Template:M gen 2002 ISDA 6(b)

You may find yourself staring at this forbidding north wall of text — on of the most fearsome north walls in all derivatives mountaineering — and for a while begin to wonder whether your eyes are burning, or your brains leaking out of your ears. And just wait till you see what a structured finance lawyer will do with it. there are crevices, cracks, ice-covered chimneys, great glazed traverses which have claimed many a valiant eaglet.

But, friends, we are aeronauts of the spirit!

“Why just in this direction, thither where all the suns of humanity have hitherto gone down? Will it perhaps be said of us one day that we too, steering westward, hoped to reach an India – but that it was our fate to be wrecked against infinity?”

Let us not be daunted by der Morderwand!

Section 6(b)(i): Notice

It starts off gently. If you are subject to a Termination Event — remember these are generally extraneous things beyond your control like Tax Events, Illegality, Force Majeure, for which you can’t really be blamed, but which affect your capacity to efficiently perform the agreement, so this is nothing really to be ashamed about, even though it might colour your counterparty’s view of carrying on — you must notify your counterparty.

Section 6(b)(ii): Transfer to Avoid Termination Event

Things start to go a bit wobbly. You sense that ISDA’s crack drafting squad™ has been on the sauce, or marching powder or something, and became attached to the idea of trying to codify the unknowable future. It gets worse before it gets better but here the permutations are about the parties tax status: either the Tax law has changed for one or other party — a Tax Event — or a party has executed some fancy cross-border merger which has somehow changed its tax residence, status, or eligibility of favourable tax treatment: this is a Tax Event Upon Merger. Here, in essence, you have a little window to sort yourself out, if you hadn’t done that before the merger (isn’t that what Tax advisors are for, by the way?).

Tax Event Upon Merger is also apt to create magnificent rounds of three-dimensional ninja combat drafting, because there is an Affected Party, and a Burdened Party, and they are not ~ necessarily ~ the same, and that is even before you worry about what has happened if there is a Credit Event Upon Merger (could be, right? There is a merger... so why not?) and/or a Force Majeure going on at the same time.

In any case: the Affected Party of a simple Tax Event, or the Affected Party of a TEUM who is also the Burdened Party must try doggedly for twenty days to transfer its rights and obligations to an unaffected Office or Affiliate before it is allowed to trigger an Early Termination Date. In any case the innocent, Unaffected Party, has a varnished right to decline the transfer if it can’t trade with the designated transferee.

Section 6(b)(iii) Two Affected Parties

Well, if they are both Affected Parties they can do their best to agree a fix, but this is what all eagle-eyed members of legal squad will recognise as an agreement to agree. Template:M gen 2002 ISDA 6(b)(iv)