HomeMy WebLinkAboutOrdinance 14339;tr _
ORDINANCE NO I~3 9
ORDINANCE AUTHORIZING THE EXECUTION AND
DELIVERY OF ONE OR MORE INTEREST RATE SWAP AGREEMENTS
IN "CONNECTION WITH THE CITY OF FORT WORTH, TEXAS
WATER AND SEWER SYSTEM SUBORDINATE LIEN REVENUE BONDS,
SERIES 1999A, AND ORDAINING OTHER MATTERS IN RESPECT THERETO
THE STATE OF TEXAS
COUNTIES OF TA.RRANT AND DENTON
CITY OF FORT WORTH
WHEREAS, the City of Fort Worth, Texas (the "City" or the "Issuer"), a "home-rule" cnty
operatmg under ahome-rule charter adopted pursuant to Section 5 of Article XI of the Texas
Constitution, wnth a population according to the latest federal decennial census of m excess of
50,000, has established and currently owns and operates a combnned waterworks and sanitany sewer
system (the "System"); and
WHEREAS, Chapter 1371, Texas Government Code ("Chapter 1371 ") authorizes the Cnty
Councnl of the City to execute and deliver "credit agreements at or after the issuance of obligations
or in conjunction with the payment, sale, resale, or exchange of obligations to enhance the security
for or provide for the payment, redemptnon, or remarketing of the obligatnons and nnterest on the
obligatnons", and
WHEREAS, the Cnty currently has outstanding its Water and Sewer System Subordinate
Lien Revenue Bonds, •Senes 1999A, in the aggregate principal amount of $61,750,000 (the
"Bonds"), and
WHEREAS, the Bonds are secured by a lnen on and pledge of the "Pledged Revenues" of the
City's Water and Sewer System (the "System"); and
WHEREAS, the City's financnal advisors have recommended to the City Council and Cnty
management that in connection with the economic and efficnent operation of the System, and to
enhance the security for or provide for the payment of the principal of and interest on the Bonds, rt is
advisable that the Crty enter into an "ISDA Master Agreement", in substantially the form attached
hereto (the "MSCS Interest Rate Swap Agreement"), with Morgan Stanley Capital Services, Inc.
("MSCS") and an "ISDA Master Agreement", nn substantially the form attached hereto (the "RFP
Interest Rate Swap Agreement"), with Rice Financnal Products, Inc. ("RFP"); and
WHEREAS, the MSCS Interest Rate Swap Agreement and the RFP Interest Rate Swap
Agreement are collectively referred to herenn as the "Interest Rate Swap Agreements", and MSCS
and RFP are individually referred to herein as a "Provider" and are collectively referred to herein as
the "Providers", and
WHEREAS, each Interest Rate Swap Agreement constitutes a "credit agreement" and the
Bonds constitute"obligations", as said terms are used in Chapter 1371, and `~
WHEREAS, the Interest Rate Swap Agreements hereinafter authorized shall be executed,
issued and delivered pursuant to Chapter 1371, for the purposes set forth above; and
WHEREAS, defined terms not otherwise defined in this Ordinance shall have the meanings
given said terms in the Interest Rate Swap Agreements.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
FORT WORTH, TEXAS
SECTION 1 GROSS REVENUES The City Council hereby declares that the payments
received by the City from the Providers under each Interest Rate Swap Agreement shall constitute
Gross Revenues for all purposes.
Section 2. INTEREST RATE SWAP AGREEMENTS AUTHORIZED That the execution
of each Interest Rate Swap Agreement, including the "Schedule to the Master Agreement" and the
"Confirmation" in substantially the form attached to each Interest Rate Swap Agreement, is hereby
approved. The City Manager, any Assistant City Manager and the Director of Finance each are
authorized to execute on behalf of the City the Interest Rate Swap Agreements, including the
documents attached thereto as described above, as well as all other documents necessary to
implement the Interest Rate Swap Agreements. Any of the aforesaid officers or employees of the
City may complete the Notional Amount, the Fixed Amount and the Floating Amount in any
Confirmation relating to each Interest Rate Swap Agreement. Any of the aforesaid officers or
employees of the City may, at any time during the term of each Interest Rate Swap Agreement,
execute one or more Confirmations with either Provider, or both Providers, under the terms and
conditions contained in each Interest Rate Swap Agreement, provided that (i) the aggregate amount
of Confirmations executed shall not result in the Notional Amount of all Confirmations exceeding
$61,750,000, (ii) if the City is paying the Floating Amount, the Floating Amount shall be based upon
the BMA Municipal Swap Index announced by Mumcipal Market Data (the "BMA Index") or, if the
BMA Index reflected in the documents no longer is published, an index that, in the opimon of the
Director of Finance, produces a substantially equivalent interest rate (provided, that the Floating
Amount may not exceed the maximum "net effective interest rate" as then permitted by Chapter
1204, Texas Government Code ("Chapter 1204")), (iii) if the City is paying the Fixed Amount, the
Fixed Amount may not exceed the maximum "net effective interest rate" as then permitted by
Chapter 1204, and (iv) the term of the Interest Rate Swap Agreements may not extend beyond March
1, 2020 Nothing in this Ordinance requires any of the aforesaid officers or employees of the City to
execute a Confirmation v~nth either Provider if, m the judgment of said officers or employees, the
terms proposed by either Provider to execute a Confirmation are not in the best financial interest of
the City
Section 3 FINDINGS The City Council finds and determines that the execution and
delivery of the Interest Rate Swap Agreements shall enhance the security for or provide for the
payment of the principal of and interest on the Bonds by providing for the receipt of fixed rate
payments which currently are estimated to exceed the variable rate payments to be made by the City
under the Interest Rate Swap Agreements, on an annual basis, by approximately $250,000 per year
for the term of the Interest Rate Swap Agreements. The City Council hereby further finds that any
f riding or determination by any officer or employee acting under authority delegated thereto by this
Ordinance in connection with a transaction under the Interest Rate Swap Agreements has the same
force and effect as a finding or determination made by the City Council.
Section 4 PLEDGE. That the payments to be made by the City under each Interest Rate
Swap Agreement are and shall be secured by and payable from a lien on and pledge of the Pledged
Revenues subordinate to the lien on and pledge of the Pledged Revenues securuig the payment of the
Bonds. The payments under each Interest Rate Swap Agreement are and will be secured by and
payable only from the Pledged Revenues as hereinabove described, and are not secured by or
payable from a mortgage or deed of trust on any properties, whether real, personal, or rruxed, consti-
tuting the System.
Section 5 PAYMENT ACCOUNT That in connection with the payment obligations to the
Providers under the terms of the respective Interest Rate Swap Agreements, the Director of Finance
shall establish an account on the books of the City in which there shall be deposited, on or before the
dates specified in each Interest Rate Swap Agreement, the amount necessary to satisfy the payment
obligations of the City thereunder
Section 6 ORDINANCE TO CONSTITUTE A CONTRACT, EQUAL SECURITY That
this Ordinance shall be deemed to be and shall constitute a contract between the City and the
Providers and the pledge made in this Ordinance by the City and the covenants and agreements set
forth in this Ordinance to be performed by the City shall be for the equal and proportionate benefit,
security, and protection of each Provider, without preference, priority, or distinction as to security or
otherwise of the Interest Rate Swap Agreements authorized hereunder over any of the others by
reason of time of issuance, sale, or maturity thereof or otherwise for any cause whatsoever, except as
expressly provided in or permitted by this Ordinance.
Section 7 SEVERABILITY OF INVALID PROVISIONS That if any one or more of the
covenants, agreements, or provisions herein contained shall be held contrary to any express
provisions of law or contrary to the policy of express law, though not expressly prohibited, or against
public policy, or shall for any reason whatsoever be held invalid, then such covenants, agreements,
or provisions shall be null and void and shall be deemed separable from the remauung covenants,
agreements, or provisions and shall in no way affect the validity of any of the other provisions hereof
or of the Interest Rate Swap Agreements authorized hereunder
Section 8 PAYMENT AND PERFORMANCE ON BUSINESS DAYS That, except as
provided to the contrary in either Interest Rate Swap Agreement, whenever under the terms of this
Ordinance, the performance date of any provision hereof or thereof, including the scheduled
payments to the Providers under the terms of the respective Interest Rate Swap Agreements, shall
occur on a day other than a Business Day, then the performance thereof, including such scheduled
payments, need not be made on such day but may be performed or paid, as the case may be, on the
next succeeding Business Day with the same force and effect as if made on the date of performance
or payment.
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Section 9 LMTATION OF BENEFITS WITH RESPECT TO THE ORDINANCE That
with the exception of the nghts or benefits herein expressly conferred, nothing expressed or contained
herein or implied from the provisions of this Ordinance is intended or should be construed to confer
upon or give to any person other than the City and the Providers, any legal or equitable nght, remedy,
or claim under or by reason of or in respect to this Ordinance or any covenant, condition, stipulation,
promise, agreement, or provision herein contained. This Ordinance and all of the covenants,
conditions, stipulations, promises, agreements, and provisions hereof are intended to be and shall be
for and inure to the sole and exclusive benefit of the City and the Providers as herein and therein
provided.
Section 10 FURTHER PROCEDURES That the Mayor, the City Manager, any Assistant
City Manager, the City Secretary, the City Attorney, any Assistant City Secretary, and the Director
of Finance, and all other officers, employees, and agents of the City, and each of them, shall be and
they are hereby expressly authorized, empowered, and directed from time to time and at any time to
do and perform all such acts and things and to execute, acknowledge, and deliver in the name and
under the seal and on behalf of the Issuer all such instruments, whether or not herein mentioned, as
may be necessary or desirable in order to carry out the terms and provisions of this Ordinance and
the Interest Rate Swap Agreements
Section 11 APPROVAL OF INTEREST RATE SWAP AGREEMENTS That the City
Manager of the City is hereby authorized to have control of the Interest Rate Swap Agreements and
all necessary records and proceedings pertaimng thereto pending the delivery thereof and the
investigation, examination and approval thereof by the Attorney General of the State of Texas
Section 12 PREAMBLE That the preamble to this Ordinance is hereby incorporated by
reference, and is to be considered a part of the operative text of this Ordinance
Section 13 IlVIlVIEDIATE EFFECT That this Ordinance shall be effective immediately from
and after its passage in accordance with the provisions of Section 2 of Chapter 25 of the Charter of
the Crty, and rt is accordingly so ordained.
SIGNED AND SEALED THIS 19~ DA OF SEPTEMBER, 2000
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Mayor,
City of Fort Worth, Texas , ;; - ` $~
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rty Secreta
APPROVED AS TO FORM AND LEGALITY
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Crty Attorney
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(Local Currrncy-Single Jurisdiction)
ISDA~
International Swap Dealers Association, [nc.
MASTER AGREEMENT
Dated as of September 19, 2000
City of Fort Worth, Texas and Morgan Stanley Capital Services, Inc
have entered and/or anticipate entering into one or more transactions (each a "Transaction') that are or will be
governed by this Master Agreement, which includes the schedule (the "Schedule"), and the documents and other
confirming evidence (each a "Confirmation") exchanged between the parttes confirming those Transactions.
Accordingly, the parties agree as follows: -
Interpretation
(a) Definitions. The terms defined in Section 12 and in the Schedule will have the meanings therein
specified for the purpose of this Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the provisions of the Schedule and the other
provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency between the
provisions of any Confirmation and this Master Agreement (including the Schedule), such Confirmation will
prevail for the purpose of the relevant Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on the fact that this Master Agreement
and all Confirmations form a single agreement between the parties (collectively referred to as this "Agreement"),
and the parties would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions
(i) Each party will make each payment or delivery specified in each Confirmation to be made by it,
subject to the other provisions of this Agreement.
(ii) Payments under this Agreement will be made on the due date for value on that date in the place
of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in freely
transferable funds and in the manner customary for payments in the required currency Where
settlement is by delivery (that is, other than by payment), such delivery will be made for receipt on the
due date in the manner customary for the relevant obligation unless otherwise specified in the relevant
Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition precedent that
no Event of Default or Potential Event of Default with respect to the other parry has occurred and is
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continuing, (2) the conduion precedent that no Early Termination Date in respect of the relevant
Transaction has occurred or been effectively designated and (3) each other applicable condition
precedent specified in this Agreement.
(b) Change of Account. Either parry may change its account for receiving a payment or delivery by giving
notice to the other party at least five Local Business Days prior to the scheduled date for the payment or delivery
to which such change applies uriless such other parry gives timely notice of a reasonable objection to such
change.
(c) ti'etting. !f on any date amounts would otherwise be payable: -
(r) rn the same currency; and
(ii) rn respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make payment of any such amount will
be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable
by one party exceeds the aggregate amount that would otherwise have been payable by the other parry, replaced
by an obligation upon the parry by whom the larger aggregate amount would have been payable to pay to the
other party the excess of the larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount will be determined in respect
of all amounts payable on the same date in the same currency it respect of such Transactions, regardless of
whether such amounts are payable in respect of the same Transaction. The election may be made in the Schedule
or a Confirmation by specifying that subparagraph (ii) above will not apply to the Transactions identified as
being subject to the election, together with the starturg date (in which case subpazagraph (ii) above will not, or
will cease to, apply to such Transactions from such date). This election may be made sepazately for different
groups of Transactions and will apply separately to each pairing of branches or offices through which the parties
make and receive payments or deliveries.
(d) Default Interest; Other Amounts. Prior to the occurrence or effective designation of an Eazly
Termination Date in respect of the relevant Transaction, a party that defaults in the performance of any payment
obligation will, to the extent permitted by law and subject to Section 6(c), be required to pay interest (before
as well as after judgment) on the overdue amount to the other party on demand in the same currency as such
overdue amount, for the period from (and including) the original due date for payment to (but excluding) the
date of actual payment, at the Default Rate. Such interest will be calculated on the basis of daily compounding
and the actual number of days elapsed If, prior to the occurrence or effective designation of an Eazly
Termination Date in respect of the relevant Transaaion, a party defaults in the performance of any obligation
required to be settled by delivery, it will compensate the other party on demand if and to the extent provided
for in the relevant Confirmation or elsewhere in this Agreement.
3. Representations
Each party represents to the other parry (which representations will be deemed to be repeated by each party on
each date on which a Transaction is entered into) that: -
(a) Basic Representations
(i) Status !t is duly organized and validly existing under the laws of the jurisdiction of its
organisation or incorporation and, if relevant under such laws, in good standing;
(ii) Powers. !t has the power to execute this Agreement and any other documentation relating to this
Agreement to which it is a parry, to deliver this Agreement and any other documentation relating to this
Agreement that rt is required by this Agreement to deliver and to perform iu obligations under this
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Agreement and any obligations tt has under any Credtt Support Document to which tt is a parry and
has taken all necessary actton to authorise such execution, delivery and performance:
(iii) No Violation or Conflict. Such execution, delivery and performance do not violate or conflict
wtth any law applicable to it, any provision of its constitutional documents, any order or judgment of
any court or other agency of government applicable to tt or any of its assets or any contractual
restriction btnding on or affecting it or any of its assets;
(iv) Consents. All governmental and other consents that are requtred to have been obtained by it wtth
respect to this Agreement or any Credit Support Document to which tt is a parry have been obtained
and aze in full force and effect and all conditions of any such consents have been complied with; and
(v) Obligations Binding. Its obligations under this Agreement and any Credit Support Document to
which tt is a parry constitute its legal, valid and btnding obligations, enforceable in accordance with
their respective terms (subject to applicable bankruptcy, reorganisation, insolvency, moratorium or
similar laws affectutg creditors rights generally and subject, as to enforceability, to equitable prrrtctples
of general application (regazdless of whether enforcement is sought in a proceeding in equity or at
law)).
(b) Absence of Certain Events. No .Event of Default or Potential Event of Default or, to its knowledge,
Termination Event with respect to it has occurred and is continuing and no such event or circumstance would
occur as a result of its enterutg unto or performing its obligations under this Agreement or any Credit Support
Document to which tt is a party
(c) Absence of Litigation. There is not pending or, to its knowledge, threatened against it or any of its
Affiliates any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body,
agency or official or any azbitrator that is likely to affect the legality, validity or enforceability against it of this
Agreement or any Credit Support Document to which it is a party or its ability to perform its obligations under
this Agreement or such Credit Support Document.
(d) Accuracy of Specified Information. All applicable information that is fiunished in writing by or on
behalf of it to the other party and is identified for the purpose of this Section 3(d) in the Schedule is, as of the
date of the information, true, accurate and complete in every material respect.
4. Agreements
Each party agrees with the other that, so long as either party has or may have any obligation under this
Agreement or under any Credit Support Document to which it is a party -
(a) Furnish Specified Information. It will deliver to the other parry any forms, documents or certificates
specified in the Schedule or any Confirmation by the date specified in the Schedule or such Confirmation or,
if none is specified, as soon as reasonably practicable.
(b) Maintain Authorisations. It will use all reasonable efforts to maintain in full force and effect all
consents of any governmental or other authority that are required to be obtained by it with respect to this
Agreement or any Credit Support Document to which it is a parry and will use all reasonable efforts to obtain
any that may become necessary in the future.
(c) Comply with Laws. It will comply in all material respects with all applicable laws and' orders to which
it may be subject if failure so to comply would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party
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Events of Default and Termination Events
(a) Events ojDefault. The occurrence at any time with respect to a parry or if applicable, anv Credit
Support Provider of such party or any Specified Entity of such party of any of the following events constitutes
an event of default (an "Event of Default") with respect to such paity• -
(i) Failure to Pay or Deliver Failure by the party to make, when due, any payment under this
Agreement or delivery under Section 2(a)(i) or 2(d) required to be made by it if such failure is not
remedied on or~before the Hurd Local Business Day after notice of such failure is given to the paity•
(ii) Breach of Agreement. Failure by the parry to comply with or perform any agreement or
obligation (outer than an obligation to make any payment under this Agreement or delivery under
Section 2(a)(i) or 2(d) or to give notice of a Termination Event) to be complied with or performed by
the parry in accordance with this Agreement if such failure is not remedied on or before the thirtieth
day after notice of such failure is given to the parry;
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider of such parry to comply with or perform
any agreement or obligation to be complied with or performed by it in accordance with any Credit
Support Document if such failure is continuing after any applicable grace period has elapsed;
(2) the expiration or termination of such Credit Support Document or the failing or ceasing of
such Credit Support Document to be in full force and effect for the purpose of this Agreement
(in either case other than in accordance with its terms) pnor to the satisfaction of all obligations
of such patty under each Transaction to which such Credit Support Document relates without the
written consent of the other party; or
(3) the parry or such Credit Support Provider disaffirms, disclaims, repudiates or rejects, in
whole or in part, or challenges the validity of, such Credit Support Document;
(iv) Misrepresentation. A representation made or repeated or deemed to have been made or repeated
by the parry or any Credit Support Provider of such party in this Agreement or any Credit Support
Document proves to have been incorrect or misleading in any material respect when made or repeated
or deemed to have been made or repeated;
(v) Dejault under Specifred Transaction. The party, any Credit Support Provider of such parry or
any applicable Specified Entity of such parry (I) defaults under a Specified Transaction and, after giving
effect to any applicable notice requirement or grace period, there occurs a liquidation of, an acceleration
of obligations under, or an early termination of, that Specified Transaction, (2) defaults, after giving
effect to any applicable notice requirement or grace period, in making any payment or delivery due on
the last payment, delivery or exchange date of-, or any payment on early termination of, a Specified
Transaction (or such default continues for at least three Local Business Days if there is no applicable
notice requirement or grace period) or (3) disaffirms, disclaims, repudiates or rejects, in whole or in
part, a Specified Transaction (or such action is taken by any person or entity appointed or empowered
to operate it or act on its behalfj;
(vi) Cross Dejault. If "Cross Default" is specified in the Schedule as applying to the party, the
occurrence or existence of (1) a default, event of default or other similar condition or event (however
described) in respect of such party, any Credit Support Provider of such parry or any applicable
Specified Entity of such party under one or more agreemenu or instruments relating to Specified
lndebtedness of any of them (individually or collectively) in an aggregate amount of not less than the
applicable Threshold Amount (as specified in the Schedule) whuch has resulted in such Specified
Indebtedness becoming, or becoming capable at such time of being declared, due and payable under
such agreements or instruments, before it would otherwise have been due and payable or (2) a default
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by such parry, such Credit Support Provider or such Specifed Entity (individually or collectively) in
making one or more payments on the due date thereof in an aggregate amount of not less than the
applicable Threshold Amount under such agreements or instruments (after giving effect to any
applicable notice requirement or grace period);
(vii) Bankruptcy The parry, any Credit Support Provider of such party or any applicable Specified
Entry of such party -
(1) is dissolved (other than pursuant to a consolidation, amalgamation or merger), (Z) becomes
insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay
its debts as they become due: (3) makes a general assignment, azrangement or composition with
or for the benefit of its creditors; (4) institutes or has instituted against it a proceeding seeking
a judgment of insolvency or bankruptcy or any other reLef under any bankruptcy or insolvency
law or other similar law affecting creditors' rights, or a petition is presented for its winding-up
or liquidation, and, in the case of any such proceeding or petition instituted or presented against
it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry
of an order for relief or the making of an order for its winding-up or liquidation or (B) is not
dismissed, discharged, stayed or restrained to each case within 30 days of the institution or
presentation thereof; (5) has a resolution passed for iu winding-up, official management or
liquidation (other than pursuant to a consolidation, amalgamation or merger); (6) seeks or
becomes subject to the appointment of an administrator, provisional liquidator, conservator,
receiver, trustee, custodian or other sutulaz official for it or for all or substantially all its assets;
(7) has a secured parry take possession of all or substantially all iu assets or has a distress,
executton, attachment, sequestration or other legal process levied, enforced or sued on or against
all or substantially all its assets and such secured party maintains possession, or any such process
is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter,
(8) causes or is subject to any event with respect to it which, under the applicable laws of any
jurisdiction, has an analogous effect to any of the events specified in clauses (1) to (7) (inclusive);
or (9) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the foregoing acts; or
(viii) Merger Without Assumption. The parry or any Credit Support Provider of such parry
consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets
to, another entity and, at the time of such consolidation, amalgamation, merger or transfer -
(1) the resultutg, surviving or transferee entity fails to assume all the obligations of such parry
or such Credit Support Provider under this Agreement or any Credit Support Document to which
it or its predecessor was a party by operation of law or pursuant to an agreement reasonably
satisfactory to the other parry to this Agreement; or
(2) the benefits of any Credit Support Document fail to extend (without the consent of the other
party) to the performance by such resulting, surviving or transferee entity of its obligations under
this Agreement.
(b) Terneination Events. The occurrence at any time with respect to a party or, if applicable, any Credit
Support Provider of such party or any Specified Entity of such party of any event specified below constitutes
an Illegality if the event is specified in{i) below, and, if specified to be applicable, a Credit Event Upon Merger
if the event is specified pursuant to (ii) below or an Additional Termrnation Event if the event is specified
pursuant to (iii) below -
(i) Illegality. Due to the adoption of, or any change in, any applicable law after the date on which
a Transaction is entered into, or due to the promulgation of, or any change in, the interpretation by any
court, tribunal or regulatory authority with competent jurisdiction of any applicable law after such.date,
it becomes unlawful (other than as a result of a br°ach by the parry of Section 4(b)) for such parry
(which wtll be the Affected Parry): -
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(1) to perform any absolute or contingent obligation to make a payment or delivery or to receive
a payment or delivery in respect of such Transaction or to comply with any other material
provision of this Agreement relating to such Transaction, or
(2) to perform, or for any Credit Support Provider of such parry to perform, any contingent or
other obligation which the parry (or such Credit Support Provider) has under any Credit Support
Document relating to such Transaction;
(tt) Credit Event Upon Merger if "Credit Event lJpon Merger' is spectfied in the Schedule as
applying to the parry, such party ("X"), any Credit Support Provider of X or any applicable Specified
Entity of X consolidates or amalgamates with, or merges with or into, or transfers all or substantially
all its assets to, another entity and such action does not constitute an event described to
Section 5(a)(vtii) but the creditworthiness of the resulting, surviving or transferee entity is materially
weaker than that of X, such Credit Support Provider or such Specified Entiry, as the case may be,
immediately prior to such action (and, ui such event, X or its successor or transferee, as appropriate,
will be the Affected Patty); or
(iii) Additional Termination Event. !f any "Additional Termination Event" is specified in the
Schedule or any Confiumatton as applying, the occurrence of such event (and, in such event, the
Affected Party or Affected Parties shall be as specified for such Additional Termination Event in the
Schedule or such Confirmation).
(c) Event of Default and Illegality. !f an event or circumstance which would otherwise constitute or give
rise to an Event of Default also constitutes an lllegaliry, it will be treated as an lllegaliry and will not constitute
an Event of Default.
6. Early Termination
(a) Right to Terminate Following Event of Default. if at any time an Event of Default with respect to a
parry (the "Defaulting Part}') has occurred and is then continuing, the other party (the "Non-defaulting Party')
may, by not more than 20 days notice to the Defaulting Party specifying the relevant Event of Default, designate
a day not earlier than the day such notice is effective as an Early Termination Date in respect of all outstanding
Transactions. lf, however, "Automatic Early Termination" is spectfied in the Schedule as applying to a parry,
then an Early Termination Date to respect of all outstanding Transactions will occur immediately upon the
occurrence with respect to such parry of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or,
to the extent analogous thereto, (8), and as of the time immediately preceding the institution of the relevant
proceeding or the presentation of the relevant petition upon the occurrence with respect to such party of an Event
of Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
(b) Right to Terminate Following Termination Event
(i) Notice. if a Termination Event occurs, an Affected Party will, promptly upon becoming aware
of it, notify the other party, specifying the nature of that Termination Event and each Affected
Transaction and will also give such other information about that Termination Event as the other parry
may reasonably require.
(ii) Two AJj'ected Parties. If an Illegality under Section 5(b)(i)(1) occurs and there are two Affected
Parties, each party will use all reasonable efforu to reach agreement within 30 days after notice thereof
is given under Section 6(b)(i) on action to avoid that Termination Event.
(iii) Right to Terminate. Lf:-
(1) an agreement under Section 6(b)(ii) has not been effected with respect to all Affected
Transactions within 30 days after an Affected Party gives notict: under Section 6(b)(i); or
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(2) an Illegaliry other than that referred to in Section 6(b)(ii), a Credit Event Upon Merger or
an Additional Termination Event occurs,
either parry in the case of an lllegaliry, any Affected Parry in the case of an Additional Terrrunauon
Event if there is more than one Affected Parry, or the party which is not the .Affected Parry in the case
of a Credit Event Upon Merger or an Additional Termination Event if there is only one Affected Parry
may, by not more than 20 days notice to the other parry and provided that the relevant Termination
Event is then continuing, designate a day not earlier than the day such nonce is effective as an Early
Termuiation Date in respect of all Affected Transactions.
(c) Effect of Designation.
(i) If notice designating an Early Termuiation Date is given under Section 6(a) or (b), the Early
Termination Date will occur on the date so designated, whether or not the relevant Event of Default
or Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early Termination Date, no further payments
or deliveries under Section 2(a)(i) or 2(d) in respect of the Terminated Transactions will be required
to be made, but without prejudice to the other provisions of this Agreement. The amount, if any,
payable in respect of an Early Termination Date shall be determined pursuant to Section 6(e).
(d) Calculations.
(i) Statement. On or as soon as reasonably practicable following the occurrence of an Early
Termination Date, each party will make the calculations on its part, if any, contemplated by Section
6(e) and will provide to the other party a statement (1) showing, in reasonable detail, such calculations
(including all relevant. quotations and specifying any amount payable under Section 6(e)) and (2) giving
details of the relevant account to which any amount payable to it is to be paid In the absence of written
confirmation from the source of a quotation obtained in determining a Market Quotation, the records
of the parry obtaining such quotation will be conclusive evidence of the existence and accuracy of such
quotation.
(ii) Payment Date. An amount calculated as being due in respect of any Early Termination Date
under Section 6(e) will be payable on the day that notice of the amount payable is effective (in the case
of an Early Termination Date which is designated or occurs as a result of an Event of Default) and on
the day which is two Local Business Days after the day on which notice of the amount payable is
effective (in the case of an Early Termination Date which is designated as a result of a Termination
Event). Such amount will be paid together with (to the extent permitted under applicable law) interest
thereon (before as well as after judgment), from (and including) the relevant Early Termination Date
to (but excluding) the date such amount is paid, at the Applicable Rate. Such interest will be calculated
on the basis of daily compounding and the actual number of days elapsed.
(e;) Payments on Early Termination. !f an Early Termination Date occurs, the following provisions shall
apply based on the parties' election in the Schedule of a payment measure, either "Market Quotation" or "Lass",
and a payment method, either the "First Method" or the "Second Method" if the parties fail to designate a
payment measure or payment method in the Schedule, it will be deemed that "Market Quotation" or the "Second
Method", as the case may be, shall apply The amount, if any, payable in respect of an Early Termination Date
and determined pursuant to this Section will be subject to any Set-off.
(i) Events ojDefault. !f the Early Termination Date results from an Event of Default: -
(1) First Method acid Market Quotation. if the First Method and Market Quotation apply, the
Defaulting Parry will pay to the Non~efaulting Party the excess, if a positive number, of (A) the
sum of the Settlement Amount (determined by the Non~efaulting Party) in respect of the
1SD,4o 1992
Second Printing
Terrrunated Transactions and the Unpaid Amounts owing to the Non-defaulting Parry over (B) the
Unpaid Amounts owing to the Defaulting Party
(2) First Method and Loss. if the First Method and Loss apply, the Defaulting Parry will pay
to the Non~efaulting Parry, if a positive number, the Non-defaulting Parry s Loss in respect of
this Agreement.
(3) Second Method and Market Quotation: If the Second Method and Market Quotation apply,
an amount will be payable equal to (A) the sum of the Settlement Amount (deterrruned by the
Non-defaulting Parry) in respect of the Terrrunated Transactions and the Unpaid Amounts owing
to the Non~efaulting Parry less (B) the Unpaid Amounts owing to the Defaulting Parry !f that
amount is a positive number, the Defaulting Parry will pay it to the Non-defaulting Parry; if it is
a negative number, the Non-defaulting Party will pay the absolute value of that amount to the
Defaulting Parry _
(4) Second Method and loss. if the Second Method and Loss apply, an amount will be payable
equal to the Non~efaulting Parry's Loss in respect of this Agreement. If that amount is a positive
number, the Defaulting Party will pay it to the Non-defaulting Party; if it is a negative number,
the Non-defaulting Parry will pay the absolute value of that amount to the Defaulting Parry
(ii) Termination Events. !f the Early Termination Date results from a Termination Event: -
(1.) One Affected Parry if there is one Affected Party, the amount payable will be determined
in accordance with Section 6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4), if Loss
applies, except that, in either case, references to the Defaulting Party and to the Non~efaulting
Party will be deemed to be references to the Affected Party and the party which is not the
Affected Party, respectively, and, if Loss applies and fewer than all the Transactions are being
terminated, Loss shall be calculated in respect of all Terminated Transactions.
(2) Two Affected Parties. if there are two Affected Parties: -
(A) if Market Quotation applies, each parry will determine a Settlement Amount in respect
of the Terminated Transactions, and an amount will be payable equal to (1) the sum of (a)
one-half of the difference between the Settlement Amount of the party with the higher
Settlement Amount ("X") and the Settlement Amount of the party with the lower Settlement
Amount (" Y")and (b) the Unpaid Amounts owing to X less (11) the Unpaid Amounts owing
to Y, and
(B) if Loss applies, each party will deternine its Loss in respect of this Agreement (or, if
fewer than all the Transactions are being. terminated, in respect of all Tetmtnated
Transactions) and an amount will be payable equal to one-half of the difference between the
Loss of the parry with the higher Loss ("X") and the Loss of the parry with the lower Loss
(" Y" ).
if the amount payable is a positive number, Y will pay it to X if it is a negative number, X will
pay the absolute value of that amount to Y
(iii) Adjustment for Bankruptcy. In circumstances where an Early Termination Date occurs because
"Automapc Early Termination" applies in respect of a parry, the amount determined under this Section
6(e) will be subject to such adjustments as are appropriate and permitted by law to reflect any payments
or deliveries made by one ,party to the other under this Agreement (and retained by such other parry.)
during the penod from the relevant Early Temlitiation Date to the date for payment determined under
Section 6(d)(ii)
ISDAo 1992
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(iv) Pre-Estimate. The parttes agree that if Market Quotation applies an amount recoverable under
this Section 6(e) is a reasonable pre~stimate of loss and not a penalty Such amount is payable for the
loss of bazgain and the loss of protection against future nsks and except as otherwtse provided to this
Agreement neither parry will be entitled to recover any additional damages as a consequence of such
losses.
Transfer
Neither this Agreement nor any interest or obligation to or under chts Agreement may be transferred (whether
by way of security or otherwise) by either parry without the pnor written consent of the other party, except
that: -
(a) a parry may make such a transfer of this Agreement pursuant to a consolidation or amalgamanon with,
or merger with or into, or transfer. of all or substannally all its assets to, another entity (but without prejudice
to any other right or remedy under this Agreement)• and
(b) a parry may make such a transfer of all or any part of its interest in any amount payable to it from a
Defaulting Parry under Section 6(e).
Any purported transfer that is not in compliance with this Section will be void.
8. Miscellaneous
(a) Entire Agreemenn This Agreement constitutes the entire agreement and understanding of the parties
with respect to its subject matter and supersedes all oral communication and prior writings with respect thereto.
(b) Amendments. No amendment, modification or waiver in respect of this Agreement will be effective
unless in writing (including a venting evidenced by a facsmile transmission) and executed by each of the parties
or confirmed by an exchange of telexes or electronic messages on.an electronic messaging system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(rii) and 6(c)(ii), the obligations of the
parties under this Agreement will survive the termination of any Transaction.
(d) Remedies Cumulative Except as provided in this Agreement, the rights, powers, remedies and
privileges provided in this Agreement aze cumulative and not exclusive of any rights, powers, remedies and
privileges provided by law
(e) Counterparts and Confirmations
(i) This Agreement (and each amendment, modification and waiver in respect of it) may be executed
and delivered in counterparts (including by facsimile transmission), each of which will be deemed an
original.
(ii) The parties intend that they are legally bound by the temis of each Transaction from the moment
they agree to those terms (whether orally or otherwise). A Confirmation shall be entered into as soon
as practicable and may be executed and delivered in counterparts (including by facsimile transmission)
or be created by an exchange of telexes or by an exchange of electronic messages on an electronic
messaging system, which in each case will be sufizcient for all purposes to evidence a binding
supplement to this Agreement. The parties will specify therein or through another effective means that
any such counterpart, telex or electtoruc message constitutes a Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right, power or privilege in respect of this
Agreement will not be presumed to operate as a waiver, and a sutgle or partial exercise of any right, power or
privilege will not be presumed to preclude any subsequent or further exercise, of that right, power or privilege
or the exercise of any other right, power or privilege.
9 ISDAo 1992
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(g) Headings. The headings used in this Agreement are for convenience of reference only and are not to
affect the construction of or to be taken into consideration in intetpreting~this Agreement.
Expenses
A Defaulting Party will, on demand, indemnify and hold harmless the other parry for and against all reasonable
out-of-pocket expenses, including legal fees, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document to which the Defaulting Parry is
a party or by reason of the early ternunation of any Transaction, including, but not limited to, costs of
collection.
10. Notices
(a) Bfjectiveness. Any notice or other communication in respect of this Agreement may be graven in any
manner set forth below (except that a notice or other communication under Section 5 or 6 may not be graven by
facsunile transmission or electronic messaging system) to the address or number or in accordance with the
electronic messaging system details provided (see the Schedule) and will be deemed effective as indicated: -
(i) if in writing and delivered in person or by courier, on the date it is delivered,
(ii) if sent by telex, on the date the recipient's answerback is received;
(iii) if sent by facsimile transmission, on the date that transmission is received by a responsible
employee of the recipient in legible form (it being agreed that the burden of proving receipt will 'be on
the sender and will not be met by a transmission report generated by the sender's facsimile machine);
(iv) if sent by certified or registered mail (ainmail, if overseas) or -the equivalent (return receipt
requested), on the date that mail is delivered or its delivery is attempted, or
(v) if sent by electronic messaging system, on the date that electronic message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Local Business Day
or that communication is delivered (or attempted) or received, as applicable, after the close of business on a
Local Business Day, in which case that communication shall be deemed given and effective on the first following
day that is a Local Business Day
(b) Change of Addresses. Either party may by notice to the other change the address, telex or facsimile
number or electronic messaging system details at which notices or other communications are to be given to it.
11. Governing Law and Jurisdiction
(a) Governing Law This Agreement will be governed by and construed in accordance with the law
specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating to this Agreement
("Proceedings"), each patty irrevocabty -
(i) submits to the jurisdiction of the English courts, if this Agreement is expressed to be governed
by English law, or .to the nonexclusive 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, if this Agreement
is expressed to be governed by the laws of the State of New York; 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
10 1SDAo 1992
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inconvenient forum and further waives the right to obJect, with respect to such Proceedings, that such
court does not have any jurisdiction over such parry
Nothing in this Agreement precludes either parry from bringing Proceedings in any other jurisdiction (outside,
if this Agreement is expressed to be governed by English law, the Contracting States, as defined in Section 1(3)
of the Civil Jurisdiction and Judgments Act 1982 or any modification, extension or reenactment thereof for the
time being in force) nor will the bringing of Proceedings in any one or more Jurisdictions preclude the bringing
of Proceedings in any other jurisdiction.
(c) Waiver oj[mmunides. 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, (iu) 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
aught 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.
12. Definitions
As used in this Agreement: -
"Additional Termination Event" has the meaning specified in Section 5(b).
"Affected Party" has the meaning specified in Section 5(b).
"Affected Transactions" means (a) with respect to any Termination Event consisting of an Illegality, all
Transactions affected by the occurrence of such Termination Event and (b) with respect to any other Termination
Event, all Transactions.
"Affiliate" means, subject to the Schedule, in relation to any person, any entity controlled, directly or indirectly,
by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under
common control with- the person. For this purpose, "control" of any entity or person means ownership of a
majority of the voting power of the entity or person.
"Applicable Rate" means: -
(a) in respect of obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a
Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either party from and after the date
(determined in accordance with Section 6(d)(ii)) on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would have been but for Section 2(a)(iii))
by aNon-defaulting Parry, the Non-default Rate; and
(d) in all other cases, the Termination Rate.
"consent" includes a consent, approval, action, authorisation, exemption, notice, filing, registration or exchange
control consent.
"Credit Event Upon Merger" has the meaning specified in Section 5(b).
"Credit Support Document" means any agreement or instrument that is specified as such in this Agreement.
"Credit Support Provider" has the meaning specified in the Schedule.
11 15DAo 1992
Second Prineing
"Default Rate" means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the
relevant payee (as certified by it) if it were to fund or of funding the relevant amount plus l % per annum.
"Defaulting Party" has the meaning specified in Section 6(a).
"Early Termination Date" means the date deterrruned in accordance with Section 6(a) or 6(b)(iii).
"Event of Default" has the meaning specified in Section 5(a) and, if applicable, in the Schedule.
"!!legality" has the meaning specified in Section 5(b).
"law" includes any treaty, law, rule or regulation and "lanful" and "unlawful" will be construed accordingly
"Local Business Day" means, subject to the Schedule, a day on which commercial banks are open for business
(including dealings in foreign exchange and foreign currency deposits) (a) in relation to any obligation under
Section 2(a)(i), m the place(s) specified in the relevant Confirmation or, if not so specified, as otherwise agreed
by the parties in writing or determined pursuant to provisions contained, or incorporated by reference, in this
Agreement, (b) in relation to any other payment, in the place where the relevant account is located, (c) in
relation to any notice or other communication, including notice contemplated under Section 5(a}(i), in the city
specified in the address for nonce provided by the recipient and, in the case of a notice contemplated by Section
2(b), in the place where the relevant new account is to be located and (d) in relation to Section 5(a)(v)(2), in
the relevant locations for performance with respect to such Specified Transaction.
"Loss" means, with respect to this Agreement or one or more Tenmuiated Transactions, as the case may be,
and a parry, an amount that party reasonably determines in good faith to be its total losses and costs (or gain,
in which case expressed as a negative number) in connection with this Agreement or that Ternnated Transaction
or group of Terminated Transactions, as the case may be, including any loss of bargain, cost of funding or, at
the election of such party but without duplication, loss or cost incurred as a result of iu terminating, liquidating,
obtaining or reestablishing any hedge or related trading position (or any gain resulting from any of them) Loss
includes losses and costs (or gains) in respect of any .payment or delivery required to have been made (assuming
satisfaction of each applicable condition precedent) on or before the relevant Early Termination Date and not
made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does not
include a parry's legal fees and out-of-pocket expenses referred to under Section 9 A party will determine iu
Loss as of the relevant Early Termination Date, or, if that is not reasonably practicable, as of the eazliest date
thereafter as is reasonably practicable. A parry may (but need not) determine its Loss by reference to' quotations
of relevant rates or prices from one or more leading dealers in the relevant markets.
"~Karket Quotation" means, with respect to one or more Terminated Transactions and a party making the
determination, an amount determined on the basis of quotations from Reference Mazket-makers. Each quotation
will be for an amount, if any, that would be paid to such .party (expressed as a negative number) or by such
party (expressed as a positive number) in consideration of an agreement between such party (taking into account
any existing Credit Support Document with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that would have the effect of
preserving for such party the economic equivalent of any payment or delivery (whether the underlying obligation
was absolute or contingent and assuming the satisfaction of each applicable condition precedent) by the parties
under Section 2(a)(i) in respect of such Terminated Transaction or group of Terminated Transactions that would,
but for the occurrence of the relevant Eazly Termination Date, have been required after that date. For this
purpose, Unpaid Amounts in respect of the Terminated Transaction or group of Terminated Transactions are
to be excluded but, without limitation, any payment or delivery that would, but for the relevant Early
Termination Date, have been required (assumuig satisfaction of each applicable condition precedent) after that
Eazly Termination Date is to be included The Replacement Transaction would be subject to such documentation
as such parry and the Reference Market-maker may, in good faitli, agree. The parry making the determination
(or iu agent) will request each Reference Market-maker to provide its quotation to the extent reasonably
practicable as of the same day and time (without regard to different time zones) on or as soon as reasonably
practicable after the relevant Early Termination Date. The day and time as of which those quotations are to be
12 ISDAa 1992
Second Panting
obtained will be selected rn good faith by the parry obliged to make a deterrrunatron under Section 6(e}, and.
rf each parry is so obliged, after consultation with the other if more than three quotations are provided, the
Market Quotation will be the az~thmetic mean of the quotations, without regard to the quotations having the
highest and lowest values. if exactly three such quotations are provided, the Market Quotation will be .the
quotation remaining after disregarding the highest and lowest quotations. For this purpose, if more than one
quotatioq has the same highest value or lowest value, then one of such quotations shall be disregarded. If fewer
than three quotations are provided, it will be deemed that the Market Quotation in respect of such Terminated
Transaction or group of Termurated Transactions cannot be determined.
"ti'on-default Rate" means a rate per annum equal to the cost (without proof or evidence of any actual cost) to
the Non-defaulting Party (as certified by rt) if it were to fund the relevant amount.
".Non-defaulting Party" has the meaning specified in Section 6(a).
"Potential Event of Default" means any event which, with the giving of notice or the lapse of time or both,
would constitute an Event of Default.
"Reference Market-makers" means four leading dealers in the relevant market selected by the parry determuting
a Market Quotation in good faith (a) from among dealers of the highest credit standing which satisfy all the
criteria that such parry applies generally at the time in deciding whether to offer or to make an extension of
credit and (b) to the extent practicable, from among such dealers having an office in the same city
"Scheduled Payment Date" means a date on which a payment or delivery is to be made under Section 2(a)(i)
with respect to a Transaction.
"Set-off"' means set-0ff, offset, combination of accounu, right of retention or withholding or similar right or
requirement to which the payer of an amount under Section 6 is entitled or subject (whether arising under this
Agreement, another contract, applicable law or otherwise) that is exercised by, or imposed on, such payer
"Settlement Amount" means, with respect to a party and any Eazly Termination Date, the sum of -
(a) the Market Quotations (whether positive or negative) for each Terminated Transaction or group of
Terminated Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference to any Unpatd Amounts) for each
Terminated Transaction or group of Terminated Transactions for which a Market Quotation cannot be
determined or would not in (in the reasonable belief of the parry making the determination) produce a commercially
reasonable result.
"Specified Entity" has the meaning specified in the Schedule.
"Specified Indebtedness" means, subject to the Schedule, any obligation (whether present or future, contingent
or otherwise, as principal or surety or otherwise) in respect of borrowed money
"Specified Transaction" means, subject to the Schedule, (a) any transaction {including an agreement with respect
thereto) now existing or hereafter entered into between one -party to this Agreement (or any Credit Support
Provider of such party or any applicable Specified Entity of such party) and the other party to this Agreement
(or any Credit Support Provider of such other party or any applicable Specified Entity of such other patty) which
rs a rate swap transaaion, -basis swap, forwazd rate transaction, commodity swap, commodity option, equity or
equity index 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 similaz transaction (including any option with respect to any of these
transactions), (b) any combination of these transactions and (c) any other transaction identified as a Specified
Transaction in thus Agreement or the relevant Confirmation.
13 1SDAo 1992
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"Terminated Transactions" means with respect to any Early Termination Date (a) tf resulttng from a
Termutation Event, all Affected Transactions and (b) tf resulting from an Event of Default, all Transactions (tn
etcher case) in effect Immediately before the effectiveness of the notice designating that Early Terrrunation Date
(or, if "Automatic Early Terminatton' applies, Immediately before the Early Terntinatton Date).
"Termination Event" means an Illegallty or, If specified to be appltcable, a Credit Event Upon Merger or an
Additional Terrrunation Event.
"Termination Rate" means a rate per annum equal to the arithmetic mean of the cost (without proof or evidence
of any actual cost) to each parry (as certified by such parry) if it were to fund or of funding such amounts.
"Unpaid Amounts" owing to any party means, with respect to an Early Termination Date, the aggregate of
(a) in respect of all Tetmtnated Transactions, the amounts that became payable (or that would have become
payable but for Section 2(a)(iti)) to such parry under Section 2(a)(i) on or prior to such Early Termination Date
and which remain unpaid as at such Early Terttttnation Date and (b) in respect of each Tertrunated Transaction,
for each obligation under Section 2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to
be settled by delivery to such parry on or prior to such Early Termination Date and which has not been so settled
as at such Early Termination Date, an amount equal to the fair market value of that which was (or would have
been) required to be delivered as of the originally scheduled date for delivery, in each case together with (to the
extent permitted under applicable law) interest, in the currency of such amounu, from (and including) the date
such amounts or obligations were or would have been required to have been paid or performed to (but excluding)
such Early Ternination Date,. at the Applicable Rate. Such amounts of interest will be calculated on the basis
of daily compounding and the actual number of days elapsed. The fair market value of any obligation referred
to in clause (b) above shall be reasonably determined by the party obliged to make the determination under
Section 6(e) or, if each party is so obliged, it shall be the average of the fair market values reasonably
determined by both parties.
1N WITNESS WHEREOF the parties have executed this document on the respective dates specified below with
effect from the date specified on the first page of this document.
City of Fort Worth, Texas Morgan Stanley Capital Services, Inc.
(Name of Parry)
By BY'
Name: Name:
Title: Title:
Date: Date:
14
(Name of Party)
1SDAo 1992
Second Printing
CWT DRAFT
9/ 18/00
SCHEDULE
TO THE
MASTER AGREEMENT
dated as of July 19, 2000
between
MORGAN STANLEY CAPITAL SERVICES INC.
("Party A")
and
CITY OF FORT WORTH, TEXAS
("Party B")
Part 1. Termination Provisions
(a) "Specified Entity" means in relation to Pazty A for the purpose of:-
Section 5(a)(v), Affiliates
Section 5(a)(vi), None Specified
Section 5(a)(vii), None Specified
Section 5(b)(ii), None Specified
and in relation to Party B for the purpose of:-
Section 5(a)(v), Affiliates
Section 5(a)(vi), None Specified
Section 5(a)(vii), None Specified
Section 5(b)(ii), None Specified
(b) "Specified Transaction" means, in lieu of the meaning specified in Section 12, any contractor transaction,
including an agreement with respect thereto (whether or not documented under or effected pursuant to a
master agreement) now existing or hereafter entered into between one party to this Agreement (or any
Credit Support Provider of such party or any applicable Specified Entity of such pazty) and the other party
to this Agreement (or any Credit Support Provider of such party or any applicable Specified Entity of such
party )
(c) "Cross Default" applies to Party A and Party B Section 5(a)(vi) is hereby amended by deleting in the
seventh line thereof the words ", or becoming capable at such time of being declazed,"
(d) "Specified Indebtedness" has the meaning specified in Section 12.
(e) "Threshold Amount" means: (i) with respect to Party A, U.S $50,000,000 (or the equivalent in another
currency, currency unit or combination thereof); and (ii) with respect to Party B, (A) in connection with any
Specified Indebtedness relating to the source of funds set forth in Part 4(e) hereof, $1:00 and (B) in
connection with any other Specified Indebtedness, $50,000,000 (or its equivalent in another currency,
currency unit or combination thereof).
(f) Bankruptcy Clause (6) of Section 5(a)(vii) of this Agreement is hereby amended to read in its entirety as
follows.--
"(6)(A) seeks or becomes subject to the appointment of an administrator, provisional liquidator,
conservator, receiver, trustee, custodian or other similaz official for it or for all or substantially all
its assets (or, in the case of a Government Entity, for the System) or (B) in the case of a
Government Entity, any Credit Support Provider of such Government Entity or any applicable
CWi1NYLIB11475735.10 15
CWT DRAFT
9/ 18/00
Specified Entity of such Government Entity, (I) there shall be appointed or designated with respect
to it, an entity such as an organization, boazd, commission, authority, agency or body to monitor,
review, oversee, recommend or declaze a financial emergency or similar state of fmancial distress
with respect to it or (II) there shall be declared or introduced or proposed for consideration by it or
by any legislative or regulatory body with competent jurisdiction over it, the existence of a state of
fmancial emergency or similar state of fmancial distress in respect of it;"
(g) Merger Without Assumption. Section 5(a)(viii) of this Agreement is hereby amended to read in
its entirety as follows:--
"(viii) Merger Without Assumption. The party, any Credit Support Provider of such party or,
in the case of Party B, consolidates or amalgamates with, or merges with or into, or transfers all or
substantially all its assets (or, in the case of Party B, all or substantially all of the System) to,
another entity (or, without limiting the foregoing, if such_party is a Government Entity, an entity
such as an organization, board, commission, authority, agency or body succeeds to the principal
functions of, or powers and duties granted to, such party, any Credit Support Provider of such
party or any applicable Specified Entity generally or with respect to the System) and, at the time of
such consolidation, amalgamation, merger, transfer, or succession.--
(1) the resulting, surviving, transferee or successor entity fails to assume all the obligations of
such pazty, such Credit Support Provider or such Specified Entity under this Agreement or any
Credit Support Document to which it or its predecessor was a party by operation of law or
pursuant to an agreement reasonably satisfactory to the other party to this Agreement;
(2) the benefits of any Credit Support Document fail to extend (without the consent of the other
party) to the performance by such resulting, surviving, transferee or successor entity of its
obligations under this Agreement; or"
(3) In the case of a Government Entity, the sources of payment for the obligations of such
Government Entity as set forth in Part 4(e) hereof are no longer available for the satisfaction of
such resulting, surviving, transferee or successor entity's obligations to the other party hereto.
(h) "Credit Event Upoa Merger" applies to Party A and Party B. Section 5(b)(ii) is hereby deleted
in its entirety and replaced by the following:
"(ii) Credit Event Upon Merger If "Credit Event Upon Merger" is specified in the Schedule
as applying to the party, such party ("X"), any Credit Support Provider of X or any applicable
Specified Entity of X consolidates or amalgamates with, or merges with or into, or transfers all or
substantially all its assets (or, in the case of a Government Entity, all or substantially all of the
System) to, or reorganizes, incorporates, reincorporates, or reconstitutes into or as, another entity,
or another entity transfers all or substantially all its assets (or, in the case of a Government Entity,
all or substantially all of the System) to, or reorganizes, incorporates, reincorporates, or
reconstitutes into or as, X (or, without limiting the foregoing, if X is a Government Entity, an
entity such as an organization, board, commission, authority, agency or body succeeds to the
principal functions of, or powers and duties granted to, X (or any applicable Specified Entity)
generally or with respect to the System), and such action does not constitute an event described in
Section 5(a)(viii) but the creditworthiness of X or the resulting, surviving, transferee, or successor
entity (which will be the Affected Party) is materially weaker than that of X, such Credit Support
Provider or such Specified Entity, as the case may be, immediately prior to such action; or"
(i) The "Automatic Early Termination" provisions of Section 6(a) will not apply to Pazty A and will not.
apply to Party B, provided, however, where the Event of Default is specified in Section 5(a)(vii)(1), (3), (4), (5), (6)
or to the extent analogous thereto, (8) and 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 this Agreement,
then the Automatic Early Termination provisions of Section 6(a) will apply to Party A and Party B.
CWIINYLIB14475735.10 16
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If an Early Termination Date occurs under Section 6(a) as a result of Automatic Early Termination, the
Defaulting Pazty shall fully indemnify the Non-defaulting Party on demand against all expense, loss,
damage or liability that the Non-defaulting Party may incur in respect of this Agreement and each
Transaction as a consequence of movements in interest, currency, exchange or other relevant rates or prices
or Market Quotations between the Early Termination Date and the Local Business Day on which the Non-
defaulting Party first becomes aware that the Early Tennination Date has occurred under Section 6(a).
(j) Payments on Early Termination. "Market Quotation" and "First MethocP' will apply for the purpose
of Section 6(e) of this Agreement.
(k) Additional Termination Event will apply The following shall constitute Additional Termination Events:
(i) with respect to Party B, if Party B's s;nior, unsecured, unenhanced debt rating is
withdrawn, suspended or reduced below "BBB" in the case of S&P or "Baal" in the case
of Moody's, and
For the purpose of the Termination Event above, the Affected Party shall be Party B.
(ii) with respect to Party A, if Party A's Credit Support Provider's senior, unsecured,
unenhanced debt rating is withdrawn, suspended or reduced below "BBB" in the case of
S&P or "Baa2" in the case of Moody's.
For the purpose of the Termination Event above, the Affected Party shall be Party A.
Part 2. Agreement to Deliver Documents
For the purpose of Section 4, each party agrees to deliver the following documents, as applicable:
Covered by
Party required to Date by which to be Sec.3(d)
deliver document Form/Document/Certificate delivered Representation
Party A Either (1) a signature booklet The earlier of the fifth Yes
and containing secretary's certificate and Business Day after the
Pazty B resolutions ("authorizing resolutions") Trade Date of the first
authorizing the party to enter into Transaction or upon
derivatives transactions of the type _ execution of this
contemplated by the parties or (2) a Agreement and as deemed
secretary's certificate, authorizing necessary for any further
resolutions and incumbency certificate, documentation.
in either case, for such party and any
Credit Support Provider of such party
reasonably satisfactory in form and
substance to the other party
Party A A written opinion of legal counsel to Upon execution of this No
Pazty A, reasonably satisfactory in form Agreement and upon the
and substance to Party B. execution of each
Confirmation.
Party A and A duly executed copy of the Credit Upon the execution of this No
Party B Support Documents specified in Part 3 Agreement
of this Schedule
CWTINYLIB14475735.9 0 1 ~
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Party required to Date by which to be
deliver document Form/Document/Certificate delivered
Party A A copy of the annual financial report of As soon as practicable
and such party (in the case of Party A, in after the execution of this
Party B respect of Morgan Stanley Dean Witter Agreement and also
& Co) containing audited consolidated within 120 days (or as
financial statements for each such fiscal soon as practicable after
year, certified by independent certified becoming publicly
public accountants and prepazed in available) after the end of
accordance with generally accepted each of its fiscal years
accounting principles in the country in while there are any
which such party is organized. obligations outstanding
under this Agreement.
Party B Copies or, where available, certified Upon execution of this
copies of (1) the charter and enabling Agreement and as deemed
statutes (or comparable legislation) necessary for further
creating Party B and authorizing Party documentation
B to enter into this Agreement, the
exhibits, supplements, and attachments
hereto, the documents incorporated by
reference herein, and the Confirmations
hereunder; (2) any constituent
instruments of Pazty B, rules,
regulations, investment policies,
guidelines, resolutions, ordinances, or
provisions affecting the authority of
Party B to enter into this Agreement,
the exhibits, supplements, and
attachments hereto, the documents
incorporated by reference herein, and
the Confirmations hereunder, and the
performance of its obligations
hereunder and thereunder; and (3)
amendments to any of the foregoing.
Party B A written opinion of legal counsel to Upon execution of this
Party B, reasonably satisfactory in form Agreement and upon the
and substance to Party A. execution of each
Confirmation
Party B Covered Agreement and all other Upon execution of the
documents relating to the Incorporated Confirmation for the
Provisions (as such term is defined in relevant Bond-Related
Part 4(g) of this Schedule) Transaction
[Party B UCC-1 Financing Statements covering Upon execution of this
the pledged revenues, if any, set forth Agreement
in Part 4(e) of this Schedule, to the
extent required by the laws of the State
of Texas
Covered by
Sec. 3(d)
Representation
Yes
Yes
No
Yes
Yes]
CWT~NYLIB1~475735.10 18
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Party required to Date by which to be
deliver document Form/Document/Certificate delivered
Party A and Such other documents as the other Upon request
Party B party may reasonably request
Part 3. Miscellaneous
(a) Addresses for Notices. For the purpose of Section 10(a)•-
(i) Address for notices or communications to Party A.-
Morgan Stanley Capital Services Inc.
1585 Broadway, 3rd Floor
New York, New York 10036
Attention: Derivative Products Group-Documentation
Facsimile No.. 212-761-0580 Telephone No.. 212-761-2566/2590
(ii) Address for notices or communications to Party B -
City of Fort Worth
Address. 1000 Throckmorton, 3`d Floor
Fort Worth, Texas 76102
Attention: Director of Finance
Facsimile No.. 817-871-8966 Telephone No.. 817-871-8517
Telex No.. _ Answer back:
Electronic Messaging System Details:
In connection with communications provided by Party A
as Calculation Agent, with a copy to•
First Southwest Company
Address. 1700 Pacific Avenue
Suite 500
Dallas, Texas 7520
Attention. David Brayshaw
Facsimile No.. (214) 954-4339 Telephone No (214) 953-4040
provided that failure to deliver such communications shall
not constitute a default or breach under this Agreement.
Covered by
Sec. 3(d)
Representation
No
(b) Notices. Section 10(a) is amended by adding in the third line thereof after the phrase "messaging system"
and before the ")" the words, "; provided, however, any such notice or other commurucation may be given
by facsimile transmission if telex is unavailable, no telex number is supplied to the party providing notice,
or if answer back confirmation is not received from the party to whom the telex is sent."
(c) Process Agent. Party B irrevocably appoints as its agent for service to process. Not Applicable.
(d) Calculation Agent means Party A.
CVYT~NYLIB11475735.10 19
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9/18/00
(e) Credit Support Document means any credit support annex, any Confirmation and any other document
any of which by its terms secures, guarantees or otherwise supports either or both pazties' obligations under
this Agreement, including, but not limited to, the guarantee of Morgan Stanley Dean Witter & Co.
(f) Credit Support Provider means in relation to Party A. Morgan Stanley Dean Witter & Co
Credit Support Provider means in relation to Party B None.
(g) Governing Law; Jurisdiction. This Agreement, each Credit Support Document and each Confirmation
will be governed by and construed in accordance with the laws of the State of Texas, however, the rights,
duties and obligations of Party A will be governed by and construed in accordance with the laws of the
State of New York. Section 11(b) is amended by deleting such subsection in its entirety
(h) Waiver of Jury Trial. Each party waives, to the_fullest extent permitted by applicable law, any right it
may have to a trial by jury in respect of any Proceedings relating to this Agreement or any Credit Support
Document.
(i) Netting of Payments. Clause (ii) of Section 2(c) will not apply to any amounts .payable with respect to
Transactions from the date of this Agreement.
(j) "Affiliate" will have the meaning specified in Section 12, but excludes Morgan Stanley Derivative
Products Inc.
Part 4. Other Provisions
(a) Deferral of Payments and Deliveries in Connection with Illegality and Incipient Illegality; Interest on
Deferred Payments. Section 2(a)(iii) is hereby amended to read in its entirety as follows.
(iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition
precedent that no Event of Default, Illegality, Potential Event of Default or Incipient
Illegality with respect to the other pazty has occurred and is continuing, (2) the condition
precedent that no Early Termination Date in respect of the relevant Transaction has
occurred or been effectively designated and (3) each other applicable condition precedent
specified in this Agreement.
(b) Representations
(i) The introductory clause of Section 3 of this Agreement is hereby amended to read in its entirety as
follows.
Each party represents to the other party (which representations will be deemed to be
repeated by each party on each date on which a Transaction is entered into and, in the
case of the representations in Section 3(a), at all times until the termination of this
Agreement) that:--
(ii) Section 3(a)(ii) of this Agreement is hereby amended to read in its entirety as follows.
Powers. It has the power (in the case of a Government Entity, pursuant to the
Authorizing Law) to execute this Agreement and any other documentation relating to this
Agreement to which it is a party, to deliver this Agreement and any other documentation
relating to this Agreement that it is required by this Agreement to deliver and to perform
its obligations under this Agreement and any obligations it has under any Credit Support
Document to which it is a party, and has taken all necessary action and made all
necessary determinations and fmdings to authorize such execution, delivery and
performance;"
CWTINYLIB14475735.10 20
,,
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(iii) Section 3(b) of this Agreement is hereby amended to read in its entirety as follows:
"(b) Absence of Certain Events. No Event of Default or Potential Event of Default or, to its
knowledge, Incipient Illegality (in the case of a Government Entity) or Termination
Event with respect to it has occurred and is continuing and no such event or circumstance
would occur as a result of its entering into or performing its obligations under this
Agreement or any Credit Support Document to which it is a party "
(iv) For purposes of Section 3, the following shall be added, immediately following paragraph
(d) thereof:
(e) It is an "eligible swap participant" under, and as defined in, 17 C.F.R. §35 1 and was not
formed solely for the purposes of constituting an "eligible swap participant."
(fj It has entered into this Agreement (including each Transaction evidenced hereby) in
conjunction with its line of business (including financial intermediation services) or the
financing of its business.
(g) It is entering into this Agreement, any Credit Support Document to which it is a pazty,
each Transaction and any other documentation relating to this Agreement or any
Transaction as principal (and not as agent or in any other capacity, fiduciary or
otherwise).
(h) Each party acknowledges that in the event an Early Termination Date is designated or
deemed to occur due to an Event of Default and it is the Defaulting Party, it will not
receive any payments upon eazly termination in respect of the Settlement Amount.
(i) The Agreement has been, and each Transaction has been and will be entered into not for
the purpose of speculation but solely in connection with the financing activities of
Party B or converting interest on the Bonds from a fixed rate to a floating rate, and
therefore reducing the cost of borrowing on the Bonds by optimizing the relative amounts
of fixed and floating rate obligations or the risk of variations in Party B's debt service
costs, and by increasing the predictability of cash flow, including earnings on invested
funds, and thereby improving Party B's ability to manage its funds and revenues.
(j). It is not eititled to claim immunity on the grounds of sovereignty or other similar
grounds with respect to itself or its revenues or assets (irrespective of their use or
intended use) from (i) suite, (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) or (v) execution or enforcement of any judgment to
which it or its revenues or assets might otherwise be made subject to in any Proceedings
(as defined in Section 11(b)) in the courts of any jurisdiction and no such immunity
(whether or not claimed) may be attributed to such party or its revenues or assets.
(c) Additional Representations of Party B. Pazty B hereby further represents to Party A (which
representations will be deemed to be repeated by Party B at all times until the termination of this
Agreement) that:
(i) This Agreement has been, and each Transaction hereunder will be (and, if applicable, has
been), entered into for the purposes of managing its borrowings or investments and not
for purposes of speculation.
(ii) Party B has taken all steps necessary or advisable to create and perfect the pledge and
security interest required to be created pursuant to Part 4(e) of this Schedule, and such
pledge and security interest have been validly created and perfected.
CWIINYLI811475735.10 21
CWT DRAFT
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(iii) Any Transaction entered into pursuant to this Agreement together with any transactions
that Party B has or may enter into with Pazty A and/or with any or all other parties does
not and will not violate or exceed any limits or restrictions contained in any
authorizations, approvals or resolutions of the board of directors, shareholders or other
authorized body of Party B.
(iv) The execution and delivery by Party B of this Agreement, each Confirmation and any
other documentation relating hereto, and the performance of Party B of its obligations
hereunder and thereunder, are in furtherance, and not in violation, of the municipal
purposes for which Party B's organized pursuant to laws of the relevant state.
(v) This Agreement and each Transaction hereunder do not constitute any kind of investment
by Party B that is proscribed by any constitution, charter, law, rule, regulation,
government code, constituent or governing instrument, resolution, guideline, ordinance,
order, writ, judgment, decree, chazge, or ruling to which Party B (or any of its officials in
their respective capacities as such) or its property is subject.
(vi) No Affiliate or other person, firm, corporation, entity, or association may liquidate,
borrow, encumber or otherwise utilize the assets of Party B
(vii) Party B is a state or political subdivision thereof, or an instrumentality, agency or
department of either of the foregoing.
(d) Credit Support Default. Subpazagraph (3) of Section 5(a)(iii) is hereby amended by adding the phrase
"(or such action is taken by any person or entity appointed or empowered to operate or act on its behalf)"
after the word "Document" in the second line thereof.
(e) Source of Payments. Party B agrees that its obligations hereunder are, and until the termination of this
Agreement pursuant to the terms hereof shall remain, payable from and secured by a pledge of Pledged
Revenues subordinate to the Subordinate Lien Bonds.
(fj Additional Agreement. Party B hereby covenants and agrees not to incur any debt on parity with the
Subordinate Lien Bonds without the prior written consent of Party A.
(g) Compliance with Covered Agreement. Party B will observe, perform and fulfill each covenant, term, and
provision in the relevant Covered Agreement applicable to Party B in effect on the date specified in the
Confirmation for the related Transaction, as any of those covenants, terms, and provisions may be
amended, supplemented or modified for the purposes of this Agreement with the prior written consent of
Party A (the "Incorporated Provisions"), with the effect, among other things, and without limiting the
generality of the foregoing, that Party A will have the benefit of each of the Incorporated Provisions
(including without limitation, covenants, right to consent to certain actions subject to consent under the
relevant Covered Agreement and delivery of fmancial statements and other notices and information). In
the event the relevant Covered Agreement ceases to be in effect for any reason, including, without
limitation, defeasance of the Bonds issued in connection with such Covered Agreement, prior to the
termination of this Agreement, the Incorporated Provisions (other than those provisions requiring payments
in respect of bonds, notes, warrants or other similar instruments issued in connection with the relevant
Covered Agreement) will remain in full force and effect for purposes of this Agreement as though set forth
herein until such date on which all of the obligations of Party B under this Agreement and any obligations
of Party B have been fully satisfied. The Incorporated Provisions are hereby incorporated by reference and
made a part of this Agreement to the same extent as if such provisions were set forth herein. For purposes
of this Agreement, the Incorporated Provisions shall be construed as though (i) all references therein to any
party making loans, extensions of credit or fmancial accommodations thereunder or commitments therefor
(the "Financings") were to Party A and (ii) to the extent that such Incorporated Provisions aze conditioned
on or related to the existence of such Financings or Pazty B having any obligations in connection therewith,
all .references to such Financings or obligations were to the obligations of Party B under this Agreement.
Any amendment, supplement, modification or waiver of any of the Incorporated Provisions without the
C4VT~NYLI814475735.10 22
CWT DRAFT
9/18/00
prior written consent of Party A shall have no force and effect with respect to this Agreement. Any
amendment, supplement or modification for which such consent is obtained shall be pazt of the
Incorporated Provisions for purposes of this Agreement.
(h) Notice of Incipient Illegality If an Incipient Illegality occurs, the Government Entity will, promptly upon
becoming aware of it, notify the other pazty, specifying the nature of that Incipient Illegality and will also
give such other information about that Incipient Illegality as the other party may reasonably require.
(i) Termination of Specified Transactions The occurrence or designation of an Early Termination Date on
account of an Event of Default or Additional Termination Event with respect to a party hereto ("Y") shall
constitute a material breach and event of default (howsoever described) under all Specified Transactions to
which Y is a party, whereupon the Non-defaulting Pazty ("X") or any Affiliate of X shall have the right to
terminate, liquidate and otherwise close out any such Specified Transactions (and Y shall be liable for any
damages suffered by X and any Affiliate of X as a result thereof).
(j) Setoff.
(i) Upon the occurrence or designation of an Early Termination Date on account of an Event of
Default or Additional Termination Event with respect to a party hereto ("Y"), any amount payable
by the other pazty ("X") or any Affiliate of X under this Agreement, any Specified Transaction
with Y, or in respect of any other matured, liquidated or terminated obligation to Y will, at the
option of X or any Affiliate of X (and without prior notice to Y), be reduced by its setoff and
recoupment against any amount(s) payable by Y to X or any Affiliate of X under this Agreement,
any Specified Transaction with Y or in respect of any other matured, liquidated or terminated
obligation of Y (and any such amount(s) payable by Y will be discharged promptly and in all
respects to the extent it is so set off). X or an Affiliate of X, as appropriate, will give notice to Y
after any setoff and recoupment is effected under this paragraph.
(ii) For purposes of the foregoing, X and any Affiliate of X shall be entitled to convert any obligation
denominated in one currency into another at such rates of exchange as it deems appropriate in good
faith and in a commercially reasonable manner, to convert any obligation to deliver non-cash
property into an obligation to deliver cash in an amount determined by it as it deems appropriate in
good faith and in a commercially reasonable manner, and amounts may be set off and recouped
irrespective of the currency, place of payment or booking office of any obligation to or from Y
(iii) If an obligation is unascertained, X or any Affiliate of X, as appropriate, may in good faith estimate
that obligation and set off and recoup in respect of that estimate, subject to the relevant party's
accounting to the other(s) when the obligation is ascertained.
(iv) Nothing in this subsection shall be effective to create a charge or other security interest. This
subsection shall be without prejudice and in addition to any right of setoff, recoupment,
combination of accounts, lien or other -right to which any party or any of its Affiliates is at any
time otherwise entitled (whether by operation of law, contract or otherwise).
(k) Condition Precedent to Payments to the Defaulting Party All obligations of anon-defaulting party
("X") and any Affiliate of X under this Agreement, any Specified Transaction with the other pazty ("Y") or
in respect of any other matured, liquidated or terminated obligation to Y are subject to the condition
precedent that Y shall have performed all of its obligations to X and any Affiliate of X under this
Agreement, any Specif ed Transaction with X and in respect of any other matured, liquidated or terminated
obligation of Y, whether or not contingent and regazdless of the currency, place of payment or booking
office of the obligation.
(1) Single Relationship. The parties and their Affiliates intend that all Transactions and Specified
Transactions shall be treated as mutual and part of a single, indivisible contractual and business
relationship
CWT~NYL~811475735.10 23
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(m) Transfers to Address Reasonable Grounds for Insecurity If either pazty ("C"), its Credit Support
Provider or any Affiliate of C has reasonable grounds for insecurity regarding a potential default under this
Agreement or any Specified Transaction by the other party ("D"), any Credit Support Provider or any
Affiliate of D, then C or any Affiliate of C may transfer its rights and obligations under this Agreement or
any agreement for a Specified Transaction to any Affiliate of C or to C, and each party hereto agrees to
such transfer and to use its best efforts to obtain any required consents from its relevant Affiliate to any
such transfer
(n) Confirmations. Party A will deliver to Party B a Confirmation relating to each Transaction.
(o) Relationship Between Parties. Each party will be deemed to represent to the other party on the date on
which it enters into a Transaction that (absent a written agreement between the parties that expressly
imposes affirmative obligations to the contrary for that Transaction).-
(i) Non-Reliance. It is acting for its own account, and it has made its own independent
decisions to enter into that Transaction and as to whether that Transaction is appropriate
or proper for it based upon its own judgment and upon advice from such advisers. as it has
deemed necessary 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 Transaction, it being
understood that information and explanations related to the terms and conditions of a
Transaction shall not be considered investment advice or a recommendation to enter into
that Transaction. No communication (written or oral) received from the other pazty shall
be deemed to be an assurance or guarantee as to the expected results of that Transaction.
(ii) Assessment and Understanding. It is capable of assessing the merits of and
understanding (on its own behalf or through independent professional advice), and
understands and accepts, the terms, conditions and risks of that Transaction. It is also
capable of assuming, and assumes, the risks of that Transaction:
(iii) Status of Parties. The other pazty is not acting as a fiduciary for or an adviser to it in
respect of that Transaction.
(p) Additional Definitions. As used in this Schedule, the following terms shall have the following meanings.
"Authorizing.Law" means Chapter 1371, Texas Government Code
"Bonds" means the City of Fort Worth, Texas Water and Sewer System Subordinate Lien
Revenue Bonds, Series 1999A, dated as of December 1, 1999, and issued in the aggregate
principal amount of $61,750,000.
"Covered Agreement" means the Ordinance.
"Default Rate" means a rate per annum equal to the cost (without proof or evidence of any actual
cost) to the relevant payee (as certified by it) if it were to fund or of funding the relevant amount
plus 1% per annum, provided, however, that with respect to amounts payable by Party B, the
Default Rate shall not exceed the Maximum Rate.
"Government Entity" means Party B.
°`Incipient Illegality" means (a) the enactment by any legislative body with competent
jurisdiction over a Government Entity of legislation which, if adopted as law,. would render
unlawful (i) the performance by such Government Entity of any absolute or contingent obligation
to make a payment or delivery or to receive a payment or delivery in respect of a Transaction or
the compliance by such Government Entity with any other material provision of this Agreement
relating to such Transaction or (ii) the performance by a Government Entity or a Specified Entity
CWIINYLI611475735.10 24
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of such Government Entity of any contingent or other obligation which the Government Entity (or
such Specified Entity) has under any Credit Support Document relating to such Transaction, (b)
any assertion in any proceeding, forum or action by a Government Entity, in respect of such
Government Entity or in respect of any entity located or organized under the laws of the state in
which such Government Entity is located to the effect that performance under this Agreement or
similar agreements is unlawful or (c) the occurrence with respect to a Government Entity or any
Specified Entity of such Government Entity of any event that constitutes an Illegality
"Maximum Rate" means the maximum "net effective interest rate" as permitted by and
calculated in accordance with the provisions of Chapter 1204, Texas Tax Code.
°`Moody's" means Moody's Investors Service, Inc.
"Ordinance" means the ordinance of the Government Entity adopted November 23, 1999,
authorizing the issuance and delivery of the Bonds.
"Pledged Revenues" has the meaning set forth in the Ordinance.
"Previously Issued Prior Lien Bonds" means the following issues of bonds issued by the
Government Entity secured by a fast lien on and pledge of the Pledged Revenues: the City of Fort
Worth, Texas Water and Sewer System Revenue Refunding Bonds, Series 1991A and Series
1991 B, the City of Fort Worth, Texas Water and Sewer System Revenue Refunding Bonds, Series
1993, the City of Fort Worth, Texas Water and Sewer System Revenue Refunding and
Improvement Bonds, Series 1996, the City of Fort Worth, Texas Water and Sewer System
Revenue Refunding and Improvement Bonds, Series 1997 and the City of Fort Worth, Texas
Water and Sewer System Revenue Refunding and Improvement Bonds, Series 1998.
"Previously Issued Subordinate Lien Bonds" means the following issues of bonds issued by the
Government Entity secured by a lien on and pledge of the Pledged Revenues subordinate to the
lien on and pledge of the Pledged Revenues securing the Prior Lien Obligations. the Bonds and
the City of Fort Worth, Texas Water and Sewer System Subordinate Lien Revenue Bonds, Series
1991, Series 1992, Series 1995, Series 1996, Series 1998, and Series 1999
"Prior Lien Bonds" means the Previously Issued Frior Lien Bonds and any bonds hereafter
issued on a parity therewith.
"S&P" means Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies,
Inc.
"Subordinate Lien Bonds" means the Previously Issued Subordinate Lien Bonds and any bonds,
notes or other obligations issued on a parity therewith.
"System" has the meaning set forth in the Ordinance.
"Termination Rate" means a rate per annual equal to the arithmetic mean of the cost (without
proof or evidence of any actual cost) to each party (as certified by such party) if it were to fund or
of funding such amounts; provided, however, that with respect to amounts payable by Party B, the
Termination Rate shall not exceed the Maximum Rate.
(~ Calculations The Calculation Agent shall provide written copies of all calculations made under this
Agreement to First Southwest Company at the address provided in Part 3(a)(ii) hereof at the same time
calculations are provided in writing to the parties hereto. The foregoing notwithstanding; the failure of the
CWIINYLI811475735.1~ 25
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9/18/00
Calculation Agent to deliver such notice to First Southwest Company shall not constitute a default or
breach under this Agreement.
(r) Bankruptcy Without limiting the applicability of any other provision of the U.S Bankruptcy Code, as
amended (11 U.S.C.A. 1, et seq., the "Bankruptcy Code"), including, without limitation, the applicable
definitions in Section 101 and Sections 3b2, 54b, 556, and 550 thereof, the parties acknowledge and agree
that all Transactions entered. into hereunder will constitute "forward contracts" or "swap agreements" as
defined in Section 101 of the Bankruptcy Code, that the rights of the parties under Section 6 of this
Agreement will constitute contractual rights to liquidate Transactions, that any margin or collateral
provided under any margin, collateral, security, or similar agreement related tot his Agreement will
constitute a "margin payment" as defined in Section 101 of the Bankruptcy Code, and that the parties are
entitled to the rights under, and the protections afforded by, Sections 362, 546, 556 and 560 of the
Bankruptcy Code.
CWTINYLIBI\475735.10 26
CWT DRAFT
9/18/00
IN WITNESS WHEREOF, the parties have executed this Schedule by their duly authorized
officers as of the date hereof.
MORGAN STANLEY CAPITAL SERVICES INC.
By
Name
Title
CITY OF FORT WORTH, TEXAS
Name•
Title•
By
CWTINYLI81\475735.10 2~
CWT DRAFT
9/18/00
MORGAN STANLEY
Date: September 19, 2000
To• City of Fort Worth, Texas From. Morgan Stanley Capital Services Inc
Attn. Contact: Vincent F Catalanotto
Fax: Fax: 212 761-0580
Tel. Tel. 212 761-2630
Re: Interest Rate Swap MSCS Ref No
The purpose of this letter agreement is to confirm the terms and conditions of the Swap Transaction entered
into between us on the Trade Date specified below (the "Transaction"). This letter agreement constitutes a
"Confirmation" as referred to in the ISDA Master Agreement below
The definitions and provisions contained in the 1991 ISDA Definitions, as supplemented by the 1998
Supplement to the 1991 ISDA Definitions and the 1992 ISDA U.S Municipal Counterparty Definitions (each as
published by the International Swaps and Derivatives Association, Inc.) (the "Defuritions") are incorporated into this
Confirmation. In the event of any inconsistency between the Definitions and this Confirmation, this Confirmation
will govern.
1 This Confirmation supplements, forms part of, and is subject to, the ISDA Master Agreement dated as
of July 1, 2000; as amended and supplemented from time to time (the "Agreement") between you and us. All
provisions contained in the Agreement govern this Confirmation except as expressly modified below
2. The terms of the particular Transaction to which this Confirmation relates are as follows.
Party A.
Party B
Trade Date:
Notional Amount:
Effective Date:
Termination Date:
Fixed Amounts.
Fixed Rate Payer•
Fixed Rate Payer Payment Dates:
Fixed Rate:
Fixed Rate Day Count Fraction.
CW~NYL1B14130358.13
Morgan Stanley Capital Services inc.
City of Fort Worth, Texas
September 19, 2000
USD 61,750,000, amortizing according to Schedule 1
September 24, 2000
March 1, 2020, subject to adjustment in accordance with the
Modified Following Business Day Convention.
Party A
Each March 1 and September 1, commencing on September 1,
2000, up to and including the Termination Date, subject to
adjustment in accordance with the Modified Following Business
Day Convention.
30/360
Floating Amounts
Floating Rate Payer party B
Floating Rate Payer Payment Dates. Each March 1 and September 1, commencing on September 1,
2000, up to and including the Termination Date, subject to
adjustment in accordance with the Modified Following Business
Day Convention.
[Floating Rate for Initial Calculation Period. _ %]
Floating Rate Option.
The "BMA Municipal Swap Index"T"' announced by Municipal
Market Data on the Determination Date and based upon the
weekly interest rate resets of tax-exempt variable rate issues
included in a database maintained by Municipal Market Data
which meets specified criteria established by the Bond Market
Association (the "Index"). The Index shall be based upon
current yields of high-.quality weekly adjustable variable rate
demand bonds which are subject to tender upon seven days
notice, the interest on which under the Internal Revenue Code of
1986, as amended, is excluded from gross income. for Federal
Income Tax purposes. The Index shall not include any bonds
the interest on which is subject to any personal "Alternative
Minimum Tax" or similar Tax unless all Tax-Exempt Bonds are
subject to such Tax.
In the event that at any time Municipal Market Data ceases to
announce the Index, makes a material change (in the judgment
of Morgan Stanley & Co. Incorporated) in the formula for or the
method of calculating the Index, or in any other way materially
modifies (in the judgment of Morgan Stanley & Co.
Incorporated). the Index, subject to the reasonable consent of
Party B, Party A will make, or will designate an alternative
indexing agent to make, such calculations as may be required to
determine the relevant index using a formula and method of
calculating such index that it reasonably believes will produce
the rate that would have been produced by Municipal Market
Data as in effect prior to such cessation, change or modification.
Spread: Inapplicable
Floating Rate Determination Dates. Each Wednesday (or if such Day is not a Business Day, the
Following Business Day) during the Calculation Period, except
that the initial rate shall be that rate determined for the
Wednesday immediately preceding the Effective Date (or if
such Day is not a Business Day, the Following Business Day)
Floating Rate Day Count Fraction: ActuaUActual
Floating Rate Reset Dates: The calendar day following the related Determination Date.
2
Compounding: Inapplicable
Method of Averaging: Weighted
Business Days: New York
Calculation Agent: party A
3 Optional Termination. (i) Party B acknowledges and agrees that Pazty A may terminate this Transaction, in
whole or in part on any Fixed Rate Payer Payment Date on or after Mazch 1, 2010, by providing Party B
notice of the day Party A elects to terminate, which day shall be not less than three (3) local Business Days
from the effective date of the notice. No payment shall be owed by either party in connection with such
termination.
(11~ Party A acknowledges and agrees that Party B may terminate this Transaction, at any time, in
whole or in part, by providing Party A notice of the day Party B elects to terminate, which day shall be not
less than three (3) local Business Days from the effective date of the notice. If Party B elects to terminate
either a portion or the entire Notional Amount of this Transaction, such termination shall constitute an
Additional Termination Event with respect to the amount terminated with Party B as the Affected Party
Notwithstanding anything to the contrary in this section, Party B will not exercise this termination option if
a payment would be payable to Party A unless Party B provides evidence reasonably satisfactory to Party A
that a timely payment can be made by Party B from the source of payments described in Part 4(e) of the
Schedule.
Following a partial termination by either party pursuant to this Section 3, the Notional Amount for the
remaining term of this Transaction shall equal the amount specified in Schedule 1 for the corresponding
Calculation Period less the sum of all paztial reductions by either party
4 Account Details.
Payments to Party A. Citibank, New York
ABA No 021 000 089
For• Morgan Stanley Capital Services Inc.
Account No. 4072 4601
Payments to Party B
Pazty A Operations Contact:
[PLEASE PROVIDE]
Bazbaza Kent
Tel 212 761-4662
Fax 212 761-0581
3
Please confirm that the foregoing correctly sets forth the terms of our agreement MSCS Ref by executing this
Confirmation and returning it to us.
Best Regards,
MORGAN STANLEY CAPITAL SERVICES INC.
BY _
Name.
Title
Acknowledged and agreed as of the date first written above:
CITY OF FORT WORTH, TEXAS
BY _
Name:
Title
4
SCHEDULE 1
FROM (and including) TO (but excluding) NOTIOPtAL AMOUPTT
Effective Date 3/1/2001 61,750,000
3i 1/2001 3/ 1!2002 59,700,000
3/ 1 /2002 3/1/2003 57,580,000
3/ 1/2003 3/ 1/2004 55,385,000
3/1!2004 3/1/2005 53,110,000
3! 1/2005 3/ 1 /2006 50,745,000
3/ 1/2006 3/ 112007 48,290,000
3/ 1/2007 3! 1/2008 45,735,000
3/1/2008 3/1/2009 43,075,000
3/1/2009 3/1/2010 40,300,000
3/1/2010 3/1/2011 37,410,000
3/1/2011 3/1/2012 34,395,000
3/1/2012 3/1/2013 31,245,000
3/ 1 /2013 3/ 1/2014 27,950,000
3/1/2014 3/1/2015 24,505,000
3/ 1/2015 3/ 1/2016 20,895,000
3/1/2016 3/1!2017 17,110,000
3i 1/2017 3/ 1/2018 13,140,000
3/ 1/2018 3/1/2019 8,970,000
3/ 1/2019 3/ 1/2020 4,595,000
(..ocal Cur. rncv-Smele Ju: isdicuon 1
ISDA~
[ntcmarional Swap Dealers Association. Inc.
MASTER AGREEMENT
Dated as of September 19.x 2000
City of Fort Worth, Texas and Rice Financial Products, Inc
have entered and/or anticipate entering into one or more transactions (each a "Transaarori') that are or will be
governed by t}us Master Agreement, which includes the schedule (the "Schedule"), and the documents and other
confirming evidence (each a "Confirmation") exchanged between the parries confirming those Transactions.
Accordingly, the parties agree as follows: -
Interpretation
(a) Defrnidons. The terms defined in Section 12 and in the Schedule will have the meanings therein
specified for the purpose of this Master Agreement.
(b) Inconsistency. !n the event of any uconsistency between the provisions of the Schedule and the other
provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency between the
provisions of any Confirmation and this Master Agreement (uicluding the Schedule), such Confirmation will
prevail for the purpose of the relevant Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on the fact that ttus Master Agreement
and all Confirmations form a single agreement between the parues (collectively referred to as this "Agreement"),
and the parries would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions.
(i) Each party will make each payment or delivery specified in each Confirmation to be trade by it,
subject to the other provisions of this Agreement.
(ii) Paymenu under this Agreement will be made on the due date for value on that date m the place
of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in freely
transferable funds and in the manner customary for payments in the required currency Where
settlement is by delivery (that is, other than by payment), such delivery will be made for receipt on the
due date in the manner customary for the relevant obligation unless otherwise specified in the relevant
Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition precedent that
no Event of Default or Potential Event of Default with respect to the other parry has occurred and !s
Copyright ~ 1992 by International Swap Dealers Association. Inc.
Second Printing
continuing, (?) the condition precedent that no Earn Termination Date to respect of the reieyant
Transaction has occurred or been etTectively designated and (3) each other applicable condition
precedent specified in this Agreement.
(b) Change ojAccount. Either party may change its account for recen~ing a payment or deli~en by giving
notice to the other parry at least five Local Business Davs prior to the scheduled date for the payment or dcliyen
to which such. change applies unless such other parry gives timely nonce of a reasonable objection to such
change.
(c) Vetting if on any date amounts would otherwise be payable: -
(i) in the same currency and
(ii) in respect of the same Transaction,
by each parry to the other, then, on such date, each parry s obligation to make payment of any such amount will
be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable
by one parry exceeds the aggregate amount that would otherwise have been payable by the other parry, replaced
by an obligation upon the parry by whom the larger aggregate amount would have been payable to pay to the
other parry the excess of the larger aggregate amount over the smaller aggregate amount.
The parries may elect in respect of two or more Transactions that a net amount will be determined in respect
of all amounu payable on the same date in the same currency tit respect of such Transactions, regardless of
whether such amounts are payable in respect of the same Transaction. The election may be made in the Schedule
or a Confirmation by specifying that subparagraph (ii) above will not apply to the Transactions identified as
being subject to the election, together with the starting date (in which case subparagraph (u) above will not, or
will cease to, apply to such Transactions from such date). This election may be made separately for different
groups of Transactions and will apply separately to each pairing of branches or offices through which the parties
make and receive payments or deliveries.
(d) Default Lnterest; Other A-nounts. Prior to the occurrence or effective designation of an Early
Termination Date in respect of the relevant Transaction, a party that defaults in the petformarice of any payment
obligation will, to the extent permitted by law and subject to Section 6(c), be required to pay interest (before
as well as after judgment) on the overdue amount to the other parry on demand m the same currency as such
overdue amount, for the period from (and including) the origuial due date for payment to (but excluding) the
date of actual payment, at the Default Rate. Such interest will be calculated on the basis of daily compounding
and the actual number of days elapsed lf, prior to the occurrence or effective designation of an Early
Termination Date in respect of the relevant Transaction, a parry defaulu in the performance of any obligation
required to be settled by delivery, it will compensate the other parry on demand if and to the extent provided
for in the relevant Confiumation or elsewhere in this Agreement.
3. Representations
Each party represents to the other parry (which representations will be deemed to be repeated by each parry on
each date on which a Transaction is entered into) that: -
(a) Basic Representations
(i) Status it is duly organized and validly existing under the laws of the jurisdiction of its
organisation or incorporation and, if relevant under such laws, in good standing;
(ii) Powers It has the power to execute this Agreement and any other documentation relating to thus
Agreement to which it is a parry, to deliver this Agreement and any other documentation relating to this
Agreement that it~ is required by this Agreement to deliver and to perform its o>;liganons under this
1SDAc 1992
Second Panting
Agreement and any obligations -t has under anv Credit Support Document to w•-uch -t u a pam• and
has taken all necessary action to authorise such execution, del-verv and performance:
(tit) ~o [violation or Conflict. Such execution, delivery and performance do not v-olate or confi-ct
w-th any law applicable to -t, any prov-s-on of us constitutional documents, anv order or judgment of
anv court or other agency of government applicable to it or any of its assets or anv contractual
restriction binding on or affecting it or any of its assets:
(iv) Consents. All governmental .and other consents that are required to have been obtained b~ it with
respect to this Agreement or any Credit Support Document to which it -s a patty have been obtained
and are in full force and effect and all conditions of any such consents have been compl-ed w•-th, and
(~) Obligations Binding Its obligations under this Agreement and any Credit Support Document to
which it -s a parry const-tute its legal, valid and binding obligations, enforceable in accordance with
their respect-ve terms (subject to applicable bankruptcy, reorgatusation, insolvency, moratorium or
sirrular laws affecting creditors tights generally and subject, as to enforceabil-ry, to equitable pruzciples
of general application (regardless of whether enforcement is sought in a proceeding -n equity or at
law)).
(b) Absence of Certain Events. No Event of Default or Potential Event of Default or to its knowledge,
Termination Event with respect to it has occurred and is continuuzg and no such event or circumstance would
occur as a result of iu entering into or perfomung its obligations under this Agreement or any Credrt Support
Document to which -t is a party
(c) Absence of Litigation. There -s not pending or, to its knowledge, threatened against -t or any of its
Affiliates any action, suit or proceeding at law or m equity or before any court, tribunal, governmental body,
agency or official or any arbitrator that is likely to affect the legality, validity or enforceabilrry agaurst -t of this
Agreement or any Credit Support Document to which it is a parry or its abilrry to perform its obligations under
this Agreement or such Credit Support Document.
(d) Accuracy ojSpeeified /njortnation. All applicable information that is funushed in writing by or on
behalf of it to, the other party and is identified for the purpose of this Section 3(d) in the Schedule is, as of the
date of the information, true, accurate and complete in every material respect.
4. Agreements
Each party agrees with the other that, so long as either parry has or may have any obl-gat-on under this
Agreement or under any Credit Support Document to which it -s a party -
(a) Furnish Specifced Information. -t will deliver to the other parry any forms, documents or certificates
specified tit the Schedule or any Confirmation by the date specified in the Schedule or such Confirmation or,
if none -s specified,. as soon as reasonably practicable.
(b) Maintain Authorisations. It will use all reasonable efforts to maintain in full force and effect all
consenu of any governmental or other authority that are required to be obtained by -t with respect to this
Agreement or any Credit Support Document to which -t is a parry and will use all reasonable efforts to obtain
any that may become necessary in the future.
(c) Comply with Laws. It will comply in all material respects with all applicable laws and orders to which
it may be subject if failure so to comply would materially -mpair its ab-liry to perform its obligations under this
Agreement or any Credit Support Document to which -t is a parry
3 1SDAo 1992
Second Panting
Events of Default and Termination Events
(a) Events ojDejault. The occurrence at any nme with respect to a pam or if appltcable, anv Credit
Support Provider of such parry or anv Spectfied Enurv of such parry of any of the following events consntutes
an event of default (an "Event of Default") with respect to such pam• -
(t) Failure to Pay or Deliver Failure by the party to make, when due, anv pa~Tnent under this
Agreement or delivery under Section ~(a)(i) or 2(d> required to be made by a tf such failure is not
remedied on or before the third Local Business Day after nonce of such failure is given to the pam
(ii) Breach of Agreement. Failure by the parry to comply with or perform anv agreemcnt or
obhgatton (other than an obligation to make anv payment under this Agreement or deltverv under
Section 2(a)(i) or 2(d) or to give notice of a Tet7riiriatton Event) to be complied with or performed by
the parry in accordance with this Agreement if such failure is not remedied on or before the tlunieth
day after notice of such failure is given to the parry;
(itt) Credit Support Default.
(1) Failure by the patty or any Credit Support Provider of such parry to comply with or perform
any agreement or obligation to be complied with or performed by it in accordance wrath any Credit
Support Document if such failure is continuing after any applicable grace period has elapsed,
(?) the expiration or termination of such Credit Support Document or the failing or ceasing of
such Credit Support Document to be in full force and effect for the purpose of this Agreement
(in etcher case other than in accordance wtth its terms) prior to the satisfaction of al! obhgauons
of such party under each Transaction to which such Credit Support Document relates without the
written consent of the other parry; or
(3) the party or such Credit Support Provider disaffirms, disclaims, repudiates or re~ecu, in
whole or in part, or challenges the validity of, such Credit Support Document;
(iv) Misrepresentation. A representation made or repeated or deemed to have been made or repeated
by the party or any Credit Support Provider of such parry to this Agreement or any Credit Support
Document proves to have been incorrect oc misleading in any material respect when made or repeated
or deemed to have been made or repeated;
(v) Default under Specified Transaction. The party, any Credit Support Provider of such parry or
any applicable Specified Entity of such parry (I) defaults under a Specified Transaction and, after givutg
effect to any appitcable notice requirement or grace period, there occurs a liquidation of, an acceleration
of obltgattons under, or an early tentiuiation of, that Specified Transaction, (2) defaults, after giving
effect to any applicable notice requirement or grace period, in making any payment or delivery due on
the last payment, delivery or exchange date of, or any payment on early termuiation of, a Specified
Transaction (or such default continues for at least three Local Business Days if there is no appltcable
notice requirement or grace penod) or (3) disaffirms, disclauns, repudiates or rejects, in whole or in
part, a Spectfied Transaction (or such action is taken by any person or entity appointed or emporarered
to operate it or act on iu behalf);
(vi) Cross Default. if "Cross Default" is specified in the Schedule as applying to the parry, the
occurrence or existence of (1) a default, event of default or other similar condition or event (however
described) in respect of such parry, any Credit Support Provider of such party or any applicable
Spectfied Entity of such parry under one or more agreements or instruments relating to Specified
Indebtedness of any of them (undividually or collectively) in an aggregate amount of not less than the
appltcable Threshold Amount (as specified to the Schedule) which has resulted in such Specified
indebtedness becortung, or becoming capable at such time of being declared. due and payable under
such agreements or instruments, before it would otherwise have been due and payable or (2) a default
1SDAo 1992
Second Panting
by such party, such Credit Support Provider or such Specified Entity (individually or collecuvel~) in
making one or more payments on the due date thereof.. in an aggregate amount of not less than the
applicable Threshold Amount under such agreements or instruments (after giving effect to any
applicable notice requirement or grace period);
(vu) Bankruptcy The parry, any Credit Support Provider of such party or any applicable Specified
Enuri of such parry• -
(!) is dissolved (other than pursuant to a consolidation, amalgamation or merger)• (=) becomes
insolvent or is unable to pay its debts or fails or admits m writing its inability generally to pati
its debts as they become due: (3) makes a general assignment, arrangement or composition with
or for the benefit of its creditors: (4) institutes or has utstituted against it a proceeding seekine
a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency
law or other similar law affecting creditors tights, or a petition is presented for its winding-up
or liquidation, and, uz the case of any such proceeding or petition instituted or presented against
it, such proceeding or petition (A) results in a judgment of insolvency or bankruptcy or the entry
of an order for relief or the making of an order for its winding-up or liquidation or (B) is not
dismissed, discharged, stayed or restrained in each. case within 30 days of the institution or
presentation thereof; (5) has a resolution passed for its winding-up, official management or
liquidation (other than pursuant to a consolidation, amalgamation or merger): (6) seeks oc
becomes subject to the appointment of an admuusuator, provisional liquidator, conservator,
receiver, trustee, custodian or other similar official for it or for all or substantially all its assets:
(7) has a secured party take possession of all or substantially all its assets or has a distress,
execution, attachment, sequestration or other legal process levied, enforced or sued on or against
all or substantially all its asseu and such secured party maintains possession, or any such process
is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter,
(8) causes or is subject to any event with respect to it which, under the applicable laws of any
jurisdiction, has an analogous effect to any of the events specified in clauses (1) to (7) (inclusive);
or (9) takes any action m furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the foregoing acts; or
(viii) Merger Without Assumption. The party or any Credit Suppott Provider of such parry
consolidates or amalgamates with, of merges with or into, or transfers all or substantially all iu assets
to, another entity and, at the tune of such consolidation, amalgamation, merger or transfer -
(1) the resulting, surviving or transferee entity fails to assume all the obligations of such party
or such Credit Support Provides under this Agreement or any Credit Support Document to which
it or its predecessor was a party by operation of law or pursuant to an agreement reasonably
satisfactory to the other party to this Agreement; or
(2) the benefiu of any Credit Support Document fail to extend (without the consent of the other
parry) to the performance by such resulting, surviving or transferee entity of iu obligations under
this Agreement.
(b) Terminptian Events. The occurrence at any tune with respect to a party or, if applicable, any Credit
Support Provider of such party or any Specified Entity of such parry of any event specified below constitutes
an Illegality if the event is specified in (i) below, and, if specified to be applicable, a Credit Event Upon Merger
if the event is specified pursuant to (ii) below or an Additional Termination Event if the event is specified
pursuant to (iii) below -
(i) Illegality. Due to the adoption of, or any change in, any applicable law after the date on which
a Transaction is entered into,. or due to the promulgation of, or any change in, the interpretation by any
court, tribunal or regulatory authority with competent jurisdiction of any applicable law after such date,
it becomes unlawful (other than as a result of a breach by the parry of Section 4(b)) for such parry
(which will be the Affected Parry) -
1SDAa 1992
Second Priming
(1) to perform any absolute or contingent oblieauon to make a payment or delivery or to recen~e
a pa~Trient or delivery in respect of such Transaction or to comply with am' other material
provision of this Agreement relating to such Transaction, or
(2) to perform, or for any Credit Support Provider of such party to perform, any contingent or
other obligation which the party (or such Credit Support Provider) has under any Credit Support
Document relating to such Transaction:
(u) Credit Event Cpon .1•terger if "Credit Event Upon Merger" is specified in the Schedule as
applying to the parry, such patty ("X"), any Credit Support Provider of \ or any applicable Specified
Entiry of X consoLdates or amalgamates with, or merges with or into, or transfers all or substantially
all its assets to, another entity and such action does not .constirute an e~•ent described in
Section 5(a)(vui) but the creditworthiness of the resulting, surviving or transferee ennrv is materially
weaker than that of X, such Credit Support Provider or such Specified_Entiry, as the case may be,
immediately prior to such action (and, m such event, X or its successor or transferee, as appropriate.
will be the Affected Parry), or
(iii) Additional Termination Event. !f any "Additional Termination Event" is specified in the
Schedule or any Confirmation as applying, the occurrence of such event (and, in such event, the
Affected Parry or Affected Parties shall be as specified for such Additional Termination Event u1 the
Schedule or such Confirmation).
(c) Event of Dejault and /!legality. if an event or circumstance which would otherwise constitute or give
rise to an Event of Default also constitutes an Illegality, it will be treated as an lllegaliry and will not constitute
an Event of Default.
6. Early Termination
(a) Right to Terminate Following Event of Dejault if at any time an Event of Default with respect to a
parry (the "Defaulting Party") has occurred and is then continuing, the other parry (the "Non-defaulting Party")
may, by not more than 20 days notice to the Defaulting Parry specifying the relevant Event of Default, designate
a day not earliet than the day such notice is effective as an Early Termination Date in respect of all outstanding
Transactions. lf, however, "Automatic Early Termination" is specified m the Schedule as applying to a parry,
then an Early Termination Date in respect of all outstanding Transactions will occur immediately upon the
occurrence with respect to such parry of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or,
to the extent analogous thereto, (8), and as of the tune utunediately preceding the instirution of the relevant
proceeding or the presentation of the relevant petition upon the occurrence with respect to such party of an Event
of Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
(b) Right to Terminate Following Termination Event
(i) iYotice. !f a Termination Event occurs, an Affected Party will, promptly upon becoming aware
of it, notify the other party, specifying the nature of that Termination Event and each Affected
Transaction and will also give such other information about that Termuation Event as the other party
may reasonably require.
(ii) Two AJjected Parties. if an lllegaliry under Section 5(b)(i)(1) occurs and there are two Affected
Parties, each parry will use all reasonable efforts to reach agreement within 30 days after notice thereof
is given under Section 6(b)(i) on action to avoid that Termination Event.
(iii) Right to Terminate. !f -
(1) an agreement under Section 6(b)(ii) has not been effected with respect to all Affected
Transactions within 30 days after an Affected Parry gives notice under Section 6(b)(i); or
1SD,4o 1992
Second Printing
(3) an lllegahry other than that referred to to Section 6(b)(ti), a Credit Event Lpon Merger or
an Additional Tetmtnanon Event occurs;
etther patty in the case of an Illegality, anv Affected Party to the case of an Addtuonal Terrrunanon
Event if there is more than one Affected Party; or the party which is not the Affected Pam to the case
of a Credit Event Upon Merger or an Addtnonal Termination Event if there is only one At~'ected Pam
may, by not more than 20 days noace to the other pam and provided that the relevant Termtnaton
Event is t}ren conanutng, designate a day not earlier than the day such noace is effective as an Earl
Termination Date m respect of all Affected Transactions.
(c) Effect of Designation.
(t) if nonce designating an Early Termtttauon Date is gn•en under Seaton 6(a) or (b), the Early
Tertntnation Date will occur on the date so designated, whether or not the relevant Event of Default
or Termination Event is then conttnutng.
(ii) Upon the occurrence or effective designation of an Early Termination Date, no further pavmenu
or deliveries under Section 2(a)(i) or 2(d) to respect of the Tetmuiated Transactions will be requued
to be made, but without prejudice to the other provisions of this Agreement. The amount, if any
payable in respect of an Early Termitation Date shall be determined pursuant to Seaton 6(e)
(d) Calculations.
(i) Statement. On or as soon as reasonably practicable following the occurrence of an Early
Termuiation Date, each parry will make the calculaaons on its part, tf any, contemplated by Section
6(e) and will provide to the other parry a statement (1) showing, in reasonable detail, such calculations
(including all relevant quotations and specifying any amount payable under Section 6(e)) and (2) giving
details of the relevant account to which any amount payable to it is to be paid. !n the absence of written
confirmation from the source of a quotation obtained to detemtuiing a Market Quotation, the records
of the parry obtaining such quotation will be conclusive evidence of the existence and accuracy of such
quotation.
(ii) Payment Date. An amount calculated as being due in respect of any Early Tetmtnaaon Date
under Section 6(e) will be payable on the day that noace of the amount payable is effective (in the case
of an Early Termination Date which is designated or occurs as a result of an Event of Default) and on
the day which is two Local Business Days after the day on which notice of the amount payable is
effective (in the case of an Eazly Terrninaaon Date which is designated as a result of a Termuiation
Event). Such amount will be paid together with (to the extent permitted under applicable law) interest
thereon (before as well as after judgment), from (and including) the relevant Early Termination Date
to (but excluding) the date such amount is paid, at the Applicable Rate. Such interest will be calculated
on the basis of daily compounding and the actual number of days elapsed.
(e) Paynrenu on Early Termination. if an Early Termination Date occurs, the following provisions shall
apply based on the parties election in the Schedule of a payment measure, etther "Market-Quotation" or "Loss",
and a payment method, etther the "First Method" or the "Second Method" !f the parties fail to designate a
payment measure or payment method in the Schedule, it will be deemed that "Market Quotation" or the "Second
Method", as the case .may be, shall apply The amount, if any, payable in respect of an Eazly Termination Date
and determined pursuant to this Section will be subject'to any Set-off.
(i) Events of Default. if the Early Termination Date results from an Event of Default: -
(1) First Method and Marker Quotation. !f the First Method and Market Quotation apply, the
Defaulting Party will pay to the Non-defaulting Parry the excess, if a positive number, of (A) the
sum of the Settle.~rient Amount (determined by the Non-defaulting Parry in respect of the
LSDAo 1992
Second Printing
Terminated Transactions and the t,npatd Amounts owing to the Non{letaulung Pam uver (B~ the
Unpaid Amounts owing to the Defaulting Party
(2) First .bfethnd and Lnss. if the First Method and Loss apply the Defaulting Party will pay
to the Non-defaulting Party, if a posttive number the Non-defaulting Pam s Loss in respect of
this Agreement.
(3) Second .tilethnd and ,tifarket Quotation. if the Second Method and 1lazket Quotation apply
an amount will be payable equal to (A) the sum of the Settlement Amount (detemuned by the
Non-defaulting Parry) in respect of the Terminated Transactions and the Unpaid Amounts owing
to the Non-defaulting Pam Less (B) the Unpaid Amounts owing to the Defaulting Party If that
amount is a posttive number the Defauittng Parry will pay it to the Non-defaulting Pam tf tt is
a negative number, the Non-defaulting Parry will pay the absolute value of that amount to the
Defauittng Parry
(4) Second Method and Lass. !f the Second Method and Loss apply, an amount will be payable
equal to the Non-defaulting Parry s Loss in respect of this Agreement. if that amount is a posttive
number, the Defauittng Party will pay it to the Non-defaulting Parry; if tt is a negattve number,
the Non-defaulting Party will pay the absolute value of that amount to the Defaulting Party
(ti) Terrainatt`on Events. if the Early Termination Date results from a Termination Event: -
(I) One AfJrected Party if there is one Affected Party, the amount payable will be determined
in accordance with Section 6(e)(i)(3), tf Market Quotation applies, or Seaton 6(e)(i)(4), if Loss
applies, except that, in either case, references to the Defaulting Parry and to the Non-defaultutg
Parry will be deemed to be references to the Affeted Party and the parry which is not the
Affected Party, respectively, and, if Loss applies and fewer than all the Transactions are being
terminated, Loss shall be calculated in respect of all Ternunated Transactions.
(2) Tian Ajj"ected Parties. !f there aze two Affected Parties: -
(A) if Market Quotation applies, each parry will determine a Settlement Amount in respect
of the Terminated Transactions, and an amount will be payable equal to (1) the sum of (a)
one-half of the difference between the Settlement Amount of the party with the higher
Settlement Amount ("X") and the Settlement Amount of the parry with the lower Settlement
Amount (" Y")and (b) the Unpaid Amounu owing to X less (11) the Unpaid Amounts owing
to Y, and
(B) if Loss applies, each party will determine its Loss in respect of this Agreement (or, if
fewer than all the Transactions are being terminated, in respect of all Terminated
Transactions) and an amount will be payable equal to one-half of the difference between the
Loss of the patty with the higher Loss ("X") and the Loss of the parry with the lower Loss
(" 1'" ).
if the amount payable is a positive number, Y will pay tt to X, tf it is a negattve number, X will
pay the absolute value of that amount to Y
(iii) Adjustment jor Bankruptcy. !n circumstances where an Early Termination Date occurs because
"Automatic Early Tertunanon' applies in respect of a parry, the amount determined under this Section
6(e) will be subject to such adjustmenu as azeappropnate and permitted by law to reflect any paymenu
or deliveries made by one parry to the other under this Agreement (and retained by such other party)
during the period from the relevant Early Termination Date to the date for payment deternuned under
Section 6(d)(ii).
1SDAo 1992
Second Printing
(iv) Pre-Estimate. The parties agree that tf Market Quotation applies an amount recu~•erabie under
this Section 6(e) is a reasonable pre~stimaie of loss and not a penalrv Such amount is payable for the
loss of bargain and the loss of protection against futuee risks and except as otherwise provided in this
Agreement neither parry will be entitled to recover any additional damages as a consequence of such
losses.
Transfer
Neither this Agreement nor any interest or obligation in or under this Agreement may be transferred (~ti~iether
by way of security or otherwise) by etcher parry without the prior written consent of the other pam except
chat: -
(a) a party may make such a transfer of this Agreement ptusuant to a consolidation or amalgamanon with,
or merger with or into, or transfer of all or substantially all its asseu to, another entity (but without prejudice
to any other right or remedy under this Agreement) and
(b) a parry may make such a transfer of all or any part of its interest in any amount payable to tt from a
Defaulting Parry under Section 6(e).
Any purported transfer that is not in compliance with this Section will be void.
8. Miscellaneous
(a) Entire Agreement. This Agreement constirutes the enure agreement and understanding of the parties
with respect to its subject matter and supersedes all oral communication and prior writings with respect thereto.
(b) Amendments. No amendment, modification or waiver in respect of this Agreement will be effective
unless in writing (including a writing evidenced by a facsimile transmission) and executed by each of the parties
or confirmed by an exchange of telexes or electronic messages on an electronic messaging system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations of the
parties under clus Agreement will survive the termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the rights, powers, remedies and
privileges provided in this Agreement are cumulative and not exclusive of any righu, powers, remedies and
privileges provided by law
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver in respect of it) may be executed
and delivered in counterparts (including by facsimile transmission), each of which will be deemed an
original.
(ii) The parties intend that they are legally bound by the terms of each Transaction from the moment
they agree to those terms (whether orally or otherwise). A Confirmation shall be entered into as soon
as practicable and may be executed and delivered in counterparts (including by facsimile transmission)
or be created by an exchange of telexes or by an exchange of electronic messages on an electronic
messaging system, which in each case will be sufficient for all purposes to evidence a binding
supplement to this Agreement. The parties will specify therein or through another effective means that
any such counterpart, telex or electronic message constirutes a Confirmation.
(f) No Waiver ojRights. A failure or delay in exercising any right, power or privilege in respect of this
Agreement will not be presumed to operate as a waver, and a single or partial exercise of any right, power or
privilege will not be presumed to preclude any subsequent or further exercise, of that right, power or privilege
or the exercise of any other right, power or privilege.
1SDAe 1992
Second Panting
(g) Headings. The headings used in this Agreement are for com•eruence of reference only and are not to
affect the construction of or to be taken into consideration in interpreang this Agreement.
Expenses
A Defaulting Parry will, on demand, indemnify and hold harmless the other parry for and aeainst all reasonable
out-of-pocket expenses, including legal fees, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document to which the Defaulting Pam is
a parry or by reason of the early termination of any Transaction, including, but not limited to, costs of
collection.
10. Notices
(a) Effectiveness. Any notice or other communication in respect of this Agreement may be given in anv
manner set forth below (except that a notice or other communication under Section 5 or 6 may not be given by
facsimile transrrussion or electronic messaging system) to the address or number or in accordance with the
electronic messaging system details provided (see the Schedule) and will be deemed effective as indicated. -
(i) if in writing and delivered in person or by courier, on the date it is delivered;
(ii) if sent by telex, on the date the recipient s answerback is received,
(iii) if sent by facsimile transmission, on the date that transmission is received by a responsible
.employee of the recipient in legible form (it being agreed that the burden of proving receipt will be on
the sender and will not be met by a transmission report generated by the sender s facsimile machine);
(iv) if sent by certified or registered mail (aumail, 'if overseas) or the equivalent (return receipt
requested), on the date that mail is delivered or its delivery is attempted, or
(y) if sent by electronic messaging system, on the date that electronic message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Local Business Day
or that communication is delivered (or attempted) or received, as applicable, after the close of business on a
Local Business Day, in which case that communication shall be deemed given and effective on the first following
day that is a Local Business Day
(b) Change ojAddresses. Either party may by notice to the other change the address, telex or facsunile
number or electronic messaging system details at which notices or other communications are to be given to it.
11 Governing Law aad Jurisdiction
(a) Governing Law. This Agreement will be governed by and construed in accordance with the taw
specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating to this Agreement
("Proceedings"), each parry irrevocably -
(i) submiu to the jurisdiction of the English couru, if this Agreement is expressed to be governed
by English law, or to the non-exclusive jurisdiction of the couru of the State of New York and the
United States District Court located m the Borough of Manhattan in New York Ciry, if this Agreement
is expressed to be governed by the laws of the State of New York, and
(ii) waives any objection which it may have at any time to the laying of venue of any Proceedings
brought in an~ such court, waives any claim that such Proceedings have been brought in an
10 1SDAo 1992
Second Printing
inconvenient forum and further waives the right to obJect, with respect to such Proceedings. that such
court does not have any Jurisdiction over such parry
Nothing in this Agreement precludes either patty from bringing Proceedings in an~ other Jurisdiction (outside,
if this Agreement is expressed to be governed by English law, the Contracting States, as defined m Secnon I (• )
of the Civil Junsdicnon and Judgments Act 1982 or any modification. extension or reenactment thereof for the
tame being in force) nor will the bringing of Proceedings in any one or more Jurisdictions preclude the bringing
of Proceedings in any other jurisdiction.
(c) iVaiver of /mraunities. Each parry 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 immunicv on the
grounds of sovereignty or other sunilar grounds from (i) suit, (u) Jurisdiction of any coup, (ui) relief by wav
of inJunction, order for specific performance or for recovery of property, (rv) 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
aught otherwise be entitled in any Proceedings in the courts of any Jurisdiction and uzevocably agrees, to the
extent permitted by applicable law, that it will not claim any such unmurury tit any Proceedings.
12. Definitions
As used in this Agreement:-
"Additions! Terneination Event" has the meaning specified in Section 5(b).
"Affected Parry" has the meaning specified in Section 5(b).
"Affected Transactions" means (a) with respect to .any Termination Event consisting of an lllegaliry, all
Transactions affected by the occurrence of such Termination Event and (b) with respect to any other Termination
Event, all Transactions.
"Affdiate" means, subject to the Schedule, in relation to any person, any entity controlled, directly or indirectly,
by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under
common control with the person. For this purpose, "control" of any entity or .person means ownership of a
maJoriry of the voting power of the entity or person.
"Applicable Rate" means: -
(a) ui respect of obligations payable or deliverable (or which would have been but for Section 2(a)(iii)) by a
Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either parry from and after the date
(determined in accordance with Section 6(d)(ii)) on which that amount is payable, the Default Rate;
(cj in respect of all other obligations payable or deliverable (or wtuch would have been but for Section 2(a)(iii))
by aNon-defaulting Parry, the Non-default Rate; and
(d) in all other cases, the Termination Rate.
"consent" includes a consent, approval, action, authorisation, exemption, notice, filing, registration or exchange
control consent.
"Credit Event Upon Merger" has the meaning specified in Section 5(b).
"Credit Support Document" means any agreement or instrument that is specified as such in this Agreement.
"Credit Support Provider" has the meaning specified in the Schedule.
I1 1SDAo 1992
Second Printing
"Default Rate" means a rate per annum equal to the cost (without proof or evidence of any actual costf to the
relevant payee (as certified by it) if it were to fund or of funding the rele~•ant amount plus 1°'o per annum.
"Dejauking Party" has the meaning specified in Section 6(a).
"Early Termination Dare" means the date deterrruned in accordance with Section 6(a) or 6(b)(ui).
"Event of Default" has the meaning specified in Section 5(a) and, if applicable, in the Schedule.
"!!legality"has the meaning specified in Section 5(b).
"faw" includes any treaty, law, rule or regulation and "laxful" and "unlax~ul"will be construed accordingly
"Local Business Day" means, subject to the Schedule, a day on wtuch cortimerctal banks are open for business
(including dealings in foreign exchange and foreign currency deposits) (a) in relation to any obligation under
Section 2(a)(i), in the place(s) specified in the relevant Confirmation or, if not so specified, as otherwise agreed
by the parties in writing or determined pursuant to provisions contained, or incorporated by reference, in this
Agreement, (b) in relation to any other payment, to the place where the relevant account is located, (c) in
relation to any notice or other communication, including notice contemplated under Seaton 5{a)(i), tit the city
specified in the address for notice provided by the recipient and, in the case of a notice contemplated by Section
2(b), to the place where the relevant new account is to be located and (d) in relation to Section 5(a)(v)(2), m
the relevant locations for performance with respect to such Specified Transaction.
"Loss" means, with respect to this Agreement or one or more Terminated Transactions, as the case may be,
and a party, an amount that parry reasonably determines in good faith to be its total losses and cosu (or gaui,
to which case expressed as a negative number) in connection with this Agreement or that Terminated Transaction
or group of Terminated Transactions, as the case may be, including any loss of bargain, cost of funding or, at
the election of such parry but without duplication, loss or cost incurred as a result of its tertntnating, liquidating,
obtaining or reestablishing any hedge or related trading position (or any gain resulting from any of them). Loss
includes losses and costs (or gains) in respect of any payment or delivery required to have been made (assuming
satisfaction of each applicable condition precedent) on or before the relevant Early Termination Date and not
made, except, so as to avoid duplication, if Section 6(e)(i)(l) or (3) or 6(e)(ii)(2)(A) applies. Loss does not
include a parry's legal fees and out-of-pocket expenses referred to under Section 9 A party will determine iu
Loss as of the relevant Early Termination Date, or, if that is not reasonably practicable, as of the earliest date
thereafter as is reasonably practicable. A party may (but need not) determine iu Loss by reference to' quotations
of relevant rates or prices from one or more leading dealers in the relevant markeu.
",'Karket Quotation" means, with respect to one or more Terminated Transactions and a patty making the
determination, an amount determined on the basis of quotations from Reference Market-makers. Each quotation
will be for an amount, if any, that would be paid to such parry (expressed as a negative number) or by such
parry (expressed as a positive number) in consideration of an agreement between such party (taking mto account
any existing Credit Support Document with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that would have the effect of
preserving for such party the economic equivalent of any payment or delivery (whether the underlying obligauon
was absolute or contingent and assuming the satisfaction of each applicable condition precedent) by the parties
under Section 2(a)(i) in respect of such Terminated Transaction or group of Terminated Transactions that would,
but for the occurrence of the relevant Early Termination Date, have been required after that date. For this
purpose, Unpaid Amounts in respect of the Termuiated Transaction or group of Terminated Transactions aze
to be excluded but, without limitation, any payment or delivery that would, but for the relevant Eazly
Termination Date, have been required (assunung satisfaction of each applicable condition precedent} after that
Early Termination Date is to be included. The Replacement Transaction would be subject to such documentation
as such party and the Reference Market-maker may, m good faith, agree. The party making the determination
(or its agent} will request each Reference Market-maker to provide its quotation to the extent reasonably
practicable as of the same day and time (without regard to different time zones) on or as soon as reasonably
practicable after the relevant Early Termination Date. The day and tune as of whi", those quotations are to be
12 1SDAo 1992
Second Punting
obtained will be selected in good faith by the party obliged to make a deterrrunauon under Section 6~e1 and.
if each parry is so obliged, after consultation with the other !f riit5re titan three quotations are provided, the
Market Quotation will be the arithmetic mean of the quotations, without regard to the quotations having the
highest and lowest values. !f exactly three such quotations are provided, the Market Quotation gill be the
quotation remaining after disregarding the highest and lowest quotations. For thus purpose, if more than one
quotation has the same highest value or lowest value, then one of such quotations shall be disregarded. 1 f fewer
than three quotations are provided, it will be deemed that the Market Quotation in respect of such Terminated
Transaction or group of Terminated Transactions cannot be determined.
"ton-default Rate" means a rate per annum equal to the cost (without proof or evidence of anv actual cost) to
the Non-defaulting Parry {as certified by it) if it were to fund the relevant amount.
"ti'ondejaufting Party" has the meaning specified in Section 6(a).
"Potential Event of Default" means any event which, with the giving of notice or the lapse of time or both,
would constitute an Event of Default.
"Reference Market-makers" means four leading dealers m the relevant market selected by the parry detecmiriing
a Market Quotation m good faith (a) from among dealers of the highest credit standing which satisfy all the
criteria that such parry applies generally at the time in deciding whether to offer or to make an extension of
credit and (b) to the extent practicable, from among such dealers having an office in the same city
"Scheduled Payment Date" means a date on whiich a payment or delivery is to be made under Section 2(a)(i)
with respect to a Transaction.
"Set-o,~"' means set-off, offset, combination of accounts, right of retention or withholding or similar right or
requirement to whuch the payer of an amount under Section 6 is entitled or subject (whether arising under thus
Agreement, another contract, applicable law or otherwise) that is exercised by, or imposed on, such payer
"Settlement Amount" means, with respect to a party and any Early Termination -Date, the sum of: -
(a) the Mazket Quotations (whether positive or negative) for each Terminated Transaction or group of
Terminated Transactions for which a Market Quotation is determined, and
(b) such parry's Loss (whether positive or negative and without reference to any Unpaid Amounts) for each
Terminated Transaction or group of Terminated Transactions for whuch a Mazket Quotation cannot be
detemuned or would not in (in the reasonable belief of the parry making the determination) produce a commercially
reasonable result.
"Specified Entity" has the meariuig specified in the Schedule.
"Specified /ndebtedness" means, subject to the Schedule, any obligation (whether present or future, contingent
or otherwise, as principal or surety or otherwise) in respect of borrowed money
"Specifred Triansaction" means, subjece to the Schedule, (a) any transaction (including an agreement with respect
thereto) now existing or hereafter entered into between one parry to this Agreement (or any Credit Support
Provider of such party or any applicable Specified Entity of such parry) and the other parry to this Agreement
(or any Credit Support Provider of such other party or any apphicable Specified Entity of such other parry) which
is a rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or
equity index swap, equity or equity index option, bond option, ineerest rate option, foreign exchange transaction,
cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency torte swap
transaction, .currency option or any other similaz transaction (including any option with respect to any of these
transactions), (b) any combnation of these transactions and (c) any other transaction identified as a Specified
Transaction in thus Agreement or the relevant Confirmation
13 1SDAo 1992
Second Printing
a. ,:
"Terminated Transactions" means with respect to any Early Termtnauon Date (a) tf resulting from a
Terrrunation Event, all Affected Transactions and.(b) if resulting from an Event of Default,. all Transactions Un
either case) to effect immediately before the effectiveness of the notice designating that Early Terrrunatton Date
(or, if "Automatic Early Termination' applies, trnmediately before the Early Terrrunatton Date)
"Termination Event" means an lilegahty or, tf specified to be applicable, a Credit Event l;pon Merger or an
Additional Terminaton Event.
"Termination Rare" means a rate per annum equal to the arithmetic mean of the cost (without proof or evidence
of any actual cost) to each parry (as certified by such parry) if tt were to fund or of funding such amounts.
"Unpaid Amounts" owing to any party means, with respect to an Early Termination Date, the aggregate of
(a) in respect of all Terminated Transactions, the amounts that became pavable (or that would have become
payable but for Section 2(a)(iii)) to such parry under Section 2(a)(i) on or prior to such Early Tenrunatton Date
and which remain unpard as at such Early Termination Date and (b) in respect of each Terminated Transaction.
for each obligation under Section 2(a)(i) which was (or would have been but for Section 2(a)(tii)) required to
be settled by delivery to such parry on or pnor to such Early Termnation Date and which has not been so seNed
as at such Early Termination -Date, an amount equal to the fair market value of that which was (or would have
been) required to be delivered as of the originally scheduled date for delivery, ui each case together with (to the
extent permitted under applicable law) interest, ut the cuaenry of such amounts, from (and including) the date
such amounts or obligations were or would have been required to have been paid or performed to (but excludutg)
such Early Termination Date, at the Applicable Rate. Such amounu of interest will be calculated on the basis
of daily compounding and the actual number of days elapsed. The fair market value of any obligation referred
to in clause (b) above shall be reasonably determined by the party obliged to make the determutation under
Section 6(e) or, if each parry is so obliged, tt shall be the average of the fair market values reasonably
detertruned by both parties.
1N WITNESS WHEREOF the parties have executed this document on the respective dates specified below with
effect from the date specified on the first page of this document.
City,., of, Fort Worth,,. Texas.
(Name of Party)
By By
Name:
Title:
Date:
Rice Financial Products, Ync.
(Name of Parry)
Name:
Title:
Date:
14 1SDAc 1993
Second Printins
Y.a».Yli dJhklt s~.. :Y.:.~sf s.'k; . ~....
U.S. MUNICIPAL COUNTERIPARTY SCHEDULE
to the
Master Agreement
(Local Currency-Single Junsdiction)
dated as of , 2000
between ItFPC, Ltd. ("RF'PC") and Crty of Fort Worth, Texas ("Counterparty")
Part I. Termination Provisions.
(a) "Specified Entity" means in relation to Counterparty for the purpose of
Section 5(a)(v) (Default under Specified Transaction), not applicable
Section 5(a)(vi) (Cross Default), not applicable
Section 5(a)(vu) (Bankruptcy), not applicable
Section 5(b)(ii) (Credit Event Upon Merger), not applicable.
and in relation to RFPC for the purpose of:
Section 5(a)(v) (Default under Specified Transaction), not applicable
Section 5(a)(vi) (Cross Default), not applicable.
Section 5(a)(va) (Bankruptcy), not applicable.
Section 5(b)(ii) (Credit Event Upon Merger), not applicable
(b) "Specified Transaction" means, in lieu of the meaning specified in Section 12, any contract or
transaction, including an agreement wish respect thereto (whether or not documented under or
effected pursuant to a master agreement) now existing or hereafter entered into between one party
to this Agreement (or any Credit Support Provider of such party or any applicable Specified
Entity of such party) and the other party to this Agreement (or any Credit Support Provider of
such party or any applicable Specified Entity of such party)
(c) The "Cross Default" provisions of Section 5(a)(vi) will apply to both RFPC and Counterparty
Section 5(a)(vi) is hereby amended by deleting in the seventh line thereof the words ", or
becoming capable at such time of being declared,"
"Threshold Amount" means, in the case of RFPC, $20,000,000 and in the case of Counterparty,
(1) m connection with any Specified Indebtedness relating to the source of funds set forth m Part
V(t) of this Schedule, $1 00, and (2) in connection with any other Specified Indebtedness,
$20,000,000
(d) "Specified Indebtedness"will have the meaning specified in Section 12 of this Agreement.
NYA 296744.3
O Cou "Credit Event Upon Merger" provisions of Section ~(b)(u) will apply to RFPC and
>. a .?,..,e:.,,, ..j,<,
nterparty ~. -,~ xx:n ~, .,~~, ,> Y ~ _, ... .M -. ,
(f) The "Automatic Early Termination" provisions of Section 6(a) will apply to Counterparty and
RFPC, rovided, however, that with respect to RFPC, an Early Termination Date in respect of all
outstanding Transactions will also occur immediately upon the occurrence of an Event of Default
specified in Section 5(a)(ix)
(g) Payments on Early Termination. For the purpose of Section 6(e) of this Agreement.
(i) Mazket Quotation will apply
(ii) The First Method will apply
Each party acknowledges that to the event an Eazly Termination Date is designated or deemed to
occur due to an Event of Default and it is the Defaulting Party, rt will not receive any payments
upon early termination in respect of the Settlement Amount.
(h) Insurer Provisions. The following provisions shall apply to any Transaction to which the Swap
Insurance Policy issued by Insurer, as Credit Support Provider, to the account of Counterparty, as
principal, and for the benefit of RFPC, as beneficiary (the "Swap Insurance Policy"), relates (the
"Insured Transactions")
(i) Notwithstanding anything to the contrary in Section 6(a) of this Agreement, if any•
(A) Event of Default in respect of any Insured Transaction under Section 5(a) of this
Agreement occurs with respect to Counterparty as the Defaulting Party, except an
Event of Default under either of Sections 5(a)(vii) or 5(a)(viii) of this Agreement
(but only with respect to Insurer as the Defaulting Party), or
(B) Termination Event in respect of any Insured Transaction under Section 5(b) of
this Agreement occurs with respect to Counterparty as the Affected Party, except
a Termination Event under Section 5(b)(i)(2) or 5(b)(iii) of this Agreement with
respect to Insurer as the Affected Party,
then, m either such case, neither RFPC nor Counterparty shall designate an Early
Termination Date in respect of any such Insured Transaction unless
(Y) Insurer has failed to pay any payment due to RFPC under the terms and
conditions of the Swap Insurance Policy; or
(Z) Insurer has otherwise consented in wasting to such designation.
(ii) The definition of "Reference Market Makers" set forth m Section 12 of this Agreement
shall be amended in its entirety to read as follows
" `Reference Market Makers' means four (4) leading dealers in the relevant swap market
selected by the party detenmmng a Market Quotation in good faith (a) from among
dealers of the highest credit standing which satisfy all the critena that such party applies
generally at the time in deciding whether to offer or to make an extension of credit and
(b) to the extent practicable, from among dealers havuig an office in the same city The
rating classification assigned to any outstanding long-term senior debt secunties issued
by such dealers shall be at least (x) A or higher as deterruned by Moody's Investors
Service, Inc. ("Moody's") (2) A or higher as determined by Standard & Poor's Ratings
2
NYA 296744.3
Services, A Division of The McGraw-Hill Companies, Inc ("S&P") or (3) an equivalent
i-:~ ~"~.'.~~' ;a"f :r..fw, w..,r~.,, ~investrnent grade«ratirig determrned~•by a nationally-recognized rating service acceptable .~ ,,~~~,- _ •--=•-
to both parties and Insurer, rop vided, however, that, m any case, if Market Quotations
cannot be determined by four (4) such dealers; the party making the determination of the
Mazket Quotation may designate, with the consent of the other party and Insurer, one (1)
or more leading dealer whose long-term senior debt bears a lower investment grade
raring."
(iii) Section 8(b) of this Agreement is hereby amended by adding the phrase "and their
respective Credit Support Providers" following after the word "parties" m the second Ime
thereof
(iv) No amendment, modification, supplement or waiver of this Agreement will be effective
unless m venting and signed by each of the parties hereto and unless the parties hereto
shall have obtained the pnor wntten consent of Insurer
(v) If any Event of Default under Section 5(a) of this Agreement occurs with respect to
Counterparty as the Defaulting Party or any Termination Event under Section 5(b) of this
Agreement occurs with respect to Counterparty as the Affected Party, then Insurer
(unless Insurer has failed to meet rts payment obligations under the Swap Insurance
Policy) shall have the nght (but not the. obligation) upon notice to RFPC to designate an
Early Termination Date with respect to Counterparty with the same effect as if such
designation were made by RFPC
(vi) RFPC and Counterparty hereby acknowledge and agree that (a) Insurer shall be a Hurd
party beneficiary under any Insured Transaction and any Credit Support Document of
RFPC, entitled to enforce its nghts thereunder and (b) Insurer's obligarion with respect to
Insured Transactions shall be limited to the terms of the Swap Insurance Policy
(vii) No Insured Transaction may be assigned by Counterparty without the pnor wntten
consent of Insurer
(viii) RFPC and Counterparty hereby acknowledge that to the extent of payments made by
Insurer to RFPC under the Swap Insurance Policy, Insurer shall be fully subrogated to the
nghts of RFPC against Counterpazty under the Insured Transaction to which such
payments relate including, but not limited to, the nght to receive payment from
Counterparty, the enforcement of any remedies and the recovery of all reasonable out-of-
pocket expenses, including, but not limited to, the costs of collection. RFPC hereby
agrees to assign to Insurer rts- nght to receive payment from Counterparty under any
Insured Transacrion to the extent of any payment thereunder by Insurer to RFPC and to
execute all such instruments or agreements as Insurer deems reasonably necessary to
effect such assignment. Counterparty hereby acknowledges and consents to the
assignment by RFPC to Insurer of any nghts and remedies that RFPC has under any
Insured Transacrion or any other document executed in connection herewith.
(ix) Additional Termination Event will apply The following shall constitute Additional
Termination Events -
(a) In respect of Counterparty, Insurer fails to meet its payment obligations under rts
Swap Insurance Policy and such failure is contmutng with respect to Insurer under
the Swap Insurance Policy; rovided, however, that, in any such case,
NYA 296744.3
(X) an Event of Default has occurred or is continuing with .respect to Counterparty as
- ,. ~., the Defaulting Party;,or,A:~. .,. ~ - , . ,:,,.~~a _ x,~; ,.~ r :,~,~:~~, ~~.,.N~z.r~.r.~~-
(Y) a Termination Event has occurred or is continuing with respect to Counterparty;
or
(Z) Counterparty has either (1) no issues of rated senior debt or (2) one or more
outstanding issues of rated senior debt and rt fails to have at least one of such
issues with a rating of at least (a) Baa or higher as determined by Moody's, (b)
BBB or higher as determined by S&P or (c) an equivalent investment grade
rating determined by anationally-recognized rating service acceptable to both
parties
For the purpose of the foregoing Termination Event, the Affected Party shall be
Counterparty and any amounts payable by Counterparty upon termination therefor
shall be insured by Insurer
(b) In respect of Counterparty, Insurer fails to maintain.
(A) A financial strength rating of at least A3 from Moody's,
(B) a claims paying ability rating of at least A- from S&P; or
(C) an equivalent rating determined by anationally-recognized ratings service
acceptable to both parties,
provided, however, that in any such case, either
(X) an Event of Default has occurred and is continuing with respect to Counterparty
as the Defaulting Party;
(Y) a Termination Event has occurred and is continuing with respect to Counterparty
as the Affected Party; or
(Z) Counterparty has either (1) no issues of rated senior debt or (2) one or more
outstanding issues of rated senior debt, but rt fails to have at least one of such
issues with an unenhanced rating (disregarding any insurance or other support
with respect to such debt) of at least (i) Baa3 as determined by Moody's, (ii)
BBB- as determined by S&P or (iii) an equivalent investment grade rating
determined by anationally-recognized ratings service acceptable to both parties.
For the purpose of the foregoing Termination Event, the Affected Party shall be
Counterparty and any amounts payable by Counterparty upon termination therefor
shall be insured by Insurer
(c) In respect of RFPC, Surety Provider fails to maintain.
(A) A financial strength rating of at least A3 from Moody's,
(B) a claims paying ability rating of at least A- from S&P; or
NYA 296744.3
(C) an equivalent rating determined by anationally-recognized ratings service
k,,. .r,> ,,. ~ s~.. :~ .„ ,,~.:r~acceptable to both parties; ..~~;.-,.,.., ., ~, ,.,~...,:.._:,:~ >:~..:.o,~xk .kt, -, .~ .,~~,..- n.,.,~...,:~,
" provided, however, any such event will not be an Additional Termination Event if,
within 60 days of such event:
(X) RFPC furmshes Counterparty with a financial guaranty comparable to the Surety
Bond provided by a financial guarantor or insurer with a financial strength rating
of at least Aa from Moody's and a claims paying ability rating of at least AA
from S&P; or
(Y) RFPC delivers collateral to Counterparts under such terms and conditions as
shall be mutually agreeable to both parties
For the purpose of the foregoing Termination Event, the Affected Party shall be
RFPC and any amounts payable by Counterparty upon termination therefor shall be
insured by Surety Provider
(x) Notwithstanding Section 6 of this Agreement, any designation of an Early Terrrunation
Date m respect of the Insured Transactions by Insurer or by RFPC with the consent of
Insurer pursuant to paragraph (i) above shall apply only to the Insured Transactions and
not to any other Transaction under this Agreement, unless RFPC shall designate an Early
Termination Date m respect of such other Transaction. Nothing contasned m this
paragraph (x) shall. affect the nghts of RFPC under this Agreement to designate an Early
Termination Date in respect of any Transaction other than the Insured Transactions,
which designation shall not apply to the Insured Transactions unless expressly provided
m such designation.
(xi) Notwithstanding Section 2(c) of this Agreement, in no event shall either RFPC or
Counterparty be entitled to net its payment obligations in respect of the Insured
Transactions against the payment obligations of the other party in respect of other
Transactions under this Agreement if such Transactions are not Insured Transactions, nor
may either RFPC or Counterparts net the payment obligations of the other party under
Transactions that aze not Insured Transactions against the payment obligations of such
party under Insured Transactions, rt being the intention of the parties that their payment
obligations under Insured Transactions be treated separate and apart from all other
Transactions Section 6(e) of this Agreement shall apply to all Insured Transactions with
the same effect as if the Insured Transactions constituted a single master agreement.
Notwithstanding Section 6(e) of this Agreement, the amount payable under Section 6(e)
of this Agreement upon the termination of any Insured Transaction shall be determined
without regard to any Transactions other than the Insured Transactions, rt being the
intention of the parties that their payment obligations under the Insured Transactions be
treated separate and apart from all other Transactions unless otherwise specified in such
other Transaction and agreed to m wasting by Insurer
(xii) None of the nghts and obligations of Insurer with respect to the Insured Transactions
shall affect the nghts and obligations of the parties hereto pursuant to any Transaction
that is not an Insured Transaction.
(xiii) Notice of any Change of Account under Section 2(b) shall be delivered or given to
Insurer
NYA 296744.3
(Yiv) No Transfer under Section 7 of an Insured Transaction may occur without the pnor
~• •-~°~• -• ,,h..,".<..-,~. ~„n~~r.TM.,,. ,.,~~.~,~' wntten consent~of Insurer, and~such~consent~wilh~not~be unreasonably•withheld'•~w-~' •°~~• ~~~~ ~=•A°°~
(xv) Pursuant to Section 8(c) of this Agreement, all obligations of the parties will survive the
termination of any Transaction or the term of this Agreement so long as amounts owed
under the Swap Insurance Policy or the Surety Bond remain outstanding.
(YVi) Each of RFPC and Counterparty shall deliver to the Surety Provider a copy of any notice
delivered by rt to the other party of the occurrence of any Event of Default or
Termination Event under the Agreement, and no such notice shall be deemed effective
with respect to 12FPC unless and until rt is also deemed effective with respect to the
Surety Provider
(xvii) RFPC shall promptly provide (or cause to be provided) to Counterparty notice of the
occurrence of an Automatic Early Termination following an Event of Default specified in
Section 5(a)(vu) or 5(a)(ix) wrth respect to RFPC Counterparty shall promptly provide
(or cause to be provided) to RFPC notice of the occurrence of an Automatic Early
Termination following an Event of Default specified in Section 5(a)(vu) wrth respect to
Counterparty
(i) Right to Designate an Early Termination Date
Notwithstanding anything to the contrary in Section 6(a) of this Agreement, if any•
(i) Event of Default under Section 5(a) of this Agreement occurs in respect of ItFPC, except
as a result of the occurrence of an event described m Section 5(a)(vii) or 5(a)(vui) of this
Agreement as to the Surety Provider; or
(ii) Termination Event under Section 5(b) of this Agreement occurs in respect of 1ZFPC,
except as a result of the occurrence of an event described in Section 5(b)(i)(2) or 5(b)(iii)
of this Agreement as to the Surety Provider,
then, in either such case, unless a Surety Provider Event of Default or a Surety Provider
Termination Event has occurred and is continuing on the date designated as the Early
Termination Date:
(A) the Surety Provider shall have the nght (but not the obligation), upon notice to RFPC,
to designate an Early Termination Date with the same effect as if such designation
were made by Counterparty; and
(B) Counterparty shall not designate an Early Termination Date in respect of any such
Transaction unless the Surety Provider has otherwise consented in venting to such
designation.
~) Termination Notice by Counterparty.
Notwithstanding anything to the contrary in the Agreement, Counterparty agrees that a termination
notice delivered by Counterparty to RFPC with respect to an Event of Default or Termination Event
in respect of which RFPC is the Defaulting or Affected Party shall be in the form of Attachment 1 to
the Surety Bond, that a copy of such notice shall also be delivered by Counterparty to the Surety
Provider, and that such notice (or the occurrence of an Automatic Termination pursuant to Section
6(a) following an Event of Default specified in Section 5(a)(vii) or 5(a)(ix) wrth respect to RFPC)
shall have the following effect:
6
NYA 29.6744.3
(a) Unless a Surety Provider Event of Default or a Surety Provider Termination Event
' °"'~-X"~`~~°-~ -°~°_~•°°~ -~..,•«:A.= ~ '-~~ -~^-hasroccurred acid is continu~ing~on~the date designated in•such~-notice°(o~ deemed-•to'~ °••~;-•~~ w•
have been designated) as the Early Termination Date
(1) From and after the Early Termination Date designated in such notice (or deemed
to have been designated), Counterparty shall have no further rights against or
obligations to RFPC under this Agreement as to any Terminated Transaction and
will look solely to the Surety Provider for the performance under the Surety
Bond of what would otherwise be RFPC's continuing obligations hereunder for
the performance of RFPC's continuing obligations hereunder as to such
Terminated Transactions, subject to the terms and conditions set forth in the
Surety Bond,
(2) From and after such Early Termination Date, in consideration for the Surety
Provider's performance of its continuing obligations under the Surety Bond,
Counterparty shall perform all of the obligations, and shall pay such amounts, as
would otherwise have been required from it under this Agreement in respect of
such Terminated Transactions if no early termination of such Terrmnated
Transactions had occurred, to the Surety Provider pursuant to the Surety Bond,
subject to the terms and conditions set forth therein and herein (and the Surety
Provider shall be an intended beneficiary of the agreement in this .clause); and
(3) From and after such Early Termination Date, m consideration for the Surety
Provider's performance of its continuing obligations under the Surety .Bond and
the agreement of Counterparty in clause (2) above, the Surety Provider shalt
assume all of ItFPC's rights and obligations under this Agreement in respect of
such Terrunated Transactions (including the right to make calculations under
Section 6(d)(i) of the Master Agreement and the right to receive or the obligation
to pay, as applicable, amounts under Section 6(d)(ii) of the Master Agreement)
(and the Surety Provider is an intended beneficiary of the agreement in this
clause) and thereafter Counterparty may look only to the Surety Provider for
performance of RFPC's rights and obligations under this Agreement in respect
of such Terminated Transactions.
(b) If a Surety Provider Event of Default or a Surety Provider Termination Event has
occurred and is continuing on the date designated in the termination notice delivered
by Counterparty (or deemed to have been designated) as the Early Termination Date,
(A) Counterparty shall have no right to payment under the Surety Bond except for
payment of amounts owing but unpaid by RFPC following the termination of all
Terminated Transactions and (B) all such Terminated Transactions shall terminate in
accordance with the terms hereof as of the Early Termination Date specified in such
notice.
(c) `Surety Provider Event of Default' means either of (i) the occurrence with respect
to the Surety Provider of any event that would constitute an Event of Default or
Potential Event of Default as described in Section 5(a)(vii) of the Agreement with
respect to the Surety Provider or (ii) the sum of amounts due and owing by the Surety
Provider in respect of financial guarantees issued by the Surety Provider with respect
to swap agreements shall exceed $10,000,000 for more than three (3) New York
Business Days after notice of failure to make such payments
NYA 296744.3
(d) `Surety Provider Termination Event' means the occurrence with respect to the
- ~ -`:',, .~...,.:M.°~; ~`._ ~...`..a.;._' ~..~- s .„~ Surety Provider of an event that would constitute a Termination Event as defined ~m
the Agreement, assuming the Surety Provider were a party thereto
(k) Pledges
Counterparty hereby acknowledges that it has been advised by RFPC that RFPC has pledged rts
nghts to receive payments under this Agreement (subject to all provisions, including, wrthout
limitation, the netting provisions hereof) and under any or all other swap agreements entered into or
to be entered into by RFPC, and certain other property, for the benefit of the Surety Provider,
Counterparty and the counterparties under such other swap agreements, to secure RFPC's
obligations to make certain payments to the Surety Provider and to make payments to Counterparty
under this Agreement and such other swap agreements following the occurrence of an Event of
Default with respect to RFPC set forth in Section 5(a)(vii) or 5(a)(ix) of the Agreement. RFPC has
not otherwise granted and will not grant a secunty interest in rts nghts under and m connection with
this Agreement or any Transaction hereunder Counterparty further acknowledges that
Counterparty has not received notice of any other secunty interest in RFPC's nghts under and m
connection with this Agreement or any transaction hereunder
(1) Termination Payment Default. The following Events of Default shall be added to Section 5(a)
of the Agreement:
"(ix) Termination Payment Default The total of all payments due and owing by RFPC
and the Surety Provider for more than three New York Banking Days after notice of
failure to make such payments m respect of swap agreements between RFPC and
other counterparties exceeds $10,000,000 or the Surety Provider shall notify
Counterparty of the occurrence of an event of default or other termination event as to
RFPC under any agreement between RFPC and the Surety Provider An Event of
Default under this Section 5(a)(ix) shall be an Event of Default with respect to
RFPC "
(m) Taxes. Counterparty and RFPC represent to each other that at all times dunng the term of this
Agreement that rt is not required by any applicable law, as modified by the practice of any
relevant governmental revenue authonty, of any relevant ~unsdiction to make any deduction or
withholding for or on account of any tax, levy, import, duty, charge, assessment or fee of any
nature imposed by any govenunent or other taxing authonty m respect of any payment under this
Agreement other than a stamp, registrarion, documentation or sunilar tax from any payment
(other than interest under Section 2(d), 6(d)(ii) or 6(e) of the Agreement) to be made by rt to the
other party under the Agreement. Failure of this representation to be true on any date as to any
party shall not be an Event of Default but shall be an Additional Tenmmation Event as to which
the party required to withhold the tax shall be the Affected Party
Part II. Agreement to Deliver Documents.
For the purpose of Section 4(a) of this Agreement, each party agrees to deliver the following documents,
as applicable•
Party required to Covered by
deliver Date by which Section 3(d)
document Fonn/Document/Certrficate to be delivered Representation
RFPC Opimon of counsel to RFPC date hereof No
substantially in the form Exhibit B
NYA 296744.3
Party required to
deliver"-`~'
document
RFPC
5 1.~ ,A,~ 5 s.. w.. ~i,+....._....
Fonn/DocumentJC ertificate
Surety Bond substantially m the form
of Exhibit C to this Schedule
RFPC Opimon of counsel to the Surety
Provider substantially in the form
attached as Annexes to Exhibit C to
this Schedule
RFPC Written consent of the Surety Provider
to the execution of the relevant
Transaction.
RFPC Incumbency certificate of RFPC with
respect to the signatory of this
Agreement.
RFPC Incumbency certificate of Surety
Provider with respect to the signatory
of the Surety Bond.
Counterparty Opimon of Counterparty counsel
substantially in the form of Exhibit D
to this Schedule
Counterparty An incumbency certificate with respect
to the signatory of this Agreement.
RFPC Incumbency certificate of Insurer with
respect to the signatory of the Swap
Insurance Policy
9
Date by which
to be delivered
date hereof, the
delivery of which is a
condition to the
effectiveness of this
Agreement
date hereof
Prior to the execution
of each Transaction
other than the initial
Transaction between
RFPC and
Counterparty entered
into as of the date
hereof, the delivery of
which is a condition to
the effectiveness of this
Agreement.
Promptly after the
execution of the
Agreement.
Promptly after the
execution of the
Agreement.
date hereof
Pnor to the execution
of this Agreement and,
with respect to each
Transaction, prior to
the execution of such
Transaction.
Promptly after the
execution of the
Agreement.
Covered by
Secfiof 3'(d)'
Representation
No
No
No
Yes
No
No
Yes
No
NYA 296744.3
t•
Party required to Covered by
_ ., .~,.. ._ ,, b. deliver .,.., ; , ..1 ..... ,_.. :. ,:.......<....~.... Da"te by which Sectron3(d')
document Form/Document/Certificate to be delivered Representation
Counterparty A certified copy of the resolution or Pnor to the execution Yes
resolutions (or the equivalent thereof) of this Agreement and,
of the governing body of Counterparty, with respect to each
certified by an appropriate official of Transaction, pnor to
Counterparty, pursuant to which the execution of such
Counterparty is authonzed to enter into Transaction.
this Agreement and each Transaction.
Counterparty A letter from each Rating Agency (as Promptly after the No
such teen is defined in each Covered execution of the
Indenture relating to each Confinnation Agreement, the
dated the date hereof) that this delivery of which is a
Agreement will not have an adverse condition to the
affect on the ratings of the Bonds effectiveness of this
Agreement.
Counterparty A Swap Insurance Policy, in the form Promptly after No
of Exhibit E to this Schedule. execution of this
Agreement.
Counterparty An opinion of counsel to the Insurer in
the form of Exhibit F to this Schedule.
Counterparty A copy of the Covered Indenture
relating to each Confirmation dated the
date hereof.
Simultaneously with No
the delivery of a Swap
Insurance Policy
Promptly after Yes
execution of this
Agreement.
Each party agrees to deliver documents or certificates conning any such document or certificate at
such times pnor to the execution of any Transaction as shall be requested by the other party
Part III. Amendments.
This Agreement is hereby amended in the manner set forth m the "U S Municipal Counterparty Schedule,
Amendments to the Master Agreement (Local Currency -Single Junsdiction)" attached to this Schedule,
which provisions aze incorporated herein by reference and shall be deemed to be a part of this Agreement
as if set forth herein in their entirety
Part IV Transfer
Section 7 of this Agreement is hereby amended to read in its entirety asfollows -
"(a) Except as expressly provided herein, neither this Agreement nor any interest or
obligation in or under this Agreement. may be transferred (whether by way of secunty or
otherwise) by either party without the pnor wntten consent of the other party, except that: -
(i) a party may make such a transfer of this Agreement pursuant to a consolidation
or amalgamation with, or merger with or into, or transfer of all or substantially all its
assets to, another entity (but without prejudice to any other nght or remedy under this
Agreement),
10
NYA 296744.3
(ii) a party may make such a transfer of all or any part of its interest in any amount
' ~ -- - payable to it from a Defaulting Party under Section 6(e), and _
(ii) RFPC may transfer this Agreement and all of its rights and obligations hereunder
with respect to any or all Transactions to any Affiliate of RFPC (that ns (A) owned,
directly or indirectly, by the same persons as then own RFPC and (B) an entity
formed m the United States and continually maintained as an orgamzation governed
by the laws of the United States or any state thereof) or of the Surety Provider
without the consent of Counterparty, provided .that Counterparty is furnished with (A)
an agreement nn venting of the Surety Provider that the Surety Bond will continue to
apply to the obligations of such transferee under thus Agreement after such transfer,
or (B) a financial guaranty comparable to the Surety Bond provided by a financial
guarantor or insurer with credit ratings no lower than those of the Surety Provider and
that no such transfer may occur unless the following condrtnons shall have been met•
(1) the transferee accepts and assumes all of the transferor's obligations under
this Agreement and any Transaction being transferred,
(2) the transfemng party shall give the other party and the Surety Provider pnor
wntten notice of any transfer of the Agreement or any Transactnon, and
(3) a Potential Event of Default, an Event of Default or a Temm~natnon Event
does not occur as a result of such transfer
(b) Counterparty hereby acknowledges that to the extent of payments made by the
Surety Provider to it under the Surety Bond, the Surety Provider shall be fully subrogated to
its nghts against RFPC under the Transactnon to which such payments relate including, but
not limited to, the nght to receive payment from RFPC, the enforcement of any remedies
and the recovery of all reasonable out-of-pocket expenses, including, but not limited to, the
costs of collection. Counterparty hereby agrees to assign to the Surety Provider its nght to
receive payment from RFPC under any Tnansacrion to the extent of any payment thereunder
has beem made by the Surety Provider to it and to execute all such instruments or
agreements as the Surety Provider deems reasonably necessary to effect such assignment.
RFPC acknowledges and consents to the assngnment by Counterparty to this Agreement to
the Surety Provider of any nghts and remedies that Counterparty has under any Transaction
or any other document executed in connection herewith.
(c) Any transfer permitted by the foregonng provisions will not constitute an event or
condntnon described m Sections 5(a)(ui) or (vui) or 5(b)(ii) of the Master Agreement.
(d) Counterparty may assign, create a secunty nnterest in and grant a lnen on all nght,
title and interest of Counterparty m and to thus Agreement, including, but not hmrted to, the
present and continuing nght to make clanm for, collect, receive and recenpt for any of the
sums, amounts, income, revenues, nssues and profits and any other sums of money payable
or receivable hereunder, to bring actions and proceedings hereunder or for the enforcement
hereof, and to do any and all things which Counterparty is or may become entitled to do
hereunder, to the Trustee, and unto the Trustee's successors and assigns, in trust; provided
that, Counterparty shall remann lnable for all obligations of Counterparty under this
Agreement and each Transaction hereunder
(e) Any purported transfer that is not in compliance wrath this Section will be votd."
11
NYA 296744.3
Part V Miscellaneous.
.... ...... at. i. .... .... A, ...r.... ..... .. .: ....:x. ..... .y,.,.,-.... L
(a) Addresses for Notices. For the purpose of Section 10(a) of this Agreement.
Address for notices or communications to RFPC.
Address RFPC, Ltd.
c/o Rice Capital Partners, LLC
One World Trade Center
Suite 5201
New York, New York 10048
Attention. J Donald Rice, Jr
Telephone No (212) 432-7700
Facsumle No• (212) 432-7840
with a copy to the Calculation Agent.
Address for notices or communications to Countema
Address City of Fort Worth
1000 Throckmorton, 3`d Floor
Fort Worth, Texas 76102
Attention. Director of Finance
Facsunile No (817) 871-8966
Telephone No (817) 871-8517
Address for notices or communicarions to Suretv Provider
Address: Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention. General Counsel
Facsunile No (212) 344-5297
Telephone No. (212) 208-3482
Address for notices or communications to First Southwest Comnanv•
Address. First Southwest Company
1700 Pacific Avenue
Suite 500
Dallas, Texas 75201
Attention. David Brayshaw
Facsunile No. (214) 954-4339
Telephone No (214) 953-4040
(b) Account Detail
12
NYA 296744.3
Account for Payments to RFPC
~u; ,.....~..,. ~ J..E ~.,.......... ., 1 .. .t. ,a .,... .5.«,. w....~..~,.,.o... 7. 1~ .t ?.u.ak.... ;;a.: Kw.u,. , ,.. \,~¢..<,s...... ,y ..-..n.
The Chase Manhattan Bank, New York, New York, as custodial agent, ABA No
021-000-021, for deposit m Account No. 910-2-758100-C25279C
Account for Payments to Counterparty•
Bank One, Texas, N.A., Fort Worth, Texas/GUST, ABA # 111000614, Account #
1180121202
(c) Calculation Agent. The Calculation Agent is The Chase Manhattan Bank; rovided, however,
that if RFPC is a Defaulting Party or there occurs a Termination Event where RFPC is the sole
Affected Party, then Counterparty may select, subject to the pnor wntten approval of the Surety
Provider, a third party that is a leading dealer in the relevant market as the Calculation Agent.
- Address for notices or communications to the Calculation Agent.
Address. The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention. Corporate Trust Department
Fax No 212-946-8567
Telephone No 212-946-7837
(d) Credit Support Document. Details of any Credit Support Document, each of which is
incorporated by reference in, and made part of, this Agreement and each Confirmation (unless
provided otherwise m a Confirmation) as if set forth in full m this Agreement or such
Confirmation. in relation to RFPC, the Financial Guaranty Insurance Policy for Swap Agreement
issued by Ambac Assurance Corporation ("Ambac" and, m its capacity as such issuer, the "Surety
Provider") to the account of RFPC and for the benefit of Counterparty (the "Surety Bond"), and
in relation to Counterparty, Swap Insurance Policy
(e) Credit Support Provider.
"Credit Support Provider" means, m relation to RFPC, Surety Provider
"Credit Support Provider" means, m relation to Counterparty, Insurer
(f) Governing Law, Jurisdiction This Agreement and each Co~rmation will be governed by and
construed in accordance with the laws of the State of Texas; provided, however, that the nghts,
duties and obligations of RFPC will be governed by and construed in accordance with the laws of
the State of New York. Section 11(b) and Section 11(c) are amended by deleting each such
Section m its entirety
(g) Netting of Payments. Subparagraph (ii) of Section 2(c) of this Agreement will apply to the
Transactions executed under this Agreement m each case startuig from the date of this Schedule.
(h) "Affiliate" will have the meaning specified m Section 12 of this Agreement.
(i) "Bonds" means City of Fort Worth, Texas Water And Sewer System Subordinate Lien Revenue
Bonds, Serves 1999A.
13
NYA 296744.3
(j) "Covered Indenture" means the Ordinance Authorizing The Issuance And Sale Of City Of Fort
_...- -' - j` Worth; 'Texas Water And Sewer -System- Subordinate Lien 'Revenue Bonds; Senes 1999A~; And"~~'°` ~ '~ °i
Ordaining Other Matters Related Thereto of Counterparty adopted November 23, 1999 .r
(k) "Covered Indenture Incorporation Date" means the date of this Agreement.
(1) "Maximum Rate" means the maximum "net effective interest rate" as permitted by, and
calculated in accordance with, Chapter 1204, Texas Government Code
(m) "Pledged Revenues" has the meaning set forth in the Covered Indenture
(n) "Previously Issued Prior Lien Bonds" means the follo~vtng issues of bonds issued by the
Counterparty secured by a first lien on and pledge of the Pledged Revenues the City of Fort
Worth, Texas Water and Sewer System Revenue Refunding Bonds, Series 1991A and Senes
1991B, the Crty of Fort Worth, Texas Water and Sewer System Revenue Refunding Bonds,
Senes 1993, the City of Fort Worth, Texas Water and Sewer System Revenue Refunding and
Improvement Bonds, Senes 1996, the City of Fort Worth, Texas Water and Sewer System
Revenue Refunding and Improvement Bonds, Senes 1997 and the Crty of Fort Worth, Texas
Water and Sewer System Revenue Refunding and Improvement Bonds, Series 1998
(o) "Previously Issued Subordinate Lien Bonds" means the following issues of bonds issued by
Counterparty secured by a lien on and pledge of the Pledged Revenues subordinate to the lien on
and pledge of the Pledged Revenues securing the Prior Lien Bonds the Bonds and the Crty of
Fort Worth, Texas Water and Sewer System Subordinate Lien Revenue Bonds, Series 1991,
Series 1992, Serves 1995, Serves 1996, Series 1998 and Series 1999
(p) "Prior Lien Bonds" means the Previously Issued Prior Lien Bonds and any bonds hereafter
issued on a panty therewith.
(q) "Subordinate Lien Bonds" means the Previously Issued Subordinate Lien Bonds and any bonds
hereafter issued on a panty therewith.
(r) "System" has the meaning set forth in the Covered Indenture
(s) "Termination Rate" means, in lieu of the meaning specified in Section 12, a rate per annum
equal to the arithmetic mean of the cost (without proof or evidence of any actual cost) to each
party (as certified by such party) if rt were to fund or of funding such amounts, rop vided,
however, that with respect to amounts payable by Party B, the Termination Rate shall not exceed
the Maximum Rate
(t) Security and Source of Payments Counterparty agrees that its obligations hereunder are, and
until the termination of this Agreement pursuant to the terms hereof shall remain, payable from
Pledged Revenues subordinate to the Subordinate Lien Bonds Counterparty hereby covenants
and agrees not to rncur any debt on panty with the Subordinate Lien Bonds without the prior
written consent of RFPC Counterparty represents that rt has taken all steps necessary or
advisable to create and perfect a pledge and security interest m the Pledged Revenues to secure its
obligations under this Agreement, and such pledge and security interest have been validly created
and perfected.
(u) No Personal Recourses Neither the members or the officers of Counterparty nor any person
executing this Agreement or any Confirmation shall be liable personally thereon or by reason of
the delivery thereof, and no recourse shall be had for the payment of amounts due pursuant to this
Agreement or any Confirmation or for any claim based hereon or, with respect to any
Transaction, on the Covered Indenture relating to such Transaction, against any member of
14
NYA 296744.3
Counterparty or officer or employee, or, any person executing this Agreement or any
Corifirmation:~-..,,... E, _ , _., r, _ ..~.-,...~,..,~_s. _ _. ~.. ~ .-.~.k..:.~:,... a .._... <_.. ~ ~..~.
(v) Consent to Amendments. Any other provision o£ this Agreement notwithstanding, the parties
hereto shall not amend this Agreement, including this Schedule and any Confirmation, without
the pnor wntten consent of the Surety Provider, which is a Hurd party beneficiary of the
agreement contained m this Part VI(1)
(w) Extension of Representations. The representations of Section 3 of this Agreement made by each
party to the other party shall also be deemed made to Insurer as provided in such Section 3
(x) This Agreement is hereby amended by adding the following Section "13" hereto -
"13. Relationship Between Parties
Each party will be deemed to represent to the other party (or, in the case of Section 15(d),
Counterparty will be deemed to represent to 1tFPC) on the date on which it enters into a
Transaction that (absent a wntten agreement between the parties that expressly imposes
affirmative obligations to the contrary for that Transaction) -
(a) Non Reliance. It is acting for its own account, and it has made its own independent
decisions to enter into that Transaction and as to whether that Transaction is appropriate or
proper for it based upon its own judgment and upon advice from such advisors as it has deemed
necessary It is not relying on any commumcahon (wntten or oral) of the other party as
investment advice or as a recommendation to enter into that Transaction, it being understood that
information and explanations related to the terms and conditions of a Transaction shall not be
considered investment advice or a recommendation to enter into that Transaction. It has not
received from the other party any assurance or guarantee as to the expected results of that
Transaction.
(b) Assessment and Understanding It is capable of assessing the merits of and
understanding (on its own behalf or through independent professional advice), and understands
and accepts, the terms, conditions and risks of that Transaction. It is also capable of assuming,
and assumes, the nsks of that Transaction.
(c) Status of Parties The other party is not acting as a fiduciary for or as an advisor to it in
respect of that Transaction.
(d) Pricing It has venfied through independent professional advice that the pricing of that
Transaction is fair and reasonable and it understands that such pricing reflects credit and
structuring components."
(y) Calculations. The Calculation Agent shall provide wntten copies of all calculations made under
this Agreement to First Southwest Company at the address provided in Part 5(a) hereof at the
same time calculations aze provided in venting to the parties hereto The foregoing
notwithstanding, the failure of the Calculation Agent to deliver such notice to First Southwest
Company shall not constitute a default or breach under this Agreement.
(z) Bankruptcy. Without limiting the applicability of any other provisions of the U.S Bankruptcy
Code, as amended (11 U S C.A. 1, et seq., the "Bankruptcy Code"), without limitation, the
applicable definitions in Section 101 and Sections 362, 546, 556, and 550 thereof, the parties
acknowledge and agree that all Transactions entered into hereunder will constitute "forward
contracts" or "swap agreements" as defined in Section 101 of the Bankruptcy Code, that the nghts
15
NYA 296744.3
of the parties under Section 6 of this Agreement will constitute contractual nghts to liquidate
' _- --• ~' r= •~ ~"~°'Transactions that any margin or collateral provided under any margin, `collatelal;'secunty or
similar agreement related to this Agreement will constitute a "margin payment" as defined in
Section 101 of the Bankruptcy Code, and that the parties are entitled to the rights under, and the
protections afforded by, Section 362, 546, 556 and 560 of the Bankruptcy Code.
16
NYA 296744.3
The parties executing this Schedule have executed the Master Agreement and have agreed as to the
contents of this Schedule •~ ~ °~~~ ~ ~- - ~~ .r ~- °• ~-
RFPC, LTD
By•
Name•
Title.
CITY OF FORT WORTH, TEXAS
Name
Title:
By•
17
NYA 296744.3
,. ... ... ._-a.-,... ,.. ._,~_ 6.~,_.,,,......~ ._~.._., .._ .~ _ _......N.....w....r.w..~.,~a,.~,..,.._.,_..._....~_.....,
U S MUNICIPAL COUNTERPARTY SCHEDULE
AMENDMENTS
to the
Master Agreement
(Local Currency-Single Junsdiction)
Part I. Termination Provisions.
(a) Events of Default.
(i) Bankruptcy. Clause (6) of Section 5(a)(vii) of this Agreement is hereby amended to read
in its entirety as follows -
"(6)(A) seeks or becomes subject to the appointment of an administrator, provisional liquidator,
conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all
its assets (or, in the case of a Government Entity, for the System or for all or substantially all of
the System's assets) or (B) in the case of a Government Entity, any Credit Support Provider of
such Government Entity or any applicable Specified Entity of such Government Entity, (I) there
shall be appointed or designated with respect to it, an entity such as an organization, board,
commission, authority, agency or body to monitor, review, oversee, recommend or declare a
financial emergency or similar state of financial distress with respect to it or (II) there shall be
declared or introduced or proposed for consideration by it or by any legislative or regulatory body
with competent junsdiction over it, the existence of a state of financial emergency or sunilar state
of financial distress in respect of it;"
(ii) Merger Without Assumption. Section 5(a)(viu) of this Agreement is hereby amended to
read in its entirety as follows.-
"(viii) Merger l~thout Assumption. The party or any Credit Support Provider of such party
consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its
assets to, another entity (or, without limiting the foregoing, if such party is a Government Entity,
an entity such as an organization, board, commission, authority, agency or body succeeds to the
principal functions of, or powers and duties granted to, such party or any Credit Support Provider
of such party) and, at the time of such consolidation, amalgamation, merger, transfer or
succession.-
(1) the resulting, surnving, transferee or successor entity fails to assume all the
obligations of such party or such Credit Support Provider under this Agreement or any
Credit Support Document to which it or its predecessor was a party by operation of law
or pursuant to an agreement reasonably satisfactory to the other party to this Agreement;
or
NYA 297037.3
(2) the benefits of any Credit Support Document fail to extend (without the consent of
'~"~-•° ~ ° ='--~-._.. ~~`",.~;.,.~.k=x `~~ the-other'paity) to the performance by~ such iesultiig,survivirig;'transfetee-or"succt;'ssor'°`~'"°'° `'' "°~'
entity of its obligations under this Agreement."
(b) Termination Events. Section 5(b)(ii) of this Agreement is hereby amended to readmits entirety
as follows
"(ii) Credit Event Upon Merger If "Credit Event Upon Merger" is specified in the Schedule
as applying to the party, such party ("X"), any Credit Support Provider of X or any applicable
Specified Entity of X consolidates or amalgamates with, or merges ~vrth or into, or transfers all or
substantially all its assets (or, in the case of a Government Entity, for the System or for all or
substantially all of the System's assets) to, or reorgamzes, incorporates, reincorporates, or
reconstitutes into or as, another entity or another entity transfers all or substantially all its assets
(or, in the case of a Government Entity, all or substantially all of the System's Assets) to, or
reorgmzes, incorporates, reincorporates or reconstitutes as, X (or, without limiting the foregoing,
if X is a Govenunent Entity, an entity such as an organization, board, commission, authority,
agency or body succeeds to the principal functions of, or powers and duties granted to, X
(generally or with respect to the System), any Credit Support Provider of X or any Specified
Entity of X) and such action does not constitute an event described in Section 5(a)(viii) but the
creditworthiness of the resulting, surviving, transferee or successor entity (which will be the
Affected Party) is materially weaker than that of X, such Credit Support Provider or such
Specified Entity, as the case may be, immediately prior to such action, or"
Part II. Other Provisions.
(a) Obligations. Section 2(a)(iii) of this Agreement is hereby amended to read in its entirety as
follows -
"(iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition
precedent that no Event of Default, Potential Event of Default or Incipient Illegality with respect
to the other party has occurred and is continuing, (2) the condition precedent that no Early
Termination Date in respect of the relevant Transaction has occurred or been effectively
designated and (3) each other applicable condition precedent specified in this Agreement."
(b) Representations.
(i) The introductory clause of Section 3 of this Agreement is hereby amended to read in its
entirety asfollows -
"Each party represents to the other party (which representations will be deemed to be repeated by
each party on each date on which a Transaction is entered into and, in the case of the
representations in Section 3(a) and 3(e), at all times until the termination of this Agreement)
that:-"
(ii) Section 3(a)(ii) of this Agreement is hereby amended to read in its entirety asfollows -
"(ii) Powers. It has the power to execute this Agreement and any other documentation
relating to this Agreement to which it is a party, to deliver this Agreement and any other
documentation relating to this Agreement that rt is required by this Agreement to deliver and to
perform its obligations under this Agreement and any obligations rt has under any Credit Support
Document to which rt is a party and has taken all necessary action and made all necessary
determinations and findings to authorize such execution, delivery and performance;"
(iii) Section 3(b) of this Agreement is hereby amended to read in its entirety as follows.
2
NYA 297037.3
"(b) Absence ojCertain Events. No Event of Default or Potential Event of Default or, to rts
`~ ' "' " ~-''''~`""°' "'kriowled e, Inca lent Ille a'ht in the 'case of`a`'Government 'Enti - or~Tertnriation'Ewent"with
g '~ p~ g Y ( tY)
respect to rt has occurred and is continuing and no such event or circumstance would occur as a
result of rts entering into or performing its obligations under this Agreement or any Credit
Support Document to which rt is a party "
(iv) Section 3 of this Agreement is hereby amended by adding the following subsection "(e)"
thereto, which subsection shall only apply to the Govemment Entrty-
"(e) Non-Speculation. This Agreement has been, and each Transaction hereunder will be
(and, if applicable, has been), entered into for purposes of managing rts borrowings or
investments and not for purposes of speculation."
(v) Section 3 of this Agreement is hereby amended by adding the following subsection "(f)"
thereto - _
"(f) No Immunity. It is not entitled to claim immunity on the grounds of sovereignty or other
similar grounds with respect to itself or rts revenues or assets (irrespective of their use or intended
use) from (i) suit, (ii) ~unsdiction of any court, (iii) relief by way of mJunction, order for specific
performance or for recovery of property, (iv) attachment of its assets (whether before or after
judgment) or (v) execution or enforcement of any judgment to which it or its revenues or assets
might otherwise be made subject to in any Proceedings (as defined m Section 11(b)) in the courts
of any ~unsdiction and no such immumty (whether or not claimed) may be attributed to such
party or rts revenues or assets "
(c) Agreements.
(i) The introductory clause of Section 4 of this Agreement is hereby amended to readmits
entirety as follows.-
"Each party agrees with the other (or, in the case of Section 4(d), (e) and (f), the Govemment
Entity agrees with the other party) that, so long as either party has or may have any obligation
under this Agreement or under any Credit Support Document to which rt is a party-"
(ii) Section 4 of this Agreement is hereby amended by adding the following subsections "(d)"
and "(e)" thereto -
"(d) Compliance with Covered Indenture. The Govemment Entity will observe, perform and
fulfill each provision in the Covered Indenture applicable to such Govemment Entity m effect on
the Covered Indenture Incorporation Date, as any of those provisions may be amended,
supplemented or modified for purposes of this Agreement with the pnor written consent of the
other party hereto (the "Incorporated Provisions"), with the effect that such other party hereto will
have the benefit of each of the Incorporated Provisions (including without limitation, covenants,
rght to consent to certain actions subject to consent under the Covered Indenture and delivery of
financial statements and other notices and information} In the event the Covered Indenture
ceases to be in effect pnor to the termination of this Agreement, the Incorporated Provisions
(other than those provisions requinng payments in respect of bonds, notes, warrants or other
similar instruments issued under the Covered Indenture) will remain in full force and effect for
purposes of this Agreement as though set forth herein until such date on which all of the
obligations of the Govemment Entity under this Agreement and any obligations of the
Government Entity or any Credit Support Provider of the Govemment Entity under a Credit
Support Document have been fully satisfied. The Incorporated Provisions are hereby
incorporated by reference and made a part of this Agreement to the same extent as if such
provisions were set forth herein. For purposes of this Agreement, the Incorporated Provisions
NYA 297037.3
shall be construed as though (i) all references therein to any party making loans, extensions of
"° ~' '~'' '~ credit~or~financial accommodations thereunder or commitments therefor (the "Financings") were
to the other party hereto and (ii) to the extent that such Incorporated Provisions are conditioned
on or relate to the existence of such Financings or the Government Entity having any obligations
in connection therewith, all references to such Financings or obligations were to the obligations
of the Government Entity under this Agreement. Any amendment, supplement, modification or
waiver of any of the Incorporated Provisions without the pror wntten consent of the other party
hereto shall have no force and effect with respect to this Agreement. Any amendment,
supplement or modification for which such consent is obtained shall be part of the Incorporated
Provisions for purposes of this Agreement.
(e) Notice of Incipient Illegality. If an Incipient illegality occurs, the Goverunent Entity
will, promptly upon becoming aware of rt, notify the other party, specifying the nature of that
_ Incipient Illegality and will also give such other information about that Incipient Illegality as the
other party may reasonably require "
(d) Definitions. Section 12 of this Agreement is hereby amended to add the following definitions in
their appropnate alphabetical order•-
"'Covered Indenture' has the meaning specified in the Schedule "
`"Covered Indenture Incorporation Date' has the meaning specified in the Schedule."
"'Government Entity' means Counterparty "
"'Incipient Illegality' means (a) the enactment by any legislative body with competent
~unsdiction over a Government Entity of legislation which, if adopted as law, would render
unlawful (i) the performance by such Goverrunent Entity of any absolute or contingent
obligation to make a payment or delivery or to receive a payment or delivery in respect of a
Transaction or the compliance by such Governrrient Entity with any other material provision
of this Agreement relating`to such Transaction or (ii) the performance by a Government
Entity or a Credit Support Provider of such Government Entity of any contingent or other
obligation which the Government Entity (or such Credit Support Provider) has under any
Credit Support Document relating to such Transaction; (b) any assertion in any proceeding,
forum or action by a Government Entity, in respect of such Government Entity or in respect
of any entity located or organised under the laws of the state in which such Government
Entity is located to the effect that performance under this Agreement or similar agreements
is unlawful or (c) the occurrence with respect to a Government Entity or any Credit Support
Provider of such Government Entity of any event that constitutes an Illegality
4
NYA 297037.3
_ t + a..
RFPC, Ltd.
c/o Maples and Calder
Attorneys-at-Law
Ugland House
South Church Street
P O Box 309
Georgetown, Grand Cayman
Cayman Islands, Bntish West Indies
Insured Transaction
September 19, 2000
City of Fort Worth, Texas
1000 Throckmorton, 3`d Floor
Fort Worth, Texas 76102
The purpose of this letter agreement is to co~nn the terms and conditions of the Swap
Transaction entered into between us on the Trade Date specified below (the "Transaction") This letter
agreement constitutes a "Confirmation" as referred to in the ISDA Master Agreement below
The definitions and provisions contained in the 1991 ISDA Definitions, as supplemented by the
1998 Supplement to the 1991 ISDA Definitions and the 1992 ISDA U S Municipal Counterparty
definitions (each as published by the Internal Swaps and Derivatives Association, Inc) (the "Definitions")
are incorporated into this Confirmation. In the event of any inconsistency between the Definitions an this
Confirmation, this Confirmation will govern.
1 This Confirmation supplements, forms part of, and is subject to, the ISDA Master
Agreement dated as of September 19, 2000, as amended and supplemented from time to time (the
"Agreement") between you and us All provisions contained in the Agreement govern this Confirmation
except as expressly modified below The Transaction evidenced by this Confirmation shall constitute an
"Insured Transaction" as defined in Part I(h) of the Schedule to the Agreement.
2 The terms of the particular Transaction to which this Confirmation relates aze as follows.
Party A. RFPC, Ltd.
Party B City of Fort Worth, Texas.
Trade Date September 19, 2000
Notional Amount: USD 12,350,000, amortizing according to Schedule
1
Effective Date.. September [29], 2000
NYA 296787.3
Tennmation Date:
Mazch 1, 2011, subject to adjustment in accordance
with the Modified Following Business Day
Convention.
Fixed Amounts
Fixed Rate Payer•
Fixed .Rate Payer Payment Dates
Party A.
Each Mazch [ 1 ] and September [ 1 ], commencing
on March [1], 2001 up to and including the
Termination Date, subject to adjustment in
accordance with the Modified Following Business
Day Convention.
Fixed Rate Penod End Dates
Fixed Rate•
Fixed Rate Day Count Fraction.
Each Mazch 1 and September 1 commencing on
Mazch 1, 2001 No Adjustment shall apply to
Penod End Dates.
%.
30/360
Floating Amounts•
Floating Rate Payer•
Floating Rate Payer Payment Dates
Party B
Each March [ 1 ] and September [ 1 ], commencing
on March [1], 2001 up to and including the
Termination Date, subject to adjustment in
accordance with the Modified Following Business
Day Convention.
Floating Rate Penod End Dates:
Each March 1 and September 1 commencing on
March 1, 2001 No Adjustment shall apply to
Penod End Dates
Floating Rate Option. The "BMA Municipal Swap Index"TM announced
by Municipal Market Data on the Determination
Date and based upon the weekly interest rate resets
oftax-exempt vanable rate issues included in a
database maintained by Municipal Market Data
which meets specified cntena established by the
Bond Market Association (the "Index") The Index
shall be based upon current yields of high quality
weekly adjustable vanable rate demand bonds
which are subject to tender upon seven date notice,
the interest in which under the Internal Revenue
NYA 296787.3
Y
Code of 12986, as amended, is excluded from gross
income for Federal Income Tax purposes. The
Index shall not include any bonds the interest on
which is subject to any personal "Alternative
Maximum Tax" or similar Tax unless all Tax-
Exempt Bonds are subject to such Tax.
Floating Rate Determination Dates
Floating Rate Day Count Fraction.
Floating Rate Reset Dates
Method of Calculation.
Business Days.
Calculation Agent:
In the event that at any time Municipal Data ceases
to announce the Index, makes a matenal change (in
the judgment of Party A in the formula for or the
method of calculating the Index, or in any other
way matenally modifies (in the judgment of Party
A) the Index, subject to the reasonable consent of
Party B, Party A will make, or will designate an
alternative indexing agent to make, such
calculations as may be required to determine the
relevant index using a formula and method of
calculating such index that it reasonably believes
will produce the rate that would have been
produced by Municipal Mazket Data as ui effect
pnor to such cessation, change or modification.
Each Wednesday (or if such. Day is not a Business
Day, the Following Business Day) dunng the
Calculation Penod, except that the imtial rate shall
be that rate determined for the Wednesday
immediately preceding the Effective Date (or if
such Day is not a Business Day, the Following
Business Day)
ActuaUActual
The calendar day following the related
Determination Date
Weighted Average
New York.
Party A.
3 Party A shall pay to Party B on September [ ), 2000 a fixed payment of [$
4 Account Details:
Payments to Party A.
The account indicated an the Schedule
NYA 296787.3
Payments to Party B
The account indicated in the Schedule
Please confirm that the foregoing currently sets forth. the terms of our agreement by executing ties
Confirmation and returning rt to us
Best regards,
RFPC, LTD
By•
Name
Title
Acknowledged and agreed as of the date first wntten above
CITY OF FORT WORTH, TEXAS
By•
Name
Title•
4
NYA 296787:3
SCHEDULEI
FROM (and including) TO (but excluding) NOTIONAL AMOUNT
Effective Date 3/1/2001 12,350,000
3/ 1/2001 3/ 1/2002 11,940,000
3/1/2002 3/1/2003 11,516,000
3/1/2003 3/1/2004 11,077,000
3/ 1/2004 3/ 1/2005 10,622,000
3/1/2005 3/1/2006 10,149,000
3/1/2006 3/1/2007 9,658,000
3/.1/2007 3/1/2008 9,147;000
3/1/2008 3/1/2009 8,615,000
3/ 1/2009 3/ 1/2010 8,060,000
3/1/2010 3/1/2011 7,482,000
NYA 296787.3