2002 Master Agreement

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The parties have refused in the past to add such transactions. The parties were concerned that an accidental or technical delivery failure in any of these transactions could trigger a default event under the 1992 Agreement. In particular, rest was vulnerable to this type of breakdowns and delivery failures. The 2002 agreement helps to improve this outcome by requiring “the acceleration or early termination of all transactions that have not been carried out in accordance with the documents in force for that specified transaction.” In other words, for a default to occur under the 2002 agreement, the documentation governing the specified transaction in question would have to be terminated prematurely. The “Default under Specified Transaction” provision provides that it is a default event under the agreement where a party (or its credit carrier provider or a particular entity) has been late in a “specified transaction” with its counterparty (or the credit carrier provider or reporting entity of the counterparty). In accordance with the 1992 Agreement, a specified transaction was defined only to encompass the most common non-traded derivatives, such as swaps, between the Parties but which were not regulated by the Party`s 1992 Agreement. The framework agreement allows the parties to calculate their financial risk from OTC transactions on a net basis, i.e. a party calculates the difference between what it owes to a counterparty under a framework agreement and what the counterparty owes it under the same agreement. However, a Contracting Party may transmit to ISDA, at any time during the compliance period, another notification indicating an earlier deadline for compliance. Such a letter has the effect of revoking compliance on the date indicated. Although the amendments already made are not revoked, any subsequent compliance by one of the party`s counterparties is ineffective with regard to a framework agreement concluded between them in 2002.

Following the decision by ISDA to extend the deadline for compliance, Contracting Parties may also transmit to ISDA, on or before 12 March 2004, a communication indicating retroactively 1 March 2004 as the previous deadline. The Framework Agreement was updated in 2002 (known as the 2002 Isda Framework Agreement). . . .

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