FOREIGN EXCHANGE AND OPTIONS
MASTER AGREEMENT
(FEOMA)
MASTER AGREEMENT dated as of August 31, 2002 by and
between Xxxxxx Xxxxxxx & Co. Incorporated, a Delaware corporation and
Xxxxxx Xxxxxxx Charter Xxxxxxxx X.X., a Delaware limited partnership.
SECTION 1. DEFINITIONS
Unless otherwise required by the context, the following terms
shall have the following meanings in the Agreement:
"Agreement" has the meaning given to it in Section 2.2.
"American Style Option" means an Option which may be
exercised on any Business Day up to and including the Expiration Time.
"Base Currency", as to a Party, means the Currency agreed to as
such in relation to it in Part VII of the Schedule.
"Business Day" means for purposes of: (i) Section 3.2, a day
which is a Local Banking Day for the applicable Designated Office of the
Buyer; (ii) Section 5.1 and the definition of American Style Option, a day
which is a Local Banking Day for the applicable Designated Office of the
Seller; (iii) clauses (i), (viii) and (xii) of the definition of Event
of Default,
a day which is a Local Banking Day for the Non-Defaulting Party; (iv)
solely in relation to delivery of a Currency, a day which is a Local
Banking Day in relation to that Currency; and (v) any other provision of
the Agreement, a day which is a Local Banking Day for the applicable
Designated Offices of both Parties; provided, however, that neither
Saturday nor Sunday shall be considered a Business Day for any purpose.
"Buyer" means the owner of an Option.
"Call" means an Option entitling, but not obligating (except upon
exercise), the Buyer to purchase from the Seller at the Strike Price a
specified quantity of the Call Currency.
"Call Currency" means the Currency agreed to as such at the
time an Option is entered into, as evidenced in a Confirmation.
"Close-Out Amount" has the meaning given to it in Section 8.1.
"Close-Out Date" means a day on which, pursuant to the
provisions of Section 8.1, the Non-Defaulting Party closes out Currency
Obligations and/or Options or such close-out occurs automatically.
"Closing Gain", as to the Non-Defaulting Party, means the
difference described as such in relation to a particular Value Date under
the provisions of Section 8.1.
"Closing Loss", as to the Non-Defaulting Party, means the
difference described as such in relation to a particular Value Date under
the provisions of Section 8.1.
"Confirmation" means a writing (including telex, facsimile or
other electronic means from which it is possible to produce a hard copy)
evidencing an FX Transaction or an Option, and specifying:
(A) in the case of an FX Transaction, the following information:
(i) the Parties thereto and the Designated
Offices through which they are respectively acting,
(ii) the amounts of the Currencies being
bought or sold and by which Party,
(iii) the Value Date, and
(iv) any other term generally included in such a
writing in accordance with the practice of the relevant foreign exchange
market; and
(B) in the case of an Option, the following information:
(i) the Parties thereto and the Designated
Offices through which they are respectively acting,
(ii) whether the Option is a Call or a Put,
(iii) the Call Currency and the Put Currency
that are the subject of the Option and their respective quantities,
(iv) which Party is the Seller and which is the
Buyer,
(v) the Strike Price,
(vi) the Premium and the Premium Payment
Date,
(vii) the Expiration Date,
(viii) the Expiration Time,
(ix) whether the Option is an American Style
Option or a European Style Option, and
(x) such other matters, if any, as the Parties
may agree.
"Credit Support" has the meaning given to it in Section 8.2.
"Credit Support Document", as to a Party (the "first Party"),
means a guaranty, hypothecation agreement, margin or security agreement
or document, or any other document containing an obligation of a third
party ("Credit Support Provider") or of the first Party in favor of the other
Party supporting any obligations of the first Party under the Agreement.
"Credit Support Provider" has the meaning given to it in the
definition of Credit Support Document.
"Currency" means money denominated in the lawful currency of
any country or the Ecu.
"Currency Obligation" means any obligation of a Party to deliver
a Currency pursuant to an FX Transaction, the application of Section
6.3(a) or (b), or an exercised Option (except, for the purposes of Section
8.1 only, one that is to be settled at its In-the-Money Amount
under Section 5.5).
"Currency Pair" means the two Currencies which potentially
may be exchanged in connection with an FX Transaction or upon the
exercise of an Option, one of which shall be the Put Currency and the
other the Call Currency.
"Custodian" has the meaning given to it in the definition of
Insolvency Proceeding.
"Defaulting Party" has the meaning given to it in the definition
of Event of Default.
"Designated Office(s)", as to a Party, means the office or offices
specified in Part II of the Schedule.
"Effective Date" means the date of this Master Agreement.
"European Style Option" means an Option for which Notice of
Exercise may be given only on the Option's Expiration Date up to and
including the Expiration Time, unless otherwise agreed.
"Event of Default" means the occurrence of any of the following
with respect to a Party (the "Defaulting Party", the other Party being the
"Non-Defaulting Party"):
(i) the Defaulting Party shall (A) default in any payment when
due under the Agreement (including, but not limited to, a Premium
payment) to the Non-Defaulting Party with respect to any Currency
Obligation or Option and such failure shall continue for two (2) Business
Days after the Non-Defaulting Party has given the Defaulting Party
written notice of non-payment, or (B) fail to perform or comply with any
other obligation assumed by it under the Agreement and such failure is
continuing thirty (30) days after the Non-Defaulting Party has given the
Defaulting Party written notice thereof;
(ii) the Defaulting Party shall commence a voluntary Insolvency
Proceeding or shall take any corporate action to authorize any such
Insolvency Proceeding;
(iii) a governmental authority or self-regulatory organization
having jurisdiction over either the Defaulting Party or its assets in the
country of its organization or principal office (A) shall commence an
Insolvency Proceeding with respect to the Defaulting Party or its assets or
(B) shall take any action under any bankruptcy, insolvency or other
similar law or any banking, insurance or similar law or regulation
governing the operation of the Defaulting Party which may prevent the
Defaulting Party from performing its obligations under the Agreement as
and when due;
(iv) an involuntary Insolvency Proceeding shall be commenced
with respect to the Defaulting Party or its assets by a person other than a
governmental authority or self-regulatory organization having jurisdiction
over either the Defaulting Party or its assets in the country of its
organization or principal office and such Insolvency Proceeding
(A) results in the appointment of a Custodian or a judgment of insolvency
or bankruptcy or the entry of an order for winding-up, liquidation,
reorganization or other similar relief, or (B) is not dismissed within five
(5) days of its institution or presentation;
(v) the Defaulting Party is bankrupt or insolvent, as defined
under any bankruptcy or insolvency law applicable to it;
(vi) the Defaulting Party fails, or shall otherwise be unable, to
pay its debts as they become due;
(vii) the Defaulting Party or any Custodian acting on behalf of
the Defaulting Party shall disaffirm, disclaim or repudiate any Currency
Obligation or Option;
(viii) any representation or warranty made or given or deemed
made or given by the Defaulting Party pursuant to the Agreement or any
Credit Support Document shall prove to have been false or misleading in
any material respect as at the time it was made or given or deemed made
or given and one (1) Business Day has elapsed after the Non-Defaulting
Party has given the Defaulting Party written notice thereof;
(ix) the Defaulting Party consolidates or amalgamates with or
merges into or transfers all or substantially all its assets to another entity
and (A) the creditworthiness of the resulting, surviving or transferee entity
is materially weaker than that of the Defaulting Party prior to such action,
or (B) at the time of such consolidation, amalgamation, merger or transfer
the resulting, surviving or transferee entity fails to assume all the
obligations of the Defaulting Party under the Agreement by operation of
law or pursuant to an agreement satisfactory to the Non-Defaulting Party;
(x) by reason of any default, or event of default or other similar
condition or event, any Specified Indebtedness (being Specified
Indebtedness of an amount which, when expressed in the Currency of the
Threshold Amount, is in aggregate equal to or in excess of the Threshold
Amount) of the Defaulting Party or any Credit Support Provider in
relation to it: (A) is not paid on the due date therefor and remains unpaid
after any applicable grace period has elapsed, or (B) becomes, or becomes
capable at any time of being declared, due and payable under agreements
or instruments evidencing such Specified Indebtedness before it would
otherwise have been due and payable;
(xi) the Defaulting Party is in breach of or default under any
Specified Transaction and any applicable grace period has elapsed, and
there occurs any liquidation or early termination of, or acceleration of
obligations under, that Specified Transaction or the Defaulting Party (or
any Custodian on its behalf) disaffirms, disclaims or repudiates the whole
or any part of a Specified Transaction;
(xii) (A) any Credit Support Provider of the Defaulting Party or
the Defaulting Party itself fails to comply with or perform any agreement
or obligation to be complied with or performed by it in accordance with
the applicable Credit Support Document and such failure is continuing
after any applicable grace period has elapsed; (B) any Credit Support
Document relating to the Defaulting Party expires or ceases to be in full
force and effect prior to the satisfaction of all obligations of the
Defaulting Party under the Agreement, unless otherwise agreed in writing
by the Non-Defaulting Party; (C) the Defaulting Party or any Credit
Support Provider of the Defaulting Party (or, in either case, any Custodian
acting on its behalf) disaffirms, disclaims or repudiates, in whole or in
part, or challenges the validity of, any Credit Support Document; (D) any
representation or warranty made or given or deemed made or given by
any Credit Support Provider of the Defaulting Party pursuant to any
Credit Support Document shall prove to have been false or misleading in
any material respect as at the time it was made or given or deemed made
or given and one (1) Business Day has elapsed after the Non-Defaulting
Party has given the Defaulting Party written notice thereof; or (E) any
event set out in (ii) to (vii) or (ix) to (xi) above occurs in respect of any
Credit Support Provider of the Defaulting Party; or
(xiii) any other condition or event specified in Part IX of the
Schedule or in Section 11.14 if made applicable to the Agreement in Part
XI of the Schedule.
"Exercise Date", in respect of any Option, means the day on
which a Notice of Exercise received by the applicable Designated Office
of the Seller becomes effective pursuant to Section 5.1.
"Expiration Date", in respect of any Option, means the date
agreed to as such at the time the Option is entered into, as evidenced in a
Confirmation.
"Expiration Time", in respect of any Option, means the latest
time on the Expiration Date on which the Seller must accept a Notice of
Exercise as agreed to at the time the Option is entered into, as evidenced
in a Confirmation.
"FX Transaction" means any transaction between the Parties for
the purchase by one Party of an agreed amount in one Currency against
the sale by it to the other of an agreed amount in another
Currency, both such amounts either being deliverable on the same Value
Date or, if the Parties have so agreed in Part VI of the Schedule, being
cash-settled in a single Currency, which is or shall become subject to the
Agreement and in respect of which transaction the Parties have agreed
(whether orally, electronically or in writing): the Currencies involved, the
amounts of such Currencies to be purchased and sold, which Party will
purchase which Currency and the Value Date.
"In-the-Money Amount" means (i) in the case of a Call, the
excess of the Spot Price over the Strike Price, multiplied by the aggregate
amount of the Call Currency to be purchased under the Call, where both
prices are quoted in terms of the amount of the Put Currency to be paid for
one unit of the Call Currency; and (ii) in the case of a Put, the excess of
the Strike Price over the Spot Price, multiplied by the aggregate amount of
the Put Currency to be sold under the Put, where both prices are quoted in
terms of the amount of the Call Currency to be paid for one unit of the Put
Currency.
"Insolvency Proceeding" means a case or proceeding seeking a
judgment of or arrangement for insolvency, bankruptcy, composition,
rehabilitation, reorganization, administration, winding-up, liquidation or
other similar relief with respect to the Defaulting Party or its debts or
assets, or seeking the appointment of a trustee, receiver, liquidator,
conservator, administrator, custodian or other similar official (each, a
"Custodian") of the Defaulting Party or any substantial part of its assets,
under any bankruptcy, insolvency or other similar law or any banking,
insurance or similar law governing the operation of the Defaulting Party.
"LIBOR", with respect to any Currency and date, means the
average rate at which deposits in the Currency for the relevant amount and
time period are offered by major banks in the London interbank market as
of 11:00 a.m. (London time) on such date, or, if major banks do not offer
deposits in such Currency in the London interbank market on such date,
the average rate at which deposits in the Currency for the relevant amount
and time period are offered by major banks in the relevant foreign
exchange market at such time on such date as may be determined by the
Party making the determination.
"Local Banking Day" means (i) for any Currency, a day on
which commercial banks effect deliveries of that Currency in accordance
with the market practice of the relevant foreign exchange market, and (ii)
for any Party, a day in the location of the applicable Designated Office of
such Party on which commercial banks in that location are not authorized
or required by law to close.
"Master Agreement" means the terms and conditions set forth in
this Master Agreement, including the Schedule.
"Matched Pair Novation Netting Office(s)", in respect of a Party,
means the Designated Office(s) specified in Part V of the Schedule.
"Non-Defaulting Party" has the meaning given to it in the
definition of Event of Default.
"Notice of Exercise" means telex, telephonic or other electronic
notification (excluding facsimile transmission) providing assurance of
receipt, given by the Buyer prior to or at the Expiration Time, of the
exercise of an Option, which notification shall be irrevocable.
"Novation Netting Office(s)", in respect of a Party, means the
Designated Office(s) specified in Part V of the Schedule.
"Option" means a currency option which is or shall become
subject to the Agreement.
"Parties" means the parties to the Agreement, including their
successors and permitted assigns (but without prejudice to the application
of clause (ix) of the definition of Event of Default); and the term "Party"
shall mean whichever of the Parties is appropriate in the context in which
such expression may be used.
"Premium", in respect of any Option, means the
purchase price of the Option as agreed upon by the Parties, and payable by
the Buyer to the Seller thereof.
"Premium Payment Date", in respect of any Option, means the
date on which the Premium is due and payable, as agreed to at the time the
Option is entered into, as evidenced in a Confirmation.
"Proceedings" means any suit, action or other proceedings
relating to the Agreement, any FX Transaction or any Option.
"Put" means an Option entitling, but not obligating (except upon
exercise), the Buyer to sell to the Seller at the Strike Price a specified
quantity of the Put Currency.
"Put Currency" means the Currency agreed to as such at the time
an Option is entered into, as evidenced in a Confirmation.
"Schedule" means the Schedule attached to and part of this
Master Agreement, as it may be amended from time to time by agreement
of the Parties.
"Seller" means the Party granting an Option.
"Settlement Date" means, in respect of: (i) an American Style
Option, the Spot Date of the Currency Pair on the Exercise Date of such
Option, and (ii) a European Style Option, the Spot Date of the Currency
Pair on the Expiration Date of such Option; and, where market practice in
the relevant foreign exchange market in relation to the two Currencies
involved provides for delivery of one Currency on one date which is a
Local Banking Day in relation to that Currency but not to the other
Currency and for delivery of the other Currency on the next Local
Banking Day in relation to that other Currency, "Settlement Date" means
such two (2) Local Banking Days.
"Settlement Netting Office(s)", in respect of a Party, means the
Designated Office(s) specified in Part V of the Schedule.
"Specified Indebtedness" means any obligation (whether present
or future, contingent or otherwise, as principal or surety or otherwise) in
respect of borrowed money, other than in respect of deposits received.
"Specified Transaction" means any transaction (including an
agreement with respect thereto) between one Party to the Agreement (or
any Credit Support Provider of such Party) and the other Party to the
Agreement (or any Credit Support Provider of such Party) which is a rate
swap transaction, basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity linked swap, equity or equity index
option, bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, currency swap
transaction, cross-currency rate swap transaction, currency option or any
other similar transaction (including any option with respect to any of these
transactions) or any combination of any of the foregoing.
"Spot Date" means the spot delivery day for the relevant
Currency Pair as generally used by the relevant foreign exchange market.
"Spot Price" means the rate of exchange at the time at which
such price is to be determined for foreign exchange transactions in the
relevant Currency Pair for value on the Spot Date, as determined in good
faith: (i) by the Seller, for purposes of Section 5, and (ii) by the Non-
Defaulting Party, for purposes of Section 8.
"Strike Price", in respect of any Option, means the price at which
the Currency Pair may be exchanged, as agreed to at the time the Option is
entered into, as evidenced in a Confirmation.
"Threshold Amount" means the amount specified as such for
each Party in Part VIII of the Schedule.
"Value Date" means, with respect to any FX Transaction, the
Business Day (or where market practice in the relevant foreign exchange
market in relation to the two Currencies involved provides for delivery of
one Currency on one date which is a Local Banking Day in relation to that
Currency but not to the other Currency and for delivery of the other
Currency on the next Local Banking Day in relation to that other Currency
("Split Settlement") the two (2) Local Banking Days in accordance with
that market practice) agreed by the Parties for delivery of the Currencies
to be purchased and sold pursuant to such FX Transaction, and, with
respect to any Currency Obligation, the Business Day (or, in the case of
Split Settlement, Local Banking Day) upon which the obligation to deliver
Currency pursuant to such Currency Obligation is to be performed.
SECTION 2. FX TRANSACTIONS AND OPTIONS
2.1 Scope of the Agreement. The Parties (through their
respective Designated Offices) may enter into (i) FX Transactions, for
such quantities of such Currencies, as may be agreed subject to the terms
of the Agreement, and (ii) Options, for such Premiums, with such
Expiration Dates, at such Strike Prices and for the purchase or sale of such
quantities of such Currencies, as may be agreed subject to the terms of the
Agreement; provided that neither Party shall be required to enter into any
FX Transaction or Option with the other Party (other than in connection
with an exercised Option). Unless otherwise agreed in writing by the
Parties, each FX Transaction and Option entered into between Designated
Offices of the Parties on or after the Effective Date shall be governed by
the Agreement. Each FX Transaction and Option between any two
Designated Offices of the Parties outstanding on the Effective Date which
is identified in Part I of the Schedule shall also be governed by the
Agreement.
2.2 Single Agreement. This Master Agreement, the terms
agreed between the Parties with respect to each FX Transaction and
Option (and, to the extent recorded in a Confirmation, each such
Confirmation), and all amendments to any of such items shall together
form the agreement between the Parties (the "Agreement") and shall
together constitute a single agreement between the Parties. The Parties
acknowledge that all FX Transactions and Options are entered into in
reliance upon such fact, it being understood that the Parties would
not otherwise enter into any FX Transaction or Option.
2.3 Confirmations. FX Transactions and Options shall be
promptly confirmed by the Parties by Confirmations exchanged by mail,
telex, facsimile or other electronic means from which it is possible to
produce a hard copy. The failure by a Party to issue a Confirmation shall
not prejudice or invalidate the terms of any FX Transaction or Option.
2.4 Inconsistencies. In the event of any inconsistency
between the provisions of the Schedule and the other provisions of the
Agreement, the Schedule will prevail. In the event of any inconsistency
between the terms of a Confirmation and the other provisions of the
Agreement, (i) in the case of an FX Transaction, the other provisions of
the Agreement shall prevail, and the Confirmation shall not modify the
other terms of the Agreement and (ii) in the case of an Option, the terms
of the Confirmation shall prevail, and the other terms of the Agreement
shall be deemed modified with respect to such Option, except for the
manner of confirmation under Section 2.3 and, if applicable, discharge of
Options under Section 4.
SECTION 3. OPTION PREMIUM
3.1 Payment of Premium. Unless otherwise agreed in
writing by the Parties, the Buyer shall be obligated to pay the Premium
related to an Option no later than its Premium Payment Date.
3.2 Late Payment or Non-Payment of Premium. If any
Premium is not received on or before the Premium Payment Date, the
Seller may elect: (i) to accept a late payment of such Premium; (ii) to give
written notice of such non-payment and, if such payment shall not be
received within two (2) Business Days of such notice, treat the related
Option as void; or (iii) to give written notice of such non-payment and, if
such payment shall not be received within two (2) Business Days of such
notice, treat such non-payment as an Event of Default under clause (i) of
the definition of Event of Default. If the Seller elects to act under either
clause (i) or (ii) of the preceding sentence, the Buyer shall pay all out-of-
pocket costs and actual damages incurred in connection with such unpaid
or late Premium or void Option, including, without limitation, interest on
such Premium from and including the Premium Payment Date to but
excluding the late payment date in the same Currency as such Premium at
overnight LIBOR and any other losses, costs or expenses incurred by the
Seller in connection with such terminated Option, for the loss of its
bargain, its cost of funding, or the loss incurred as a result of terminating,
liquidating, obtaining or re-establishing a delta hedge or related trading
position with respect to such Option.
SECTION 4. DISCHARGE AND TERMINATION OF OPTIONS;
NETTING OF OPTION PREMIUMS
4.1 Discharge and Termination. If agreed in Part V of the
Schedule, any Call or any Put written by a Party will automatically be
discharged and terminated, in whole or in part, as applicable, against a
Call or a Put, respectively, written by the other Party, such discharge and
termination to occur automatically upon the payment in full of the
last Premium payable in respect of such Options; provided that such
discharge and termination may only occur in respect of Options:
(i) each being with respect to the same Put Currency and
the same Call Currency;
(ii) each having the same Expiration Date and Expiration
Time;
(iii) each being of the same style, i.e. either both being
American Style Options or both being European Style Options;
(iv) each having the same Strike Price;
(v) each being transacted by the same pair of Designated
Offices of Buyer and Seller; and
(vi) neither of which shall have been exercised by delivery
of a Notice of Exercise;
and, upon the occurrence of such discharge and termination, neither Party
shall have any further obligation to the other Party in respect of the
relevant Options or, as the case may be, parts thereof so discharged and
terminated. Such discharge and termination shall be effective
notwithstanding that either Party may fail to record such discharge and
termination in its books. In the case of a partial discharge and termination
(i.e., where the relevant Options are for different amounts of the Currency
Pair), the remaining portion of the Option which is partially discharged
and terminated shall continue to be an Option for all purposes of the
Agreement, including this Section 4.1.
4.2 Netting of Option Premiums. If agreed in Part V of the
Schedule and if, on any date, Premiums would otherwise be payable under
the Agreement in the same Currency between the same respective
Designated Offices of the Parties, then, on such date, each Party's
obligation to make payment of any such Premium will be automatically
satisfied and discharged and, if the aggregate Premium(s) that would
otherwise have been payable by such Designated Office of one Party
exceeds the aggregate Premium(s) that would otherwise have been
payable by such Designated Office of the other Party, replaced by an
obligation upon the Party by whom the larger aggregate Premium(s)
would have been payable to pay the other Party the excess of the larger
aggregate Premium(s) over the smaller aggregate Premium(s) and, if the
aggregate Premiums are equal, no payment shall be made.
SECTION 5. EXERCISE AND SETTLEMENT OF OPTIONS
5.1 Exercise of Options. The Buyer may exercise an
Option by delivery to the Seller of a Notice of Exercise. Subject to
Section 5.3, if a Notice of Exercise with respect to an Option has not been
received by the Seller prior to or at the Expiration Time, the Option shall
expire and become void and of no effect. Any Notice of Exercise shall
(unless otherwise agreed):
(i) in respect of an American Style Option, (A) if received at or
prior to 3:00 p.m. on a Business Day, be effective upon receipt thereof by
the Seller, and (B) if received after 3:00 p.m. on a Business Day, be
effective only as of the opening of business of the Seller on the first
Business Day subsequent to its receipt; and
(ii) in respect of a European Style Option, if received on or, if the
parties have so agreed, before the Expiration Date, prior to or at the
Expiration Time, be effective upon receipt thereof by the Seller.
5.2 No Partial Exercise. Unless otherwise agreed by the
Parties, an Option may be exercised only in whole.
5.3 Automatic Exercise. Unless otherwise agreed in Part
VI of the Schedule or unless the Seller is otherwise instructed by the
Buyer, if an Option has an In-the-Money Amount at its Expiration Time
that equals or exceeds the product of (x) 1% of the Strike Price (or such
other percentage or amount as may have been agreed by the Parties) and
(y) the amount of the Call Currency or Put Currency, as appropriate, then
the Option shall be deemed automatically exercised. In such case, the
Seller may elect to settle such Option either in accordance with Section
5.4 or by payment to the Buyer on the Settlement Date for such Option of
the In-the-Money Amount, as determined at the Expiration Time or as
soon thereafter as practicable. In the latter case, the sole
obligations of the
Parties with respect to settlement of such Option shall be to deliver or
receive the In-the-Money Amount of such Option on the Settlement Date.
The Seller shall notify the Buyer of its election of the method of
settlement of an automatically exercised Option as soon as practicable
after the Expiration Time.
5.4 Settlement of Exercised Options. An exercised Option
shall settle on its Settlement Date. Subject to Section 5.3 and 5.5, on the
Settlement Date, the Buyer shall pay the Put Currency to the Seller for
value on the Settlement Date and the Seller shall pay the Call Currency to
the Buyer for value on the Settlement Date. An exercised Option shall be
treated as an FX Transaction and a Currency Obligation (except, for the
purposes of Section 8.1 only, if it is to be settled at its In-the-Money
Amount), and for this purpose the relevant Settlement Date shall be
treated as the Value Date of the FX Transaction.
5.5 Settlement at In-the-Money Amount. An Option shall
be settled at its In-the-Money Amount if so agreed by the Parties at the
time such Option is entered into. In such case, the In-the-Money Amount
shall be determined based upon the Spot Price at the time of exercise or as
soon thereafter as practicable. The sole obligations of the Parties with
respect to settlement of such Option shall be to deliver or receive the In-
the-Money Amount of such Option on the Settlement Date.
SECTION 6. SETTLEMENT AND NETTING OF FX
TRANSACTIONS
6.1 Settlement of FX Transactions. Subject to Sections 6.2
and 6.3, each Party shall deliver to the other Party the amount of the
Currency to be delivered by it under each Currency Obligation on the
Value Date for such Currency Obligation.
6.2 Settlement Netting. If, on any date, more than one
delivery of a particular Currency under Currency Obligations is to be
made between a pair of Settlement Netting Offices, then each Party shall
aggregate the amounts of such Currency deliverable by it and only the
difference between these aggregate amounts shall be delivered by
the Party owing the larger aggregate amount to the other Party, and, if the
aggregate amounts are equal, no delivery of the Currency shall be made.
6.3 Novation Netting. (a) By Currency. If the Parties
enter into an FX Transaction through a pair of Novation Netting Offices
giving rise to a Currency Obligation for the same Value Date and in the
same Currency as a then existing Currency Obligation between the same
pair of Novation Netting Offices, then immediately upon entering into
such FX Transaction, each such Currency Obligation shall automatically
and without further action be individually canceled and simultaneously
replaced by a new Currency Obligation for such Value Date determined as
follows: the amounts of such Currency that would otherwise have been
deliverable by each Party on such Value Date shall be aggregated and the
Party with the larger aggregate amount shall have a new Currency
Obligation to deliver to the other Party the amount of such Currency by
which its aggregate amount exceeds the other Party's aggregate amount,
provided that if the aggregate amounts are equal, no new Currency
Obligation shall arise. This Section 6.3 shall not affect any other Currency
Obligation of a Party to deliver any different Currency on the same Value
Date.
(b) By Matched Pair. If the Parties enter into an FX
Transaction between a pair of Matched Pair Novation Netting Offices then
the provisions of Section 6.3(a) shall apply only in respect of Currency
Obligations arising by virtue of FX Transactions entered into between
such pair of Matched Pair Novation Netting Offices and involving the
same pair of Currencies and the same Value Date.
6.4 General (a) Inapplicability of Sections 6.2 and 6.3.
The provisions of Sections 6.2 and 6.3 shall not apply if a Close-Out Date
has occurred or a voluntary or involuntary Insolvency Proceeding or
action of the kind described in clause (ii), (iii) or (iv) of the definition of
Event of Default has occurred without being dismissed in relation to either
Party.
(b) Failure to Record. The provisions of Section 6.3 shall
apply notwithstanding that either Party may fail to record the new
Currency Obligation in its books.
(c) Cut-off Date and Time. The provisions of Section 6.3
are subject to any cut-off date and cut-off time agreed between the
applicable Novation Netting Offices and Matched Pair Novation Netting
Offices of the Parties.
SECTION 7. REPRESENTATIONS, WARRANTIES AND
COVENANTS
7.1 Representations and Warranties. Each Party represents
and warrants to the other Party as of the Effective Date and as of the date
of each FX Transaction and each Option that: (i) it has authority to enter
into the Agreement (including such FX Transaction or Option, as the case
may be); (ii) the persons entering into the Agreement (including such FX
Transaction or Option, as the case may be) on its behalf have been duly
authorized to do so; (iii) the Agreement (including such FX Transaction or
Option, as the case may be) is binding upon it and enforceable
against it in accordance with its terms (subject to applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting creditors'
rights generally and applicable principles of equity) and does not and will
not violate the terms of any agreements to which such Party is bound; (iv)
no Event of Default, or event which, with notice or lapse of time or both,
would constitute an Event of Default, has occurred and is continuing with
respect to it; (v) it acts as principal in entering into each FX Transaction
and Option and exercising each and every Option; and (vi) if the Parties
have so specified in Part XV of the Schedule, it makes the representations
and warranties set forth in such Part XV.
7.2 Covenants. Each Party covenants to the other Party
that: (i) it will at all times obtain and comply with the terms of and do all
that is necessary to maintain in full force and effect all authorizations,
approvals, licenses and consents required to enable it lawfully to perform
its obligations under the Agreement; (ii) it will promptly notify the other
Party of the occurrence of any Event of Default with respect to itself or
any Credit Support Provider in relation to it; and (iii) if the Parties
have set
forth additional covenants in Part XVI of the Schedule, it makes the
covenants set forth in such Part XVI.
SECTION 8. CLOSE-OUT AND LIQUIDATION
8.1 Manner of Close-Out and Liquidation. (a) Close-Out.
If an Event of Default has occurred and is continuing, then the Non-
Defaulting Party shall have the right to close out all, but not less than all,
outstanding Currency Obligations (including any Currency Obligation
which has not been performed and in respect of which the Value Date is
on or precedes the Close-Out Date) and Options, except to the extent that
in the good faith opinion of the Non-Defaulting Party certain of such
Currency Obligations or Options may not be closed out under applicable
law. Such close-out shall be effective upon receipt by the Defaulting
Party of notice that the Non-Defaulting Party is terminating such Currency
Obligations and Options. Notwithstanding the foregoing, unless
otherwise agreed by the Parties in Part X of the Schedule, in the case of an
Event of Default in clause (ii), (iii) or (iv) of the definition thereof with
respect to a Party and, if agreed by the Parties in Part IX of the Schedule,
in the case of any other Event of Default specified and so agreed in Part
IX with respect to a Party, close-out shall be automatic as to all
outstanding Currency Obligations and Options, as of the time immediately
preceding the institution of the relevant Insolvency Proceeding or action.
The Non-Defaulting Party shall have the right to liquidate such closed-out
Currency Obligations and Options as provided below.
(b) Liquidation of Currency Obligations. Liquidation of
Currency Obligations terminated by close-out shall be effected as follows:
(i) Calculating Closing Gain or Loss. The Non-Defaulting
Party shall calculate in good faith, with respect to each such terminated
Currency Obligation, except to the extent that in the good faith opinion of
the Non-Defaulting Party certain of such Currency Obligations may not
be liquidated as provided herein under applicable law, as of the Close-Out
Date or as soon thereafter as reasonably practicable, the Closing
Gain, or, as appropriate, the Closing Loss, as follows:
(A) for each Currency Obligation calculate a
"Close-Out Amount" as follows:
(1) in the case of a Currency Obligation
whose Value Date is the same as or is later than the Close-Out Date, the
amount of such Currency Obligation; or
(2) in the case of a Currency Obligation
whose Value Date precedes the Close-Out Date, the amount of such
Currency Obligation increased, to the extent permitted by applicable law,
by adding interest thereto from and including the Value Date to but
excluding the Close-Out Date at overnight LIBOR; and
(3) for each such amount in a Currency
other than the Non-Defaulting Party?s Base Currency, convert such
amount into the Non-Defaulting Party?s Base Currency at the rate of
exchange at which, at the time of the calculation, the Non-Defaulting
Party can buy such Base Currency with or against the Currency of the
relevant Currency Obligation for delivery (x) if the Value Date of such
Currency Obligation is on or after the Spot Date as of such time of
calculation for the Base Currency, on the Value Date of that Currency
Obligation or (y) if such Value Date precedes such Spot Date, for delivery
on such Spot Date (or, in either case, if such rate of exchange is not
available, conversion shall be accomplished by the Non-Defaulting Party
using any commercially reasonable method); and
(B) determine in relation to each Value Date: (1)
the sum of all Close-Out Amounts relating to Currency Obligations under
which the Non-Defaulting Party would otherwise have been entitled to
receive the relevant amount on that Value Date; and (2) the sum of all
Close-Out Amounts relating to Currency Obligations under which the
Non-Defaulting Party would otherwise have been obliged to deliver the
relevant amount to the Defaulting Party on that Value Date; and
(C) if the sum determined under (B)(1) is greater
than the sum determined under (B)(2), the difference shall be the Closing
Gain for such Value Date; if the sum determined under (B)(1) is less than
the sum determined under (B)(2), the difference shall be the Closing Loss
for such Value Date.
(ii) Determining Present Value. To the extent permitted by
applicable law, the Non-Defaulting Party shall adjust the Closing Gain or
Closing Loss for each Value Date falling after the Close-Out Date to
present value by discounting the Closing Gain or Closing Loss from and
including the Value Date to but excluding the Close-Out Date, at LIBOR
with respect to the Non-Defaulting Party's Base Currency as at the Close-
Out Date or at such other rate as may be prescribed by applicable law.
(iii) Netting. The Non-Defaulting Party shall aggregate the
following amounts so that all such amounts are netted into a single
liquidated amount payable to or by the Non-Defaulting Party: (x) the sum
of the Closing Gains for all Value Dates (discounted to present value,
where appropriate, in accordance with the provisions of Section 8.1(b)(ii))
(which for the purposes of the aggregation shall be a positive
figure); and (y) the sum of the Closing Losses for all Value Dates
(discounted to present value, where appropriate, in accordance with the
provisions of Section 8.1(b)(ii)) (which for the purposes of the
aggregation shall be a negative figure).
(c) Liquidation of Options. To liquidate unexercised
Options and exercised Options to be settled at their In-the-Money
Amounts that have been terminated by close-out, the Non-Defaulting
Party shall:
(i) Calculating Settlement Amount. Calculate in good
faith with respect to each such terminated Option, except to the extent that
in the good faith opinion of the Non-Defaulting Party certain of such
Options may not be liquidated as provided herein under applicable law, as
of the Close-Out Date or as soon as reasonably practicable thereafter a
settlement amount for each Party equal to the aggregate of:
(A) with respect to each Option purchased by such
Party, and which the other Party has not elected to treat as void pursuant
to Section 3.2(ii) for lack of payment of the Premium, the current market
premium for such Option;
(B) with respect to each Option sold by such Party
and which such Party has not elected to treat as void pursuant to Section
3.2(ii) for lack of payment of the Premium, any unpaid Premium,
provided that, if the Close-Out Date occurs before the Premium Payment
Date, such amount shall be discounted from and including the Premium
Payment Date to but excluding the Close-Out Date at a rate equal to
LIBOR on the Close-Out Date and, if the Close-Out Date occurs after the
Premium Payment Date, to the extent permitted by applicable law, the
settlement amount shall include interest on any unpaid Premium from and
including the Premium Payment Date to but excluding the Close-Out Date
in the same Currency as such Premium at overnight LIBOR;
(C) with respect to any exercised Option to be
settled at its In-the-Money Amount (whether or not the Close-Out Date
occurs before the Settlement Date for such Option), any unpaid amount
due to such Party in settlement of such Option and, if the Close-Out Date
occurs after the Settlement Date for such Option, to the extent permitted
by applicable law, interest thereon from and including the applicable
Settlement Date to but excluding the Close-Out Date at overnight LIBOR;
and
(D) without duplication, the amount that the Non-
Defaulting Party reasonably determines in good faith, as of the Close-Out
Date or as of the earliest date thereafter that is reasonably practicable, to
be its additional losses, costs and expenses in connection with such
terminated Option, for the loss of its bargain, its cost of funding, or the
loss incurred as a result of terminating, liquidating, obtaining or re-
establishing a delta hedge or related trading position with respect to such
Option;
(ii) Converting to Base Currency. Convert any settlement
amount calculated in accordance with clause (i) above in a Currency other
than the Non-Defaulting Party's Base Currency into such Base Currency
at the Spot Price at which, at the time of the calculation, the Non-
Defaulting Party could enter into a contract in the foreign exchange
market to buy the Non-Defaulting Party's Base Currency in exchange for
such Currency (or, if such Spot Price is not available, conversion shall be
accomplished by the Non-Defaulting Party using any commercially
reasonable method); and
(iii) Netting. Net such settlement amounts with respect to
each Party so that all such amounts are netted to a single liquidated
amount payable by one Party to the other Party.
(d) Final Netting. The Non-Defaulting Party shall net (or,
if both are payable by one Party, add) the liquidated amounts payable
under Sections 8.1(b) and 8.1(c) with respect to each Party so that
such amounts are netted (or added) to a single liquidated amount payable
by one Party to the other Party as a settlement payment.
8.2 Set-Off Against Credit Support. Where close-out and
liquidation occurs in accordance with Section 8.1, the Non-Defaulting
Party shall also be entitled (i) to set off the net payment calculated in
accordance with Section 8.1(d) which the Non-Defaulting Party owes to
the Defaulting Party, if any, against any credit support or other collateral
("Credit Support") held by the Defaulting Party pursuant to a Credit
Support Document or otherwise (including the liquidated value of any
non-cash Credit Support) in respect of the Non-Defaulting Party's
obligations under the Agreement or (ii) to set off the net payment
calculated in accordance with Section 8.1(d) which the Defaulting Party
owes to the Non-Defaulting Party, if any, against any Credit Support held
by the Non-Defaulting Party (including the liquidated value of any non-
cash Credit Support) in respect of the Defaulting Party's obligations under
the Agreement; provided that, for purposes of either such set-off, any
Credit Support denominated in a Currency other than the Non-Defaulting
Party's Base Currency shall be converted into such Base Currency at the
rate specified in Section 8.1(c)(ii).
8.3 Other Foreign Exchange Transactions and Currency
Options. Where close-out and liquidation occurs in accordance with
Section 8.1, the Non-Defaulting Party shall also be entitled to close-out
and liquidate, to the extent permitted by applicable law, any other foreign
exchange transaction or currency option entered into between the Parties
which is then outstanding in accordance with the provisions of Section
8.1, with each obligation of a Party to deliver a Currency under such a
foreign exchange transaction being treated as if it were a Currency
Obligation (including exercised options, provided that cash-settled options
shall be treated analogously to Options to be settled at their In-the-Money
Amount) and each unexercised option being treated as if it were an Option
under the Agreement.
8.4 Payment and Late Interest. The net amount payable by
one Party to the other Party pursuant to the provisions of Sections 8.1 and
8.3 above shall be paid by the close of business on the Business Day
following the receipt by the Defaulting Party of notice of the Non-
Defaulting Party's settlement calculation, with interest at overnight
LIBOR from and including the Close-Out Date to but excluding such
Business Day (and converted as required by applicable law into any other
Currency, any costs of conversion to be borne by, and deducted from any
payment to, the Defaulting Party). To the extent permitted by
applicable law, any amounts owed but not paid when due under this
Section 8 shall bear interest at overnight LIBOR (or, if conversion is
required by applicable law into some other Currency, either overnight
LIBOR with respect to such other Currency or such other rate as may be
prescribed by such applicable law) for each day for which such amount
remains unpaid. Any addition of interest or discounting required under
this Section 8 shall be calculated on the basis of a year of such number of
days as is customary for transactions involving the relevant Currency in
the relevant foreign exchange market.
8.5 Suspension of Obligations. Without prejudice to the
foregoing, so long as a Party shall be in default in payment or
performance to the other Party under the Agreement and the other Party
has not exercised its rights under this Section 8, or, if "Adequate
Assurances" is specified as applying to the Agreement in Part XI of the
Schedule, during the pendency of a reasonable request to a Party for
adequate assurances of its ability to perform its obligations under the
Agreement, the other Party may, at its election and without penalty,
suspend its obligation to perform under the Agreement.
8.6 Expenses. The Defaulting Party shall reimburse the
Non-Defaulting Party in respect of all out-of-pocket expenses incurred by
the Non-Defaulting Party (including fees and disbursements of counsel,
including attorneys who may be employees of the Non-Defaulting Party)
in connection with any reasonable collection or other enforcement
proceedings related to the payments required under the Agreement.
8.7 Reasonable Pre-Estimate. The Parties agree that the
amounts recoverable under this Section 8 are a reasonable pre-estimate of
loss and not a penalty. Such amounts are payable for the loss of bargain
and the loss of protection against future risks and, except as otherwise
provided in the Agreement, neither Party will be entitled to recover any
additional damages as a consequence of such losses.
8.8 No Limitation of Other Rights; Set-Off. The Non-
Defaulting Party's rights under this Section 8 shall be in addition to, and
not in limitation or exclusion of, any other rights which the Non-
Defaulting Party may have (whether by agreement, operation of law or
otherwise), and, to the extent not prohibited by law, the Non-Defaulting
Party shall have a general right of set-off with respect to all amounts owed
by each Party to the other Party, whether due and payable or not due and
payable (provided that any amount not due and payable at the time of such
set-off shall, if appropriate, be discounted to present value in a
commercially reasonable manner by the Non-Defaulting Party). The
Non-Defaulting Party's rights under this Section 8.8 are subject to Section
8.7.
SECTION 9. FORCE MAJEURE, ACT OF STATE, ILLEGALITY
AND IMPOSSIBILITY
9.1 Force Majeure, Act of State, Illegality and
Impossibility. If either Party is prevented from or hindered or delayed by
reason of force majeure or act of state in the delivery or receipt of any
Currency in respect of a Currency Obligation or Option or if it becomes
or, in the good faith judgment of one of the Parties, may become
unlawful or impossible for either Party to make or receive any payment in
respect of a Currency Obligation or Option, then the Party for whom such
performance has been prevented, hindered or delayed or has become
illegal or impossible shall promptly give notice thereof to the other Party
and either Party may, by notice to the other Party, require the close-out
and liquidation of each affected Currency Obligation and Option in
accordance with the provisions of Section 8.1 and, for such purposes, the
Party unaffected by such force majeure, act of state, illegality or
impossibility (or, if both Parties are so affected, whichever Party gave the
relevant notice) shall perform the calculation required under Section 8.1 as
if it were the Non-Defaulting Party. Nothing in this Section 9.1 shall be
taken as indicating that the Party treated as the Defaulting Party for the
purpose of calculations required by Section 8.1 has committed any breach
or default.
9.2 Transfer to Avoid Force Majeure, Act of State,
Illegality or Impossibility. If Section 9.1 becomes applicable, unless
prohibited by law, the Party which has been prevented, hindered or
delayed from performing shall, as a condition to its right to designate a
close-out and liquidation of any affected Currency Obligation or Option,
use all reasonable efforts (which will not require such Party to incur a loss,
excluding immaterial, incidental expenses) to transfer as soon as
practicable, and in any event before the earlier to occur of the expiration
date of the affected Options or twenty (20) days after it gives notice under
Section 9.1, all its rights and obligations under the Agreement in respect
of the affected Currency Obligations and Options to another of its
Designated Offices so that such force majeure, act of state, illegality or
impossibility ceases to exist. Any such transfer will be subject to the prior
written consent of the other Party, which consent will not be withheld if
such other Party's policies in effect at such time would permit it to enter
into transactions with the transferee Designated Office on the terms
proposed, unless such transfer would cause the other Party to incur a
material tax or other cost.
SECTION 10. PARTIES TO RELY ON THEIR OWN EXPERTISE
Each Party will be deemed to represent to the other Party on the
date on which it enters into an FX Transaction or Option that (absent a
written agreement between the Parties that expressly imposes affirmative
obligations to the contrary for that FX Transaction or Option): (i)(A) it is
acting for its own account, and it has made its own independent decisions
to enter into that FX Transaction or Option and as to whether that FX
Transaction or Option is appropriate or proper for it based upon its own
judgment and upon advice from such advisors as it has deemed necessary;
(B) it is not relying on any communication (written or oral) of the other
Party as investment advice or as a recommendation to enter into that FX
Transaction or Option, it being understood that information and
explanations related to the terms and conditions of an FX Transaction or
Option shall not be considered investment advice or a recommendation to
enter into that FX Transaction or Option; and (C) it has not received from
the other Party any assurance or guarantee as to the expected results of
that FX Transaction or Option; (ii) it is capable of evaluating and
understanding (on its own behalf or through independent professional
advice), and understands and accepts, the terms, conditions and risks of
that FX Transaction or Option; and (iii) the other Party is not
acting as a fiduciary or an advisor for it in respect of that FX Transaction
or Option.
SECTION 11. MISCELLANEOUS
11.1 Currency Indemnity. The receipt or recovery by either
Party (the "first Party") of any amount in respect of an obligation of the
other Party (the "second Party") in a Currency other than that in which
such amount was due, whether pursuant to a judgment of any court or
pursuant to Section 8 or 9, shall discharge such obligation only to the
extent that, on the first day on which the first Party is open for business
immediately following such receipt or recovery, the first Party shall be
able, in accordance with normal banking practice, to purchase the
Currency in which such amount was due with the Currency received or
recovered. If the amount so purchasable shall be less than the original
amount of the Currency in which such amount was due, the second Party
shall, as a separate obligation and notwithstanding any judgment of any
court, indemnify the first Party against any loss sustained by it. The
second Party shall in any event indemnify the first Party against any costs
incurred by it in making any such purchase of Currency.
11.2 Assignment. Neither Party may assign, transfer or
charge or purport to assign, transfer or charge its rights or obligations
under the Agreement to a third party without the prior written consent of
the other Party and any purported assignment, transfer or charge in
violation of this Section 11.2 shall be void.
11.3 Telephonic Recording. The Parties agree that each may
electronically record all telephonic conversations between them and that
any such recordings may be submitted in evidence to any court or in any
Proceedings for the purpose of establishing any matters pertinent to the
Agreement.
11.4 Notices. Unless otherwise agreed, all notices,
instructions and other communications to be given to a Party under the
Agreement shall be given to the address, telex (if confirmed by the
appropriate answerback), facsimile (confirmed if requested) or telephone
number and to the individual or department specified by such Party in Part
III of the Schedule. Unless otherwise specified, any notice, instruction or
other communication given in accordance with this Section 11.4 shall be
effective upon receipt.
11.5 Termination. Each of the Parties may terminate the
Agreement at any time by seven (7) days' prior written notice to the other
Party delivered as prescribed in Section 11.4, and termination shall be
effective at the end of such seventh day; provided, however, that any such
termination shall not affect any outstanding Currency Obligations or
Options, and the provisions of the Agreement shall continue to apply until
all the obligations of each Party to the other under the Agreement have
been fully performed.
11.6 Severability. In the event any one or more of the
provisions contained in the Agreement should be held invalid, illegal or
unenforceable in any respect under the law of any jurisdiction, the
validity, legality and enforceability of the remaining provisions
contained in the Agreement under the law of such jurisdiction, and the
validity, legality and enforceability of such and any other provisions under
the law of any other jurisdiction shall not in any way be affected or
impaired thereby. The Parties shall endeavor in good faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
11.7 No Waiver. No indulgence or concession granted by a
Party and no omission or delay on the part of a Party in exercising any
right, power or privilege under the Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude any other or further exercise thereof or the exercise of
any other right, power or privilege.
11.8 Master Agreement. Where one of the Parties to the
Agreement is domiciled in the United States, the Parties intend that the
Agreement shall be a master agreement, as referred to in 11 U.S.C.
Section 101(53B)(C) and 12 U.S.C. Section 1821(e)(8)(D)(vii).
11.9 Time of Essence, Etc. Time shall be of the essence in
the Agreement. Unless otherwise agreed, the times referred to in the
Agreement with respect to Options shall in each case refer to the local
time of the relevant Designated Office of the Seller of the relevant Option.
11.10 Headings. Headings in the Agreement are for ease of
reference only.
11.11 Payments Generally. All payments to be made under
the Agreement shall be made in same day (or immediately available) and
freely transferable funds and, unless otherwise specified, shall be
delivered to such office of such bank, and in favor of such account as shall
be specified by the Party entitled to receive such payment in Part IV of the
Schedule or in a notice given in accordance with Section 11.4.
11.12 Amendments. No amendment, modification or waiver
of the Agreement will be effective unless in writing executed by each of
the Parties; provided that the Parties may agree in a Confirmation that
complies with Section 2.3 to amend the Agreement solely with respect to
the Option that is the subject of the Confirmation.
11.13 Credit Support. A Credit Support Document between
the Parties may apply to obligations governed by the Agreement. If the
Parties have executed a Credit Support Document, such Credit Support
Document shall be subject to the terms of the Agreement and is hereby
incorporated by reference in the Agreement. In the event of any conflict
between a Credit Support Document and the Agreement, the Agreement
shall prevail, except for any provision in such Credit Support Document in
respect of governing law.
11.14 Adequate Assurances. If the Parties have so agreed in
Part XI of the Schedule, the failure by a Party to give adequate assurances
of its ability to perform any of its obligations under the Agreement within
two (2) Business Days of a written request to do so when the other Party
has reasonable grounds for insecurity shall be an Event of Default
under the Agreement.
11.15 Correction of Confirmations. Unless either Party
objects to the terms contained in any Confirmation sent by the other Party
or sends a corrected Confirmation within three (3) Business Days of
receipt of such Confirmation, or such shorter time as may be appropriate
given the Value Date of an FX Transaction, the terms of such
Confirmation shall be deemed correct and accepted absent manifest error.
If the Party receiving a Confirmation sends a corrected Confirmation
within such three (3) Business Days, or shorter period, as appropriate, then
the Party receiving such corrected Confirmation shall have three (3)
Business Days, or shorter period, as appropriate, after receipt thereof to
object to the terms contained in such corrected Confirmation.
SECTION 12. LAW AND JURISDICTION
12.1 Governing Law. The Agreement shall be governed by,
and construed in accordance with, the laws of the jurisdiction set forth in
Part XII of the Schedule without giving effect to conflict of laws
principles.
12.2 Consent to Jurisdiction. (a) With respect to any
Proceedings, each Party irrevocably (i) submits to the non-exclusive
jurisdiction of the courts of the jurisdiction set forth in Part XIII of the
Schedule and (ii) waives any objection which it may have at any time to
the laying of venue of any Proceedings brought in any such court, waives
any claim that such Proceedings have been brought in an inconvenient
forum and further waives the right to object, with respect to such
Proceedings, that such court does not have jurisdiction over such Party.
Nothing in the Agreement precludes either Party from bringing
Proceedings in any other jurisdiction nor will the bringing of Proceedings
in any one or more jurisdictions preclude the bringing of Proceedings in
any other jurisdiction.
(b) Each Party irrevocably appoints the agent for service of
process (if any) specified with respect to it in Part XIV of the Schedule. If
for any reason any Party's process agent is unable to act as such, such
Party will promptly notify the other Party and within thirty (30) days will
appoint a substitute process agent acceptable to the other Party.
12.3 Waiver of Jury Trial. Each Party irrevocably waives
any and all right to trial by jury in any Proceedings.
12.4 Waiver of Immunities. Each Party irrevocably waives,
to the fullest extent permitted by applicable law, with respect to itself and
its revenues and assets (irrespective of their use or intended use), all
immunity on the grounds of sovereignty or other similar grounds from (i)
suit, (ii) jurisdiction of any court, (iii) relief by way of injunction,
order for
specific performance or for recovery of property, (iv) attachment of its
assets (whether before or after judgment) and (v) execution or
enforcement of any judgment to which it or its revenues or assets might
otherwise be entitled in any Proceedings in the courts of any jurisdiction
and irrevocably agrees, to the extent permitted by applicable law, that it
will not claim any such immunity in any Proceedings.
XXXXXX XXXXXXX & CO. INCORPORATED
By /S/ G. Xxxxxxx Xxxxx, Jr. ___________
Name: G. Xxxxxxx Xxxxx, Jr.
Title:
Xxxxxx Xxxxxxx Charter Xxxxxxxx X.X.
By_/s/ Xxxxxx X. Murray_______________
Name: Xxxxxx X. Xxxxxx
Title:
I. SCHEDULE
Schedule to the International Foreign Exchange and Options Master
Agreement
dated as of August 1, 2002 (the ?Agreement?)
between Xxxxxx Xxxxxxx & Co. Incorporated ("Party A")
and Xxxxxx Xxxxxxx Charter Xxxxxxxx X.X. ("Party B").
Part I. Scope of the Agreement
The Agreement shall apply to all FX Transactions
outstanding between any two Designated Offices of the
Parties on the Effective Date.
Part II. Designated Offices
Each of the following shall be a Designated Office:
Party A: New York
Party B:
Each Party (the "first Party") that enters into an FX
Transaction through a Designated Office other than its head
or home office represents to the other Party (the "second
Party") that, notwithstanding the place of booking office or
jurisdiction of incorporation or organization of the first
Party, the obligations of the first Party are the same as if it
had entered into the FX Transaction through its head or
home office. This representation will be deemed to be
repeated by the first Party on each date on which it enters
into an FX Transaction.
Part III. Notices
If sent to Party A:
Address: Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx, 0xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone Number: (000) 000-0000
Telex Number: 6801048 (Answerback: FXMS)
Facsimile Number: (000) 000-0000
SWIFT Number: XXXXXX00
Name of Individual or Department
to whom Notices are to be sent: Foreign Exchange Trading
Department
If sent to Party B:
Address:
Telephone Number:
Facsimile Number:
Name of Individual or Department to whom Notices are to
be sent:
Part IV. Payment Instructions
[X] Name of Bank and Office, Account Number and
Reference with respect to relevant Currencies: As specified
in the relevant Confirmation or as otherwise advised.
[X] With respect to each Party, as may be set forth in such
Standard Settlement Instructions as may be specified by
such Party in a notice given in accordance with Section
11.4.
Part V. Netting
A. Discharge of Options
Not Applicable
B. Netting of Premiums
Not Applicable
C. Settlement Netting Offices
Each of the following shall be a Settlement Netting Office:
Party A: Same as Part II.
Party B: Same as Part II.
Party A and Party B agree that, notwithstanding Section 6.2
of the Agreement, obligations to make payments pursuant to
FX Transactions shall only be netted, satisfied and
discharged against obligations to make payments arising out
of the same or other FX Transactions between a pair of
Settlement Netting Offices.
D. Novation Netting Offices
Each of the following shall be a Novation Netting Office:
Not applicable.
E. Matched Pair Novation Netting Offices
Each of the following shall be a Matched Pair Novation
Netting Office:
Not applicable.
Part VI. Automatic Exercise of Options; Cash Settlement of FX
Transactions
A. Automatic Exercise of Options
Not Applicable
B. Cash Settlement of FX Transactions
The following provision shall apply:
The definition of FX Transaction in Section 1 shall include
foreign exchange transactions for the purchase and sale of
one Currency against another but which shall be settled by
the delivery of only one Currency based on the difference
between exchange rates as agreed by the Parties as
evidenced in a Confirmation. Section 6.1 is modified so
that only one Currency shall be delivered for any such FX
Transaction in accordance with the formula agreed by the
Parties. Section 8.1(b)(i)(A) is modified so that the Close-
Out Amount for any such FX Transaction for which the
cash settlement amount has been fixed on or before the
Close-Out Date pursuant to the terms of such FX
Transaction shall be equal to the Currency Obligation
arising therefrom (increased by adding interest in the
manner provided in clause (A)(2) if the Value Date precedes
the Close-Out Date) and for any such FX Transaction for
which the cash settlement amount has not yet been fixed on
the Close-Out Date pursuant to the terms of such FX
Transaction, the Close-Out Amount shall be as reasonably
determined by Party A in accordance with market practice.
Part VII. Base Currency
Party A's Base Currency is U.S. Dollars.
Party B's Base Currency is U.S. Dollars.
Part VIII. Threshold Amount
For purposes of clause (x) of the definition of Event of
Default:
Party A's Threshold Amount is U.S.D. $10,000,000.
Party B's Threshold Amount is U.S.D. $10,000,000.
Part IX. Additional Events of Default
Not applicable.
Part X. Automatic Termination
The automatic termination provision of Section 8.1 shall not
apply to Party A as Defaulting Party in respect of clause (ii),
(iii) or (iv) of the definition of Event of Default.
The automatic termination provision of Section 8.1 shall not
apply to Party B as Defaulting Party in respect of clause (ii),
(iii) or (iv) of the definition of Event of Default; provided,
however where the Event of Default specified in clause (ii),
(iii), or (iv) is governed by a system of law which does not
permit termination to take place upon or after the
occurrence of the relevant Event of Default in accordance
with the terms of the Agreement, then the automatic
termination provisions of Section 8.1 will apply to Party B.
In addition to, and notwithstanding anything to the contrary
in the preceding sentence, if an Event of Default occurs as a
result of automatic termination, the Defaulting Party
hereby agrees to indemnify the Non-Defaulting Party on
demand against all loss or damage that the Non-Defaulting
Party may sustain or incur in respect of the Agreement and
each Currency Obligation (including in relation to
terminating, liquidating, obtaining or reestablishing any
hedge or related position to the extent not already taken into
account, in the calculations performed) as a result of
movements in relevant rates, prices, yields, yield curves,
volatilities, spreads or other relevant market data between
the Close-Out Date and the Business Day upon which the
Non-Defaulting Party first becomes aware that the Event of
Default has occurred, provided however, that if the Non-
Defaulting Party determines that any such movements have
actually resulted in a net, after tax, gain for the Non-
Defaulting Party then the Non-Defaulting Party agrees to
pay to the Defaulting Party the sum of such gain, subject to
any rights the Non-Defaulting Party may have under the
Agreement or otherwise.
Part XI. Adequate Assurances
Adequate Assurances under Section 11.14 shall not apply to
the Agreement.
Part XII. Governing Law
In accordance with Section 12.1 of the Agreement, the
Agreement shall be governed by the laws of the State of
New York.
Part XIII. Consent to Jurisdiction
Section 12.2 of the Agreement is amended by (i)
replacing clause (a) with: ?submits to the exclusive
jurisdiction of the courts of the State of New York and the
United States District Court located in the Borough of
Manhattan in New York City and? and (ii) deleting the last
sentence thereof.
Part XIV. Agent for Service of Process
Party A appoints the following as its agent for service of
process in any Proceedings in the State of New York: Not
applicable.
Party B appoints the following as its agent for
service of process in any Proceedings in State of New York:
Not applicable.
Part XV. Certain Regulatory Representations
A. The following FDICIA representation shall apply:
1. Party A represents and warrants that it qualifies as a
"financial institution" within the meaning of the Federal
Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") by virtue of being a:
[ X ] broker or dealer within the meaning of FDICIA;
[ ] depository institution within the meaning of FDICIA;
[ X ] futures commission merchant within the meaning of
FDICIA;
[ ] "financial institution" within the meaning of
Regulation EE (see below).
2. Party B hereby represents and warrants that it qualifies as a
"financial institution" by virtue of being a:
[ ] broker or dealer within the meaning of FDICIA;
[ ] depository institution within the meaning of FDICIA;
[ ] futures commission merchant within the meaning of
FDICIA;
[ ] "financial institution" within the meaning of
Regulation EE (see below).
3. A Party representing that it is a "financial institution" as that
term is defined in 12 C.F.R. Section 231.3 of Regulation EE
issued by the Board of Governors of the Federal Reserve
System ("Regulation EE") represents that:
(a) it is willing to enter into "financial contracts" as a
counterparty "on both sides of one or more financial
markets" as those terms are used in Section 231.3 of
Regulation EE; and
(b) during the 15-month period immediately preceding
the date it makes or is deemed to make this
representation, it has had on at least one (1) day
during such period, with counterparties that are not its
affiliates (as defined in Section 231.2(b) of
Regulation EE) either:
(i) one or more financial contracts of a
total gross notional principal amount
of $1 billion outstanding; or
(ii) total xxxxx xxxx-to-market positions
(aggregated across counterparties) of
$100 million; and
(c) agrees that it will notify the other Party if it no longer
meets the requirements for status as a financial
institution under Regulation EE.
4. If both Parties are financial institutions in accordance with
the above, the Parties agree that the Agreement shall be a
netting contract, as defined in 12 U.S.C. Section 4402(14),
and each receipt or payment or delivery obligation under the
Agreement shall be a covered contractual payment
entitlement or covered contractual payment obligation,
respectively, as defined in FDICIA.
B. The following ERISA representation shall apply:
Each Party continuously represents that it is not (i) an employee
benefit plan (hereinafter an "ERISA Plan"), as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), subject to Title I of ERISA or a
plan subject to Section 4975 of the Internal Revenue Code of
1986, as amended, or subject to any other statute, regulation,
procedure or restriction that is materially similar to Section 406
of ERISA or Section 4975 of the Code (together with ERISA
Plans, ?Plans?), (ii) a person acting on behalf of a Plan or (iii) a
person any of the assets of whom constitute assets of a Plan.
Each Party will provide notice to the other Party in the event that
it is aware that it is in breach of any aspect of this representation
or is aware that with the passing of time, giving of notice or
expiry of any applicable grace period it will breach this
representation.
C. The following Commodity Exchange Act representation shall
apply:
Each Party represents and warrants that it is an ?eligible
contract participant? under, and as defined in, Section 1(a)(12) of
the Commodity Exchange Act, and was not formed solely for the
purposes of constituting an ?eligible contract participant.?
Part XVI. Representations and Warranties:
In addition to the representations and warranties set forth in
Section 7.1 of this Agreement, each Party hereby represents and
warrants to the other Party on the date hereof and on the date of
each FX Transaction, as the case may be, that: (a) it is a
sophisticated investor able to evaluate and assume the risks
associated with transactions in currencies as contemplated by
the Agreement; (b) it is not relying upon any representations
(whether written or oral) of the other Party other than the
representations expressly set forth in the Agreement, this
Schedule, any Credit Support Document or in any
Confirmation; (c) its execution and delivery of the Agreement,
and its performance of its obligations hereunder, do not and will
not conflict with any law or regulation of the jurisdiction of its
organization or other law or regulation applicable to it, and do
not and will not violate, constitute a default under, or result in
the creation or imposition of any lien or encumbrance on any of
its property or assets under any agreement or instrument to
which it is a party or by which its assets are bound; (d) no
consent, authorization or approval (including exchange control
approval) or other action by, and no notice to or filing with, any
person or entity, including any governmental authority or
regulatory body, other than any already obtained, made or filed
and remaining in full force and effect, and the conditions of
which have been duly complied with, is required in connection
with the performance of its obligations under the Agreement;
and (e) there are no actions, proceedings or claims pending or,
to the best of its knowledge, threatened, the adverse
determination of which might have a materially adverse effect
on its ability to perform its obligations under, or affect the
validity or enforceability of, the Agreement.
Part XVII. Agreement Superseding
A new Section 11.16 shall be added to the Agreement which
shall read as follows: "The Agreement shall supersede any
other agreement between the Parties with respect to the
subject matter hereof."
Part XVIII. 1998 FX and Currency Option Definitions.
The 1998 FX and Currency Option Definitions as published
by ISDA, EMTA and The Foreign Exchange Committee (the
?Definitions?) shall be applicable to each FX Transaction
under the Agreement, including any FX Transaction
outstanding on the date hereof, subject to the following:
A. Definitions
1. The term ?Agreement? in Section 2.2 of the
Agreement shall include the Agreement as modified
and supplemented by this Part.
2. The term ?FX Transaction? in the Definitions or in a
Confirmation shall in all cases be considered
references to an ?FX Transaction? under the
Agreement.
3. All terms in this Part shall have the meanings given
them above or in the Definitions, unless not defined
above or in the Definitions, in which case the term
shall have the meaning given in the Agreement.
B. Scope
1. Notwithstanding the absence of any reference to the
Definitions in a Confirmation, this Part and the
Definitions shall be applicable to any FX Transaction
covered by the Agreement; provided that the Parties
may agree otherwise for any Transaction as
evidenced by a Confirmation that complies with
Section 2.3 of the Agreement.
2. In the event of any inconsistency between the
Definitions and a Confirmation, the terms of the
Confirmation shall govern for the purpose of the
relevant Transaction. In the event of any
inconsistency between the Definitions and the
Agreement, the Definitions shall prevail.
C. Confirmations
Notwithstanding Sections 2.4 and 11.12 of the Agreement, in
the event of any inconsistency between the terms of a
Confirmation for an FX Transaction and the Agreement, the
terms of the Confirmation shall prevail.
D. Disruption Events
With respect to any Disruption Event that is applicable to an
FX Transaction pursuant to the Definitions or as otherwise
agreed by the Parties as evidenced by a Confirmation, Section
9 of the Agreement shall not be applicable in respect of such
FX Transaction, and the Parties shall be subject to the
Disruption Fallbacks (including but not limited to No Fault
Termination) specified as applicable pursuant to the
Definitions or such Confirmation.
E. Miscellaneous
The provisions of Part VI.B of this Schedule relating to cash
settlement of FX Transactions shall apply to Non-Deliverable
FX Transactions.
Part XIX. Force Majeure, Act of State, Illegality and Impossibility
Section 9 of the Agreement is hereby amended by deleting it
in its entirety and inserting in its place the following
replacement Section:
?9.1 Liquidation Rights. If a Force Majeure Event
occurs and is still in effect, then (but subject to Section 9.2)
either Party may, by notice to the other Party on any day or
days after the Waiting Period expires, require the close-out
and liquidation of the Currency Obligations under any or all of
the Affected Transactions in accordance with the provisions of
Section 8.1 and, for such purposes, the Party unaffected by
such Force Majeure Event shall perform the calculation
required under Section 8.1 as if it were the Non-Defaulting
Party (or, if both Parties are Affected Parties, but Parties shall
so calculate in respect of all Affected Transactions which
either Party determines to liquidate and the average of the
amounts so determined shall be the relevant amount in respect
of each Affected Transaction, except that if a Party fails to so
determine an amount, the amount determined by the other
Party shall govern). If a Party elects to so liquidate less than
all Affected Transactions, it may liquidate additional Affected
Transactions on a later day or days if the relevant Force
Majeure Event is still in effect.
9.2 Waiting Period. If the Value Date of an FX
Transaction which is an Affected Transaction, under Section
9.1 falls during the Waiting Period of the relevant Force
Majeure Event, then such Value Date will be deferred to the
first Business Day (or the first day which, but for such event,
would have been a Business Day) after the end of that
Waiting Period (or, in the case of Split Settlement, the first
Local Banking Day or the first day which, but for such event,
would have been a Local Banking Day, after the end of the
Waiting Period). Compensation for this deferral shall be at
then current market rates as determined in a commercially
reasonable manner by the calculating Party or Parties under
Section 9.
9.3 Notice by Affected Party. If a Force Majeure
Event has occurred, an Affected Party shall promptly give
notice thereof to the other Party.
9.4 Force Majeure Event and Event of Default.
Nothing in this Section 9 shall be taken as indicating that the
Party treated as the Defaulting Party for the purpose of
calculations required by Section 8.1 has committed any breach
or default. If an event occurs that would otherwise constitute
both a Force Majeure Event and an Event of Default, that
event will be treated as a Force Majeure Event and will not
constitute an Event of Default.?
In addition, the following definitions shall be added to Section
1 of the Agreement:
??Force Majeure Event?, on any day determined as if
such day were a Value Date of an FX Transaction (even if it is
not), means (i) either Party, by reason of force majeure or act
of state, is prevented from or hindered or delayed in delivering
or receiving, or it is impossible to deliver or receive, any
Currency in respect of a Currency Obligation, and which event
is beyond the control of such Party and which such Party, with
reasonable diligence, cannot overcome, or (ii) it is unlawful
for either Party to deliver or receive a payment of any
Currency in respect of a Currency Obligation. A Party whose
delivery or receipt of Currency has been or would be so
prevented, hindered or delayed or made unlawful or
impossible is an ?Affected Party?, and an FX Transaction
under which performance has been or would be so prevented,
hindered or delayed or made unlawful or impossible is an
?Affected Transaction?, unless the Parties have expressly
agreed in an Agreement, another writing or in regard to a
particular FX Transaction that other disruption events or
disruption fallbacks will apply to that FX Transaction; in such
event, that FX Transaction will be subject to such disruption
events or disruption fallbacks as the Parties have otherwise
agreed.
?Waiting Period?, in respect of a Force Majeure
Event, means that first three days after such event occurs
which are Business Days or which, but for such event, would
have been Business Days.??
Part XX. Margin and Security
A. Party B shall at all times maintain with Party A cash and
securities acceptable to Party A (together, the "Margin") in
order to secure the obligations of Party B under all open FX
Transactions entered into under the Agreement. The
amount of Margin which Party B shall maintain with Party
A shall be determined by Party A in its reasonable judgment
(which determination shall be conclusive in the absence of
manifest error), on a risk adjusted basis, taking into account
historical volatility, imputed volatility and/or such other
factors as Party A reasonably deems relevant to this
determination (the "Aggregate Margin Requirement"). On
or prior to the date of the Agreement, Party B shall have
established a pledge account with Party A (the "Account")
for the purpose of holding custody of the Margin in
accordance with the provisions of the Agreement. Party B's
failure to deposit Margin or to establish the Account as
required herein shall be an Event of Default for all purposes
under the Agreement (it being understood that there shall be
no grace period with respect to obligations of Party B
pursuant to this Part XX. Party A shall settle all FX
Transactions with Party B on a secured basis only, such that
Party A's payment obligations to Party B shall be made (a)
prior to receipt of Party B's counterpayment thereunder,
only to the extent that the amount by which Margin in the
Account exceeds the Aggregate Margin Requirement is
greater than such counterpayment or the U.S. Dollar
equivalent thereof, or (b) after Party A has confirmed receipt
of Party B's counterpayment thereunder.
B. Whenever such Aggregate Margin Requirement shall
exceed the market value of Margin on deposit with Party A
in the Account as determined by Party A at such time in its
reasonable judgment and which determination shall be
conclusive in the absence of manifest error (the "Margin
Balance", and the difference between such Aggregate
Margin Requirement and the Margin Balance being the
"Shortfall"), then Party B shall deposit immediately upon
Party A's request, additional Margin in an amount at least
equal to such Shortfall.
C. In furtherance of the foregoing, as security for the prompt
and complete payment when due and the performance by
Party B of all of its obligations to Party A under the
Agreement, Party B hereby grants to Party A a continuing
first priority security interest in and to all of Party B's right,
title and interest in and to the Margin, the Account, all
financial assets, investment property and other property and
assets which are deposited from time to time in, or credited
from time to time to, the Account, all security entitlements
in respect thereof, all income and profits thereon, all
interest, dividends and other payments and distributions
with respect thereto, and all proceeds of any of the
foregoing (the ?Margin Collateral?). In addition,
Party B hereby grants to Party A and its affiliates a first
priority security interest in and to any property of Party B at
any time held by Party A or any affiliate of Party A for any
purpose, including, without limitation, any property of Party
B held in any account with Party A or any affiliate of Party
A, any financial assets, investment property and other
property and assets which are deposited from time to time
in, or credited from time to time to, any such account, all
security entitlements in respect thereof, all income and
profits thereon, all interest, dividends and other payments
and distributions with respect thereto, and all proceeds of
any of the foregoing (the ?Collateral?), to secure all
obligations of Party B to Party A. If Collateral was
delivered in connection with a particular agreement between
Party B and Party A or any of its affiliates, then such
Collateral shall secure first the obligations of Party B with
respect to such agreement and second all other obligations
of Party B to Party A or any of its affiliates (in such order as
Party A shall determine in its sole discretion). Party A and
its affiliates and Party B hereby each acknowledge and
agree that each of Party A and its affiliates which holds
Collateral holds such Collateral for itself and also as agent
and bailee for all other of Party A and its affiliates which are
secured parties hereunder or under any agreement between
Party B and Party A or any of its affiliates. If an Event of
Default hereunder shall occur, then each of Party A and its
affiliates shall be entitled to retain or sell all Collateral as
security for Party B's obligations, even if otherwise required
pursuant to the terms of an agreement or otherwise to
deliver any Collateral to Party B or Party B's order. The
parties agree that Party A and its affiliates shall have the
rights and remedies of a secured creditor under the New
York Uniform Commercial Code (the "UCC") and under
any other applicable law or agreement to exercise any right
with respect to the Margin Collateral and the Collateral
subject to the security interest granted under the Agreement.
Each of Party A or any of its affiliates shall have free and
unrestricted use of any Margin Collateral and/or Collateral
which it holds hereunder, including, without limitation, the
right, from time to time and without notice to Party B, to
sell, pledge, repledge, hypothecate, rehypothecate, assign,
invest, use, commingle or otherwise dispose of, or otherwise
use in its business any Margin Collateral and/or Collateral
separately or in common with other securities, commodities
or other property, for the sum due to any of Party A or any
of its affiliates or for a greater sum on terms which may
otherwise impair the right of Party B to redeem
such Margin Collateral and/or Collateral, and free from any
other right of claim of any nature whatsoever of Party B,
and without retaining possession and control for delivery a
like amount of similar securities, commodities, or other
property.
D. Party B represents and warrants that it owns the Margin
Collateral and the Collateral to be pledged and assigned to
each of Party A and its affiliates hereunder and
under any other agreement between Party B and Party A or
any of its affiliates, free and clear of any liens, equities,
claims (including, without limitation, participation interests)
and transfer restrictions. Party B covenants and agrees that
it will not sell, assign, transfer, exchange or otherwise
dispose of, or grant any option with respect to, any of the
Margin Collateral or the Collateral, nor will it create, incur
or permit to exist any lien on or with respect to any of the
Margin Collateral or the Collateral, any interest therein, or
any proceeds thereof, except for the security interests
created under this Agreement or otherwise under any
agreement between Party B and Party A or any of its
affiliates. Any purported sale, assignment, transfer,
exchange, disposition, grant or lien of the Margin Collateral
or the Collateral by Party B that is not permitted under the
foregoing sentence shall be null and void and shall
constitute an Event of Default hereunder and under any
agreement between Party B and Party A or any of its
affiliates immediately prior to the taking of any such action,
if Party A so deems (it being understood that there shall be
no grace period with respect to obligations of Party B
pursuant to this Part XX).
E. Party B shall, in its sole expense and as Party A in its sole
discretion may deem necessary or advisable from time to
time, (i) to create, preserve, protect and perfect the security
interests granted under the Agreement and (ii) to enable
Party A to exercise and enforce its rights with respect to
such security interests, do all acts and things and execute
and deliver all documents and instruments in such manner
and form as Party A may require, including without
limitation UCC financing statements and continuation
statements. Party B hereby appoints Party A as its true and
lawful attorney-in-fact, including without limitation, to sign
and file such documents and instruments on Party B's behalf
and without Party B's signature; such appointment, being
coupled with an interest, shall be irrevocable. Without
limitation on the foregoing, Party B agrees to take such
action as Party A in its sole discretion may deem necessary
or advisable in the event of any change in applicable law,
including, without limitation, Articles 8 and 9 of the UCC
and the Regulations of the Department of the Treasury and
other governmental bodies governing transfers of interests
in U.S. marketable treasury securities in book-entry form.
F. The parties hereto agree that each of the Account and any
account in which any Collateral is held or to which any
Collateral is credited (a ?Collateral Account?) is a
?securities account? within the meaning of Article 8 of
the UCC and that all property and assets (including,
without limitation, cash) held in or credited to (i) the
Account or (ii) any Collateral Account shall be treated as
a "financial asset" for purposes of Article 8 of the UCC.
Part XXI. Miscellaneous
Trading Authorization for FX Transactions and Options
Party B hereby makes the following additional representations
and warranties, which shall continue during the term of any FX
Transaction and Option:
(i) Party B has duly authorized [ADVISOR] (the ?Agent?)
to enter into FX Transactions and Options on its behalf
and to take all requisite action on behalf of Party B
contemplated by and in connection with the
Agreement. Party B has designated the Agent as its
agent for performance of its obligations to Party A and
for receipt of performance by Party A of its obligations
to Party B in connection with any FX Transactions and
Options under the Agreement (including, among other
things, as agent for Party B in connection with transfers
of cash or other property and as agent for giving and
receiving of all notices under the Agreement). Party B
hereby agrees that it shall have in connection with any
FX Transaction and Option entered into by the Agent
on its behalf, the rights, responsibilities, privileges and
obligations of a "Party" directly entering into such FX
Transactions with Party A under the Agreement.
(ii) Party B shall indemnify Party A against any damages
incurred by Party A as a consequence of the failure of
the above representations made by Party B to be true at
any time made or deemed to be made, or for Agent?s
failure to act as contemplated by the Agreement.
(iii) This authorization shall continue in full force and
effect, and may be relied upon by Party A, unless
terminated by Party B by giving two (2) Business
Day?s written notice (by telex or facsimile) of such
termination to Party A. Party B will remain fully
responsible for any transactions effected by Party A for
Party B prior to the valid termination of this authority.
XXXXXX XXXXXXX & CO. INCORPORATED
By /S/ G. Xxxxxxx Xxxxx, Jr. _______________
Name:
Title:
Xxxxxx Xxxxxxx Charter Xxxxxxxx X.X., as Party B
By /s/ Xxxxxx X. Xxxxxx
Name:
1965:
1966
CUSTODIAN ACCOUNT ADDENDUM
This Addendum supplements, forms part of, and is subject
in all respects to, the Foreign Exchange and Options Master
Agreement (FEOMA) including the Schedule thereto (the
?Schedule?) dated as of August 31, 2002 by and between
Xxxxxx Xxxxxxx & Co. Incorporated and Xxxxxx Xxxxxxx
Charter Xxxxxxxx X.X. (collectively, the ?Agreement?), and
is a part of the Schedule with respect to each party;
provided, however, as used herein, ?Pledgor? means Party
B and ?Secured Party? means Party A (as defined in the
Agreement). Other capitalized terms used herein, unless
otherwise defined, have the meanings specified in the
Agreement. With respect to the rights or obligations of the
Secured Party or the Pledgor, in the event of any
inconsistencies between this Addendum and the
Agreement, the Agreement will prevail.
Having appointed Xxxxxx Xxxxxxx XX Inc. (the
?Custodian?) to hold Margin for and on behalf of the
Secured Party, the Secured Party, the Pledgor and the
Custodian (solely to the extent of the duties it has agreed to
undertake and perform hereunder) agree as follows:
A. In all respects, the rights of the Secured
Party under the Schedule with respect to
Margin shall not be affected by the
appointment of a Custodian hereunder. The
provisions of this Addendum in no way
diminish or otherwise affect the rights of the
Secured Party under the Agreement.
B. The Secured Party, by written notice to the
Custodian, may exercise all powers, and
exercise any and all rights and remedies
permitted under the Schedule as though the
Secured Party was taking such action
directly, and the Custodian will comply
with, and be entitled to rely on, all such
instructions (including, without limitation,
entitlement orders) as if such instructions
were provided by the parties jointly.
C. As used herein, the following terms have the
following meaning:
?Advice from the Secured Party? or ?Advice? means a
written notice sent to the Pledgor and/or the Custodian or
transmitted by a facsimile sending device by any of those
individuals designated by the Secured Party, except that for
any of the following purposes it shall mean notice by
telephone to a person designated by the Pledgor in
writing as authorized to receive such advice or, in the event
that no such person is available, to any officer of the
Pledgor and confirmed promptly in writing thereafter: (i)
for initial or additional Margin; (ii) that the Secured Party
has issued a Notice of Exercise with respect to an Option;
or (iii) that the Pledgor has failed to give notice of intent to
make payment of amounts or deliveries as required under
Paragraph 5 of this Addendum. With respect to any
covering purchase transaction, the Advice from the Secured
Party shall mean a Confirmation in use by the Secured
Party and sent or transmitted to the Pledgor and/or the
Custodian. When used herein the term ?Advise? means the
act of sending an Advice from the Secured Party.
D. The Custodian shall open an account on its
books entitled ?Special Custody Account for
Xxxxxx Xxxxxxx Charter Xxxxxxxx X.X.
(referred to herein as the ?Special Custody
Account?).
The parties hereto agree that all property and assets held in
or credited to the Special Custody Account will be treated
as financial assets under Article 8 of the Uniform
Commercial Code as in effect in the State of New York
(the ?UCC?). The parties hereto further agree that the
securities intermediary?s jurisdiction, within the meaning of
Section 8-110(e) of the UCC, in respect of the Special
Custody Account and the Margin is the State of New York
and agree that none of them has or will enter into any
agreement to the contrary.
Anything in this Addendum notwithstanding, the Custodian
hereby agrees to comply with entitlement orders and other
instructions of the Secured Party with respect to the Special
Custody Account and any Margin without further
consent of the Pledgor. The Pledgor hereby consents to
such agreement.
The Custodian represents and warrants that it has not, and
agrees that it will not, agree to comply with entitlement
orders concerning the Special Custody Account or any
Margin that are originated by any person other than the
Secured Party.
The Pledgor agrees to inform the Custodian in writing that
cash and securities specified by the Pledgor as qualifying as
Margin and equal in value to the Aggregate Margin
Requirement are to be identified on the Custodian?s books
and records as pledged to the Secured Party. The
Custodian will hold the Margin in, and credit the Margin to,
the Special Custody Account, separate and apart from any
other property of the Pledgor that may be held by the
Custodian, subject to the interest therein of the Secured
Party as the Pledgee thereof in accordance with the terms of
the Agreement. The Custodian continuously represents that
Margin will not be subject to any other lien, charge,
security interest or other right or claim of the
Custodian or any person claiming through the Custodian.
The Custodian will confirm in writing to the Secured Party
and the Pledgor all pledges, releases, substitutions or
distributions of Margin permitted under the Agreement, and
will inform the Secured Party upon request of the kind and
amount of Margin pledged to the Secured Party.
E. In the event that (i) the Secured Party
advises the Pledgor in an Advice from the
Secured Party that the Secured Party has
exercised an Option sold by the Pledgor and
the Pledgor does not promptly notify the
Secured Party by telephone of the Pledgor?s
intention to comply with the Notice of
Exercise by making payment or delivery, as
the case may be, as required under the terms
of such Option plus payment of applicable
commissions or other charges; or (ii) the
Pledgor, having received such Notice of
Exercise, fails to make such payment or
delivery, or cause such payment or delivery
to be made, then the Secured Party will
immediately notify the Pledgor in an Advice
from the Secured Party of such failure to
give telephone notice or failure to
make payment or delivery, as applicable,
and may, after transmittal of an Advice from
the Secured Party of its intention to do so
and only if the Pledgor does not promptly
make payment or delivery to the Secured
Party, direct the Custodian to take any action
necessary to fully satisfy Pledgor?s
obligations to the Secured Party, including
any of the Secured Party?s rights and
remedies under Part XX of the Schedule.
F. With respect to any losses or liabilities, the
Custodian shall be protected in acting
pursuant to any instructions from the
Pledgor as a result of any actions taken
under this Addendum, or any other action
taken or not taken by the Secured Party
believed by the Custodian in good faith to be
genuine and authorized. The Pledgor agrees
to indemnify the Custodian for, and hold it
harmless against any loss, liability or
expense incurred by the Custodian, without
negligence or bad faith on the part of the
Custodian, arising out of this Addendum.
G. The Secured Party shall not be liable for any
losses, costs, damages, liabilities or
expenses suffered or incurred by the Pledgor
as a result if any actions taken under this
Addendum, or any other action taken or not
taken by the Secured Party hereunder for the
Pledgor?s account at the Pledgor?s direction
or otherwise, except to the extent that such
loss, cost, damage, liability or expense is the
result of the Secured Party?s own
recklessness, willful misconduct or bad
faith.
H. The Pledgor continuously represents and
warrants to the Secured Party that securities
included at any time in the Margin shall be
in good deliverable form (or Custodian shall
have the unrestricted power to put such
securities into good deliverable form) in
accordance with the requirements of such
exchanges as may be the primary market or
markets for such securities. Each of
the Pledgor, the Secured Party and the
Custodian continuously represents and
warrants that:
1. it has duly executed and delivered
this Addendum, and has all requisite
power, authority and approvals to
enter into and perform its obligations
hereunder; and
2. this Addendum is its valid and
legally binding obligation,
enforceable against it in accordance
with its terms, subject to the effect of
bankruptcy, insolvency,
reorganization, moratorium and other
similar laws relating to or affecting
creditors? rights generally and to
general equitable principles.
The Secured Party and the Pledgor hereby acknowledge
that the Custodian holds securities and cash as custodian
for its customers through sub-custodians, depositaries and
deposit-taking banks which maintain omnibus accounts on
behalf of customers of the Custodian. Securities held in the
Special Custody Account may be held at the Depository
Trust Company or other book-entry depository systems in
the account of the Custodian, save that Margin
denominated in currencies other than US Dollars may be
held by a sub-custodian for the Custodian other than in
book-entry form. U.S. Treasury securities shall be held in a
Treasury/Reserve Automated Debt Entry System
(?TRADES?) Participant?s securities account of the
Custodian or of the Custodian?s sub-custodian for the
account of the Custodian at the Federal Reserve Bank.
I. A monthly statement will be provided by the
Custodian to the Secured Party and the
Pledgor listing all Margin held in the Special
Custody Account. The Custodian will also
advise the Secured Party upon request, at
any time, of the kind and amount of Margin
pledged to the Secured Party. It is agreed
that, notwithstanding any language to the
contrary in Custodian?s form of
confirmation, the Custodian holds the
Margin as agent of the Secured
Party as pledgee hereunder, not as escrow
agent. The Custodian makes no
representations as to the existence,
perfection or enforceability of any security
interest, charge, lien or other rights of the
Pledgor in or to the Margin.
J. The Pledgor shall pay the Custodian as
compensation for its services pursuant to
this Addendum such compensation as may
from time to time be agreed upon in writing
between the Pledgor and the Custodian.
K. No amendment to this Addendum shall be
effective unless in writing and signed by an
authorized officer of each of the Secured
Party, the Pledgor, and the Custodian.
L. This Addendum may be executed in one or
more counterparts, all of which together
shall constitute but one and the same
instrument.
M. Any of the parties hereto may terminate the
custodial relationship by notice, give at least
10 business days prior to the date of such
intended termination, in writing to the other
parties hereto; provided, however, that
should the Custodian or the Pledgor seek to
terminate, then the Pledgor must designate a
replacement Custodian, which the Secured
Party has, in the exercise of its sole
discretion, approved. Custodian agrees to
remain as the Custodian until such time as a
replacement Custodian has been approved
and such replacement Custodian has agreed
o the terms of its service hereunder and
under the Agreement.
Written communications hereunder shall be sent in
the manner specified in the agreement address:
a. If to Custodian, to:
Xxxxxx Xxxxxxx XX Inc.
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
b. If to the Pledgor, to:
Xxxxxx Xxxxxxx Charter Xxxxxxxx X.X.
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
W/copy to: Xxxxxx Xxxxxxx
x. If to the Secured Party, to:
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Foreign Exchange Trading
Desk
Phone: (000) 000-0000
Fax: (000) 000-0000
N. This Addendum will be governed by the
laws of the State of New York applicable to
transactions entered into and to be
performed wholly within the State of New
York.
XXXXX
N
XXXX
XXX
CHAR
TER
CAMP
XXXX
X.X.
By: /s/
Xxxxxx
X
Xxxxxx
Name:
Title:
XXXXX
N
XXXX
XXX
& CO.
INCO
RPOR
ATED
By: /s/ G.
Xxxxxx
x
Xxxxx,
Xx.
Name:
Title:
XXXXX
N
XXXX
XXX
DW
INC.
(for
purpo
ses of
this
Adden
dum)
By: /s/
Xxxxxx
X
Xxxxxx
Name:
Title:
CWT\NYLIB1\656531.2
