Agreements - 1987 ISDA Provision

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1987 ISDA Interest Rate and Currency Exchange Agreement

A Jolly Contrarian owner’s manual™

4 in a Nutshell

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Original text

4 Agreements
Each party agrees with the other that, so long as it has or may have any obligation under this Agreement or under any Credit Support Document to which it is a party:-
4(a) Furnish Specified Information. It will deliver to the other party:-

4(a)(i) any forms, documents or certificates relating to taxation specified in Part 3 of the Schedule or any Confirmation; and
4(a)(ii) any other documents specified in Part 3 of the Schedule or any Confirmation,

by the date specified in Part 3 of the Schedule or such Confirmation or, if none is specified, as soon as practicable.
4(b) Maintain Authorisations. It will use all reasonable efforts to maintain in full force and effect all consents of any governmental or other authority that are required to be obtained by it with respect to this Agreement or any Credit Support Document to which it is a party and will use all reasonable efforts to obtain any that may become necessary in the future.
4(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.
4(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.
4(e) Payment of Stamp Tax. It will pay any Stamp Tax levied or imposed upon it or in respect of its execution or performance of this Agreement by a jurisdiction in which it is incorporated, organised, managed and controlled, or considered to have its seat, or in which a branch or office through which it is acting for the purpose of this Agreement is located (“Stamp Tax Jurisdiction”) and will indemnify the other party against any Stamp Tax levied or imposed upon the other party or in respect of the other party's execution or performance of this Agreement by any such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the other party.

See ISDA Comparison for a comparison between the 1992 ISDA and the 2002 ISDA.
The Varieties of ISDA Experience
Subject 2002 (wikitext) 1992 (wikitext) 1987 (wikitext)
Preamble Pre Pre Pre
Interpretation 1 1 1
Obligns/Payment 2 2 2
Representations 3 3 3
Agreements 4 4 4
EODs & Term Events 5 Events of Default: FTPDBreachCSDMisrepDUSTCross DefaultBankruptcyMWA Termination Events: IllegalityFMTax EventTEUMCEUMATE 5 Events of Default: FTPDBreachCSDMisrepDUSTCross DefaultBankruptcyMWA Termination Events: IllegalityTax EventTEUMCEUMATE 5 Events of Default: FTPDBreachCSDMisrepDUSSCross DefaultBankruptcyMWA Termination Events: IllegalityTax EventTEUMCEUM
Early Termination 6 Early Termination: ET right on EODET right on TEEffect of DesignationCalculations; Payment DatePayments on ETSet-off 6 Early Termination: ET right on EODET right on TEEffect of DesignationCalculationsPayments on ETSet-off 6 Early Termination: ET right on EODET right on TEEffect of DesignationCalculationsPayments on ET
Transfer 7 7 7
Contractual Currency 8 8 8
Miscellaneous 9 9 9
Offices; Multibranch Parties 10 10 10
Expenses 11 11 11
Notices 12 12 12
Governing Law 13 13 13
Definitions 14 14 14
Schedule Schedule Schedule Schedule
Termination Provisions Part 1 Part 1 Part 1
Tax Representations Part 2 Part 2 Part 2
Documents for Delivery Part 3 Part 3 Part 3
Miscellaneous Part 4 Part 4 Part 4
Other Provisions Part 5 Part 5 Part 5

Resources and Navigation

Index: Click to expand:

Comparisons

Redlines


Discussion

The 1992 ISDA introduced a new 4(a)(iii) to cover such tax representations as are needed to allow Credit Support Providers to pay without withholding. Beyond that there were minimal changes between the versions, down to punctuation changes, though in Section 4(e) a clearer reference to offices and branches. So that is nice.

Basics

A hodge-podge of “state the bleeding obvious” rules, breach of some of which justifies (eventual) close-out as a “breach of agreement” — agreeing to provide the credit information you have patiently listed in your schedule, flagrantly breaking the law, carelessly losing one’s regulatory authorisations — and random tax provisions and indemnities (providing the necessary tax forms to minimise tax, and pay tax if you don’t).

These are the dull agreements — which by and large don’t justify close-out.

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  • JC’s “nutshell” summary of the clause
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    • The slooow default of not providing documents for delivery
    • “Covered by the Section 3(d) Representation”: vitally necessary ninja negotiator stuff, or ... ?
    • Legal opinions and financial statements? They can be excluded, can’t they — no? — oh, help, JC!

See also

References