Hedging Payments Clause Samples
The Hedging Payments clause defines the obligations and procedures related to payments arising from hedging transactions associated with the main contract. Typically, this clause specifies when and how parties must make payments to cover costs or losses resulting from financial instruments used to mitigate risks such as currency or interest rate fluctuations. For example, if a party enters into a swap or forward contract to hedge against market volatility, any resulting gains or losses are settled according to the terms set out in this clause. Its core function is to ensure that the financial impact of hedging activities is clearly allocated and managed between the parties, reducing uncertainty and potential disputes over such payments.
Hedging Payments. Each Hedging Bank agrees that it shall not (i) demand (other than as may be necessary in order to exercise any right to terminate any Hedging Transaction pursuant to a Lender Hedging Agreement as permitted under Section 10.2 of this Agreement or required under Section 10.3 of this Agreement) or receive payment, prepayment or repayment of, or any distribution in respect of, or on account of, any of the Hedging Obligations in cash or in kind, or apply any money or property in or towards the discharge of any Hedging Obligations except for scheduled payments arising under the terms of the Lender Hedging Agreements, or (ii) permit to exist or receive any security interest or any financial support (including the giving of any guarantee or the making of any deposit or payment) for or in respect of any of the Hedging Obligations other than under the Loan Documents.
Hedging Payments. (a) Before the Enforcement Date:
(i) an Obligor may make, and each Hedge Counterparty may receive and retain, payment of all Hedging Costs, including any scheduled payments or partial payments arising under the terms of the relevant Secured Hedging Agreement and any Hedging Termination Payments payable to such Hedge Counterparty pursuant to the termination of any Secured Hedging Agreement (or hedging transaction thereunder) which is permitted under this Agreement;
(ii) each Hedge Counterparty may only discharge any Hedging Liability by set-off in accordance with Clause 37 (Set-Off) and only to the extent that such Hedging Liability is permitted to be paid under Clause 34.4(a)(i); and
(iii) each Hedge Counterparty may only discharge any Hedging Liability under any netting arrangements in accordance with the terms of the relevant Secured Hedging Agreement but only to the extent that such Hedging Liability is permitted to be paid under Clause 34.4(a)(i).
(b) Prior to the Enforcement Date, no Hedge Counterparty may receive or retain any payment of, or any distribution in respect of (or on account of), any Hedging Liability in cash or in kind, or apply any money or assets in or towards the repayment or discharge of any Hedging Liability save as provided in Clause 34.4(a).
(c) On and from the Enforcement Date, no Hedge Counterparty may receive or retain any payment of, or any distribution in respect of (or on account of), any Hedging Liability in cash or in kind, or apply any money or assets in or towards the repayment or discharge of any Hedging Liability which would otherwise be permitted under the preceding provisions of this Clause 34.4 (Hedging Payments). On and from the Enforcement Date, any Hedging Liability may only be repaid or discharged pursuant to a distribution by the Agent made in accordance with Clause 35 (Sharing among the Finance Parties) and Clause 36 (Payment Mechanics). The foregoing provisions shall not prevent a netting of payments pursuant to Sections 2(c) or 6(e) of the ISDA Master Agreement or their equivalent in any Agreed CGD Master provided that (on and from the Enforcement Date) any resulting amount due to a Hedge Counterparty is made to and/or through the Agent in accordance with Clause 36.1 (Payments to the Agent).