located or organized, to the effect that performance under this
Agreement or similar agreements is unlawful, or (c) the occurrence with
respect to Party B or any applicable Credit Support Provider of Party B
of any event that constitutes an Illegality.
"Operative Documents" means the limited liability company agreement and
the by laws or other similar documents or instruments, other
constituent documents, and the investment policies, procedures,
restrictions, or guidelines of Party B, and the then-current disclosure
document of Party B.
(9) Appointment of a Manager. Party B may, at any time in accordance with
the Amended and Restated Agreement of Limited Liability Company of Party B dated
August 10, 2000, appoint a person or entity that is a registered investment
advisor under the Investment Advisers Act of 1940 (which may be an Affiliate of
Party A) to act as the Manager and Party B may grant the Manager full
discretionary power and authority to make investment decisions for, in the name
of, and on behalf of, Party B, including without limitation the power and
authority to enter into Transactions as the agent and for the account of Party B
and to advise and direct Party B to enter into Transactions and to execute and
deliver Confirmations in connection therewith. Party B shall deliver to Party A
a copy of the investment management agreement with such Manager entered into in
connection with such appointment. In connection with Party B's entering into any
Transactions hereunder, Party A will be entitled to rely conclusively upon any
request, instruction, certificate, opinion, or other document furnished to Party
A by an employee or agent of the Manager in connection with this Agreement and
the Transactions as though such request, instruction, certificate, opinion, or
other document was given by Party B, until such time as Party B affirmatively,
and upon written notice to Party A, revokes, terminates, or modifies such
authorization.
12
(10) Set-off.
(a) Without affecting the provisions of this Agreement requiring the
calculation of certain net payment amounts, all payments under this Agreement
will be made without setoff or counterclaim; provided, however, that in addition
to any rights of setoff a party may have as a matter of law or otherwise, upon
the designation or deemed designation of an Early Termination Date, the
non-Defaulting Party or non-Affected party (in either case, "X") may without
prior notice set off any sum or obligation (whether or not arising under this
Agreement, whether or not matured, whether or not contingent and regardless of
the currency, place of payment or booking office of the obligation) owed or due
by the Defaulting Party or Affected Party (in either case, "Y") to X against any
sum or obligation (whether or not arising under this Agreement, whether or not
matured, whether or not contingent and regardless of the currency, place of
payment or booking office of the obligation) owed or due by X or any Affiliate
of X to Y.
(b) For the purposes of cross-currency set-off, X may convert any
obligation to another currency at a market rate determined by X.
(c) If an obligation is unascertained, X may in good faith estimate that
obligation and set off in respect of the estimate, subject to the relevant party
accounting to the other when the obligation is ascertained.
(11) Escrow. If by reason of the time difference between the cities in which
payments are to be made, it is not possible for simultaneous payments to be made
on any date on which both parties are required to make payments hereunder,
either party may, at its option and in its sole discretion, notify the other
party that payments on that date are to be made in escrow. In this case, deposit
of the payment due earlier on that date shall be made by 2:00 p.m. (local time
at the place for the earlier payment) on that date with an escrow agent selected
by the notifying party, accompanied by irrevocable payment instruction (i) to
release the deposited payment to the intended recipient upon receipt by the
escrow agent of the required deposit of the corresponding payment from the other
party on the same date accompanied by irrevocable payment instructions to the
same effect or (ii) if the required deposit of the corresponding payment is not
made on that same date, to return the payment deposited to the party that paid
it in escrow. The party that elects to have payments made in escrow shall pay
the costs of the escrow arrangements and shall cause those arrangements to
provide that the intended recipient of the payment due to be deposited first
shall be entitled to interest on that deposited payment for each day in the
period of its deposit at the rate offered by the escrow agent for that day for
overnight deposits in the relevant currency in the office where it holds that
deposited payment (at 11:00 a.m. local time on that day) if that payment is not
released by 5:00 p.m. local time on the date it is deposited for any reason,
other than the intended recipient's failure to make the escrow deposit it is
required to make hereunder in a timely fashion.
(12) Consent to Recording. The parties agree that each may electronically
record all telephonic conversations between, marketing and trading personnel in
connection with this Agreement.
(13) Waiver of Jury Trial. Each party hereby irrevocably waives any and all
right to trial by jury with respect to any legal proceeding arising out of or
relating to this Agreement or any Transaction contemplated hereunder.
13
EXHIBIT A
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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 ML SSG
DELAWARE, LLC (the "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 August 10, 2000 (the
"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.
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: ..............................
2