Right to Terminate - ISDA Provision: Difference between revisions

Right to Terminate - ISDA Provision (view source)

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 What a beast. If you track it through in {{tag|nutshell}} terms, it isn’t as bad as it first seems, but you have the derivative lawyer’s gift for over-complication, and the ISDA drafter’s yen for dismal drafting, to thank for this being the trial it is.
-To make it easier, we’ve invented some concepts: Unaffected Party and Unaffected Transaction - saves you all that mucking around saying the party who is not the Affected Party and so on)
+To make it easier, we’ve invented some concepts:
+*“{{isdaprov|Unaffected Party}}” and “{{isdaprov|Unaffected Transaction}}” — saves you all that mucking around saying “the party who is not the {{isdaprov|Affected Party}}” and *“{{isdaprov|Transaction}}s other than  those that are, or are deemed, to be {{isdaprov|Affected Transaction}}s” and so on)
+*{{isdaprov|Termination Event Notice}} as an elegant and self-explanatory alternative to "after an {{isdaprov|Affected Party}} gives notice under Section {{isdaprov|6(b)(i)}}
 Here is how it works.
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 ====Divide up the types of {{isdaprov|Termination Event}}====
-# Tax ones: If a {{isdaprov|Tax Event}} or a {{isdaprov|TEUM}}<ref>That’s “{{isdaprov|Tax Event Upon Merger}}” to the cool kids.</ref> ''where the party merging is the one that suffers the tax'', the parties have a month to try to rearrange matters between them, their offices and affiliates to avoid the tax issue. Only once that has failed are you in {{isdaprov|Termination Event}} territory. ''See Section {{isdaprov|6(b)}}(ii) and {{isdaprov|6(b)(iii)}}''.
+# '''Tax ones''': If a {{isdaprov|Tax Event}} or a {{isdaprov|TEUM}}<ref>That’s “{{isdaprov|Tax Event Upon Merger}}” to the cool kids.</ref> ''where the party merging is the one that suffers the tax'', the parties have a month to try to rearrange matters between them, their offices and affiliates to avoid the tax issue. Only once that has failed are you in {{isdaprov|Termination Event}} territory. ''See Section {{isdaprov|6(b)}}(ii) and {{isdaprov|6(b)(iii)}}''.
-# {{isdaprov|Unaffected Party}} ones: If it’s a {{isdaprov|CEUM}}<ref>That’s “{{isdaprov|Credit Event Upon Merger}}” to the cool kids.</ref>, an {{isdaprov|ATE}} or a {{isdaprov|TEUM}} ''where the {{isdaprov|Unaffected Party}} suffers the tax''
+# '''{{isdaprov|Unaffected Party}} ones''': If it’s a {{isdaprov|CEUM}}<ref>That’s “{{isdaprov|Credit Event Upon Merger}}” to the cool kids.</ref>, an {{isdaprov|ATE}} or a {{isdaprov|TEUM}} ''where the {{isdaprov|Unaffected Party}} suffers the tax''
-# {{isdaprov|Illegality}} and {{isdaprov|Force Majeure}}: Here there may be a {{isdaprov|Waiting Period}} to sit through, to see whether the difficulty clears (For {{isdaprov|Force Majeure Event}} it is eight {{isdaprov|Local Business Day}}s; for {{isdaprov|Illegality}} ''other than one preventing performance of a {{isdaprov|Credit Support Document}}'': three {{isdaprov|Local Business Day}}s; Sit through it.
+# '''{{isdaprov|Illegality}} and {{isdaprov|Force Majeure}}''': Here there may be a {{isdaprov|Waiting Period}} to sit through, to see whether the difficulty clears (For {{isdaprov|Force Majeure Event}} it is eight {{isdaprov|Local Business Day}}s; for {{isdaprov|Illegality}} ''other than one preventing performance of a {{isdaprov|Credit Support Document}}'': three {{isdaprov|Local Business Day}}s; Sit through it.
 ::Why is there exception for {{isdaprov|Illegality}} on a {{isdaprov|Credit Support Document}}? Because, even though it wasn’t your fault, illegality of a {{isdaprov|Credit Support Document}} profoundly changes your credit assessment (in a way that arguably, even a payment or delivery obligation doesn’t), and that is the most fundamental risk you are managing under the {{isdama}}.
 {{ref}}