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Sample schedule provisions to 1992 ISDA master agreement

We have put together a collection of sample provisions used in the Schedule to the 1992 and 2002 ISDA master Agreement. These provisions are for reference only and are viewed by you subject to the terms and conditions for use.

Part 1
Part 2
Part 3
Part 4
Part 5

Part 1 Termination Provisions.


(a) “Specified Entity” means in relation to Party A for the purpose of:

Section 5(a)(v) [] [None Specified]
Section 5(a)(vi) [] [None Specified]
Section 5(a)(vii) [] [None Specified]
Section 5(b)(iv) [] [None Specified]

and in relation to Party B for the purpose of:

Section 5(a)(v) [] [None Specified]
Section 5(a)(vi) [] [None Specified]
Section 5(a)(vii) [] [None Specified]
Section 5(b)(iv) [] [None Specified]

(b) “Specified Transaction” will have the meaning specified in Section 14.

(c) “Cross Default” will apply to Party A and Party B. Section 5(a)(vi) is hereby amended by deleting in the seventh line thereof the words “, or becoming capable at such time of being declared,”.

Specified Indebtedness” has the meaning specified in Section 14.

Threshold Amount” means, with respect to Party A or any Credit Support Provider or Specified Entity U.S.$[ ] or its equivalent in other currencies, and with respect to Party B, the higher amount between EUR [ ] or [ ] % of the stockholder’s equity of Party B (or the equivalent in another currency, currency unit or combination thereof).

(d) “Credit Event Upon Merger” will apply to Party A and Party B provided that, Credit Event Upon Merger will not apply to Party B if a Designated Event occurs with respect to an affiliate of Party B.

(e) The “Automatic Early Termination” provision of Section 6(a) will [not] apply to Party A and will [not] apply to Party B.

(f) Payments on Early Termination. “Market Quotation” and “Second Method” will apply for the purpose of Section 6(e) of this Agreement.

(g) “Termination Currency” means the currency selected by the Non-defaulting Party or the party which is not the Affected Party, as the case may be, or in circumstances where there are two Affected Parties, agreed by Party A and Party B, provided however, that the Termination Currency (i) shall always be one of the currencies in which payments in respect of any terminated Transaction are required to be made by the Confirmations and (ii) shall be freely transferable into all other currencies in which payments are to be made in respect of any terminated Transaction. If such selected currency is not freely available or if no agreement has been reached in case where there are two Affected Parties, the Termination Currency shall be EURO.

(h) The following “Additional Termination Event” will apply.
[sample]

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Part 2 Representations.


(a) Payer Tax Representations. For the purpose of Section 3(e) of this Agreement, each party makes 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)) 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); (ii) the satisfaction of the agreement of the other party contained in Section 4(a)(i) or 4(a)(iii) and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii); and (iii) the satisfaction of the agreement of the other party in Section 4(d), provided that it will not be a breach of this representation where reliance is placed on clause (ii) and the other party does not deliver a form or document under Section 4(a)(iii) by reason of material prejudice to its legal or commercial position.

(b) Payee Tax Representations.

Party A Payee Tax Representations : None

Party B Payee Tax Representations : The following representation will apply to Party A and Party B:

It is not resident in [].

^

Part 3 Agreement to Deliver Documents.


For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party agrees to deliver the following documents, as applicable:

(a) Tax forms, documents or certificates to be delivered are:

Party A and B shall as soon as possible deliver to the other party (or as directed) any form or document accurately completed and in a manner reasonably satisfactory to the other party that may be required or reasonably requested in order to allow the other party to make a payment under a Transaction without any deduction or withholding for or on account of any Tax or with deduction or withholding at a reduced rate, promptly upon reasonable demand by the other party.

Party B to provide a Non-Resident Declaration in the form attached hereto as Exhibit B at or promptly following the execution of this Agreement. Covered by section 3(d) Representation.

(b) Other documents to be delivered are:

Party required to deliver document

Form/Document/Certificate

Date by which to be delivered

Covered by Section 3(d) Representation

Party A and B [Copies of documents evidencing it’s capacity to execute this Agreement, each Confirmation and any Credit Support Document (if applicable) and to perform its obligations hereunder and thereunder.] As soon as practicable after the execution of this Agreement and each confirmation at the case may be. Yes
Party A and B [A copy of the annual report containing audited consolidated financial statements for each such fiscal year, certified by independent public accountants and prepared in accordance with generally accepted accounting principles in the country in which it is organized.] Upon request as soon as publicly available No
Party A Credit Support Document specified in Part 4(f) of the Schedule At or within 30 days of execution of this Agreement YEs

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Part 4 Miscellaneous.


(a) Addresses for Notices. For the purpose of Section 12(a) of this Agreement:

(i) Address for notices or communications to Party A:

Address: []
Attention: []
Facsimile No.: []
Telephone No.: []
(For all purposes)

(ii) Address for notices or communications to Party B:

Address: []
Attention: []
Telephone: []
Fax No: []

(b) Process Agent.

Party A appoints as its Process Agent: []
Party B appoints as its Process Agent : []

(c) Offices. The provisions of Section 10(a) will [not] apply to Party A and to Party B.

(d) Multibranch Party. For the purpose of Section 10(c):

Party A is [not a Multibranch Party] [a Multibranch Party and may act through the following Offices: Head Office in [], and the branch of []] Party B is [not a Multibranch Party] [a Multibranch Party and may act through the following Offices: Head Office in [], and the branch of []]

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(e) “Calculation Agent.

The Calculation Agent is Party A provided, however, where Party A fails to perform its obligations as Calculation Agent or where Party B disputes any determination, calculation or estimate which dispute cannot be resolved within twenty-four hours, then (i) the relevant party shall pay the amount, if any, that is not in dispute and (ii) the parties shall appoint an independent third party that would qualify as a Reference Market-maker (a Substitute Calculation Agent) to resolve the dispute the determination of which shall be final and binding absent manifest error. If the parties cannot agree on a Substitute Calculation Agent, each party shall elect an independent Reference Market-maker and such two Reference Market-maker’s jointly shall appoint a third Reference Market-maker which shall be deemed to be the “Substitute Calculation Agent”.

(f) “Credit Support Document” means in relation to Party A [] in the form attached hereto as Exhibit A.

“Credit Support Document” means in relation to Party B [] in the form attached hereto as Exhibit B.

(g) “Credit Support Provider” means in relation to Party A: []

“Credit Support Provider” means in relation to Party B: []

(h) Governing Law and Jurisdiction. This Agreement will be governed by and construed in accordance with the laws of [England].

(i) Netting of Payments. Clause (ii) of Section 2(c) will not apply to any amounts payable with respect to Transactions from the date of this Agreement.

(j) “Affiliate” has the meaning specified in Section 14.

^

Part 5 Other Provisions.


(a) Set off.

Section 6 shall be amended by inserting the following provision:

“(f) Set-off. Any amount (the “Early Termination Amount”) payable to one party (the “Payee”) by the other party (the “Payer”) under Section 6(e), in circumstances where there is a Defaulting Party or one Affected Party in the case where a Termination Event under Section 5(b)(iv) has occurred, will, at the option of the party (“X”) other than the Defaulting Party or the Affected Party (and without prior notice to the Defaulting Party or the Affected Party), be reduced by its set-off against any amount(s) (the “Other Agreement Amount ”) payable (whether at such time or in the future or upon occurrence of a contingency) by the Payee to the Payer (irrespective of the currency, place of payment or booking office of the obligation) under any other agreement(s) between the Payee and the Payer or instrument(s) or undertaking(s) issued or executed by one party to, or in favour of, the other party (and the Other Agreement Amount will be discharged promptly and in all respects to the extent it is so set-off). X will give notice to the other party of any set-off effected under this Section 6(f).

For this purpose, either the Early Termination Amount or the Other Agreement Amount (or the relevant portion of such amounts) may be converted by X into the currency in which the other is denominated at the rate of exchange at which such party would be able, acting in a reasonable manner and in good faith, to purchase the relevant amount of such currency.

If an obligation is unascertained, X may in good faith estimate that obligation and set-off in respect of the estimate, subject to the relevant party accounting to the other when the obligation is ascertained.

Nothing in this Section 6(f) shall be effective to create a charge or other security interest. This Section 6(f) shall be without prejudice and in addition to any right of set-off, combination of accounts, lien or other right to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise).”

^

(b) Confirmations. Party A will deliver to Party B a Confirmation relating to each Transaction.

(c) Interpretation. Reference is made to the 2000 Definitions (the “Definitions”) and the 1998 ISDA FX and Currency Option Definitions (the “FX Definitions”), each as published by the International Swaps and Derivatives Association, Inc. which are hereby incorporated by reference. Any terms used and not otherwise defined herein which are contained in the 2000 Definitions or the FX Definitions shall have the meaning set forth therein (without regard to any amendments thereto subsequent to the date hereof). Any reference in the 2000 Definitions to a Swap Transaction shall be deemed to include a Transaction hereunder. In the event of any inconsistency between the 2000 Definitions and the FX Definitions, the FX Definitions shall prevail with respect to an FX Transaction or a Currency Option. In the event of any inconsistency between the provisions of this Agreement and the 2000 Definitions or the FX Definitions, the provisions of this Agreement shall prevail.

(d) [Section 5(a)(vi) ? Cross Default ? is amended to add the following provision at the end thereof :

provided however, that notwithstanding the foregoing, an Event of Default shall not occur if : (i) the event or condition referred to in (1) or the failure to pay referred to in (2) is caused by an error or omission of an administrative or operational nature; and (ii) in respect of (2) (a) funds were available to such party, any Credit support Provider of such party or any applicable Specified Entity of such party, as the case may be, to enable to make the relevant payment when due and (b) such relevant payment is made within three Local Business Days after notice of such failure is given to such party, any Credit Support Provider or any applicable Specified Entity of such party, as the case may be.” ]

(e) Severability. If any term, provision, covenant, or condition of this Agreement, or the application thereof to any party or circumstance, shall be held to be invalid or unenforceable (in whole or in part) for any reason, the remaining terms, provisions, covenants, and conditions hereof shall continue in full force and effect as if this Agreement had been executed with the invalid or unenforceable portion eliminated, so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter of this Agreement and the deletion of such portion of this Agreement will not substantially impair the respective benefits or expectations of the parties to this Agreement; provided, however, that this severability provision shall not be applicable if any provision of Section 2, 5, 6, or 13 (or any definition or provision in Section 14 to the extent that it relates to, or is used in or in connection with any such Section) shall be so held as to be invalid or unenforceable.

(f) Recording of Conversations. Each Party (i) consents to the recording of the telephone conversations between trading, marketing parties in connection with this Agreement or any potential Transaction and (ii) agrees to obtain any necessary consent of, and give notice of such recording to, such personnel (iii) agrees, to the extent permitted by law, that recordings may be submitted in evidence in any Proceedings relating to this Agreement.

^

(g) Early Termination

Party A commits to provide to Party B upon its request a firm market price for a reduction of the Notional Amount of the Transaction.

If the parties cannot agree, then Party B is entitled to terminate partially or totally any or all the Transactions in respect of this Agreement at any time. In the event of such early termination, the termination amount shall be calculated according to the provisions of Section 6(e)(ii)(2)(A) of the Agreement.

(h) Absence of Litigation. The words “or any of its Affiliates” in Section 3(c) is replaced by “Credit Support Provider or any of its Specified Entity”.

(i) [“Credit Event Upon Merger”. The definition of Section 5(b)(iv) is deleted in its entirety and replaced by the following:

If “Credit Event Upon Merger” is specified in the Schedule as applying to the party and a Designated Event (as defined below) occurs with respect to such party, any Credit Support Provider of such party or any applicable Specified Entity of such party (in each case, “X”), and such Designated Event does not constitute a Merger Without Assumption, and the creditworthiness of X or, if applicable, the successor, surviving or transferee entity of X, after taking into account any applicable Credit Support Document, is materially weaker immediately after the occurrence of such Designated Event than that of X immediately prior to the occurrence of such Designated Event (and, in any such event, such party or its successor, surviving or transferee entity, as appropriate, will be the Affected Party). A “Designated Event” with respect to X means that:

(1) X consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets (or any substantial part of the assets comprising the business conducted by X as of the date of this Agreement) to, or reorganises, reincorporates or reconstitutes into or as, another entity;

(2) any person, related group of persons or entity acquires directly or indirectly the beneficial ownership of (A) equity securities having the power to elect a majority of the board of directors (or its equivalent) of X or (B) any other ownership interest enabling it to exercise control of X; or

The creditworthiness of X or, if applicable, the successor, surviving or transferee entity of X shall be considered to be materially weaker, if the Rating of X or, if applicable, the successor, surviving or transferee entity of X, has fallen below than [ ] with respect to Party B and [ ] with respect to Party A (or its Credit Support Provider if any) as published by Standard and Poor’s Corporation or below [ ] with respect to Part B and [ ] with respect to Party A (or its Credit Support Provider if any) as published by Moody's Investors Service, Inc.

For this purpose, dquo;Rating” means in the case of Party A (or its Credit Support Provider if any), the long-term unsecured and unsubordinated debt or other obligations and, in the case of Party B, the Insurer Financial Strength Rating published by either Standard and Poor’s Corporation or Moody's Investors Service, Inc, including a rating based only upon public information or, if this rating is not available, the [] rating.]

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(j) “Transfer” Notwithstanding the provisions of Section 7, Party A may transfer its rights and obligations under this Agreement including all Transactions thereunder, to any affiliate (a “Transferee”) of ML & Co., effective (the “Effective Date”) upon delivery to Party B of both (a) an executed acceptance and assumption by the Transferee of such transferred rights and obligations of Party A; and (b) an executed guarantee (the “Guarantee”) of [] with respect to obligations of the Transferee, which Guarantee shall constitute a Credit Support Document provided under this Agreement between the Transferee and Party B. On the Effective Date, any transfer made pursuant to the preceding sentence will release Party A and Party B from their respective obligations to each other under this Agreement and any Credit Support Provider of its obligations under any Credit Support Document but only insofar as such obligations under such Credit Support Document relate to the obligations of Party A or Party B so released, provided that the above mentioned rights of transfer should be exercised only if:

(i) Equivalent Creditworthiness: the Assignee should have a credit rating at least equal to that of Party A and the obligations of the Assignee must be guaranteed pursuant to a full unconditional guaranty of the guarantee of the Credit Support Provider of Party A;

(ii) No Adverse Tax Consequences: Such transfer does not have any adverse tax consequences for Party B.

(iii) Not Unlawful: It does not become unlawful for either party to perform any obligation under this Agreement as a result of such transfer; and

(iv) No Event of Default : an Event of Default does not occur as a result of such transfer."

(k) “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 provided this escrow agent is independent of either party and shall not be an affiliate of either 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."

(l) “Non-Reliance”. Each party represents to the other party (which representation will be deemed to be repeated by each party on each date on which a Transaction is entered into or amended, extended or otherwise modified) that it is acting for its own account, and has made its own independent decisions to enter into this Agreement and any Transaction hereunder and as to whether this Agreement and any Transaction hereunder is appropriate or proper for it based on its own judgment and upon advice from such advisors as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into this Agreement or any Transaction hereunder, it being understood that information and explanations related to the terms and conditions of this Agreement and any Transaction hereunder shall not be considered investment advice or a recommendation to enter into this Agreement or any Transaction hereunder. No communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected results of any Transaction hereunder."

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The above notes are intended to provide only general outlines and should be read in conjunction with, and are qualified in their entirety by, the full provisions of the relevant ISDA provisions and definitions. They should never be used in place of professional advice. We accept no responsibility for any loss arising from any action taken or not taken by anyone using this material or using this material in conjunction with any ISDA documentation in reliance thereof.

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