Events of Default (Early Termination Payments) - ISDA Provision

Section 6(e)(i) 1992 ISDA

(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.

Commentary

Note the effect of this is that all transactions are terminated and the recourse is to a net sum under Section 6(e) of the master agreement - NOT under the transations. Therefore, if your credit support (particularly guarantees or letters of credit) explicitly references the Transaction, you may lose any credit support at precisely the point you want to rely on it. Further commentary on the Guarantee page.

• Guarantee