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2018 ISDA Credit Support Deed (IM) (English law)
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Paragraph 4 in a Nutshell™
Use at your own risk, campers!
Paragraph 4. Conditions Precedent, Transfers, Timing, Calculations and Substitutions
4(a) Conditions Precedent. The Chargor’s obligations to transfer under Paragraphs 3 and 5 and the Secured Party’s obligations to instruct transfers under Paragraphs 3, 4(e)(iii), 5 and the provisions requiring the return of zero-Valued Posted Credit Support (IM) are subject to the conditions precedent that:
- (i) There is no live Event of Default, Potential Event of Default or Specified Condition for the other party; and
- (ii) No Early Termination Date has been designated for all Covered Transactions (IM) which has not been fully satisfied.
4(b) Means of Transfer. All transfers under this Deed must be accompanied with any necessary documentation to effect the transfer and made in accordance with the instructions of the relevant transferee:
- (i) For Eligible Credit Support (IM): to the Custodian (IM), who must then credit them to the relevant Segregated Account; and
- (ii) For Posted Credit Support (IM): by the Custodian (IM) (or if relevant the Secured Party) to the Chargor’s designated account for the receipt of such transfer.
4(c) Transfer Timing. Subject to Paragraph 4(a) and 5:
- (i) Secured Party: if a Secured Party demands Eligible Credit Support (IM):
- by the Notification Time, then the Chargor must transfer it by the close of business on the Regular Settlement Day;
- after the Notification Time, then the Chargor must transfer it by the close of business on the Local Business Day after the Regular Settlement Day;
- (ii) Chargor: if a Chargor demands Posted Credit Support (IM):
- by the Notification Time, then the Secured Party must instruct the Custodian (IM) by the instructions deadline in the Control Agreement for it to transfer Posted Credit Support (IM) by close of business on the Regular Settlement Day;
- after the Notification Time, then the Secured Party must instruct the Custodian (IM) by the instructions deadline in the Control Agreement for it to transfer Posted Credit Support (IM) by close of business on the Local Business Day after the Regular Settlement Day.
Template:Nutshell 2018 CSD 4(d)
4(e) Substitutions.
- (i) On any Local Business Day the Chargor may send a “Substitution Notice” informing the Secured Party that it wishes to substitute new Eligible Credit Support (IM) (the “Substitute Credit Support (IM)”) into the Segregated Accounts in place of specified Posted Credit Support (IM) (the “Original Credit Support (IM)”).
- (ii) The Chargor must obtain the Secured Party’s consent to the proposed substitution. The Chargor must transfer the Substitute Credit Support (IM) to the Segregated Accounts on the Local Business Day following receipt the Secured Party’s consent (or the date of the Substitution Notice if the consent requirement is disapplied).
- (iii) Upon transfer of the Substitute Credit Support (IM) into the Segregated Accounts (that date the “Substitution Date”), the Secured Party must instruct the Custodian (IM) to transfer Original Credit Support (IM) as if the Chargor had demanded it under Paragraph 3(b) after the Notification Time on the Substitution Date. The Value of the Original Credit Support (IM) when transferred must be as close as practicable to, but not more than, the Value of the Substitute Credit Support (IM) at that time as calculated by the Calculation Agent (IM).
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Full text of Paragraph 4
Paragraph 4. Conditions Precedent, Transfers, Timing, Calculations and Substitutions
4(a) Conditions Precedent. Unless otherwise specified in Paragraph 13, each obligation of the Chargor to make a transfer under Paragraphs 3 and 5 and of the Secured Party to instruct the Custodian (IM) to make a transfer under Paragraphs 3, 4(e)(iii), 5 and the provisions of Paragraph 13 relating to the return of Posted Credit Support (IM) with a Value of zero is subject to the conditions precedent that:
- (i) no Event of Default, Potential Event of Default or Specified Condition has occurred and is continuing with respect to the other party; and
- (ii) no Early Termination Date has occurred or been designated for which any unsatisfied payment obligations (whether present, actual, future or contingent) exist which is in respect of all Covered Transactions (IM).
4(b) Means of Transfer. All transfers under this Deed of any Eligible Credit Support (IM) or Posted Credit Support (IM) shall be made in accordance with the instructions of the Secured Party, Chargor or Custodian (IM), as applicable, and shall be made:
- (i) in the case of Eligible Credit Support (IM), (A) by book-entry, wire or other transfer of such Eligible Credit Support (IM) to the Custodian (IM) (accompanied in the case of certificated securities that cannot be paid or delivered by book-entry by any duly executed instruments of transfer, assignments in blank, transfer tax stamps or any other documents necessary to permit the Custodian (IM) to make legally valid transfers of such certificated securities upon instruction of the Secured Party) and (B) the Custodian (IM) ’s crediting such assets to the relevant Segregated Account; and
- (ii) in the case of Posted Credit Support (IM), by book-entry, wire or other transfer of such Posted Credit Support (IM) by the Custodian (IM) (or in the case of excess proceeds, the Secured Party) to the relevant cash, securities or other account of the Chargor (with the same Custodian (IM) or elsewhere) identified by the Chargor for the receipt of such transfer (accompanied in the case of certificated securities that cannot be paid or delivered by book-entry by any duly executed instruments of transfer, assignments in blank, transfer tax stamps or any other documents necessary to permit the Chargor to make legally valid transfers of such certificated securities without further action of the Custodian (IM)).
4(c) Transfer Timing. Subject to Paragraph 4(a) above (if applicable) and Paragraph 5 and unless otherwise specified in Paragraph 13, if a demand for the transfer of Eligible Credit Support (IM) is made by the Notification Time, then the relevant transfer by the Chargor will be made not later than the close of business on the relevant Regular Settlement Day; if a demand is made after the Notification Time, then the relevant transfer by the Chargor will be made not later than the close of business on the next Local Business Day following the relevant Regular Settlement Day.
Subject to Paragraph 4(a) above (if applicable) and Paragraph 5 and unless otherwise specified in Paragraph 13, if a demand for the transfer of Posted Credit Support (IM) is made by the Notification Time, then the relevant instruction by the Secured Party to the Custodian (IM) will be served prior to the latest time by which instructions must be submitted to the Custodian (IM) under the relevant Control Agreement in order for the Custodian (IM) to effect the transfer of Posted Credit Support (IM) by close of business on the relevant Regular Settlement Day; if a demand is made after the Notification Time, then the relevant instruction by the Secured Party to the Custodian (IM) will be served not later than the latest time (and day) by which instructions must be submitted to the Custodian (IM) under the relevant Control Agreement in order for the Custodian (IM) to effect the transfer of Posted Credit Support (IM) by close of business on the next Local Business Day following the relevant Regular Settlement Day.
4(d) Calculations. All calculations of Value and Credit Support Amount (IM) for purposes of Paragraph 3 in respect of a Calculation Date (IM) will be made by the Calculation Agent (IM) as of the Calculation Time (IM) on such Calculation Date (IM). In the case of any calculation of Value, the Calculation Agent (IM) may use Values most recently reasonably available for close of business in the relevant market for the relevant Eligible Credit Support (IM) as of the relevant Calculation Time (IM). In the case of any calculation of Credit Support Amount (IM), the Calculation Agent (IM) may use relevant information or data (including, but not limited to, inputs for any applicable model specified in Paragraph 13 to determine Margin Amount (IM) for certain Covered Transactions (IM)) most recently reasonably available for close of business in the relevant market(s) as of the Calculation Time (IM). The Calculation Agent (IM) will notify each party (or the other party, if the Calculation Agent (IM) is a party) of its calculations not later than the Notification Time on the Local Business Day following the applicable Calculation Date (IM).
4(e) Substitutions.
- (i) The Chargor may on any Local Business Day by notice (a “2018 English law IM CSD”) inform the Secured Party that it wishes to transfer to the Segregated Account s Eligible Credit Support (IM) (the “2018 English law IM CSD”) specified in that 2018 English law IM CSD in substitution for certain Posted Credit Support (IM) (the “Original Credit Support (IM)”) specified in the 2018 English law IM CSD.
- (ii) Unless Paragraph 13 specifies that no consent is required, the Chargor must obtain the Secured Party’s consent to the proposed substitution. The Chargor will be obliged to transfer the 2018 English law IM CSD to the Segregated Account s on the next Local Business Day following the date:
- (A) on which the Chargor receives notice (which may be oral telephonic notice) from the Secured Party of its consent (if consent is needed); or
- (B) of the 2018 English law IM CSD (if no consent is needed).
- (iii) Subject to Paragraph 4(a) above (if applicable), following the date on which the 2018 English law IM CSD is transferred to the Segregated Account s, unless otherwise specified in Paragraph 13 (the “2018 English law IM CSD”), the Secured Party will be obliged to instruct the Custodian (IM) to transfer to the Chargor the Original Credit Support (IM) as if a demand for such Original Credit Support (IM) had been made pursuant to Paragraph 3(b) after the Notification Time on such 2018 English law IM CSD; provided that the Secured Party will only be obliged to instruct the Custodian (IM) to transfer Original Credit Support (IM) with a Value as of the date of transfer as close as practicable to, but in any event not more than, the Value of the 2018 English law IM CSD as of that date, as calculated by the Calculation Agent (IM).
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