1992 ISDA Nutshell

ISDA MASTER AGREEMENT

dated as of ......................................

[SPECIFY] and [SPECIFY] will enter into “Transactions” governed by this Master Agreement (including the “Schedule” and each “Confirmation”) exchanged between the parties confirming those Transactions. The parties agree:

1. Interpretation

1(a) Definitions. Most of the definitions are in Section 14 but some are in the Schedule.
1(b) Inconsistency. Where they conflict, each Confirmation overrides the Schedule, and the Schedule overides the Master Agreement.
1(c) Single Agreement. When they enter each Transaction the parties are relying on the Master Agreement and all outstanding Confirmations being a single agreement. They would not otherwise enter into any Transaction.
Template:Nutshell 1992 ISDA 2 Template:Nutshell 1992 ISDA 3 Template:Nutshell 1992 ISDA 4 Template:Nutshell 1992 ISDA 5 6. Early Termination
6(a) Right to Terminate Following Event of Default. If one party (“Defaulting Party”) suffers an Event of Default, the other (the “Non-defaulting Party”) may, by not more than 20 days’ notice, designate an Early Termination Date for all outstanding Transactions. If Automatic Early Termination applies to the Defaulting Party and the Event of Default it is qualifying Bankruptcy event, the Early Termination Date will occur:

(i) upon the Bankruptcy event, if under 5(a)(vii)(1), (3), (5) or (6) or if analogous, (8); and

(ii) immediately before institution of the relevant proceeding, if under 5(a)(vii)(4) or if analogous, (8).

6(b) Right to Terminate Following Termination Event

6(b)(i) Notice. Upon becoming aware of a Termination Event the Affected Party will promptly give the other party with reasonable details of it and each Affected Transaction.

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

If there is an Illegality or a Tax Event with only one Affected Party or a Tax Event Upon Merger where the Burdened Party is the Affected Party, before designating an Early Termination Date the Affected Party must use all reasonable efforts to transfer, within 20 days of giving notice of the Termination Event, all its rights and obligations under the Affected Transactions to one of its Offices or Affiliates so that the Termination Event ceases to exist.

If it cannot make such a transfer, it will advise the other party within the 20 day period, and the other party may effect such a transfer within 30 days after the original notice of Termination Event.

Any such transfer will require the other party’s prior written consent (which may not be withheld if the other party’s prevailing policies would permit it to enter into transactions on the terms proposed).

6(b)(iii) Two Affected Parties. If there is an Illegality or a Tax Event with two Affected Parties, each must use all reasonable efforts agree within 30 days after the Termination Event Notice to avoid it.

6(b)(iv) Right to Terminate: If the Termination Event still exists but:―

(1) Illegality and Tax Termination Events: neither party has managed to avoid an Illegality, Tax Event or Tax Event Upon Merger as contemplated in Sections 6(b)(ii) or 6(b)(iii) within 30 days of a Termination Event Notice; or

(2) Other Termination Events: there is an Illegality relating to a Credit Support Document, a Credit Event Upon Merger, an Additional Termination Event or a Tax Event Upon Merger where the Burdened Party is not the Affected Party:

either party (if both are Affected Parties) or the Non-Affected Party (in any other case) may, on not more than 20 days’ notice, designate an Early Termination Date for all Affected Transactions.

Template:Nutshell 1992 ISDA 6(c) Template:Nutshell 1992 ISDA 6(c) 6(e) Payments on Early Termination. If an Early Termination Date occurs, the “Early Termination Amount” will be determined as follows (subject to any Set-off).
6(e)(i) Events of Default. If the Early Termination Date follows an Event of Default: —

(1) If First Method and Market Quotation applies, the Defaulting Party must pay any positive excess of (A) the sum of Settlement Amount 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) If First Method and Loss applies, the Defaulting Party must pay the Non-defaulting Party’s positive Loss (if it has suffered one).

(3) If Second Method and Market Quotation applies, the amount payable will be (A) the sum of the Settlement Amount for 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 positive, the Defaulting Party will pay that amount to the Non-defaulting Party; if negative, the Non-defaulting Party will pay its absolute value to the Defaulting Party.

(4) If Second Method and Loss applies, the Non-defaulting Party’s Loss in respect of this Agreement will be payable. If it is positive number, the Defaulting Party will pay it to the Non-defaulting Party; if negative, the Non-defaulting Party will pay its absolute value to the Defaulting Party.

8. Contractual Currency

8(a) Payment in the Contractual Currency: Each payment under this Agreement must be made in the currency specified for that payment (the “Contractual Currency”). Payments made in a Non-Contractual Currency will only discharge an obligation to the extent the recipient, having converted it into the Contractual Currency in good faith using commercially reasonable procedures, achieves the full amount payable in the Contractual Currency.

If the converted amount falls short of the amount payable in the Contractual Currency, the payer must immediately pay the necessary balance in the Contractual Currency.

If the converted amount exceeds the full amount payable in the Contractual Currency, the payee must promptly refund the excess.

8(b) Judgments. If a party obtains judgment in a Non-Contractual Currency against the other for any amount due under this Agreement and, having recovered that judgment debt, a shortfall or excess remains over the original amount due in the Contractual Currency (due to the exchange rate at which the judgment creditor, in good faith and a commercially reasonable manner, converted the judgement debt into the Contractual Currency), that judgment creditor:

(i) will be entitled to immediately receive from the other party, the value of any such shortfall in the Contractual Currency; and

(ii) must promptly refund to the other party any such excess in the Contractual Currency.

8(c) Separate Indemnities. The indemnities in this Section 8 are independent of the parties’ other obligations in this Agreement. They create separate causes of action. They will apply notwithstanding any indulgence granted to the payer by the payee, or any other claims made or judgments awarded for amounts due under this Agreement.
8(d) Evidence of Loss. Under Section 8, it will be enough if a party can show that it would have suffered a loss had it actually made the currency conversion.
9. Miscellaneous
9(a) Entire Agreement. This Agreement is the entire agreement between the parties on its subject matter.
9(b) Amendments. An amendment of, or waiver given under, this Agreement will only be effective if in writing and executed by each of the parties otherwise suitably electronically confirmed.
9(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and 6(c)(ii), the parties’ obligations will survive the termination of any Transaction.
9(d) Remedies Cumulative. Except otherwise stated, a party’s rights under this Agreement are additional to any rights it happens to have at law.
Template:Nutshell 1992 ISDA 9(e) Template:Nutshell 1992 ISDA 9(f) 9(g) Headings. Headings in this Agreement are for convenience only and should not be considered when interpreting this Agreement.
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11 Expenses

A Defaulting Party will on demand indemnify the Non-Defaulting Party for all reasonable costs — including Stamp Tax — that the Non-Defaulting Party incurs in closing out Transactions and enforcing its rights against the Defaulting Party.

12. Notices

12(a) Effectiveness. Any communication under this Agreement may be given in any manner described below (except that communications about Events of Default and Termination Events or Early Termination may not be given by electronic messaging system) as set out in the Schedule) and will be effective when delivered:―

(i) By hand: when delivered;

(ii) By telex: when the recipient’s answerback is received;

(iii) By fax: when received in legible form (the burden of proof being on the sender: a transmission report won’t do);

(iv) By registered mail: when delivered (or when delivery is attempted);

(v) By electronic messaging system: when received; or

unless delivery or receipt happens outside ordinary business hours on a Local Business Day, in which case it will be deemed effective on the following Local Business Day.
12(b) Change of Details. Either party may change its contact details by notice.

13. Governing Law and Jurisdiction
13(a) Governing Law. The governing law will be set out in the Schedule.
Template:Nutshell 1992 ISDA 13(b) 13(c) Service of Process. Each party appoints any Process Agent specified for it in the Schedule to receive service of process in any Proceedings. If a Process Agent cannot act, the appointing party must tell the other party and within 30 days appoint an acceptable substitute. The parties consent to service of process by hand, fax or registered mail per Section 12. This clause does not stop parties serving process in any other permissible manner.
13(d) Waiver of Immunities. Each party irrevocably waives all sovereign immunity relating to any Proceedings and agrees not to claim any such immunity in any Proceedings.
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