ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of October 23, 1997
----------------------------
UBS AG and Banco Itau S.A. 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 parties
confirming those Transactions.
Accordingly, the parties agree as follows:
1. INTERPRETATION
(a) DEFINITIONS. The terms defined in Section 14 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
Agree ment.
(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 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) CHANGE OF ACCOUNT. Either party 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 unless such other party gives timely notice of a
reasonable objection to such change.
(c) NETTING. If on any date amounts would otherwise be payable:
(i) in the same currency; and
(ii) in 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 party, replaced by an obligation upon the party
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 in 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 (ii) 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 Offices through which the parties make and receive payments or
deliveries.
(d) DEDUCTION OR WITHHOLDING FOR TAX.
(i) GROSS-UP. All payments under this Agreement will be made without
any deduction or withholding for or on account of any Tax unless such
deduction or withholding is required by any applicable law, as
modified by the practice of any relevant governmental revenue author
ity, then in effect. If a party is so required to deduct or withhold,
then that party ("X") will:
(1) promptly notify the other party ('Y") of such requirement;
(2) pay to the relevant authorities the full amount required to
be deducted or withheld (including the full amount required to
be deducted or withheld from any additional amount paid by X to
Y under this Section 2(d)) promptly upon the earlier of
determin ing that such deduction or withholding is required or
receiving notice that such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified
copy), or other documenta tion reasonably acceptable to Y,
evidencing such payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition
to the payment to which Y is otherwise entitled under this
Agreement, such additional amount as is necessary to ensure
that the net amount actually received by Y (free and clear of
Indemnifiable Taxes, whether assessed against X or Y) will
equal the full amount Y would have received had no such
deduction or withholding been required. However, X will not be
required to pay any additional amount to Y to the extent that
it would not be required to be paid but for:
(A) the failure by Y to comply with or perform any
agreement contained in Section 4(a)(i), 4(a)(iii) or
4(d); or
(B) the failure of a representation made by Y pursuant to
Section 3(f) to be accurate and true unless such failure
would not have occurred but for (1) any action taken by a
taxing authority, or brought in a court of competent
jurisdic tion, on or after the date on which a
Transaction is entered into (regardless of whether such
action is taken or brought with respect to a party to
this Agree ment) or (11) a Change in Tax Law.
(ii) LIABILITY. If:
(1) X is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, to
make any deduction or withholding in respect of which X would
not be required to pay an additional amount to Y under Section
2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly
against X,
then, except to the extent Y has satisfied or then satisfies the
liability resulting from such Tax, Y will promptly pay to X the
amount of such liability (including any related liability for
interest, but including any related liability for penalties only if Y
has failed to comply with or perform any agreement contained in
Section 4(a)(i), 4(a)(iii) or 4(d)).
(e) DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective
designation of an Early 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 Early Termination Date in respect of the
relevant Transaction, 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 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(f), at
all times until the termination of this Agreement) that:
(a) BASIC REPRESENTATIONS.
(i) STATUS. It is duly organized and validly existing under the laws
of the jurisdiction of its organization 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 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 to authorize such execution, delivery and
performance;
(iii) NO VIOLATION OR CONFLICT. Such execution, delivery and
performance do not violate or conflict with 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 it or any of
its assets or any 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 by it with respect to this Agreement or any
Credit Support Document to which it is a party have been obtained and
are 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 it is a party constitute its legal,
valid and binding obligations, enforceable in accordance with their
respective terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable principles
of general application (regardless 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 entering into or performing its obligations under this
Agreement or any Credit Support Document to which it 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 arbitrator 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
furnished 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.
(e) PAYER TAX REPRESENTATION. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(e) is accurate and
true.
(f) PAYEE TAX REPRESENTATIONS. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(f) is accurate and true.
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 party or,
in certain cases under subparagraph (iii) below, to such government or
taxing authority as the other party reasonably directs:
(i) any forms, documents or certificates relating to taxation specified
in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any Confirmation;
and
(iii) upon reasonable demand by such other party, any form or
document that may be required or reasonably requested in writing in
order to allow such other party or its Credit Support Provider to
make a payment under this Agreement or any applicable Credit Support
Document without any deduction or withholding for or on account of
any Tax or with such deduction or withholding at a reduced rate (so
long as the completion, execution or submission of such form or
document would not materially prejudice the legal or commercial
position of the party in receipt of such demand), with any such form
or document to be accurate and completed in a manner reasonably
satisfactory to such other party and to be executed and to be
delivered with any reasonably required certification,
in each case by the date specified in the Schedule or such Confirmation or,
if none is specified, as soon as reasonably practicable.
(b) MAINTAIN AUTHORIZATIONS. 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 party 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.
(d) TAX AGREEMENT. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon
learning of such failure.
(e) PAYMENT OF STAMP TAX. Subject to Section I 1, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of
this Agreement by a jurisdiction in which it is incorporated, organized,
managed and controlled, or considered to have its seat, or in which a
branch or office through which it is acting for the purpose of this
Agreement is located ("Stamp Tax Jurisdiction") and will indemnify the
other party against any Stamp Tax levied or imposed upon the other party or
in respect of the other party's execution or performance of this Agreement
by any such Stamp Tax Jurisdiction which is not also a Stamp Tax
Jurisdiction with respect to the other party.
5. EVENTS OF DEFAULT AND TERMINATION EVENTS
(a) EVENTS OF DEFAULT. 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 of the following events constitutes
an event of default (an "Event of Default") with respect to such party:
(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(e) required to be made by it if such failure is not
remedied on or before the third Local Business Day after notice of
such failure is given to the party;
(ii) BREACH OF AGREEMENT. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to make
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) or to give notice of a Termination Event or any agreement or
obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied
with or performed by the party 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 party;
(iii) CREDIT SUPPORT DEFAULT.
(1) Failure by the party or any Credit Support Provider of such
party 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) prior to the satisfaction of all obligations of such
party under each Transaction to which such Credit Support
Document relates without the written consent of the other
party; or
(3) the party 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 (other than a representation
under Section 3(e) or (f)) made or repeated or deemed to have been
made or repeated by the party 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) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit
Support Provider of such party or any applicable Specified Entity of
such party (1) 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 behalf);
(vi) CROSS DEFAULT. 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 party or any applicable Specified Entity of such
party under one or more agreements or instruments relating to
Specified Indebtedness of any of them (individually or collectively)
in an aggregate amount of not less than the applicable Threshold
Amount (as specified in the Schedule) which 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
by such party, such Credit Support Provider or such Specified 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 party, any Credit Support Provider of such
party or any applicable Specified Entity of such party:
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) 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, arrangement 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 relief 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 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 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;
(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
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 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 and, at the time 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
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
(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) TERMINATION 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, a Tax Event if the event
is specified in (ii) below or a Tax Event Upon Merger if the event is
specified in (iii) below, and, if specified to be applicable, a Credit
Event
Upon Merger if the event is specified pursuant to (iv) below or an
Additional Termination Event if the event is specified pursuant to (v)
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 party of Section
4(b)) for such party (which will be the Affected Party):
(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
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;
(ii) TAX EVENT. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on
which a Transaction is entered into (regardless of whether such
action is taken or brought with respect to a party to this Agreement)
or (y) a Change in Tax Law, the party (which will be the Affected
Party) will, or there is a substantial likelihood that it will, on
the next succeeding Scheduled Payment Date (1) be required to pay to
the other party an additional amount in respect of an lndemnifiable
Tax under Section 2(d)(i)(4) (except in respect of interest under
Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which
an amount is required to be deducted or withheld for or on account of
a Tax (except in respect of interest under Section 2(e), 6(d)(ii) or
6(e)) and no additional amount is required to be paid in respect of
such Tax under Section 2(d)(i)(4) (other than by reason of Section
2(d)(i)(4)(A) or (B));
(iii) TAX EVENT UPON MERGER. The party (the "Burdened Party") on the
next succeeding Scheduled Payment Date will either (1) be required to
pay an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has
been deducted or withheld for or on account of any Indemnifiable Tax
in respect of which the other party is not required to pay an
additional amount (other than by reason of Section 2(d)(i)(4)(A) or
(B)), in either case as a result of a party consolidating or
amalgamating with, or merging with or into, or transferring all or
substantially all its assets to, another entity (which will be the
Affected Party) where such action does not constitute an event
described in Section 5(a)(viii);
(iv) CREDIT EVENT UPON MERGER. If Credit Event Upon Merge 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 to, another entity and
such action does not constitute an event described in Section
5(a)(viii) but the creditworthiness of the resulting, surviving or
transferee entity 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 (and, in such event, X or its
successor or transferee, as appropriate, will be the Affected Party);
or
(v) ADDITIONAL TERMINATION EVENT. If 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 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. 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 Illegality 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 party (the "Defaulting Party") 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. If, however, "Automatic Early Termination" is
specified in the Schedule as applying to a party, then an Early Termination
Date in respect of all outstanding Transactions will occur immediately upon
the occurrence with respect to such party 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 party may reasonably require.
(ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality
under Section 5(b)(i)(1) or a Tax Event occurs and there is only one
Affected Party, or if a Tax Event Upon Merger occurs and the Burdened
Party is the Affected Party, the Affected Party will, as a condition
to its right to designate an Early Termination Date under Section
6(b)(iv), use all reasonable efforts (which will not require such
party to incur a loss, excluding immaterial, incidental expenses) to
transfer within 20 days after it gives notice under Section 6(b)(i)
all its rights and obligations under this Agreement in respect of the
Affected Transactions to another of its Offices or Affiliates so that
such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will
give notice to the other party to that effect within such 20 day
period, whereupon the other party may effect such a transfer within
30 days after the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be
subject to and conditional upon the prior written consent of the
other party, which consent will not be withheld if such other party's
policies in effect at such time would permit it to enter into
transactions with the transferee on the terms proposed.
(iii) TWO AFFECTED PARTIES. If an Illegality under Section 5(b)(i)(1)
or a Tax Event occurs and there are two Affected Parties, each party
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.
(iv) RIGHT TO TERMINATE. If:
(1) a transfer under Section 6(b)(ii) or an agreement under
Section 6(b)(iii), as the case may be, has not been effected
with respect to all Affected Transactions within 30 days after
an Affected Party gives notice under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon
Merger or an Additional Termination Event occurs, or a Tax Event
Upon Merger occurs and the Burdened Party is not the Affected
Party,
either party in the case of an Illegality, the Burdened Party in the
case of a Tax Event Upon Merger, any Affected Party in the case of a
Tax Event or an Additional Termination Event if there is more than
one Affected Party, or the party which is not the Affected Party in
the case of a Credit Event Upon Merger or an Additional Termination
Event if there is only one Affected Party may, by not more than 20
days notice to the other party and-provided that the relevant
Termination Event is then continuing, designate a day not earlier
than the day such notice is effective as an Early Termination Date in
respect of all Affected Transactions.
(c) EFFECT OF DESIGNATION.
(i) If notice designating an Early Termination 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(e) 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 party 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) in the Termination Currency, 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. If 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 "Loss", 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 OF DEFAULT. If the Early Termination Date results from an
Event of Default:
(1) First Method and Market Quotation. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the
Non-defaulting Party the excess, if a positive number, of (A)
the sum of the Settlement Amount (determined by the
Non-defaulting Party) in respect of the Terminated Transactions
and the Termination Currency Equivalent of the Unpaid Amounts
owing to the Non-defaulting Party over (B) the Termination
Currency Equivalent of the Unpaid Amounts owing to the
Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply,
the Defaulting Party will pay to the Non-defaulting Party, if a
positive number, the Non-defaulting Party'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 (determined by the
Non-defaulting Party) in respect of the Terminated Transactions
and the Termination Currency Equivalent of the Unpaid Amounts
owing to the Non-defaulting Party less (B) the Termination
Currency Equivalent of the Unpaid Amounts owing to the
Defaulting Party. 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 Party will pay the
absolute value of that amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss
apply,an amount will be payable equal to the Non-defaulting
Party'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 Party will pay the absolute value of that amount
to the Defaulting Party.
(ii) TERMINATION EVENTS. If the Early Termination Date results from a
Termination Event:
(1) One Affected Party. 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-defaulting 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 party 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 Termination Currency Equivalent of the Unpaid
Amounts owing to X less (11) the Termination Currency
Equivalent of 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 party with the higher Loss ("X") and the Loss of the
party 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 "Automatic Early Termination" applies
in respect of a party, 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 party) during
the period from the relevant Early Termination Date to the date for
payment determined under Section 6(d)(ii).
(iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies
an amount recoverable under this Section 6(e) is a reasonable
pre-estimate of loss and not a penalty. Such amount is payable for
the loss of bargain and the loss of protection against future risks
and except as otherwise provided in this Agreement neither party will
be entitled to recover any additional damages as a consequence of
such losses.
7. TRANSFER
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of
the other party, except that:
(a) 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 right or remedy under this Agreement); and
(b) 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).
Any purported transfer that is not in compliance with this Section will be
void.
8. CONTRACTUAL CURRENCY
(a) PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement
will be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable
law, any obligation to make payments under this Agreement in the
Contractual Currency will not be discharged or satisfied by any tender in
any currency other than the Contractual Currency, except to the extent such
tender results in the actual receipt by the party to which payment is owed,
acting in a reasonable manner and in good faith in converting the currency
so tendered into the Contractual Currency, of the full amount in the
Contractual Currency of all amounts payable in respect of this Agreement.
If for any reason the amount in the Contractual Currency so received falls
short of the amount in the Contractual Currency payable in respect of this
Agreement, the party required to make the payment will, to the extent
permitted by applicable law, immediately pay such additional amount in the
Contractual Currency as may be necessary to compensate for the shortfall.
If for any reason the amount in the Contractual Currency so received
exceeds the amount in the Contractual Currency payable in respect of this
Agreement, the party receiving the payment will refund promptly the amount
of such excess.
(b) JUDGMENTS. To the extent permitted by applicable law, if any judgment
or order expressed in a currency other than the Contractual Currency is
rendered (i) for the payment of any amount owing in respect of this
Agreement, (ii) for the payment of any amount relating to any early
termination in respect of this Agreement or (iii) in respect of a judgment
or order of another court for the payment of any amount described in (i) or
(ii) above, the party seeking recovery, after recovery in full of the
aggregate amount to which such party is entitled pursuant to the judgment
or order, will be entitled to receive immediately from the other party the
amount of any shortfall of the Contractual Currency received by such party
as a consequence of sums paid in such other currency and will refund
promptly to the other party any excess of the Contractual Currency received
by such party as a consequence of sums paid in such other currency if such
shortfall or such excess arises or results from any variation between the
rate of exchange at which the Contractual Currency is converted into the
currency of the judgment or order for the purposes of such judgment or
order and the rate of exchange at which such party is able, acting in a
reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with
the amount of the currency of the judgment or order actually received by
such party. The term "rate of exchange" includes, without Limitation, any
premiums and costs of exchange payable in connection with the purchase of
or conversion into the Contractual Currency.
(c) SEPARATE INDEMNITIES. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and
independent causes of action, will apply notwithstanding any indulgence
granted by the party to which any payment is owed and will not be affected
by judgment being obtained or claim or proof being made for any other sums
payable in respect of this Agreement.
(d) EVIDENCE OF LOSS. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss
had an actual exchange or purchase been made.
9. MISCELLANEOUS
(a) ENTIRE AGREEMENT. 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 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 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 are 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 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 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 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.
(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 interpreting this Agreement.
10. OFFICES; MULTIBRANCH PARTIES
(a) If Section 10(a) is specified in the Schedule as applying, each party
that enters into a Transaction through an Office other than its head or
home office represents to the other party that, notwithstanding the place
of booking office or jurisdiction of incorporation or Organization of such
party, the obligations of such party are the same as if it had entered into
the Transaction through its head or home office. This representation will
be deemed to be repeated by such party on each date on which a Transaction
is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office
through which it makes and receives payments or deliveries with respect to
a Transaction will be specified in the relevant Confirmation.
11. EXPENSES
A Defaulting Party will, on demand, indemnify and hold harmless the other
party for and against all reasonable out-of-pocket expenses, including
legal fees and Stamp Tax, 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 Party is a party or by reason of
the early termination of any Transaction, including, but not limited to,
costs of collection.
12. NOTICES
(a) EFFECTIVENESS. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice
or other communication under Section 5 or 6 may not be given by facsimile
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 (airmail, 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.
13. 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 party irrevocably:
(i) submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or to the
non-exclusive jurisdiction of the courts of the State of New York and
the United States District Court located in the Borough of Manhattan
in New York City, 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 inconvenient
forum and further waives the right to object, with respect to such
Proceedings, that such court does not have any jurisdiction over such
party.
Nothing in this Agreement precludes either party 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 re- enactment 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) SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent
(if any) specified opposite its name in the Schedule to receive, for it and
on its behalf, service of process in any Proceedings. If for any reason any
party's Process Agent is unable to act as such, such party will promptly
notify the other party and within 30 days appoint a substitute process
agent acceptable to the other party. The parties irrevocably consent to
service of process given in the manner provided for notices in Section 12.
Nothing in this Agreement will affect the right of either party to serve
process in any other manner permitted by law.
(d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues
and assets (irrespective of their use or intended use), all immunity on the
grounds of sovereignty or other similar grounds from (i) suit, (ii)
jurisdiction of any court, (iii) relief by way of injunction, order for
specific performance or for recovery of property, (iv) attachment of its
assets (whether before or after judgment) and (v) execution or enforcement
of any judgment to which it or its revenues or assets might otherwise be
entitled in any Proceedings in the courts of any jurisdiction and
irrevocably agrees, to the extent permitted by applicable law, that it will
not claim any such immunity in any Proceedings.
14. 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 TRANSITIONS" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, 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 a Non-defaulting Party, the
Non-default Rate; and
(d) in all other cases, the Termination Rate.
"BURDENED PARTY" has the meaning specified in Section 5(b).
"CHANGE IN TAX LAW" means the enactment, promulgation, execution or
ratification of, or any change in or amendment to, any law (or in the
application or official interpretation of any law) that occurs on or after
the date on which the relevant Transaction is entered into.
"CONSENT" includes a consent, approval, action, authorization, 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.
"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.
"DEFAULTING PARTY" has the meaning specified in Section 6(a).
"EARLY TERMINATION DATE" means the date determined in accordance with
Section 6(a) or 6(b)(iv).
"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.
"ILLEGALITY" has the meaning specified in Section 5(b).
"INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be
imposed in respect of a payment under this Agreement but for a present or
former connection between the jurisdiction of the government or taxation
authority imposing such Tax and the recipient of such payment or a person
related to such recipient (including, without limitation, a connection
arising from such recipient or related person being or having been a
citizen or resident of such jurisdiction, or being or having been
organized, present or engaged in a trade or business in such jurisdiction
or having or having had a permanent establishment or fixed place of
business in such jurisdiction, but excluding a connection arising solely
from such recipient or related person having executed, delivered, performed
its obligations or received a payment under, or enforced, this Agreement or
a Credit Support Document).
"LAW" includes any treaty, law, rule or regulation (as modified, in the
case of tax matters, by the practice of any relevant governmental revenue
authority) and "lawful" 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), 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, in the
place where the relevant account is located and, if different, in the
principal financial center, if any, of the currency of such payment, (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 notice 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 Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of 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 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
party but without duplication, loss or cost incurred as a result of its
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 party's legal fees and
out-of-pocket expenses referred to under Section 11. A party will determine
its 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 its Loss by reference to
quotations of relevant rates or prices from one or more leading dealers in
the relevant markets.
"MARKET 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 Market-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
Early 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 (assuming 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, in 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 time as of which those quotations are to be obtained will
be selected in good faith by the party obliged to make a determination
under Section 6(e), and, if each party is so obliged, after consultation
with the other. If more than 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. 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 quotation 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 Terminated
Transactions cannot be determined.
"NON-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 it) if it were to fund the relevant amount.
"NON-DEFAULTING PARTY" has the meaning specified in Section 6(a).
"OFFICE" means a branch or office of a party, which may be such party's
bead or home office.
"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 party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria
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 such dealers having an office in the same city.
"RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions
(a) in which the party is incorporated, organized, managed and controlled
or considered to have its seat, (b) where an Office through which the party
is acting for purposes of this Agreement is located, (c) in which the party
executes this Agreement and (d) in relation to any payment, from or through
which such payment is made.
"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-off, offset, combination of accounts, 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 Early
Termination Date, the sum of:
(a) the Termination Currency Equivalent of 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 Unpaid Amounts) for each Terminated Transaction or group of
Terminated Transactions for which a Market Quotation cannot be determined
or would not (in the reasonable belief of the party 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 party)
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, interest rate option, foreign exchange
transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency
option or any other similar transaction (including any option with respect
to any of these transactions), (b) any combination of these transactions
and (c) any other transaction identified as a Specified Transaction in this
Agreement or the relevant confirmation.
"STAMP TAX" means any stamp, registration, documentation or similar tax.
"TAX" means any present or future tax, levy, impost, duty, charge,
assessment or fee of any nature (including interest, penalties and
additions thereto) that is imposed by any government or other taxing
authority in respect of any payment under this Agreement other than a
stamp, registration, documentation or similar tax.
"TAX EVENT" has the meaning specified in Section 5(b).
"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).
"TERMINATED TRANSACTIONS" means with respect to any Early Termination Date
(a) if resulting from a Termination Event, all Affected Transactions and
(b) if resulting from an Event of Default, all Transactions (in either
case) in effect immediately before the effectiveness of the notice
designating that Early Termination Date (or, if "Automatic Early
Termination" applies, immediately before that Early Termination Date).
"TERMINATION CURRENCY" has the meaning specified in the Schedule.
"TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount
denominated in the Termination Currency, such Termination Currency amount
and, in respect of any amount denominated in a currency other than the
Termination Currency (the "Other Currency"), the amount in the Termination
Currency determined by the party making the relevant determination as being
required to purchase such amount of such Other Currency as at the relevant
Early Termination Date, or, if the relevant Market Quotation or Loss (as
the case may be), is determined as of a later date, that later date, with
the Termination Currency at the rate equal to the spot exchange rate of the
foreign exchange agent (selected as provided below) for the purchase of
such Other Currency with the Termination Currency at or about 11:00 a.m.
(in the city in which such foreign exchange agent is located) on such date
as would be customary for the determination of such a rate for the purchase
of such Other Currency for value on the relevant Early Termination Date or
that later date. The foreign exchange agent will, if only one party is
obliged to make a determination under Section 6(e), be selected in good
faith by that party and otherwise will be agreed by the parties.
"TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon
Merger or, if specified to be applicable, a Credit Event Upon Merger or an
Additional Termination 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 party (as
certified by such party) 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 Terminated
Transactions, the amounts that became payable (or that would have become
payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on
or prior to such Early Termination Date and which remain unpaid 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)(iii)) required to be settled by delivery to such party 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
amounts, 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 Termination 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 Termination Currency Equivalents
of the fair market values reasonably determined by both parties.
IN 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.
UBS AG Banco Itau S.A.
--------------------------- ---------------------------
(Name of Party) (Name of Party)
By: /s/ M. Weber By: /s/ Fernando Antonio Neves Lima
--------------------------- --------------------------------
Name: Name: Fernando Antonio Neves Lima
Title: Title:Managing Director
Date: Date:
By: /s/ illegible
---------------------------
Name:
Title:
Date:
BANCO ITAU S.A.
AMENDMENT AGREEMENT TO ISDA MASTER AGREEMENT
In consideration of their continuing to transact in accordance with
the terms of the ISDA Master Agreement dated October 23, 1997 as amended
from time to time (the "Master Agreement") between Banco Itau S.A. ("BI")
and UBS AG ("UBS"), BI and UBS agree to amend the Master Agreement as set
out below:
Part 4(d)(ii) of the Schedule to the Master Agreement is deleted and
replaced with:
"(ii) Party B is a Multibranch Party and may act through its Sao Paulo,
Brazil and Grand Cayman, Cayman Islands Offices."
The effective date of this Amendment Agreement is August 28, 2000.
This Amendment Agreement is governed by the laws of the State of New
York.
For and on behalf of For and on behalf of UBS AG Banco Itau S.A.
/s/ Paulo Roberto Soares /s/ David Kelly
------------------------------- -------------------------------------
Name: Paulo Roberto Soares Name: David Kelly
Title: Senior Managing Director Title: Executive Director
Legal & External Affairs
/s/ Fernando Antonio N. Lima /s/ Daniel J. Bicker, Jr.
-------------------------------- -------------------------------------
Name: Fernando Antonio N. Lima Name: Daniel J. Bicker, Jr.
Title: Managing Director Title: Associate Director
Credit Risk Management
SCHEDULE
to the Master Agreement
dated as of October 23, 1997
between
UBS AG, a banking and BANCO ITAU S.A., a bank
corporation organized under the organized under the laws of
laws of Switzerland the Federative Republic of
Brazil ("Republic of Brazil")
("Party A") ("Party B")
PART 1
TERMINATION PROVISIONS
In this Agreement:
(a) "SPECIFIED ENTITY" means in relation to Party A for the purpose of:
Section 5(a)(v), NONE
Section 5(a)(vi), NONE
Section 5(a)(vii), NONE
Section 5(b)(iv), NONE
and in relation to Party B for the purpose of:
Section 5(a)(v), MATERIAL AFFILIATES OF PARTY B
Section 5(a)(vi), MATERIAL AFFILIATES OF PARTY B
Section 5(a)(vii), MATERIAL AFFILIATES OF PARTY B
Section 5(b)(iv), MATERIAL AFFILIATES OF PARTY B
(b) "SPECIFIED TRANSACTION". The definition of "Specified Transaction" in
Section 14 is amended by inserting the text, "precious metals transaction,"
after the text, "foreign exchange transaction" and by adding at the end
thereof, "and, if a Global Master Repurchase Agreement is entered into
between Party A (including any one of its branch offices) and Party B, any
transaction pursuant to such Global Master Repurchase Agreement."
(c) The "CROSS DEFAULT" provisions of Section 5 (a)(vi) will apply to both
parties but shall exclude any default that results solely from wire
transfer difficulties or an error or omission of an administrative or
operational nature (so long as sufficient funds are available to the
relevant party on the relevant date), but only if payment is made within
three (3) Local Business Days after such transfer difficulties have been
corrected or the error or omission has been discovered.
If such provisions apply:
"SPECIFIED INDEBTEDNESS" means any obligation (whether present or
future, contingent or otherwise, as principal or surety or otherwise) in
respect of borrowed money or any Derivative Transaction other than any
Specified Transaction.
"THRESHOLD AMOUNT" means
(i) with respect to Swiss Bank Corporation, 2% of "Total Capital
and Reserves" of Swiss Bank Corporation as shown on the most
recent annual audited financial statements of Swiss Bank
Corporation and
(ii) with respect to Banco Itau S.A., or any Specified
Entity, the lesser of U.S. Dollars 10mm or 2% of the
stockholders' equity (however described) of Banco Itau
S.A. or the relevant Specified Entity as shown on the
most recent annual audited financial statements of
Banco Itau S.A. or the relevant Specified Entity.
(d) THE "CREDIT EVENT UPON MERGER" provisions of Section 5 (b)(iv) will
apply to Party A and Party B, amended as follows:
"'Credit Event Upon Merger' shall mean that a Designated Event (as
defined below) occurs with respect to a party, [any Credit Support Provider
of the party] or any applicable Specified Entity (any such party or entity,
"X"), and such Designated Event does not constitute an event described in
Section 5(a)(viii) but the creditworthiness of X, or, if applicable, the
successor, surviving or transferee entity of X, is materially weaker than
that of X immediately prior to such event. In any such case the Affected
Party shall be the party with respect to which, or with respect to the
[Credit Support Provider or] Specified Entity of which, the Designated
Event occurred, or, if applicable, the successor, surviving or transferee
entity of such party. For purposes hereof, a Designated Event means that,
after the date hereof:
(i) X consolidates, amalgamates with or merges with or into, or
transfers all or substantially all its assets to, or receives
all or substantially all the assets or obligations of, another
entity; or
(ii) any person or entity acquires directly or indirectly the
beneficial ownership of equity securities having the power to
elect a majority of the board of directors of X or otherwise
acquires directly or indirectly the power to control the
policy-making decisions of X."
(e) THE "AUTOMATIC EARLY TERMINATION" provision of Section 6 (a) will apply
to Party A or Party B amended by the addition of the following at the end
of Section 6 (e)(iii):
"In addition to, and notwithstanding anything to the contrary in the
preceding sentence of this Section 6(e)(iii), if an Early Termination Date
is deemed to have occurred under Section 6(a) as a result of Automatic
Early Termination, the Defaulting Party hereby agrees to indemnify the
Non-defaulting Party on demand against all loss or damage that the
Non-defaulting Party may sustain or incur in respect of each Transaction,
or the hedging of such Transaction, as a result of a movement in interest
rates, currency exchange rates or market quotations between the Early
Termination Date and the date (the "Determination Date") upon which the
Non-defaulting Party first becomes aware that the Early Termination Date
has been deemed to have occurred under Section 6(a).
If the Non-Defaulting Party shall determine that it would gain or benefit
from the movement in interest rates, currency exchange rates or market
quotations between the Early Termination Date and the Determination Date,
the amount of such gain or benefit shall be deducted from the amount
payable by the Defaulting Party pursuant to Section 6(e)(i)(4).
The determination Date shall be a date not later than the date upon which
creditors generally of the Defaulting Party are notified of the occurrence
of the Event of Default leading to the deemed Early Termination Date".
(f) "PAYMENTS ON EARLY TERMINATION". For the purpose of Section
6 (e) of this Agreement:
(i) Loss will apply.
(ii) The Second Method will apply.
(g) "TERMINATION CURRENCY" means United States Dollars.
(h) "ADDITIONAL TERMINATION EVENT " will not apply.
(i) Section 5(a) of the Agreement is amended by adding the following
subsections (ix) - (xiii) thereto:
(ix) The Republic of Brazil ( in respect of Party B) or Switzerland
(in respect of Party A), or any competent governmental or regulatory agency
or instrumentality thereof, shall declare a moratorium on the payment of
Specified Indebtedness by the party or any Specified Entity thereof;
(x) any governmental agency having jurisdiction over the party or any
of its properties shall take or institute any action or proceeding for its
dissolution or disestablishment, or for the disestablishment or suspension
of a substantial portion of its operation, and such action or proceeding
remains undismissed or unstayed on appeal for a period of 30 days;
(xi) any government or governmental agency shall have taken any
action which materially adversely affects the party's ability to perform
any of its obligations hereunder, and such action shall not have been
rescinded or modified, and the adverse effects thereof shall not have been
eliminated, to the satisfaction of the other party, within 30 days after
written notice of such action shall have been given by such other party to
the party affected; or
(xii) the validity or enforceability of this Agreement or any
Transaction shall be contested by the party, or the party shall deny
generally any liability hereunder, or any change in the laws of the
Republic of Brazil ( in respect of Party B) or Switzerland (in respect of
Party A) shall occur which purports to render, or may have the effect of
rendering, any provision of this Agreement or any Transaction invalid,
illegal or unenforceable.
(xiii) any material adverse change in the present form of government
of the Republic of Brazil.
PART 2
TAX REPRESENTATIONS
REPRESENTATIONS OF PARTY A AND PARTY B.
(a) PAYER TAX REPRESENTATION. For the purpose of Section 3(e), Party A and
Party B hereby make the following representation: It is not required
by any applicable law, as modified by the practice of any relevant
governmental revenue authority, of any Relevant Jurisdiction to make
any deduction or withholding for or on account of any Tax from any
payment (other than interest under Section 2(e), 6(d)(ii) or 6(e)) to
be made by it to the other party under this Agreement. In making this
representation, it may rely on: (A) the accuracy of any representation
made by the other party pursuant to Section 3(f); (B) the satisfaction
of the agreement of the other party contained in Section 4(a)(i) or
4(a)(iii) and the accuracy and effectiveness of any document provided
by the other party pursuant to Section 4(a)(i) or 4(a)(iii); and (C)
the satisfaction of the agreement of the other party contained in
Section 4(d); provided that it shall not be a breach of this
representation where reliance is placed on clause (B) and the other
party does not deliver a form or document under Section 4(a)(iii) by
reason of material prejudice to its legal or commercial position.
(b) PAYEE TAX REPRESENTATIONS. For the purpose of Section 3(f), Party A
makes the representation(s) specified below:
(A) The following representation will apply with respect to each
Transaction effectuated by an Office of Party A not located in
the United States of America and the Office of Party B which is
located in the United States of America:
It is fully eligible for the benefits of the "Business Profits"
or "Industrial and Commercial Profits" provision, as the case may
be, the "Interest" provision or the "Other Income" provision (if
any) of the Specified Treaty with respect to any payment
described in such provisions and received or to be received by it
in connection with this Agreement and no such payment is
attributable to a trade or business carried on by it through a
permanent establishment in the Specified Jurisdiction.
If such representation applies, then:
"Specified Treaty" means, with respect to a Transaction, the tax
treaty applicable between the United States of America and
Switzerland; and
"Specified Jurisdiction" means the United States of America.
(B) The following representation will apply with respect to each
Transaction effectuated between an Office of Party A and an
Office of Party B located in the United States of America in both
cases:
Each payment received or to be received by Party A in connection
with this Agreement will be effectively connected with its
conduct of a trade or business in the United States of America.
(c) PAYEE TAX REPRESENTATIONS. For the purpose of Section 3(f),
Party B makes the representation(s) specified below: NONE
PART 3
AGREEMENT TO DELIVER DOCUMENTS
For the purpose of Sections 4(a) (i) and (ii) of this Agreement, each party
agrees to deliver the following documents, as applicable:
(a) Tax forms, documents or certificates to be delivered are:
PARTY REQUIRED TO
DELIVER DOCUMENT FORM/DOCUMENT/CERTIFICATE DATE BY WHICH TO BE
DELIVERED
Party A Department of the On or before execution of
Treasury Internal Revenue this Agreement and on an
Service Form 4224 annual basis thereafter
Party B Department of the On or before execution of
Treasury Internal Revenue this Agreement
Service
Form W-8
(b) Other documents to be delivered are:
PARTY REQUIRED COVERED BY
TO DELIVER DATE BY WHICH SECTION 3(D)
DOCUMENT FORM/DOCUMENT/CERTIFICATE TO BE DELIVERED REPRESENTATION
Party A and Party Signature Authentication On or before YES
B satisfactory to the execution of
other party hereto this Agreement
Party B Powers of Attorney On or before YES
acceptable to Party A execution of
evidencing the authority this Agreement
of any officers acting
on behalf of Party B to
submit to foreign
jurisdictions
Party B Certified copy of the On or before YES
By-Laws of Party B execution of
this Agreement
Party B Certified copy of Board On or before YES
Resolutions (from the execution of
board of executives or this Agreement
officers) (i) appointing
persons authorized to
execute this Agreement
and to enter into
Transactions hereunder
and (ii) describing, as
fully as possible, the
business purposes for
which Party B is
entering into this
Agreement
Party B A copy of the acceptance On or before YES
of Party B's Process execution of
Agent specified in Part this Agreement
4 hereof, of its
appointment
Party B Legal Opinion of On or before YES
Brazilian counsel to execution of
Party B, substantially this Agreement
in the form attached
Party B hereto as Exhibit A On or before YES
execution of
Credit Support Document this Agreement
described in Part 4(f)
PART 4
MISCELLANEOUS
(a) ADDRESSES FOR NOTICES. For the purposes of Section 12(a) of
this Agreement:
(i) All notices or communications to Party A shall, with respect to a
particular Transaction, be sent to the address, telex number, or
facsimile number reflected in the Confirmation of that Transaction,
and any notice for purposes of Sections 5 or 6 shall be sent to:
Address: UBS AG, Stamford Branch, 677 Washington Blvd.,
Stamford, CT 06912-0300
Attention: Legal Affairs
Facsimile: (203) 719-6097
with a copy to: Swiss Bank Corporation, Legal Services SBC Group,
Malzgasse 30,
4002 Basel, Switzerland, (Fax) 61 288 3299
(ii) All notices or communications to Party B shall be sent to the
address, telex number, or facsimile number reflected below:
Address: Banco Itau S.A., Sao Paulo, Rua Boa Vista, 176-11th floor,
Corpo 5,
Sao Paulo, Brazil
Attention: Mesa de Cambio Facsimile: (55 11) 237 2324
Telephone No: (55 11) 237 4100
(b) PROCESS AGENT. For the purpose of Section 13 (c) of this Agreement:
Party A appoints as its Process Agent: UBS AG, Stamford Branch,
677 Washington Blvd., Stamford, CT 06912-0300, Attention: Legal Affairs
Party B appoints as its Process Agent: Banco Itau S.A. New York
Branch, 540 Madison Ave., 24th Fl New York, N.Y. 10022; Tel: (212)
486-1280; Fax: (212) 888-9342
(c) OFFICES.
(i) Section 10(c) is deleted in its entirety and the following is
inserted in its place:
If a party is specified as a Multibranch Party in the Schedule,
such Multibranch Party may enter into Transactions through any
applicable Office listed in the Schedule and, subject to Section
7 and Section 10(a), shall make and receive payments or
deliveries with respect to a Transaction only through the Office
specified in the relevant Confirmation.
(ii) The provisions of Section 10(a) will apply to Party A and Party
B, it being the understanding of the parties that while obligations
entered into by an Office of a party pursuant to this Agreement
constitute obligations of the relevant party (and not merely of such
Office), each party will, in respect of any Transaction and in the
ordinary course of business, send payments and notices to and receive
payments and notices from the Office of the other party specified in
the Confirmation of such Transaction rather than any other office of
such party. A party (the "owed party") may seek payment from the head
office of the other party (the "owing party") with respect to this
Agreement in the event that an amount payable to the owed party by
the owing party pursuant to this Agreement (including any amount
payable as a result of the occurrence or designation of an Early
Termination Date) has not been paid in full when due.
(d) MULTIBRANCH PARTY. For the purpose of Section 10 (c) of this
Agreement:
(i) Party A is a Multibranch Party and may act through its Basel,
Geneva, Hong Kong, London, Lugano, New York, Singapore, Stamford,
Stockholm, Tokyo and Zurich Offices.
(ii) Party B is not a Multibranch Party.
(e) CALCULATION AGENT. The Calculation Agent is Party A, unless otherwise
specified in a Confirmation in relation to the relevant Transaction.
(f) CREDIT SUPPORT DOCUMENT. Details of any Credit Support Document: The
ISDA Credit Support Annex attached hereto is a Credit Support Document with
respect to Party B in accordance with the terms of this Agreement and is
incorporated herein by this reference.
(g) CREDIT SUPPORT PROVIDER. Credit Support Provider means: NOT APPLICABLE.
(h) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of New York (without reference to
choice of law doctrine). With respect to any suit, action or proceedings
("Proceedings") relating to any Transaction or this Agreement, the parties
irrevocably (i) agree to bring any Proceedings exclusively in the state or
federal courts located in the Borough of Manhattan in the City and State of
New York and (ii) each party waives any objection which it may have at any
time to the laying of venue of any Proceedings brought in any such court,
waives any claim that such proceedings have been brought in an inconvenient
forum and further waives the right to object, with respect to such
Proceedings, that such court does not have jurisdiction over it.
(i) NETTING OF PAYMENTS. Subparagraph (ii) of Section 2 (c) of this
Agreement will apply. For purposes of precious metals transactions, Section
2(c) of this Agreement is amended by: (i) adding the words "or deliverable"
after the word "payable" in lines 1, 6, 8, 10 and 11; (ii) adding the words
"or, in the case of delivery obligations, the same commodity" after "in the
same currency" in lines 2 and 10; (iii) adding the words "or delivery"
after "payment" in line 4; and (iv) adding the words "or deliver" after
"pay" in line 8.
(j) "AFFILIATE" will have the meaning specified in Section 14 of this
Agreement.
PART 5
OTHER PROVISIONS
(a) ESCROW. If by reason of the time difference between the cities in which
payments are to be made or otherwise, it is not possible for simultaneous
payments to be made on any date on which both parties are required to make
payments hereunder, either party may at its option and in its sole
discretion notify the other party that payments on that date are to be made
in escrow. In this case deposit of the payment due earlier on that date
shall be made by 2:00 p.m. (local time at the place for the earlier
payment) on that date with an escrow agent selected by the party giving the
notice, accompanied by irrevocable payment instructions (i) to release the
deposited payment to the intended recipient upon receipt by the escrow
agent of the required deposit of the corresponding payment from the other
party on the same date accompanied by irrevocable payment instructions to
the same effect or (ii) if the required deposit of the corresponding
payment is not made on that same date, to return the payment deposited to
the party that paid it into escrow. The party that elects to have payments
made in escrow shall pay the costs of the escrow arrangements and shall
cause those arrangements to provide that the intended recipient of the
payment due to be deposited first shall be entitled to interest on that
deposited payment for each day in the period of its deposit at the rate
offered by the escrow agent for that day for overnight deposits in the
relevant currency in the office where it holds that deposited payment (at
11:00 a.m. local time on that day) if that payment is not released by 5:00
p.m. local time on the date it is deposited for any reason other than the
intended recipient's failure to make the escrow deposit it is required to
make hereunder in a timely fashion.
(b) SET-OFF. Without affecting the provisions of this Agreement requiring
the calculation of certain net payment amounts, all payments under this
Agreement will be made without set-off or counterclaim; provided, however,
that upon the designation of any Early Termination Date, in addition to and
not in limitation of any other right or remedy (including but not limited
to any right to set off, counterclaim, or any other right to withhold
payment or any right of recourse under any Credit Support Document) under
applicable law the Non-defaulting Party or Non-affected Party (in either
case, "X") may, without prior notice to any person, set off any sum or
obligation (whether or not arising under this Agreement and whether matured
or unmatured, whether or not contingent and irrespective of the currency,
place of payment or booking office of the sum or obligation) owed by the
Defaulting Party or Affected Party (in either case, "Y") to X or any
Affiliate of X against any sum or obligation (whether or not arising under
this Agreement, whether matured or unmatured, whether or not contingent and
irrespective of the currency, place of payment or booking office of the sum
or obligation) owed by X or any Affiliate of X to Y and, for this purpose,
may convert one currency into another at a market rate determined by X. If
any sum or obligation is unascertained, X may in good faith estimate that
sum or obligation and set-off in respect of that estimate, subject to X or
Y, as the case may be, accounting to the other party when such sum or
obligation is ascertained.
(c) REPRESENTATIONS AND WARRANTIES.
(i) Section 3(a) is amended by adding the following paragraphs (vi)
and (vii):
"(vi) NO AGENCY. It is entering into this Agreement
and each Transaction as principal (and not as agent or in any
other capacity, fiduciary or otherwise).
(vii) ELIGIBLE SWAP PARTICIPANT. It is an "eligible swap
participant" as that term is defined by the United States Commodity
Futures Trading Commission in 17 C.F.R. ss. 35.1(b)(2) and it has
entered into this Agreement and it is entering into each Transaction
in connection with its line of business (including financial
intermediation services) or the financing of its business; and the
material terms of this Agreement and such Transaction have been
individually tailored and negotiated."
(ii) Section 3 is further amended by adding the following
paragraph (g) as follows:
"(g) REPRESENTATIONS AND WARRANTIES OF PARTY B. Party B represents
and warrants to and for the benefit of Party A as of the date hereof,
and shall be deemed to represent and warrant to and for the benefit
of Party A as of the date of each Transaction, as follows:
(i) It has, to the extent necessary, taken all steps and done
all things necessary in order to cause this Agreement to comply
in all respects with any governmental requirements issued by
the Republic of Brazil, or the Central Bank of Brazil or any
other regulatory agency as they may pertain to the Transactions
contemplated herein;
(ii) Party B is authorized, or not prevented, as the case may
be, pursuant to the regulations or laws of the Republic of
Brazil, including, but not limited to, Resolution 2012 of July
20, 1993 and Circular 2348 of June 30, 1993, and any subsequent
revisions to such laws, to enter into Transactions contemplated
herein;
(iii) Party B is solely responsible for determining that each
Transaction meets the requirements set forth by any Brazilian
governmental entity, including, without limitation, the Central
Bank of Brazil and Party B further agrees to notify Party A
immediately in the event the Central Bank of Brazil or any
other Brazilian governmental entity should bring any claim,
action (administrative or other) or proceeding against Party B,
or threaten to do any of the foregoing, on the grounds that it
has not complied with or has otherwise violated or failed to
meet the requirements of such governmental entity; and
(iv) Party B is entering into this Agreement and each Transaction
hereunder for the legitimate business purpose of hedging market
risks in its line of business."
(d) 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 party 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 party is not acting as a fiduciary
for or an adviser to it in respect of that Transaction.
(e) WAIVER OF JURY TRIAL. Each party hereby irrevocably waives any and all
right to trial by jury in any suit, action or proceeding arising out of or
relating to this Agreement or any Transaction and acknowledges that this
waiver is a material inducement to the other party's entering into this
Agreement.
(f) CONSENT TO RECORDING. The parties agree that each may electronically
record all telephonic conversations between them and that any such
recordings may be submitted in evidence to any court or in any Proceedings
for the purpose of establishing any matters pertinent to the relevant
Transaction.
(g) SCOPE OF AGREEMENT. Upon the effectiveness of this Agreement, unless
otherwise agreed to in writing by the parties to this Agreement with
respect to specific Specified Transactions, all Specified Transactions then
outstanding or any future Specified Transactions between Offices of the
parties listed in Part 4(d) shall be subject to the terms hereof, with the
exception of repurchase transactions and reverse repurchase transactions,
and each such Specified Transaction shall be a "Transaction" for purposes
of this Agreement.
(h) SEVERANCE. In the event any one or more of the provisions contained in
this Agreement should be held invalid, illegal or unenforceable in any
respect, such provisions shall be severed from this Agreement to the extent
of such invalidity, illegality or unenforceability, unless such severance
shall substantially impair the benefits of the remaining portions of this
Agreement. This Agreement after such severance shall remain the valid,
binding and enforceable obligation of the parties hereto.
(i) NETTING PROVISIONS. If an Early Termination Date occurs, amounts
determined in respect of all Terminated Transactions shall be aggregated
with and netted against one another in performing the calculations
contemplated by Section 6(e). If the calculation of the amount payable
pursuant to Section 6(e) in respect of an Early Termination Date would
involve the aggregation or netting of amounts determined in respect of
Transactions of different types, and under applicable law amounts
determined in respect of one or more types of Transactions hereunder may
not be aggregated with or netted against amounts determined in respect of
one or more other types of Transactions in performing such calculation,
then, notwithstanding the foregoing or any other provision of this
Agreement, aggregation and netting will be performed within and between
types of Transactions to the fullest extent permitted by law in performing
such calculation, and the set-off provisions of this Agreement and
applicable law shall be applied to the resulting amount or amounts.
(j) PAYMENT INSTRUCTIONS. All payments to be made hereunder in
respect of Transactions shall be made in accordance with standing
payment instructions provided by the parties (or as otherwise
specified in a Confirmation).
(k) FOREIGN CURRENCY RESTRICTIONS. In the event any foreign currency
restriction or prohibition is imposed in Brazil or in any other country in
which a party intends to make a payment, any and all payments due hereunder
by the party subject to such restriction or prohibition shall nevertheless
be made in the currency in which it is denominated. The party shall make
the payment (i) from a country in which no foreign exchange restrictions or
prohibitions have been imposed or (ii) by any other lawful mechanism for
the acquisition of the relevant foreign currency in the exchange market.
Any and all costs and expenses incurred in effecting such transactions
shall be borne by the party incurring them.
(l) PROCESSING AND SAFEKEEPING FEES. In connection with any Transaction
entered into hereunder, Party B agrees to pay for any processing or
safekeeping fees charged by any clearing organization or custodian
(including, without limitation, Euroclear, Cedel or the Bank of Boston)
that arise or relate to the Transactions and Party B shall pay the full
amount of such fees to Party A within ten (10) Local Business Days of Party
B's receipt of a copy of an invoice or documentation reflecting such fees.
(m) AMENDMENT TO EVENTS OF DEFAULT. Section (5)(vii)(2) is amended by (i)
inserting the following text after the word "insolvent": "due to, in the
case of Party B, its suspension by the appropriate governmental, regulatory
or ministerial agency or instrumentality."
(n) DEFINITIONS.
(i) The following definition shall appear in Section 14 after the
definition of "Defaulting Party":
"'Derivative Transaction' means:
(a) any transaction (including an agreement with respect thereto)
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, interest
rate option, foreign exchange transaction, precious metals
transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap
transaction, currency option, repurchase transaction or any other
similar transaction (including any option with respect to any of
these transactions); and
(b) any combination of these transactions."
(ii) The following definition shall appear in Section 14 after the
definition of "Loss":
"'Material Affiliates' means all Affiliates that have more than 5% of
the total consolidated group assets or account for more than 10% of
total consolidated group income, in each case as reflected on the
most recent audited consolidated financial statements of the group."
PART 6
ADDITIONAL TERMS FOR EQUITY AND EQUITY INDEX TRANSACTIONS
PHYSICAL DELIVERY OF SHARES
Notwithstanding anything to the contrary in this Agreement or in the
Definitions, the following provisions will apply for the purposes of any
Transaction which contemplates by its terms the physical delivery of
shares, participation certificates or other equity securities ("Shares"):
(a) DIVIDENDS AND EXPENSES.
The following provision shall be included as Section 2(f):
"(f) DIVIDENDS AND EXPENSES ON DELIVERY: All dividends on the Shares
to be delivered shall be payable to and all costs and expenses incurred in
connection with the delivery of Shares (including, without prejudice to
Section 2(d), any Tax or Stamp Tax and any interest or penalties payable in
connection therewith) shall be payable by the party who would customarily
receive such dividend or bear such costs or expenses under a contract for
the purchase of the Shares by the deliveree through the clearance system
specified in the relevant Confirmation."
(b) DEFAULT INDEMNITY.
If prior to the occurrence or effective designation of an Early
Termination Date in respect of any Transaction a party defaults in the
performance of any obligation under such Transaction required to be settled
by delivery, it will indemnify the other party on demand for any costs,
losses or expenses (including the costs of borrowing Shares, if applicable)
resulting from such default. A certificate signed by the deliveree setting
out such costs, losses or expenses in reasonable detail shall be conclusive
evidence that they have been incurred.
PART 7
ADDITIONAL TERMS FOR FX TRANSACTIONS AND CURRENCY OPTIONS
(a) STANDARD TERMS AND CONDITIONS APPLICABLE TO FX TRANSACTIONS
AND CURRENCY OPTIONS
(i) INCORPORATION OF AND AMENDMENTS TO ISDA FX Definitions. The 1992
FX and Currency Option Definitions (the "FX and Currency Option
Definitions"), published by the International Swaps and Derivatives
Association, Inc., are hereby incorporated by reference with respect
to any "Currency Options" and "FX Transactions" as defined by the FX
and Currency Option Definitions, except as otherwise specifically
provided in the Schedule and in the Confirmation.
The following amendments are made to the FX and Currency Option
Definitions (all Section references are to the FX and Currency Option
Definitions):
(1) Section 2.2 is amended by the addition of the following
definitions with respect to Currency Options as paragraphs (u)
and (v) thereof:
"(u) CALL OPTION. 'Call Option' means a Currency Option entitling, but
not obligating, the Buyer to purchase from the Seller at the
Strike Price a specified quantity of the Call Currency.
(v) PUT OPTION. 'Put Option' means a Currency Option entitling, but
not obligating, the Buyer to sell to the Seller at the Strike
Price a specified quantity of the Put Currency."
(2) Section 2.2(k) is hereby amended by deleting in its entirety the
final sentence thereof and adding the following two sentences at
the end thereof: "A Currency Option may be exercised in whole or
in part. If a Currency Option is exercised in part, the
unexercised portion shall not be extinguished thereby but shall
remain a Currency Option to the extent of such unexercised
portion until the earlier of (i) the expiration of the Currency
Option or (ii) an exercise of the Currency Option that leaves no
remaining unexercised portion thereof."
(3) Section 2.4 is hereby amended by adding after the text "Section
2.4(b)" in the first sentence the text "or Section 2.4(c)," and
by adding a subsection (c) as follows:
"(c) POTENTIAL EVENT OF DEFAULT. If an Event of Default or a Potential
Event of Default has occurred and is continuing and an Early
Termination Date has not been designated by the Non-defaulting
Party, the Non-defaulting Party may, by written notice, specify
that any or all Currency Options being settled while such Event
of Default or Potential Event of Default is continuing shall be
settled in accordance with Section 2.4(b) and upon such notice
becoming effective, the parties shall be deemed to have elected
to have the specified Currency Options settle at the In-the-Money
Amount unless and until the Event of Default or Potential Event
of Default is no longer continuing."
(4) Section 2 is hereby amended by the addition of the following as a
new Section 2.5:
"Section 2.5 TERMS RELATING TO PAYMENT OF PREMIUM.
(a) If any Premium is not received on or before the Premium
Payment Date, the Seller may elect: (i) to accept a late
payment of such Premium; (ii) to give written notice of such
non-payment and, if such payment shall not be received within
two (2) Local Business Days of such notice, treat the related
Currency Option as void; or (iii) to give written notice of
such non-payment and, if such payment is not received within
two (2) Local Business Days of such notice, treat such
non-payment as an Event of Default under Section 5(a)(i). If
the Seller elects to act under clause (i) or (ii) of the
preceding sentence, the Buyer shall pay all out-of-pocket costs
and actual damages incurred in connection with such unpaid or
late Premium or void Currency Option, including without
limitation interest on such Premium from and including the
Premium Payment Date to but excluding the late payment date in
the same Currency as such Premium at the then prevailing market
rate, and any other losses, costs or expenses incurred by the
Seller in connection with such terminated Currency Option, for
the loss of its bargain, its cost of funding, or the loss
incurred as a result of terminating, liquidating, obtaining or
re-establishing a delta hedge or relating trading position with
respect to such Currency Option."
(5) Article 3 is hereby amended by adding the following new
Sections 3.2 and 3.3:
"Section 3.2 CURRENCY OBLIGATION. 'Currency Obligation' means
any obligation of a party to deliver an amount of currency
pursuant to an FX Transaction or an exercised Currency Option,
including a netted Currency Obligation, and including any
Currency Obligation previously entered into by the parties.
Section 3.3 SETTLEMENT NETTING OFFICE. 'Settlement Netting Office'
means (i) with respect to Party A, New York, London, Singapore
and Zurich and (ii) with respect to Party B, [PLEASE ADVISE].
Additional Settlement Netting Offices with respect to a party
may be specified by written agreement of the parties, effective
on such date as the parties may designate in such written
agreement."
(ii) CONFIRMATIONS. FX Transactions and Currency Options shall be
promptly confirmed by the parties by Confirmations exchanged by mail,
telex, facsimile or other electronic means. Unless either party
objects to the terms of an FX Transaction or Currency Option
contained in any Confirmation within three (3) Local Business Days of
receipt thereof, the terms of such Confirmation shall be deemed
correct and accepted absent manifest error, unless a corrected
Confirmation is sent by a party within such three (3) day period, in
which case the party receiving such corrected Confirmation shall have
three (3) Local Business Days after receipt thereof to object to the
terms contained in such corrected Confirmation.
(b) DISCHARGE AND TERMINATION WITH RESPECT TO CURRENCY OPTIONS.
Unless otherwise agreed, any Call Option or any Put Option
written by a party will automatically be terminated and discharged,
in whole or in part, as applicable, against a Call Option or a Put
Option, respectively, written by the other party, such termination
and discharge to occur automatically upon the payment in full of the
last Premium payable in respect of such Currency Options; provided
that such termination and discharge may only occur in respect of
Currency Options:
(A) each being with respect to the same Put Currency and the
same Call Currency;
(B) each having the same Expiration Date and Expiration Time;
(C) each being of the same style, i.e., either both being
American Style Options or both being European Style Options;
(D) each having the same Strike Price;
(E) neither of which shall have been exercised by delivery of a
Notice of Exercise;
(F) which are entered into by the same Offices of the parties;
and
(G) which are otherwise identical in terms that are material for
the purposes of offset and discharge;
and, upon the occurrence of such termination and discharge, neither
party shall have any further obligation to the other party in respect
of the relevant Currency Options or, as the case may be, parts
thereof so terminated and discharged. Such termination and discharge
shall be effective notwithstanding that either party may fail to
record such termination and discharge on its books. In the case of a
partial termination and discharge (i.e., where the relevant Currency
Options are for different amounts of the Currency Pair), the
remaining portion of the Currency Option which has not been partially
discharged and terminated shall continue to be a Currency Option for
all purposes of this Agreement.
Furthermore, (i) such termination and discharge shall be effective
whether or not any written confirmation of such termination and
discharge is exchanged; and (ii) the fact that the confirmations of
the Currency Options so terminated and discharged do not reflect such
termination and discharge shall not be construed to override the
termination and discharge provisions of this paragraph (b) with
respect to such Currency Options, notwithstanding the provisions of
Section 1(b) or any other provision of this Agreement.
(c) NETTING OF CURRENCY OPTION PREMIUMS. Section 2(c) shall
not apply to Currency Options.
If, on any date, and unless otherwise mutually agreed by the parties,
a Premium would otherwise be payable hereunder in the same currency
between a pair of Settlement Netting Offices of the parties, then, on
such date, each party's obligation to make payment of any such
Premium will be automatically satisfied and discharged and, if the
aggregate Premium(s) that would otherwise have been payable by such
Settlement Netting Office of one party exceeds the aggregate
Premium(s) that would otherwise have been payable by such Settlement
Netting Office of the other party, replaced by an obligation upon the
party by whom the larger aggregate Premium(s) would have been payable
to pay the other party the excess of the larger aggregate Premium(s)
over the smaller aggregate Premium(s).
(d) NOVATION NETTING WITH RESPECT TO FX TRANSACTIONS.
(i) Unless otherwise agreed by the parties hereto, whenever an FX
Transaction is entered into between a pair of Offices of the parties
which creates a Currency Obligation in the same currency and for the
same Value Date as an existing Currency Obligation between such
Offices, such Currency Obligations shall automatically and without
further action be netted, individually cancelled and simultaneously
replaced through novation by a new Currency Obligation determined as
follows: (A) if the cancelled Currency Obligations evidenced an
undertaking by the same party to deliver the underlying currency, the
new Currency Obligation shall equal the aggregate of the cancelled
Currency Obligations, and (B) if the cancelled Currency Obligations
evidence undertakings by each party to deliver the underlying
currency, the amount of the underlying currency to be delivered by
each party under the cancelled Currency Obligations shall be
compared, and the new Currency Obligation shall equal the amount by
which the Currency Obligation of the party having the greater
obligation with respect to each currency exceeded the Currency
Obligation of the party having the lesser obligation with respect to
such currency. Such new Currency Obligation shall be considered a
"Currency Obligation" under this Agreement.
(ii) The novation netting provisions of subsection (i) above shall be
effective notwithstanding that either party may fail to record such
novation netting on its books. Furthermore, (A) such novation netting
shall be effective whether or not any written confirmation of such
novation netting is exchanged; and (B) the fact that the
confirmations of the FX Transactions subject to such novation netting
do not reflect such novation netting shall not be construed to
override the novation netting provisions of subsection (i) of
paragraph (d) above with respect to such FX Transactions,
notwithstanding the provisions of Section 1(b) or any other provision
of this Agreement.
(e) PAYMENT NETTING WITH RESPECT TO CURRENCY OBLIGATIONS.
Section 2(c) shall not apply to Currency Obligations.
If, on any date, more than one delivery of a particular Currency
under Currency Obligations is to be made between a pair of Settlement
Netting Offices, then each party shall aggregate the amounts of such
Currency deliverable by it and only the difference between these
aggregate amounts shall be delivered by the party owing the larger
aggregate amount to the other party, and, if the aggregate amounts
are equal, no delivery of the Currency shall be made.
(f) DEFINITIONS. Section 14 is hereby amended as follows:
The definition of "Terminated Transactions" shall be deemed to include
Currency Obligations.
(g) ESCROW. Part 5(a) of this Schedule shall not apply to
Currency Options or FX Transactions.
PART 8
ADDITIONAL TERMS FOR PRECIOUS METALS TRANSACTIONS
(a) INCORPORATION OF AND AMENDMENTS TO 1991 ISDA DEFINITIONS AND COMMODITY
DEFINITIONS. The 1991 ISDA Definitions (the "Definitions") and the 1993
ISDA Commodity Derivative Definitions (the "Commodity Definitions"), as
published by the International Swaps and Derivatives Association, Inc., are
hereby incorporated by reference with respect to any "Transactions" in
commodities as defined by the Commodity Definitions, except as otherwise
specifically provided in this Schedule and in the Confirmation. For
purposes of this Agreement, "Transactions" (as defined in the Commodity
Definitions) shall be deemed to be "Transactions" as such term is used in
this Agreement.
(b) DEFINITIONS. (i) Notwithstanding any other definitions incorporated by
reference in the Schedule or as provided in theSchedule ,for purposes of
this Part 8, the definitions of the following term are hereby amended or
modified as specified below:
The definition of "Transaction" in Section 1.1 of the Definitions
is amended by inserting the phrase "Forward Contract" after the
phrase "option transaction" in the fourth line thereof.
(ii) The Definitions are further modified by the addition of
a new Section 7.2(c)(xi):
"(xi) 'Forward Contract' means any Transaction that is identified in
the related Confirmation as a forward contract (or that, based
on such Confirmation, is otherwise identifiable as a forward
purchase and sale transaction) and provides for the sale by
Seller of a specified quantity of precious metal for an agreed
purchase price, and the purchase by Buyer of such precious
metal for such purchase price, for settlement more than two
Local Business Days after the Trade Date of such Transaction."
(c) DELIVERY OF METAL. Unless otherwise specified by the parties delivery
of Precious Metals shall be effected by credit of metal to an unallocated
account at a member of the London Gold Market, the London Silver Market or
loco Zurich, as elected by the party receiving the metal, or to a pool
account at a mutually agreed refiner, or such other location as mutually
agreed by the parties. If the party making delivery does not receive notice
of such election prior to the date of delivery, such party shall effect
delivery by credit of metal to an unallocated account at a member of the
London bullion market or as otherwise agreed. Unless otherwise agreed, all
quantities of precious metal so delivered shall be in troy ounces of gold
minimum .995 fine, troy ounce of silver minimum .999 fine, or troy ounces
of platinum [or palladium minimum .9995 fine,, as the case may be. Each
delivery is subject to customary variations permitted in the commercial
bullion trade and the party receiving delivery shall only pay for the
quantity of fine troy ounces of metal actually delivered.
(d) MISCELLANEOUS. Subject to this Agreement, for purposes of Precious
Metals transactions, all references to "payment", "payments", "pay", "paid"
and "payable" are deemed to include references to "delivery", "deliveries",
"deliver", "delivered" and "deliverable", respectively.
(e) EXERCISE OF OPTIONS. Unless otherwise agreed by the parties with
respect to a Metal Option, the following provision shall apply: Exercise
received after 9:30 A.M. New York time on any Local Business Day prior to
the Expiration Date shall be deemed to cause an exercise at the opening of
business on the following Local Business Day.
PART 9
ADDITIONAL TERMS FOR FORWARD RATE AGREEMENTS
(a) DEFINITIONS. The following definitions shall apply in
respect of Forward Rate Agreements ("F.R.A.s"):
"Fixing Date" means the day which is two (2) Local Business Days prior to
the Effective Date except for Pounds Sterling for which the Fixing Date and
the Effective Date are the same.
"Contract Rate" means the forward rate of interest for the period from and
including the Effective Date to but excluding the Maturity Date as agreed
between the parties.
(b) SETTLEMENT RATE. Wherever two parties enter into a F.R.A. the Buyer
will agree to pay to the Seller on the Effective Date (if the Contract Rate
exceeds the Floating Rate Option), and the Seller will agree to pay to the
Buyer on the Effective Date (if the Floating Rate Option exceeds the
Contract Rate) an amount calculated in accordance with the following
formula:
(i) when L is higher than R
(L - R) x D x A
===============
(B x 100) + (L x D)
or (ii) when R is higher than L
(R - L) x D x A
===============
(B x 100) + (L x D)
where L = Floating Rate Option (expressed as a number and not a
percentage, e.g. 10.11625 and not 10.11625%)
R = Contract Rate (expressed as a number and not a percentage)
D = Days in Contract Period
A = Contract Amount
B = 360 days except where the Contract Currency is Pounds
Sterling (or any other currency where the contract rate is
calculated on 365 days according to the market custom) when 'B'
= 365.
In the event that no Floating Rate Option is available for the Contract
Period, then it will be the responsibility of both parties to agree to both
the basis for establishing an alternative rate and the reference banks to
be used for this purpose; and to specify the Effective Date and the
Maturity Date at the time of dealing.
PART 10
ADDITIONAL TERMS FOR BOND OPTION TRANSACTIONS
(a) Incorporation of and Amendments to ISDA Bond Option Definitions. The
Bond Option Definitions published by the International Swaps and
Derivatives Association, Inc. as of July 26, 1994 (the "Bond Definitions"),
as modified below, are hereby incorporated by reference with respect to any
Transaction that is a Bond Option Transaction as defined in the Bond
Definitions, except as otherwise specifically provided herein or in the
relevant Confirmation.
(i)The Bond Definitions are hereby amended as follows:
(1) Section 1.1 is amended by (i) adding the word "or" between
"government" and "governmental entity", (ii) adding the text, ", other than
direct obligations of the United States Government, ('U.S. Treasury
Securities')" after the words "governmental entity" and (iii) deleting the
text "or publicly or privately owned company".
(2) Section 1.6 is amended by (i) deleting the text, "(a) in
respect of a Seller that is a commercial bank," and (ii) by deleting the
text "and (b)" and all text following.
(3) Section 1.7 is amended by deleting all text following
"Seller Business Day".
(4) Section 1.9 is amended by deleting the text "[a list of
bonds to be provided by working group members.]" and by adding the
following text in lieu thereof: "`Bonds' means the bond or debt security
underlying the relevant Bond Option Transaction as specified in a
Confirmation.".
(5) Section 3.4 is amended by adding the text "if Cash
Settlement applies to the Bond Option Transaction," at the beginning of
clause (c).
(6) Section 3.6(f) is amended by adding the text "or the
Federal Reserve Bank of New York, as" after "securities exchange."
(7) Section 4.1(c) is amended by adding the following at the
end of the third paragraph: "; provided, however, that the oral Notice of
Exercise of the Bond Option Transaction shall be effective notwithstanding
any failure to deliver such written confirmation of exercise".
(8) Section 4.1(f) is amended by adding the text "as
specified in the Confirmation" at the end thereof.
(9) Section 4.1(g) is amended by deleting all text after "last
day of the Exercise Period)".
(10) Section 4.2 is deleted in its entirety.
(11) Section 6.1 is amended by adding the following text at the
end of the paragraph: "If such account information is not specified in the
Confirmation, such account information shall be specified by the parties at
the time the Bond Option Transaction is exercised by the Buyer".
(12) Section 6.2(b) is amended by adding the following text at
the end thereof: "In the event a party exercises its right to buy-in Bonds
in accordance with the terms of this paragraph, such party shall be
entitled to any costs or fees that it incurs in exercising its buy-in
rights."
(13) Section 6.5 is amended by (i) adding the text "(a)" before
the word "When" in line 1 thereof, (ii) deleting the text, "is specified to
apply" and by adding the word "applies" in lieu thereof, (iii) deleting all
of the text in this Section after the word "that" in line 3 thereof and by
adding the following text in substitution therefor: "it possesses full
legal and beneficial title to the Bonds to be delivered and shall deliver
the same free and clear of any lien, claim, encumbrance or security
interest of any kind whatsoever."
(b) Other Standard Terms and Conditions Applicable to Bond Option
Transactions/ Amendments to the ISDA Master Agreement. Notwithstanding
anything to the contrary in this Agreement or in the Bond Definitions, the
following amendments and additional provisions will apply for the purposes
of any Transaction that is a Bond Option Transaction.
(i) This Agreement is hereby amended as set forth below. The
following amendments shall apply only with respect to Bond Option
Transactions and shall not apply to any other Transaction entered into
under this Agreement, except as otherwise specified in the relevant
Confirmation.
(1) Section 2(a)(ii) is amended by deleting the second sentence
thereof and substituting the following therefor: "Unless otherwise
specified in the relevant Confirmation or elsewhere in this Agreement,
where settlement is by delivery (that is, other than by payment), such
delivery will be made for receipt on the due date on which a Transaction
would normally be settled as specified in the Confirmation."
(2) Section 2(b) is amended by (i) adding the text "or place
for receipt of delivery (as the case may be)" in line 1 after "account",
(ii) adding the text "and at least seven Local Business Days prior to the
scheduled date for the" in line 2 after "for the payment" and (iii)
deleting the word "or" in line 3 thereof.
(3) Section 2(e) is amended by (i) adding the text "for any
costs, losses, or expenses reasonably incurred by the other party in
connection with such delivery default (including, but not limited to any
costs of funding)", in line 9 after the word "party" and (ii) by deleting
the word "if" in the same line.
(4) Section 4(e) is amended by adding the following proviso at
the end thereof: ", except, in the case of any Stamp Tax payable in
connection with the delivery of Bonds in relation to a Bond Option
Transaction, where payment of such Stamp Tax shall be for the account of
the party who would bear such cost in respect of such Bond Option
Transaction in accordance with normal practice on the Exchange".
(5) Section 5(a)(i) is amended by adding the text "(in the case
of delivery, each being a Local Business Day on which a Settlement
Disruption Event (as defined in the Bond Definitions) has not occurred)",
after the word "Day" in the last line thereof.
ISDA(R)
International Swaps and Derivatives Association, Inc.
CREDIT SUPPORT ANNEX
to the Schedule to the
Master Agreement
dated as of October 23, 1997
between
UBS AG and Banco Itau S.A.
("Party A") ("Party B")
This Annex supplements, forms part of, and is subject to, the
above-referenced Agreement, is part of its Schedule and is a Credit Support
Document under this Agreement with respect to each party.
Accordingly, the parties agree as follows:--
PARAGRAPH 1. INTERPRETATION
(a) DEFINITIONS AND INCONSISTENCY. Capitalized terms not otherwise defined
herein or elsewhere in this Agreement have the meanings specified pursuant
to Paragraph 12, and all references in this Annex to Paragraphs are to
Paragraphs of this Annex. In the event of any inconsistency between this
Annex and the other provisions of this Schedule, this Annex will prevail,
and in the event of any inconsistency between Paragraph 13 and the other
provisions of this Annex, Paragraph 13 will prevail.
(b) SECURED PARTY AND PLEDGOR. All references in this Annex to the "Secured
Party" will be to either party when acting in that capacity and all
corresponding references to the "Pledgor" will be to the other party when
acting in that capacity; provided, however, that if Other Posted Support is
held by a party to this Annex, all references herein to that party as the
Secured Party with respect to that Other Posted Support will be to that
party as the beneficiary thereof and will not subject that support or that
party as the beneficiary thereof to provisions of law generally relating to
security interests and secured parties.
PARAGRAPH 2. SECURITY INTEREST
Each party, as the Pledgor, hereby pledges to the other party, as the
Secured Party, as security for its Obligations, and grants to the Secured
Party a first priority continuing security interest in, lien on and right
of Set-off against all Posted Collateral Transferred to or received by the
Secured Party hereunder. Upon the Transfer by the Secured Party to the
Pledgor of Posted Collateral, the security interest and lien granted
Copyright(C)1994 by International Swaps and Derivatives Association, Inc.
hereunder on that Posted Collateral will be released immediately and, to
the extent possible, without any further action by either party.
PARAGRAPH 3. CREDIT SUPPORT OBLIGATIONS
(a) DELIVERY AMOUNT. Subject to Paragraphs 4 and 5, upon a demand made by
the Secured Party on or promptly following a Valuation Date, if the
Delivery Amount for that Valuation Date equals or exceeds the Pledgor's
Minimum Transfer Amount, then the Pledgor will Transfer to the Secured
Party Eligible Credit Support having a Value as of the date of Transfer at
least equal to the applicable Delivery Amount (rounded pursuant to
Paragraph 13). Unless otherwise specified in Paragraph 13, the "DELIVERY
AMOUNT" applicable to the Pledgor for any Valuation Date will equal the
amount by which:
(i) the Credit Support Amount
exceeds
(ii) the Value as of that Valuation Date of all Posted Credit Support
held by the Secured Party.
(b) RETURN AMOUNT. Subject to Paragraphs 4 and 5, upon a demand made by the
Pledgor on or promptly following a Valuation Date, if the Return Amount for
that Valuation Date equals or exceeds the Secured Party's Minimum Transfer
Amount, then the Secured Party will Transfer to the Pledgor Posted Credit
Support specified by the Pledgor in that demand having a Value as of the
date of Transfer as close as practicable to the applicable Return Amount
(rounded pursuant to Paragraph 13). Unless otherwise specified in Paragraph
13, the "RETURN AMOUNT" applicable to the Secured Party for any Valuation
Date will equal the amount by which:
(i) the Value as of that Valuation Date of all Posted Credit Support
held by the Secured Party
exceeds
(ii) the Credit Support Amount.
"CREDIT SUPPORT AMOUNT" means, unless otherwise specified in Paragraph 13,
for any Valuation Date (i) the Secured Party's Exposure for that Valuation
Date plus (ii) the aggregate of all Independent Amounts applicable to the
Pledgor, if any, minus (iii) all Independent Amounts applicable to the
Secured Party, if any, minus (iv) the Pledgor's Threshold; PROVIDED,
HOWEVER, that the Credit Support Amount will be deemed to be zero whenever
the calculation of Credit Support Amount yields a number less than zero.
PARAGRAPH 4. CONDITIONS PRECEDENT, TRANSFER TIMING, CALCULATIONS AND
SUBSTITUTIONS
(a) CONDITIONS PRECEDENT. Each Transfer obligation of the Pledgor under
Paragraphs 3 and 5 and of the Secured Party under Paragraphs 3, 4(d)(ii), 5
and 6(d) is subject to the conditions precedent that:
(i) no Event of Default, Potential Event of Default or Specified
Condition has occurred and is continuing with respect to the other
party; and
(ii) no Early Termination Date for which any unsatisfied payment
obligations exist has occurred or been designated as the result of an
Event of Default or Specified Condition with respect to the other
party.
(b) TRANSFER TIMING. Subject to Paragraphs 4(a) and 5 and unless otherwise
specified, if a demand for the Transfer of Eligible Credit Support or
Posted Credit Support is made by the Notification Time, then the relevant
Transfer will be made not later than the close of business on the next
Local Business Day; if a demand is made after the Notification Time, then
the relevant Transfer will be made not later than the close of business on
the second Local Business Day thereafter.
(c) CALCULATIONS. All calculations of Value and Exposure for purposes of
Paragraphs 3 and 6(d) will be made by the Valuation Agent as of the
Valuation Time. The Valuation Agent will notify each party (or the other
party, if the Valuation Agent is a party) of its calculations not later
than the Notification Time on the Local Business Day following the
applicable Valuation Date (or in the case of Paragraph 6(d), following the
date of calculation).
(d) SUBSTITUTIONS.
(i) Unless otherwise specified in Paragraph 13, upon notice to the
Secured Party specifying the items of Posted Credit Support to be
exchanged, the Pledgor may, on any Local Business Day, Transfer to
the Secured Party substitute Eligible Credit Support (the "Substitute
Credit Support"); and
(ii) subject to Paragraph 4(a), the Secured Party will Transfer to
the Pledgor the items of Posted Credit Support specified by the
Pledgor in its notice not later than the Local Business Day following
the date on which the Secured Party receives the Substitute Credit
Support, unless otherwise specified in Paragraph 13 (the
"Substitution Date");provided that the Secured Party will only be
obligated to Transfer Posted Credit Support with a Value as of the
date of Transfer of that Posted Credit Support equal to the Value as
of that date of the Substitute Credit Support.
PARAGRAPH 5. DISPUTE RESOLUTION
If a party (a "Disputing Party") disputes (I) the Valuation Agent's
calculation of a Delivery Amount or a Return Amount or (II) the Value of
any Transfer of Eligible Credit Support or Posted Credit Support, then (1)
the Disputing Party will notify the other party and the Valuation Agent (if
the Valuation Agent is not the other party) not later than the close of
business on the Local Business Day following (X) the date that the demand
is made under Paragraph 3 in the case of (I) above or (Y) the date of
Transfer in the case of (II) above, (2) subject to Paragraph 4(a), the
appropriate party will Transfer the undisputed amount to the other party
not later than the close of business on the Local Business Day following
(X) the date that the demand is made under Paragraph 3 in the case of(I)
above or (Y) the date of Transfer in the case of(II) above, (3) the parties
will consult with each other in an attempt to resolve the dispute and (4)
if they fail to resolve the dispute by the Resolution Time, then:
(i) In the case of a dispute involving a Delivery Amount or Return
Amount, unless otherwise specified in Paragraph 13, the Valuation
Agent will recalculate the Exposure and the Value as of the
Recalculation Date by:
(A) utilizing any calculations of Exposure for the Transactions
(or Swap Transactions) that the parties have agreed are not in
dispute;
(B) calculating the Exposure for the Transactions (or Swap
Transactions) in dispute by seeking four actual quotations at
mid-market from Reference Market-makers for purposes of
calculating Market Quotation, and taking the arithmetic average of
those obtained; provided that if four quotations are not available
for a particular Transaction (or Swap Transaction), then fewer
than four quotations may be used for that Transaction (or Swap
Transaction); and if no quotations are available for a particular
Transaction (or Swap Transaction), then the Valuation Agent's
original calculations will be used for that Transaction (or Swap
Transaction); and
(C) utilizing the procedures specified in Paragraph 13 for
calculating the Value, if disputed, of Posted Credit Support.
(ii) In the case of a dispute involving the Value of any Transfer of
Eligible Credit Support or Posted Credit Support, the Valuation Agent
will recalculate the Value as of the date of Transfer pursuant to
Paragraph 13.
Following a recalculation pursuant to this Paragraph, the Valuation Agent
will notify each party (or the other party, if the Valuation Agent is a
party) not later than the Notification Time on the Local Business Day
following the Resolution Time. The appropriate party will, upon demand
following that notice by the Valuation Agent or a resolution pursuant to
(3) above and subject to Paragraphs 4(a) and 4(b), make the appropriate
Transfer.
PARAGRAPH 6. HOLDING AND USING POSTED COLLATERAL
(a) CARE OF POSTED COLLATERAL. Without limiting the Secured Party's rights
under Paragraph 6(c), the Secured Party will exercise reasonable care to
assure the safe custody of all Posted Collateral to the extent required by
applicable law, and in any event the Secured Party will be deemed to have
exercised reasonable care if it exercises at least the same degree of care
as it would exercise with respect to its own property. Except as specified
in the preceding sentence, the Secured Party will have no duty with respect
to Posted Collateral, including, without limitation, any duty to collect
any Distributions, or enforce or preserve any rights pertaining thereto.
(b) ELIGIBILITY TO HOLD POSTED COLLATERAL; CUSTODIANS.
(i) GENERAL. Subject to the satisfaction of any conditions specified
in Paragraph 13 for holding Posted Collateral, the Secured Party will
be entitled to hold Posted Collateral or to appoint an agent (a
"Custodian") to hold Posted Collateral for the Secured Party. Upon
notice by the Secured Party to the Pledgor of the appointment of a
Custodian, the Pledgor's obligations to make any Transfer will be
discharged by making the Transfer to that Custodian. The holding of
Posted Collateral by a Custodian will be deemed to be the holding of
that Posted Collateral by the Secured Party for which the Custodian
is acting.
(ii) FAILURE TO SATISFY CONDITIONS. If the Secured Party or its
Custodian fails to satisfy any conditions for holding Posted
Collateral, then upon a demand made by the Pledgor, the Secured Party
will, not later than five Local Business Days after the demand,
Transfer or cause its Custodian to Transfer all Posted Collateral
held by it to a Custodian that satisfies those conditions or to the
Secured Party if it satisfies those conditions.
(iii) LIABILITY. The Secured Party will be liable for the acts or
omissions of its Custodian to the same extent that the Secured Party
would be liable hereunder for its own acts or omissions.
(c) USE OF POSTED COLLATERAL. Unless otherwise specified in Paragraph 13
and without limiting the rights and obligations of the parties under
Paragraphs 3, 4(d)(ii), 5, 6(d) and 8, if the Secured Party is not a
Defaulting Party or an Affected Party with respect to a Specified Condition
and no Early Termination Date has occurred or been designated as the result
of an Event of Default or Specified Condition with respect to the Secured
Party, then the Secured Party will, notwithstanding Section 9-207 of the
New York Uniform Commercial Code, have the right to:
(i) sell, pledge, rehypothecate, assign, invest, use, commingle or
otherwise dispose of, or otherwise use in its business any Posted
Collateral it holds, free from any claim or right of any nature
whatsoever of the Pledgor, including any equity or right of
redemption by the Pledgor; and
(ii) register any Posted Collateral in the name of the Secured Party,
its Custodian or a nominee for either.
For purposes of the obligation to Transfer Eligible Credit Support or
Posted Credit Support pursuant to Paragraphs 3 and 5 and any rights or
remedies authorized under this Agreement, the Secured Party will be deemed
to continue to hold all Posted Collateral and to receive Distributions made
thereon, regardless of whether the Secured Party has exercised any rights
with respect to any Posted Collateral pursuant to (i) or (ii) above.
(d) DISTRIBUTIONS AND INTEREST AMOUNT.
(i) DISTRIBUTIONS. Subject to Paragraph 4(a), if the Secured Party
receives or is deemed to receive Distributions on a Local Business
Day, it will Transfer to the Pledgor not later than the following
Local Business Day any Distributions it receives or is deemed to
receive to the extent that a Delivery Amount would not be created or
increased by that Transfer, as calculated by the Valuation Agent (and
the date of calculation will be deemed to be a Valuation Date for
this purpose).
(ii) INTEREST AMOUNT. Unless otherwise specified in Paragraph 13 and
subject to Paragraph 4(a), in lieu of any interest, dividends or
other amounts paid or deemed to have been paid with respect to Posted
Collateral in the form of Cash (all of which may be retained by the
Secured Party), the Secured Party will Transfer to the Pledgor at the
times specified in Paragraph 13 the Interest Amount to the extent
that a Delivery Amount would not be created or increased by that
Transfer, as calculated by the Valuation Agent (and the date of
calculation will be deemed to be a Valuation Date for this purpose).
The Interest Amount or portion thereof not Transferred pursuant to
this Paragraph will constitute Posted Collateral in the form of Cash
and will be subject to the security interest granted under Paragraph
2.
PARAGRAPH 7. EVENTS OF DEFAULT
For purposes of Section 5(a)(iii)(1) of this Agreement, an Event of Default
will exist with respect to a party if:
(i) that party fails (or fails to cause its Custodian) to make, when
due, any Transfer of Eligible Collateral, Posted Collateral or the
Interest Amount, as applicable, required to be made by it and that
failure continues for two Local Business Days after notice of that
failure is given to that party;
(ii) that party fails to comply with any restriction or prohibition
specified in this Annex with respect to any of the rights specified
in Paragraph 6(c) and that failure continues for five Local Business
Days after notice of that failure is given to that party; or
(iii) that party fails to comply with or perform any agreement or
obligation other than those specified in Paragraphs 7(i) and 7(ii)
and that failure continues for 30 days after notice of that failure
is given to that party.
PARAGRAPH 8. CERTAIN RIGHTS AND REMEDIES
(a) SECURED PARTY'S RIGHTS AND REMEDIES. If at any time (1) an Event of
Default or Specified Condition with respect to the Pledgor has occurred and
is continuing or (2) an Early Termination Date has occurred or been
designated as the result of an Event of Default or Specified Condition with
respect to the Pledgor, then, unless the Pledgor has paid in full all of
its Obligations that are then due, the Secured Party may exercise one or
more of the following rights and remedies:
(i) all rights and remedies available to a secured party under
applicable law with respect to Posted Collateral held by the Secured
Party;
(ii) any other rights and remedies available to the Secured Party
under the terms of Other Posted Support, if any;
(iii) the right to Set-off any amounts payable by the Pledgor with
respect to any Obligations against any Posted Collateral or the Cash
equivalent of any Posted Collateral held by the Secured Party (or any
obligation of the Secured Party to Transfer that Posted Collateral);
and
(iv) the right to liquidate any Posted Collateral held by the
Secured Party through one or more public or private sales or other
dispositions with such notice, if any, as may be required under
applicable law, free from any claim or right of any nature whatsoever
of the Pledgor, including any equity or right of redemption by the
Pledgor (with the Secured Party having the right to purchase any or
all of the Posted Collateral to be sold) and to apply the proceeds
(or the Cash equivalent thereof) from the liquidation of the Posted
Collateral to any amounts payable by the Pledgor with respect to any
Obligations in that order as the Secured Party may elect.
Each party acknowledges and agrees that Posted Collateral in the form of
securities may decline speedily in value and is of a type customarily sold
on a recognized market, and, accordingly, the Pledgor is not entitled to
prior notice of any sale of that Posted Collateral by the Secured Party,
except any notice that is required under applicable law and cannot be
waived.
(b) PLEDGOR'S RIGHTS AND REMEDIES. If at any time an Early Termination Date
has occurred or been designated as the result of an Event of Default or
Specified Condition with respect to the Secured Party, then (except in the
case of an Early Termination Date relating to less than all Transactions
(or Swap Transactions) where the Secured Party has paid in full all of its
obligations that are then due under Section 6(e) of this Agreement):
(i) the Pledgor may exercise all rights and remedies available to a
pledgor under applicable law with respect to Posted Collateral held
by the Secured Party;
(ii) the Pledgor may exercise any other rights and remedies available
to the Pledgor under the terms of Other Posted Support, if any;
(iii) the Secured Party will be obligated immediately to Transfer
all Posted Collateral and the Interest Amount to the Pledgor; and
(iv) to the extent that Posted Collateral or the Interest Amount is
not so Transferred pursuant to (iii) above, the Pledgor may:
(A) Set-off any amounts payable by the Pledgor with respect to any
Obligations against any Posted Collateral or the Cash equivalent
of any Posted Collateral held by the Secured Party (or any
obligation of the Secured Party to Transfer that Posted
Collateral); and
(B) to the extent that the Pledgor does not Set-off under (iv)(A)
above, withhold payment of any remaining amounts payable by the
Pledgor with respect to any Obligations, up to the Value of any
remaining Posted Collateral held by the Secured Party, until that
Posted Collateral is Transferred to the Pledgor.
(c) DEFICIENCIES AND EXCESS PROCEEDS. The Secured Party will Transfer to
the Pledgor any proceeds and Posted Credit Support remaining after
liquidation, Set-off and/or application under Paragraphs 8(a) and 8(b)
after satisfaction in full of all amounts payable by the Pledgor with
respect to any Obligations; the Pledgor in all events will remain liable
for any amounts remaining unpaid after any liquidation, Set-off and/or
application under Paragraphs 8(a) and 8(b).
(d) FINAL RETURNS. When no amounts are or thereafter may become payable by
the Pledgor with respect to any Obligations (except for any potential
liability under Section 2(d) of this Agreement), the Secured Party will
Transfer to the Pledgor all Posted Credit Support and the Interest Amount,
if any.
PARAGRAPH 9. REPRESENTATIONS
Each party represents to the other party (which representations will be
deemed to be repeated as of each date on which it, as the Pledgor,
Transfers Eligible Collateral) that:
(i) it has the power to grant a security interest in and lien on any
Eligible Collateral it Transfers as the Pledgor and has taken all
necessary actions to authorize the granting of that security interest
and lien;
(ii) it is the sole owner of or otherwise has the right to Transfer
all Eligible Collateral it Transfers to the Secured Party hereunder,
free and clear of any security interest, lien, encumbrance or other
restrictions other than the security interest and lien granted under
Paragraph 2;
(iii) upon the Transfer of any Eligible Collateral to the Secured
Party under the terms of this Annex, the Secured Party will have a
valid and perfected first priority security interest therein
(assuming that any central clearing corporation or any third-party
financial intermediary or other entity not within the control of the
Pledgor involved in the Transfer of that Eligible Collateral gives
the notices and takes the action required of it under applicable law
for perfection of that interest); and
(iv) the performance by it of its obligations under this Annex will
not result in the creation of any security interest, lien or other
encumbrance on any Posted Collateral other than the security interest
and lien granted under Paragraph 2.
PARAGRAPH 10. EXPENSES
(a) GENERAL. Except as otherwise provided in Paragraphs 10(b) and 10(c),
each party will pay its own costs and expenses in connection with
performing its obligations under this Annex and neither party will be
liable for any costs and expenses incurred by the other party in connection
herewith.
(b) POSTED CREDIT SUPPORT. The Pledgor will promptly pay when due all
taxes, assessments or charges of any nature that are imposed with respect
to Posted Credit Support held by the Secured Party upon becoming aware of
the same, regardless of whether any portion of that Posted Credit Support
is subsequently disposed of under Paragraph 6(c), except for those taxes,
assessments and charges that result from the exercise of the Secured
Party's rights under Paragraph 6(c).
(c) LIQUIDATION/APPLICATION OF POSTED CREDIT SUPPORT. All reasonable costs
and expenses incurred by or on behalf of the Secured Party or the Pledgor
in connection with the liquidation and/or application of any Posted Credit
Support under Paragraph 8 will be payable, on demand and pursuant to the
Expenses Section of this Agreement, by the Defaulting Party or, if there is
no Defaulting Party, equally by the parties.
PARAGRAPH 11. MISCELLANEOUS
(a) DEFAULT INTEREST. A Secured Party that fails to make, when due, any
Transfer of Posted Collateral or the Interest Amount will be obligated to
pay the Pledgor (to the extent permitted under applicable law) an amount
equal to interest at the Default Rate multiplied by the Value of the items
of property that were required to be Transferred, from (and including) the
date that Posted Collateral or Interest Amount was required to be
Transferred to (but excluding) the date of Transfer of that Posted
Collateral or Interest Amount. This interest will be calculated on the
basis of daily compounding and the actual number of days elapsed.
(b) FURTHER ASSURANCES. Promptly following a demand made by a party, the
other party will execute, deliver, file and record any financing statement,
specific assignment or other document and take any other action that may be
necessary or desirable and reasonably requested by that party to create,
preserve, perfect or validate any security interest or lien granted under
Paragraph 2, to enable that party to exercise or enforce its rights under
this Annex with respect to Posted Credit Support or an Interest Amount or
to effect or document a release of a security interest on Posted Collateral
or an Interest Amount.
(c) FURTHER PROTECTION. The Pledgor will promptly give notice to the
Secured Party of, and defend against, any suit, action, proceeding or lien
that involves Posted Credit Support Transferred by the Pledgor or that
could adversely affect the security interest and lien granted by it under
Paragraph 2, unless that suit, action, proceeding or lien results from the
exercise of the Secured Party's rights under Paragraph 6(c).
(d) GOOD FAITH AND COMMERCIALLY REASONABLE MANNER. Performance of all
obligations under this Annex, including, but not limited to, all
calculations, valuations and determinations made by either party, will be
made in good faith and in a commercially reasonable manner.
(e) DEMANDS AND NOTICES. All demands and notices made by a party under this
Annex will be made as specified in the Notices Section of this Agreement,
except as otherwise provided in Paragraph 13.
(f) SPECIFICATIONS OF CERTAIN MATTERS. Anything referred to in this Annex
as being specified in Paragraph 13 also may be specified in one or more
Confirmations or other documents and this Annex will be construed
accordingly.
PARAGRAPH 12. DEFINITIONS
As used in this Annex:--
"CASH" means the lawful currency of the United States of America.
"CREDIT SUPPORT AMOUNT" has the meaning specified in Paragraph 3.
"CUSTODIAN" has the meaning specified in Paragraphs 6(b)(i) and 13.
"DELIVERY AMOUNT" has the meaning specified in Paragraph 3(a).
"DISPUTING PARTY" has the meaning specified in Paragraph 5.
"DISTRIBUTIONS" means with respect to Posted Collateral other than Cash,
all principal, interest and other payments and distributions of cash or
other property with respect thereto, regardless of whether the Secured
Party has disposed of that Posted Collateral under Paragraph 6(c).
Distributions will not include any item of property acquired by the Secured
Party upon any disposition or liquidation of Posted Collateral or, with
respect to any Posted Collateral in the form of Cash, any distributions on
that collateral, unless otherwise specified herein.
"ELIGIBLE COLLATERAL" means, with respect to a party, the items, if any,
specified as such for that party in Paragraph 13.
"ELIGIBLE CREDIT SUPPORT" means Eligible Collateral and Other Eligible Support.
"EXPOSURE" means for any Valuation Date or other date for which Exposure is
calculated and subject to Paragraph 5 in the case of a dispute, the amount,
if any, that would be payable to a party that is the Secured Party by the
other party (expressed as a positive number) or by a party that is the
Secured Party to the other party (expressed as a negative number) pursuant
to Section 6(e)(ii)(2)(A) of this Agreement as if all Transactions (or Swap
Transactions) were being terminated as of the relevant Valuation Time;
provided that Market Quotation will be determined by the Valuation Agent
using its estimates at mid-market of the amounts that would be paid for
Replacement Transactions (as that term is defined in the definition of
"Market Quotation").
"INDEPENDENT AMOUNT" means, with respect to a party, the amount specified
as such for that party in Paragraph 13; if no amount is specified, zero.
"INTEREST AMOUNT" means, with respect to an Interest Period, the aggregate
sum of the amounts of interest calculated for each day in that Interest
Period on the principal amount of Posted Collateral in the form of Cash
held by the Secured Party on that day, determined by the Secured Party for
each such day as follows:
(x) the amount of that Cash on that day; multiplied by
(y) the Interest Rate in effect for that day; divided by
(z) 360.
"INTEREST PERIOD" means the period from (and including) the last Local
Business Day on which an Interest Amount was Transferred (or, if no
Interest Amount has yet been Transferred, the Local Business Day on which
Posted Collateral in the form of Cash was Transferred to or received by the
Secured Party) to (but excluding) the Local Business Day on which the
current Interest Amount is to be Transferred.
"INTEREST RATE" means the rate specified in Paragraph 13.
"LOCAL BUSINESS DAY", unless otherwise specified in Paragraph 13, has the
meaning specified in the Definitions Section of this Agreement, except that
references to a payment in clause (b) thereof will be deemed to include a
Transfer under this Annex.
"MINIMUM TRANSFER AMOUNT" means, with respect to a party, the amount
specified as such for that party in Paragraph 13; if no amount is
specified, zero.
"NOTIFICATION TIME" has the meaning specified in Paragraph 13.
"OBLIGATIONS" means, with respect to a party, all present and future
obligations of that party under this Agreement and any additional
obligations specified for that party in Paragraph 13.
"OTHER ELIGIBLE SUPPORT" means, with respect to a party, the items, if any,
specified as such for that party in Paragraph 13.
"OTHER POSTED SUPPORT" means all Other Eligible Support Transferred to the
Secured Party that remains in effect for the benefit of that Secured Party.
"PLEDGOR" means either party, when that party (i) receives a demand for or
is required to Transfer Eligible Credit Support under Paragraph 3(a) or
(ii) has Transferred Eligible Credit Support under Paragraph 3(a).
"POSTED COLLATERAL" means all Eligible Collateral, other property,
Distributions, and all proceeds thereof that have been Transferred to or
received by the Secured Party under this Annex and not Transferred to the
Pledgor pursuant to Paragraph 3(b), 4(d)(ii) or 6(d)(i) or released by the
Secured Party under Paragraph 8. Any Interest Amount or portion thereof not
Transferred pursuant to Paragraph 6(d)(ii) will constitute Posted
Collateral in the form of Cash.
"POSTED CREDIT SUPPORT" means Posted Collateral and Other Posted Support.
"RECALCULATION DATE" means the Valuation Date that gives rise to the
dispute under Paragraph 5; provided, however, that if a subsequent
Valuation Date occurs under Paragraph 3 prior to the resolution of the
dispute, then the "Recalculation Date" means the most recent Valuation Date
under Paragraph 3.
"RESOLUTION TIME" has the meaning specified in Paragraph 13.
"RETURN AMOUNT" has the meaning specified in Paragraph 3(b).
"SECURED PARTY" means either party, when that party (i) makes a demand for
or is entitled to receive Eligible Credit Support under Paragraph 3(a) or
(ii) holds or is deemed to hold Posted Credit Support.
"SPECIFIED CONDITION" means, with respect to a party, any event specified
as such for that party in Paragraph 13.
"SUBSTITUTE CREDIT SUPPORT" has the meaning specified in Paragraph 4(d)(i).
"SUBSTITUTION DATE" has the meaning specified in Paragraph 4(d)(ii).
"THRESHOLD" means, with respect to a party, the amount specified as such
for that party in Paragraph 13; if no amount is specified, zero.
"TRANSFER" means, with respect to any Eligible Credit Support, Posted
Credit Support or Interest Amount, and in accordance with the instructions
of the Secured Party, Pledgor or Custodian, as applicable:
(i) in the case of Cash, payment or delivery by wire transfer into
one or more bank accounts specified by the recipient;
(ii) in the case of certificated securities that cannot be paid or
delivered by book-entry, payment or delivery in appropriate physical
form to the recipient or its account accompanied by any duly executed
instruments of transfer, assignments in blank, transfer tax stamps
and any other documents necessary to constitute a legally valid
transfer to the recipient;
(iii) in the case of securities that can be paid or delivered by
book-entry, the giving of written instructions to the relevant
depository institution or other entity specified by the recipient,
together with a written copy thereof to the recipient, sufficient if
complied with to result in a legally effective transfer of the
relevant interest to the recipient; and
(iv) in the case of Other Eligible Support or Other Posted Support,
as specified in Paragraph 13.
"VALUATION AGENT" has the meaning specified in Paragraph 13.
"VALUATION DATE" means each date specified in or otherwise determined
pursuant to Paragraph 13.
"VALUATION PERCENTAGE" means, for any item of Eligible Collateral, the
percentage specified in Paragraph 13.
"VALUATION TIME" has the meaning specified in Paragraph 13.
"VALUE" means for any Valuation Date or other date for which Value is
calculated and subject to Paragraph 5 in the case of a dispute, with
respect to:
(i) Eligible Collateral or Posted Collateral that is:
(A) Cash, the amount thereof and
(B) a security, the bid price obtained by the Valuation Agent
multiplied by the applicable Valuation Percentage, if any;
(ii) Posted Collateral that consists of items that are not specified
as Eligible Collateral, zero; and
(iii) Other Eligible Support and Other Posted Support, as specified
in Paragraph 13.
PARAGRAPH 13. ELECTIONS AND VARIABLES
(a) SECURITY INTEREST FOR "OBLIGATIONS." The term "OBLIGATIONS"
as used in this Annex includes the following additional
obligations:
With respect to Party A: None
With respect to Party B: None
(b) CREDIT SUPPORT OBLIGATIONS.
(i) DELIVERY AMOUNT, RETURN AMOUNT AND CREDIT SUPPORT
AMOUNT.
(A) "DELIVERY AMOUNT" has the meaning specified in Paragraph
3(a), unless otherwise specified here:
N/A
(B) "RETURN AMOUNT" has the meaning specified in Paragraph
3(b), unless otherwise specified here:
N/A
(C) "CREDIT SUPPORT AMOUNT" has the meaning
specified in Paragraph 3, unless otherwise
specified here: N/A
(ii) ELIGIBLE COLLATERAL. The following items will qualify
as "ELIGIBLE COLLATERAL" for the party specified:
<TABLE>
<CAPTION>
VALUATION
PARTY A PARTY B PERCENTAGE
<S> <C> <C> <C>
(A) Cash N/A X 100%
(B) negotiable debt obligations
(other than interest-only
securities) issued by the U.S.
Treasury Department having an
original maturity at issuance of N/A X 98%
not more than one year
(C) negotiable debt obligations
(other than interest-only
securities) issued by the U.S.
Treasury Department having an
original maturity at issuance of N/A X 96%
more than one year but not more
than 5 years
(D) negotiable debt obligations
(other than interest-only
securities) issued by the U.S.
Treasury Department having an N/A X 94%
original maturity at issuance of
more than 5 years
</TABLE>
(iii)OTHER ELIGIBLE SUPPORT. The following items will
qualify as "OTHER ELIGIBLE SUPPORT" for the party
specified: None
(iv) THRESHOLDS.
(A) "INDEPENDENT AMOUNT" means with respect to Party A: N/A
"INDEPENDENT AMOUNT" means with respect to Party B: N/A
(B) "THRESHOLD" means with respect to Party A: N/A
"THRESHOLD" means with respect to Party B: Zero
(C)"MINIMUM TRANSFER AMOUNT" means with respect to Party A: N/A
"MINIMUM TRANSFER AMOUNT" means with respect to Party B: $250,000
(D) ROUNDING. The Delivery Amount and the Return Amount will not be
rounded.
(c) VALUATION AND TIMING.
(i) "VALUATION AGENT" means Party A.
(ii) "VALUATION DATE" means each Local Business Day.
(iii) "VALUATION TIME" means the close of business on the Local
Business Day before the Valuation Date or date of calculation,
as applicable; provided that the calculations of Value and
Exposure will be made as of approximately the same time on the
same date.
(iv) "NOTIFICATION TIME" means 10:00 a.m., New York time, on
a Local Business Day.
(v) "TRANSFER TIMING" The terms of Paragraph 4(b) are deleted and
the following substituted therefor:
"Subject to Paragraphs 4(a) and 5, and unless otherwise specified, if
a demand for the Transfer of Eligible Credit Support or Posted
Credit Support is made by the Notification Time, then the
relevant Transfer will be made by (i) 2:00 p.m. New York time
in the case of Government Obligations, and (ii) 5:00 p.m. New
York time in the case of cash, on the day such demand is made.
If such demand is made after the Notification Time, then the
relevant Transfer will be made the next Local Business Day by
2:00 p.m. New York time in the case of Government Obligations
and by 5:00 p.m. New York time in the case of cash.
(d) CONDITIONS PRECEDENT AND SECURED PARTY'S RIGHTS AND REMEDIES.
(i) The following Termination Events will be a "SPECIFIED
CONDITION" for Party A: None.
(ii) The following Termination Events will be a "SPECIFIED
CONDITION" for Party B: Illegality, Tax Event, Tax
Event Upon Merger and Credit Event Upon Merger.
(e) SUBSTITUTION.
(i) SUBSTITUTION DATE. Paragraph 4(d)(ii) is deleted and
the following substituted therefor:
"(ii) subject to Paragraph 4(a), the Secured Party will transfer to
the Pledgor the items of Posted Credit Support specified by the
Pledgor in its notice not later than the Local Business Day
following the date on which the Secured Party receives the
Substitute Credit Support (the "Substitution Date") so long as
Pledgor gives such notice by 2:00 p.m. New York time on the day
preceding the Substitution Date. If such demand is made after
the Notification Time, then the Substitution Date shall be the
second Local Business Day following Secured Party's receipt of
such notice. Notwithstanding the foregoing, the Secured Party
will only be obligated to Transfer Posted Credit Support with a
Value as of the date of Transfer of that Posted Credit Support
equal to the Value as of that date of the Substitute Credit
Support, as calculated by the Valuation Agent."
(ii)CONSENT. If specified here as applicable, then Pledgor
must obtain the Secured Party's consent for any
substitution pursuant to Paragraph 4(d): N/A
(f) DISPUTE RESOLUTION.
(i) "RESOLUTION TIME" means 1:00 p.m., New York time, on the Local
Business Day following the date on which the notice of the
dispute is given under Paragraph 5.
(ii) VALUE. For the purpose of Paragraphs 5(i)(C) and 5(ii), the
Value of Posted Credit Support of the type described in
Paragraph 13(b)(ii)(B), (C) or (D) (referred to herein as
"Government Obligations") will equal the sum of (A) either (1)
the mean of the high bid and low asked prices quoted on such
date by any principal market maker for such Government
Obligations, which market maker shall be selected by the
Disputing Party in good faith and in a commercially reasonable
manner, or (2) if no quotations are available from a principal
market maker for such date, the mean of such high bid and low
asked prices as of the day next preceding such date, on which
such quotations were available, and (B) accrued interest on
such Government Obligations (except to the extent included in
the applicable price referred to in clause (A) above).
(iii) ALTERNATIVE. The provision of Paragraph 5 will apply.
(g) HOLDING AND USING POSTED COLLATERAL.
(i) ELIGIBILITY TO HOLD POSTED COLLATERAL; CUSTODIANS. Party A and
any Custodian appointed by Party A will be entitled to hold
Posted Collateral pursuant to Paragraph 6(b); provided that the
following conditions applicable to it are satisfied:
(A)In the event Party A acts as its own custodian, it is not a
Defaulting Party and is a commercial bank or trust
company organized under the laws of the United States or
a political subdivision thereof or a U.S. branch of a
bank organized under the laws of Switzerland, having
assets of at least $10 billion and a long term debt or
deposit rating of at least "A3" from Moody's and
"A-" from S&P.
(B) Any Custodian appointed by Party A must be a
commercial bank or trust company organized under
the laws of the United States or a political
subdivision thereof or a U.S. branch of a bank
organized under the laws of Switzerland, having
assets of at least $10 billion and a long term
debt or deposit rating of at least "A3" from
Moody's and "A-" from S&P.
(C) Posted Collateral may only be held in one or more
accounts in the United States and any account established
by Party A or its Custodian to hold Posted Collateral
shall be established and maintained for the sole purpose
of receiving deliveries of and holding Posted Collateral.
(D) If Party A itself or its Custodian at any time may not
hold Posted Collateral consistent with this Paragraph
13(g) or elects not to do so, Party A shall promptly give
notice to Party B.
Initially, the Custodian for Party A is Swiss Bank
Corporation, New York Branch.
(ii) USE OF POSTED COLLATERAL. The provisions of
Paragraph 6(c) will apply to Party A and are not
applicable to Party B.
(h) DISTRIBUTIONS AND INTEREST AMOUNT.
(i) INTEREST RATE. The "INTEREST RATE" will be the rate per annum
equal to the overnight Federal Funds Rate for each day cash is
held by the Secured Party as reported In Federal Reserve
Publication H.15-519.
(ii) TRANSFER OF INTEREST AMOUNT. The Transfer of the
Interest Amount will be made on the last Local Business
Day of each calendar month.
(iii) ALTERNATIVE TO INTEREST AMOUNT. The provisions of
Paragraph 6(d)(ii) will apply.
(i) ADDITIONAL REPRESENTATION(S). Party B represents to the
other party (which representation(s) will be deemed to be
repeated as of each date on which it, as the Pledgor,
Transfers Posted Collateral) that: NONE
(j) OTHER ELIGIBLE SUPPORT AND OTHER POSTED SUPPORT.
(i) "VALUE" shall have no meaning with respect to Other
Eligible Support.
(ii) "TRANSFER" shall have no meaning with respect to Other Eligible
Support.
(k) DEMANDS AND NOTICES.
Any demand, specification or notice under this Annex (each, a "Notice"),
other than a Notice pursuant to Paragraph 4(d), may be delivered orally,
including by telephone. If such Notice is delivered orally, such oral
Notice shall be confirmed promptly in writing (a "Notice Confirmation") by
tested telex, facsimile or actual delivery. Failure to provide that Notice
Confirmation will not affect the validity of that oral Notice. All Notices
shall be delivered to the following addresses:
with respect to Party A:
Swiss Bank Corporation, New York Branch
222 Broadway, New York, New York 10038
Attention: Margin Specialist, Collateral Management-222-02-D
Telephone: (212) 574-6116 Telecopier: (212) 574-4955
with respect to Party B:
[PLEASE ADVISE]
(l) ADDRESSES FOR TRANSFERS.
Unless otherwise specified in writing by the party requesting the
Transfer of Collateral, Collateral shall be Transferred as follows:
(i) Collateral delivered to Party A, as Secured Party:
For Posted Collateral consisting of Government Obligations:
Bank of New York/SBC CUST, ABA 021000018; ref: Banco
Itau S.A., as Pledgor
For Posted Collateral consisting of cash: Swiss Bank
Corporation, ABA 026007993; ref: [SBC ACCOUNT NUMBER
FOR PARTY B TO BE PROVIDED] Banco Itau S.A., as Pledgor
All transfers of funds hereunder shall be in United States dollars
and in immediately available funds.
(ii) Collateral returned to Party B, as Pledgor:
For Posted Collateral consisting of Government Obligations:
[TO BE PROVIDED]
For Posted Collateral consisting of cash: [TO BE
PROVIDED]
(m) OTHER PROVISIONS.
AGREEMENT AS TO SINGLE SECURED PARTY AND PLEDGOR. Party A and Party B agree
that, notwithstanding anything to the contrary in the recital to this
Annex, Paragraph 1(b) or Paragraph 2 or the definitions in Paragraph 12,
(a) the term "Secured Party" as used in this Annex means only Party A, (b)
the term "Pledgor" as used in this Annex means only Party B, (c) only Party
B makes the pledge and grant in Paragraph 2, the acknowledgment in the
final sentence of Paragraph 8(a) and the representations in Paragraph 9 and
(d) only Party B will be required to make Transfers of Eligible Credit
Support hereunder.
ROLL-OFF DEFICIENCY. If (i) a payment or delivery due to be made by Party A
under any Transaction would result in the creation of, or an increase in, a
Delivery Amount if such payment or delivery were made when due (a "Roll-off
Deficiency") and (ii) no Event of Default or Potential Event of Default
with respect to Party A has occurred and is continuing, then Party A may,
in its sole discretion, and with notice to Party B, withhold such payment
or delivery until Party B has delivered Eligible Collateral to Party A
having a Value sufficient to eliminate the Roll-off Deficiency. Party A
shall invest any such deferred payment for the benefit of Party B.
PARAGRAPH 3. CREDIT SUPPORT OBLIGATIONS
The following text shall be deleted from lines 2 and 3 of Paragraph 3(a):
"if the Delivery Amount for that Valuation Date equals or exceeds the
Pledgor's Minimum Transfer Amount, then".
PARAGRAPH 4. CONDITIONS PRECEDENT, TRANSFER TIMING, CALCULATIONS
AND SUBSTITUTIONS
Subparagraph (a) of Paragraph 4 of the Credit Support Annex is hereby
amended by deleting clauses (i) and (ii) in their entirety and inserting in
lieu thereof the following:
"(i) no Event of Default or Potential Event of Default
has occurred and is continuing with respect to
the other party; and
(ii) no Early Termination Date has occurred or been designated as
the result of an Event of Default or Specified Condition with
respect to the other party."
PARAGRAPH 5. DISPUTE RESOLUTION
Paragraph 5 of the Credit Support Annex is hereby amended by deleting
clause (2) in its entirety and inserting in lieu thereof the following:
"(2) subject to Paragraph 4(a), the appropriate party will Transfer
the Delivery Amount or the Return Amount, as applicable, to the other
party not later than (X) the time delivery otherwise would have been
due if no dispute had existed in the case of (l) above, or (Y) the
close of business on the Local Business Day following the date of
Transfer in the case of (II) above,"
PARAGRAPH 7. EVENT OF DEFAULT
Subparagraph (i) of Paragraph 7 of the Credit Support Annex is hereby
amended by deleting the phrase "two Local Business Days" and inserting in
lieu thereof the phrase "one Local Business Day."
PARAGRAPH 8. CERTAIN RIGHTS AND REMEDIES
Subparagraph (a) of Paragraph 8 of the Credit Support Annex is hereby
amended by deleting the phrase "or Specified Condition" from the first
line.
PARAGRAPH 12. DEFINITIONS
Paragraph 12 of the Credit Support Annex is hereby amended as follows:
(i) The definition of "LOCAL BUSINESS DAY" is hereby amended by
inserting the following in lieu thereof: "LOCAL BUSINESS DAY
means a day on which commercial banks in New York City are open
for business (including dealings in foreign exchange and
foreign currency deposits)";
(ii) The definition of "TRANSFER" is hereby amended by deleting
clause (iii) in its entirety and inserting in lieu thereof the
following: "(iii) in the case of securities that can be paid or
delivered by book-entry, the crediting of such securities in
the name of the Secured Party or the Pledgor, as applicable, in
a book-entry securities account maintained with respect to such
securities with the relevant depository institution or other
entity specified by the recipient; and "; and
(iii) The definition of "VALUE" is hereby amended by deleting clause
(B) of subparagraph (i) in its entirety and inserting in lieu
thereof the following: "(B) a security, the Valuation
Percentage multiplied by the value of such security based on a
valuation as of the close of business on the day one Business
Day prior to such Valuation Date on the basis of yield or price
quotations of Valuation Agent or in such manner as Valuation
Agent in good faith deems appropriate to reflect the fair
market value thereof at the close of business on the day one
Business Day prior to such Valuation Date."
The following paragraphs are added to the Credit Support Annex:
PARAGRAPH 14. TAXES
Notwithstanding anything to the contrary elsewhere in the
Agreement, this Annex or any Confirmation, all payments and all Transfers
of Eligible Collateral pursuant to this Annex shall be made, and the Value
of any Eligible Collateral shall be calculated net of, any and all present
or future taxes, levies, imposts, duties, charges, assessments or fees of
any nature (including interest, penalties and additions thereto) that are
imposed by any government or other taxing authority in respect thereof.
PARAGRAPH 15. COVENANTS OF THE PLEDGOR
The Pledgor covenants at all times that:
(a) It will not, without the prior written consent of the
Secured Party, sell, assign, transfer, exchange or
otherwise dispose of, or grant any option with respect
to, the Posted Collateral.
(b) It will not create, incur or permit to exist any pledge,
lien, claim, mortgage, hypothecation, security interest,
charge, option or any other encumbrance with respect to
any of the Posted Collateral, or any interest therein, or
any proceeds thereof, except for transfers, liens and
security interest provided for in this Annex.
IN 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.
UBA AG BANCO ITAU S.A.
(PARTY A) (PARTY B)
By: /s/ M. Weber By: /s/ Fernando Antonio Neves Lima
------------------------ ------------------------
Name: Name: Fernando Antonio Neves Lima
Title: Title: Managing Director
Date: Date:
By: /s/ illegible
------------------------
Name:
Title:
Date:
Reference: 1312300
UBS WARBURG LOGO
UBS Warburg
100 Liverpool Street
London EC2M 2HR
UBS WARBURG IS A BUSINESS GROUP OF UBS AG
UBS AG is registered as a branch in England and Wales Branch No. BR004507
(A public company limited by shares, incorporated in Switzerland whose
registered offices are at Aeschenvorstadt 1, CH-4051, Basel and
Bahnhofstrasse 45, CH-8001 Zurich) Registered Address: 1 Finsbury Avenue
London EC2M 2PP Regulated in the UK by the Securities and Futures
Authority. A member of the London Stock Exchange.
TRANCHE 1
Date: 1 September 2000
To: Banco Itau, S.A., Cayman Islands Branch ("Party B")
Attention: Rodolfo Henrique Fischer
Fax No.: 55 11 237 2594
From: UBS AG, London Branch ("Party A")
Re: Share Option Transaction - UBS Ref : 1312300
------------------------------------------------------------------------------
Dear Sirs
The purpose of this communication is to confirm the terms and conditions of
put options (each a "Put Transaction") and call options (each a "Call
Transaction") entered into between us on the Trade Date specified below
(the Put Transactions and the Call Transactions are hereinafter
collectively referred to as the "Transactions"). This communication
constitutes a "Confirmation" as referred to in the Master Agreement
specified below.
The definitions contained in the 1991 ISDA Definitions (as amended and
supplemented by the 1998 Supplement) (the "1991 Definitions") and the 1996
ISDA Equity Derivatives Definitions (the "Equity Definitions") (as amended
and supplemented by the 1998 ISDA Euro Definitions) all as published by the
International Swaps and Derivatives Association, Inc., are incorporated
into this Confirmation. In the event of any inconsistency between the 1991
Definitions, the Equity Definitions and this Confirmation, this
Confirmation will govern.
This Confirmation supplements, forms part of, and is subject to, the ISDA
Master Agreement dated as of October 23, 1997, 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.
Each party hereby agrees to make each payment specified in this
Confirmation as being payable by it, not later than the due date in place
of the account specified below (or as specified in writing to the other
party at the address specified below), in freely transferable funds and in
the manner customary for payments in the applicable currency.
CALL TRANSACTION
The following terms relate to the Call Transactions:
Option Type: Call
Seller: Party A
Buyer: Party B
Premium: USD00.00% of the Initial Price
Premium Payment Date: The third Business Day after the Trade Date.
PUT TRANSACTION
The following terms relate to the Put Transactions:
Option Type: Put
Seller: Party B
Buyer: Party A
Premium: USD00.00% of the Initial Price.
Premium Payment Date: The third Business Day after the Trade Date.
The remaining provisions of this Confirmation are applicable to both the
Put Transactions and the Call Transactions.
Trade Date: 29 August 2000 (time of execution available
upon request)
Effective Date: 1 September 2000
Option Style: European
Number of Options: 3,963,292
Option Entitlement: One Share per Option
Initial Price: USD8.00
Strike Price: The Initial Price, as adjusted in accordance
with this Confirmation.
Shares: Common stock (Bloomberg code: AOLA) of America
Online Latin America, Inc (the "Issuer")
Exchange: NASDAQ National Market
Related Exchange: The principal options exchange (if any) with
respect to the Shares
Calculation Agent: Party A
PROCEDURE FOR EXERCISE
Expiration Time: 16.00 hrs (local time in New York)
Expiration Date: 29 August 2001
Automatic Exercise: Applicable
Reference Price: The closing price per Share (without regard to
any after-hours trading) on the Expiration
Date, as determined by the Calculation Agent
SETTLEMENT TERMS
Physical Settlement: Applicable; provided, however, that (subject
to satisfaction of the "Conditions precedent
to Cash Settlement") Party B may elect to cash
settle the Transaction by giving notice to
Party A of such election on a day (the
"Election Date") no earlier than 60 Business
Days before, and no later than 45 Business
Days before, the Expiration Date.
Settlement Price: If Physical Settlement is applicable, the
Settlement Price shall be the amount
determined in accordance with Section
2.1(g)(iii) of the Equity Definitions. If Cash
Settlement is applicable, the Settlement Price
shall be the price determined in accordance
with Section 4.4(b)(i) of the Equity
Definitions.
Physical Settlement Date: The Settlement Date shall be the date
determined in accordance with Section 6.2 of
the Equity Definitions.
Cash Settlement
Payment Date: If Cash Settlement is applicable, three
Currency Business Days after the Valuation
Date
Failure to Deliver: Applicable
VALUATION FOR CASH SETTLEMENT
Valuation Time: At the close of trading on the Exchange.
Relevant Price: The last reported sale price on the Exchange
as of the Valuation Time.
Averaging Dates: The Valuation Date and each of the thirty
Exchange Business Days preceding the Valuation
Date.
Averaging Date
Market Disruption: Modified Postponement
ADJUSTMENTS
Method of Adjustment: Calculation Agent Adjustment
Potential Adjustment Event: Section 9.1(e)(iii) of the Equity Definitions
is amended to read as follows:
"(iii) any dividend declared by the Issuer"
EXTRAORDINARY EVENTS
Consequences of Merger Events:
(a) Share-for-Share: Alternative Obligation, provided that
Cancellation and Payment will apply if the New
Shares are NOT listed on a national securities
exchange or quoted on the NASDAQ Stock Market.
(b) Share-for-Other: At Party A's sole discretion, Cancellation and
Payment
(c) Share-for-Combined: At Party A's sole discretion, Cancellation and
Payment
Nationalization or
Insolvency: Cancellation and Payment
ACCOUNT DETAILS
Account for payments
to Party B: (please advise)
ADDITIONAL TERMS
Structuring Fee: On each Structuring Fee Payment Date, Party B
will pay Party A a Structuring Fee calculated
in accordance with the following formula:
[omitted and filed separately with the
Securites and Exchange Commission]
Structuring Fee Payment
Date: The 29th day of each November, February, May
and August, (commencing 29 November 2000)
(subject to adjustment in accordance with the
Modified Following Business Day Convention).
Early Exercise: Party B may exercise one or more Call
Transactions on or after 29 February 2001 in
accordance with this Early Exercise provision:
To exercise one or more Call Transactions
pursuant to this Early Exercise provision,
Party B must give Party A 30 Exchange Business
Days prior irrevocable written notice (the
"Early Exercise Notice") of Party B's election
to exercise early. The notice should specify
the early exercise date (the "Early Exercise
Date") and the number of Call Transactions to
be exercised early (the "Early Exercise Call
Transactions"). Following such an election to
exercise early, the Early Exercise Date shall
be deemed to be the Expiration Date in respect
of those Early Exercised Call Transactions and
payment and delivery obligations calculated
accordingly. In addition, on the Early
Exercise Date, Party B must pay Party A an
Early Exercise Fee calculated in accordance
with the following formula:
0.32% x Initial Price x number of Call
Transactions exercised on the relevant Early
Exercise Date.
In addition, in respect of each Early
Exercise, a pro-rata structuring fee
calculated in accordance with the following
formula is also payable by Party B in respect
of the number of Call Transactions exercised
on the relevant Early Exercise Date
[omitted and filed separately with the
Securites and Exchange Commission]
where
'Pro Rata Fraction' equals (the number of days
which have elapsed from (but excluding) the
Structuring Fee Payment Date immediately
preceding the relevant Early Exercise Date to
(and including) the relevant Early Exercise
Date) / 360
Put and Call Correlation: The early exercise of one or more Call
Transactions automatically terminates a
corresponding number of Put Transactions.
Representation on
Physical Settlement: Upon the exercise of either the Call
Transaction or the Put Transaction, for the
purposes of Regulation S under the Securities
Act of 1933, as amended (the "1933 Act"),
Party B represents to Party A that Party B is
not a "U.S. Person" as that term is defined in
Regulation S under the 1933 Act.
Conditions precedent to,
Cash Settlement: Party B's right to elect Cash Settlement is
subject to satisfaction of the following
conditions precedent:
1) As of the date Party B seeks to make such
election, Party A determines in its sole
discretion that the Shares then owned by Party
A (or any affiliate of Party A) in connection
with its hedge for the Transaction, are, and
on the Settlement Date will be, eligible for
resale pursuant to Rule 144(k) of the 1933
Act; and
2) Party B has no reason to believe that the
Issuer does not meet the current public
information requirements of Rule 144(c) of the
1933 Act. Party B will be deemed to have no
reason to so believe by virtue of making an
election to cash settle; and
3) Party A determines in its sole discretion
that the Shares then owned by Party A (or any
affiliate of Party A) in connection with its
hedge for the Transaction, are not subject to
any restriction on transfer other than those
arising under federal and state securities
laws and any legend contained on the
certificates evidencing such Shares.
Transfer: Neither party may transfer the Transaction, in
whole or in part, directly or indirectly,
without the prior written consent of the
non-transferring party.
Party A Undertaking: As required by Section 10.1(f)(iii) of the
Registration Rights and Stockholders'
Agreement dated August 11, 2000 between, among
others, the Issuer and Banco Itau, S.A. (the
"Registration Rights Agreement"), Party A
agrees (A) to comply with the provisions of
Section 10.1 of the Registration Rights
Agreement and the restrictions contained in
the Stock Subscription Agreement (as defined
in the Registration Rights Agreement) with
respect to all Shares subject to this
Transaction, and to inform any transferee of
any such Shares in writing of the existence
and exact nature of such restrictions and
require any transferee to agree in writing to
be bound by such restrictions, (B) to hold all
such shares free and clear of all liens,
claims and encumbrances of any kind or nature,
other than those securing Party B's
obligations under this Transaction, (C) not to
assign or transfer this Transaction or any of
its rights, duties or obligations thereunder
other than in compliance with Section
10.1(f)(iii)(C) of the Registration Rights
Agreement, (D) that the Issuer shall have a
right to approve any proposed transferee of
Shares or assignee of this Transaction or any
of Party A's rights, duties or obligations
thereunder, including without limitation any
Affiliate (as defined in the Registration
Rights Agreement) of Party A, such approval
not to be withheld or delayed unreasonably.
Party A represents that the Issuer is a third
party beneficiary of this Party A Undertaking.
CREDIT SUPPORT
Credit Support Document: The ISDA Credit Support Annex dated October
23, 1997, as amended from time to time,
between Party A and Party B (the "Credit
Support Annex"), together with the following
elections and modifications:
Nothing herein shall be construed as creating
any obligation on Party B to post collateral
in connection with any transaction other than
this Transaction. For purposes of this
Transaction only, for purposes of Paragraph 13
of the Credit Support Annex: 1. Party B shall
deliver to Party A, on the Effective Date, as
security for its obligations under this
Transaction, an amount of USD cash equal to
the Strike Price multiplied by the Number of
Options. Party A shall deliver to Party B, on
the Effective Date, as security for its
obligations under this Transaction, a number
of Shares equal to the Number of Options.
EXPOSURE: means zero.
CREDIT SUPPORT AMOUNT: means the Independent
Amount.
INDEPENDENT AMOUNT: in respect of Party A
means, a number of Shares equal to the Number
of Options; and in respect of Party B means,
an amount of USD cash equal to the Strike
Price multiplied by the Number of Options,
PROVIDED THAT, in the event of an Early
Exercise by Party B of one or more Call
Transactions, the Independent Amount will be
amended so that, as of the relevant Early
Exercise Date the Independent Amount in
respect of Party A will mean, a number of
Shares equal the Number of Options outstanding
and unexercised as of the Early Exercise Date;
and in respect of Party B means, an amount of
USD cash equal to the Strike Price multiplied
by the Number of Options outstanding and
unexercised as of the Early Exercise Date.
ELIGIBLE COLLATERAL: in respect of Party A
means, Shares; and in respect of Party B
means, Cash.
CUSTODIAN: Party B appoints UBS AG, Stamford
Branch as its Custodian, to hold Posted
Collateral for Party B.
2. Voting Rights.
Unless a Potential Event of Default or Event
of Default shall have occurred and be
continuing, Party B shall have the right, from
time to time, to vote and to give consents,
ratifications and waivers with respect to the
Shares held by or on behalf of Party B as
Posted Collateral, and the Custodian shall,
upon receiving a written request from Party B
accompanied by a certificate of an authorized
officer of Party B stating that no Potential
Event of Default or Event of Default has
occurred and is continuing, deliver to Party B
or as specified in such request such proxies,
powers of attorney, consents, ratifications
and waivers in respect of any of such Posted
Collateral that is registered, or held through
a securities intermediary, in the name of the
Custodian or its nominee as shall be specified
in such request and be in form and substance
satisfactory to the Custodian.
If a Potential Event of Default or Event of
Default shall have occurred and be continuing,
Party A shall have the right, to the extent
permitted by law, and Party B shall take all
such action as may be necessary or appropriate
to give effect to such right, to vote and to
give consents, ratifications and waivers, and
to take any other action with respect to any
or all of the Posted Collateral with the same
force and effect as if Party A were the
absolute and sole owner thereof.
3. Interest Amounts. Paragraph 13(h) is
deleted and replaced with,
"Interest Amount. No Interest Amount will be
paid on Posted Collateral held by Party A."
4. The paragraph titled, "Agreement as to
Single Secured Party and Pledgor" of Paragraph
13(m) is deleted".
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 (in the absence of a written
agreement between the parties which expressly imposes affirmative
obligations to the contrary for that transaction):-
(A) Non-Reliance. Each party is acting for its own account, and has made
its own independent decisions to enter into that transaction and that such
transaction is appropriate or proper for it based upon its own judgment and
upon advice from such advisers as it has deemed necessary. Each party 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 explanation relating 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) with the exception of the Agreement or the Confirmation, received
from the other party shall be deemed to be an assurance or guarantee as to
the expected results of that transaction.
(B) Assessment And Understanding. Each party is capable of assessing the
merits of and understands (on its own behalf or through independent
professional advice), and accepts, the terms, conditions and risks of that
transaction. Each party is also capable of assuming and assumes, the risks
of that transaction.
(C) Status of the Parties. Neither party is acting as a fiduciary or an
adviser to the other in respect of that transaction.
Please confirm that the foregoing correctly sets forth the terms
and conditions of our agreement by executing the copy of this Confirmation
enclosed for that purpose and returning it to us by facsimile
(+ 44 20 7568 9251) at your earliest convenience.
Yours faithfully,
UBS AG, London Branch
By: /s/ Ben Hunter By: /s/ S. Edmonston
--------------- ----------------
Name: Ben Hunter Name: Sara Edmonston
Title: Authorized Signatory Title: Director
Agreed and accepted with effect as of the date first written above
Banco Itau S.A., Cayman Islands Branch
By: /s/ Rodolfo Henrique Fischer By: /s/ Fernando Antonio Neves Lima
---------------------------- -------------------------------
Name: Rodolfo Henrique Fischer Name: Fernando Antonio Neves Lima
Title: Executive Director Title: Managing Director
Reference: 1312299
UBS Warburg
100 Liverpool Street
London EC2M 2HR
UBS WARBURG IS A BUSINESS GROUP OF UBS AG
UBS AG is registered as a branch in England and Wales Branch No. BR004507
(A public company limited by shares, incorporated in Switzerland whose
registered offices are at Aeschenvorstadt 1, CH-4051, Basel and
Bahnhofstrasse 45, CH-8001 Zurich) Registered Address: 1 Finsbury Avenue
London EC2M 2PP Regulated in the UK by the Securities and Futures
Authority. A member of the London Stock Exchange.
TRANCHE 2
Date: 1 September 2000
To: Banco Itau, S.A., Cayman Islands Branch ("Party B")
Attention: Rodolfo Henrique Fischer
Fax No.: 55 11 237 2594
From: UBS AG, London Branch ("Party A")
Re: Share Option Transaction - UBS Ref : 1312299
--------------------------------------------------------------------------------
Dear Sirs
The purpose of this communication is to confirm the terms and conditions of
put options (each a "Put Transaction") and call options (each a "Call
Transaction") entered into between us on the Trade Date specified below
(the Put Transactions and the Call Transactions are hereinafter
collectively referred to as the "Transactions"). This communication
constitutes a "Confirmation" as referred to in the Master Agreement
specified below.
The definitions contained in the 1991 ISDA Definitions (as amended and
supplemented by the 1998 Supplement) (the "1991 Definitions") and the 1996
ISDA Equity Derivatives Definitions (the "Equity Definitions") (as amended
and supplemented by the 1998 ISDA Euro Definitions) all as published by the
International Swaps and Derivatives Association, Inc., are incorporated
into this Confirmation. In the event of any inconsistency between the 1991
Definitions, the Equity Definitions and this Confirmation, this
Confirmation will govern.
This Confirmation supplements, forms part of, and is subject to, the ISDA
Master Agreement dated as of October 23, 1997, 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.
Each party hereby agrees to make each payment specified in this
Confirmation as being payable by it, not later than the due date in place
of the account specified below (or as specified in writing to the other
party at the address specified below), in freely transferable funds and in
the manner customary for payments in the applicable currency.
CALL TRANSACTION
The following terms relate to the Call Transactions:
Option Type: Call
Seller: Party A
Buyer: Party B
Premium: USD00.00% of the Initial Price
Premium Payment Date: The third Business Day after the Trade Date.
PUT TRANSACTION
The following terms relate to the Put Transactions:
Option Type: Put
Seller: Party B
Buyer: Party A
Premium: USD00.00% of the Initial Price.
Premium Payment Date: The third Business Day after the Trade Date.
The remaining provisions of this Confirmation are applicable to both the
Put Transactions and the Call Transactions.
Trade Date: 29 August 2000 (time of execution available
upon request)
Effective Date: 1 September 2000
Option Style: European
Number of Options: 9,904,665
Option Entitlement: One Share per Option
Initial Price: USD8.00
Strike Price: The Initial Price, as adjusted in accordance with
this Confirmation.
Shares: Common stock (Bloomberg code: AOLA) of America Online
Latin America, Inc (the "Issuer")
Exchange: NASDAQ National Market
Related Exchange: The principal options exchange (if any) with respect to
the Shares
Calculation Agent: Party A
PROCEDURE FOR EXERCISE
Expiration Time: 16.00 hrs (local time in New York)
Expiration Date: 29 August 2002
Automatic Exercise: Applicable
Reference Price: The closing price per Share (without regard
to any after-hours trading) on the Expiration Date,
as determined by the Calculation Agent
SETTLEMENT TERMS
Physical Settlement: Applicable; provided, however, that (subject to
satisfaction of the "Conditions precedent to Cash
Settlement") Party B may elect to cash settle the
Transaction by giving notice to Party A of such
election on a day (the "Election Date") no earlier
than 60 Business Days before, and no later than 45
Business Days before, the Expiration Date.
Settlement Price: If Physical Settlement is applicable, the
Settlement Price shall be the amount determined in
accordance with Section 2.1(g)(iii) of the Equity
Definitions. If Cash Settlement is applicable, the
Settlement Price shall be the price determined in
accordance with Section 4.4(b)(i) of the Equity
Definitions.
Physical Settlement
Date: The Settlement Date shall be the date determined in
accordance with Section 6.2 of the Equity Definitions.
Cash Settlement
Payment Date: If Cash Settlement is applicable, three Currency
Business Days after the Valuation Date
Failure to Deliver: Applicable
VALUATION FOR CASH SETTLEMENT
Valuation Time: At the close of trading on the Exchange.
Relevant Price: The last reported sale price on the Exchange
as of the Valuation Time.
Averaging Dates: The Valuation Date and each of the thirty
Exchange Business Days preceding the Valuation Date.
Averaging Date
Market Disruption: Modified Postponement
ADJUSTMENTS
Method of Adjustment: Calculation Agent Adjustment
Potential Adjustment
Event: Section 9.1(e)(iii) of the Equity Definitions is
amended to read as follows:
"(iii) any dividend declared by the Issuer"
EXTRAORDINARY EVENTS
Consequences of Merger Events:
(a) Share-for-Share: Alternative Obligation, provided
that Cancellation and Payment will apply if the New
Shares are NOT listed on a national securities
exchange or quoted on the NASDAQ Stock Market.
(b) Share-for-Other: At Party A's sole discretion, Cancellation and Payment
(c) Share-for-Combined: At Party A's sole discretion, Cancellation and Payment
Nationalization or
Insolvency: Cancellation and Payment
ACCOUNT DETAILS
Account for payments
to Party B: (please advise)
ADDITIONAL TERMS
Structuring Fee: On each Structuring Fee Payment Date, Party B will pay
Party A a Structuring Fee calculated in accordance with
the following formula:
[omitted and filed separately with the
Securities and Exchange Commission]
Structuring Fee The 29th day of each November, February, May and
Payment Date: August, (commencing 29 November 2000) (subject to
adjustment in accordance with the Modified
Following Business Day Convention).
Early Exercise: Party B may exercise one or more Call Transactions
on or after 29 February 2001 in accordance
with this Early Exercise provision:
To exercise one or more Call Transactions pursuant
to this Early Exercise provision, Party B must give
Party A 30 Exchange Business Days prior irrevocable
written notice (the "Early Exercise Notice") of
Party B's election to exercise early. The notice
should specify the early exercise date (the "Early
Exercise Date") and the number of Call Transactions
to be exercised early (the "Early Exercise Call
Transactions"). Following such an election to
exercise early, the Early Exercise Date shall be
deemed to be the Expiration Date in respect of
those Early Exercised Call Transactions and payment
and delivery obligations calculated accordingly. In
addition, on the Early Exercise Date, Party B must
pay Party A an Early Exercise Fee calculated in
accordance with the following formula:
0.32% x Initial Price x number of Call Transactions
exercised on the relevant Early Exercise Date.
In addition, in respect of each Early Exercise, a
pro-rata structuring fee calculated in accordance
with the following formula is also payable by Party
B in respect of the number of Call Transactions
exercised on the relevant Early Exercise Date
[omitted and filed separately with the
Securities and Exchange Commission]
where
'Pro Rata Fraction' equals (the number of days
which have elapsed from (but excluding) the
Structuring Fee Payment Date immediately preceding
the relevant Early Exercise Date to (and including)
the relevant Early Exercise Date) / 360
Put and Call
Correlation: The early exercise of one or more Call Transactions
automatically terminates a corresponding number of
Put Transactions.
Representation on
Physical Settlement: Upon the exercise of either the Call Transaction or
the Put Transaction, for the purposes of Regulation
S under the Securities Act of 1933, as amended (the
"1933 Act"), Party B represents to Party A that
Party B is not a "U.S. Person" as that term is
defined in Regulation S under the 1933 Act.
Conditions precedent
to, Cash Settlement: Party B's right to elect Cash Settlement is subject to
satisfaction of the following conditions precedent:
1) As of the date Party B seeks to make such
election, Party A determines in its sole discretion
that the Shares then owned by Party A (or any
affiliate of Party A) in connection with its hedge
for the Transaction, are, and on the Settlement
Date will be, eligible for resale pursuant to Rule
144(k) of the 1933 Act; and
2) Party B has no reason to believe that the Issuer
does not meet the current public information
requirements of Rule 144(c) of the 1933 Act. Party
B will be deemed to have no reason to so believe by
virtue of making an election to cash settle; and
3) Party A determines in its sole discretion that
the Shares then owned by Party A (or any affiliate
of Party A) in connection with its hedge for the
Transaction, are not subject to any restriction on
transfer other than those arising under federal and
state securities laws and any legend contained on
the certificates evidencing such Shares.
Transfer: Neither party may transfer the Transaction, in whole
or in part, directly or indirectly, without the prior
written consent of the non-transferring party.
Party A
Undertaking: As required by Section 10.1(f)(iii) of the Registration
Rights and Stockholders' Agreement dated August 11, 2000
between, among others, the Issuer and Banco Itau, S.A.
(the "Registration Rights Agreement"), Party A agrees
(A) to comply with the provisions of Section 10.1
of the Registration Rights Agreement and the
restrictions contained in the Stock Subscription
Agreement (as defined in the Registration Rights
Agreement) with respect to all Shares subject to this
Transaction, and to inform any transferee of any such
Shares in writing of the existence and exact nature
of such restrictions and require any transferee to agree
in writing to be bound by such restrictions, (B) to hold
all such shares free and clear of all liens, claims
and encumbrances of any kind or nature, other than
those securing Party B's obligations under this
Transaction, (C) not to assign or transfer this
Transaction or any of its rights, duties or obligations
thereunder other than in compliance with Section 10.1(f)
(iii)(C) of the Registration Rights Agreement,
(D) that the Issuer shall have a right to approve any
proposed transferee of Shares or assignee of this
Transaction or any of Party A's rights, duties
or obligations thereunder, including without limitation
any Affiliate (as defined in the Registration Rights
Agreement)of Party A, such approval not to be withheld
or delayed unreasonably. Party A represents that the
Issuer is a third party beneficiary of this
Party A Undertaking.
CREDIT SUPPORT
Credit Support
Document: The ISDA Credit Support Annex dated October 23,
1997, as amended from time to time, between Party A
and Party B (the "Credit Support Annex"), together
with the following elections and modifications:
Nothing herein shall be construed as creating any
obligation on Party B to post collateral in
connection with any transaction other than this
Transaction. For purposes of this Transaction only,
for purposes of Paragraph 13 of the Credit Support
Annex:
1. Party B shall deliver to Party A, on the
Effective Date, as security for its obligations
under this Transaction, an amount of USD cash equal
to the Strike Price multiplied by the Number of
Options. Party A shall deliver to Party B, on the
Effective Date, as security for its obligations
under this Transaction, a number of Shares equal to
the Number of Options.
EXPOSURE: means zero.
CREDIT SUPPORT AMOUNT: means the Independent Amount.
INDEPENDENT AMOUNT: in respect of Party A means, a
number of Shares equal to the Number of Options; and
in respect of Party B means, an amount of USD cash
equal to the Strike Price multiplied by the Number of
Options, PROVIDED THAT, in the event of an Early
Exercise by Party B of one or more Call Transactions,
the Independent Amount will be amended so that, as of
the relevant Early Exercise Date the Independent
Amount in respect of Party A will mean, a number of
Shares equal the Number of Options outstanding and
unexercised as of the Early Exercise Date; and in
respect of Party B means, an amount of USD cash equal
to the Strike Price multiplied by the Number of
Options outstanding and unexercised as of
the Early Exercise Date.
ELIGIBLE COLLATERAL: in respect of Party A means,
Shares;and in respect of Party B means, Cash.
CUSTODIAN: Party B appoints UBS AG, Stamford Branch as
its Custodian, to hold Posted Collateral for Party B.
2. Voting Rights.
Unless a Potential Event of Default or Event of
Default shall have occurred and be continuing,
Party B shall have the right, from time to time, to
vote and to give consents, ratifications and
waivers with respect to the Shares held by or on
behalf of Party B as Posted Collateral, and the
Custodian shall, upon receiving a written request
from Party B accompanied by a certificate of an
authorized officer of Party B stating that no
Potential Event of Default or Event of Default has
occurred and is continuing, deliver to Party B or
as specified in such request such proxies, powers
of attorney, consents, ratifications and waivers in
respect of any of such Posted Collateral that is
registered, or held through a securities
intermediary, in the name of the Custodian or its
nominee as shall be specified in such request and
be in form and substance satisfactory to the
Custodian.
If a Potential Event of Default or Event of Default
shall have occurred and be continuing, Party A
shall have the right, to the extent permitted by
law, and Party B shall take all such action as may
be necessary or appropriate to give effect to such
right, to vote and to give consents, ratifications
and waivers, and to take any other action with
respect to any or all of the Posted Collateral with
the same force and effect as if Party A were the
absolute and sole owner thereof.
3. Interest Amounts. Paragraph 13(h) is deleted and
replaced with,
"Interest Amount. No Interest Amount will be paid on
Posted Collateral held by Party A."
4. The paragraph titled, "Agreement as to Single
Secured Party and Pledgor" of Paragraph 13(m) is
deleted".
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 (in the absence of a written
agreement between the parties which expressly imposes affirmative
obligations to the contrary for that transaction):-
(A) Non-Reliance. Each party is acting for its own account, and has made
its own independent decisions to enter into that transaction and that such
transaction is appropriate or proper for it based upon its own judgment and
upon advice from such advisers as it has deemed necessary. Each party 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 explanation relating 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) with the exception of the Agreement or the Confirmation, received
from the other party shall be deemed to be an assurance or guarantee as to
the expected results of that transaction.
(B) Assessment And Understanding. Each party is capable of assessing the
merits of and understands (on its own behalf or through independent
professional advice), and accepts, the terms, conditions and risks of that
transaction. Each party is also capable of assuming and assumes, the risks
of that transaction.
(C) Status of the Parties. Neither party is acting as a fiduciary or an
adviser to the other in respect of that transaction.
Please confirm that the foregoing correctly sets forth the terms and
conditions of our agreement by executing the copy of this Confirmation
enclosed for that purpose and returning it to us by facsimile
(+ 44 20 7568 9251) at your earliest convenience.
Yours faithfully,
UBS AG, London Branch
By: /s/ Ben Hunter By: /s/ S. Edmonston
--------------- ----------------
Name: Ben Hunter Name: Sara Edmonston
Title: Authorized Signatory Title: Director
Agreed and accepted with effect as of the date first written above
Banco Itau S.A., Cayman Islands Branch
By: /s/ Rodolfo Henrique Fischer By: /s/ Fernando Antonio Neves Lima
---------------------------- -------------------------------
Name: Rodolfo Henrique Fischer Name: Fernando Antonio Neves Lima
Title: Executive Director Title: Managing Director
Reference: 1312298
USB Warburg Logo
UBS Warburg
100 Liverpool Street
London EC2M 2HR
UBS WARBURG IS A BUSINESS GROUP OF UBS AG
UBS AG is registered as a branch in England and Wales Branch No. BR004507
(A public company limited by shares, incorporated in Switzerland whose
registered offices are at Aeschenvorstadt 1, CH-4051, Basel and
Bahnhofstrasse 45, CH-8001 Zurich) Registered Address: 1 Finsbury Avenue
London EC2M 2PP Regulated in the UK by the Securities and Futures
Authority. A member of the London Stock Exchange.
TRANCHE 3
Date: 1 September 2000
To: Banco Itau, S.A., Cayman Islands Branch ("Party B")
Attention: Rodolfo Henrique Fischer
Fax No.: 55 11 237 2594
From: UBS AG, London Branch ("Party A")
Re: Share Option Transaction - UBS Ref : 1312298
------------------------------------------------------------------------------
Dear Sirs
The purpose of this communication is to confirm the terms and conditions of
put options (each a "Put Transaction") and call options (each a "Call
Transaction") entered into between us on the Trade Date specified below
(the Put Transactions and the Call Transactions are hereinafter
collectively referred to as the "Transactions"). This communication
constitutes a "Confirmation" as referred to in the Master Agreement
specified below.
The definitions contained in the 1991 ISDA Definitions (as amended and
supplemented by the 1998 Supplement) (the "1991 Definitions") and the 1996
ISDA Equity Derivatives Definitions (the "Equity Definitions") (as amended
and supplemented by the 1998 ISDA Euro Definitions) all as published by the
International Swaps and Derivatives Association, Inc., are incorporated
into this Confirmation. In the event of any inconsistency between the 1991
Definitions, the Equity Definitions and this Confirmation, this
Confirmation will govern.
This Confirmation supplements, forms part of, and is subject to, the ISDA
Master Agreement dated as of October 23, 1997, 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.
Each party hereby agrees to make each payment specified in this
Confirmation as being payable by it, not later than the due date in place
of the account specified below (or as specified in writing to the other
party at the address specified below), in freely transferable funds and in
the manner customary for payments in the applicable currency.
CALL TRANSACTION
The following terms relate to the Call Transactions:
Option Type: Call
Seller: Party A
Buyer: Party B
Premium: USD00.00% of the Initial Price
Premium Payment Date: The third Business Day after the Trade Date.
PUT TRANSACTION
The following terms relate to the Put Transactions:
Option Type: Put
Seller: Party B
Buyer: Party A
Premium: USD00.00% of the Initial Price.
Premium Payment Date: The third Business Day after the Trade Date.
The remaining provisions of this Confirmation are applicable to both the
Put Transactions and the Call Transactions.
Trade Date: 29 August 2000 (time of execution available
upon request)
Effective Date: 1 September 2000
Option Style: European
Number of Options: 3,963,292
Option Entitlement: One Share per Option
Initial Price: USD8.00
Strike Price: The Initial Price, as adjusted in accordance
with this Confirmation.
Shares: Common stock (Bloomberg code: AOLA) of
America Online Latin America, Inc (the
"Issuer")
Exchange: NASDAQ National Market
Related Exchange: The principal options exchange (if any) with
respect to the Shares
Calculation Agent: Party A
PROCEDURE FOR EXERCISE
Expiration Time: 16.00 hrs (local time in New York)
Expiration Date: 29 August 2003
Automatic Exercise: Applicable
Reference Price: The closing price per Share (without regard
to any after-hours trading) on the
Expiration Date, as determined by the
Calculation Agent
SETTLEMENT TERMS
Physical Settlement: Applicable; provided, however, that (subject
to satisfaction of the "Conditions precedent
to Cash Settlement") Party B may elect to
cash settle the Transaction by giving notice
to Party A of such election on a day (the
"Election Date") no earlier than 60 Business
Days before, and no later than 45 Business
Days before, the Expiration Date.
Settlement Price: If Physical Settlement is applicable, the
Settlement Price shall be the amount
determined in accordance with Section
2.1(g)(iii) of the Equity Definitions. If
Cash Settlement is applicable, the
Settlement Price shall be the price
determined in accordance with Section
4.4(b)(i) of the Equity Definitions.
Physical Settlement Date: The Settlement Date shall be the date
determined in accordance with Section 6.2 of
the Equity Definitions.
Cash Settlement
Payment Date: If Cash Settlement is applicable, three
Currency Business Days after the Valuation
Date
Failure to Deliver: Applicable
VALUATION FOR CASH SETTLEMENT
Valuation Time: At the close of trading on the Exchange.
Relevant Price: The last reported sale price on the Exchange
as of the Valuation Time.
Averaging Dates: The Valuation Date and each of the thirty
Exchange Business Days preceding the
Valuation Date.
Averaging Date
Market Disruption: Modified Postponement
ADJUSTMENTS
Method of Adjustment: Calculation Agent Adjustment
Potential Adjustment Event: Section 9.1(e)(iii) of the Equity
Definitions is amended to read as follows:
"(iii) any dividend declared by the Issuer"
EXTRAORDINARY EVENTS
Consequences of Merger Events:
(a) Share-for-Share: Alternative Obligation, provided that
Cancellation and Payment will apply if the
New Shares are NOT listed on a national
securities exchange or quoted on the NASDAQ
Stock Market.
(b) Share-for-Other: At Party A's sole discretion, Cancellation
and Payment
(c) Share-for-Combined: At Party A's sole discretion, Cancellation
and Payment
Nationalization or Insolvency: Cancellation and Payment
ACCOUNT DETAILS
Account for payments to
Party B: (please advise)
ADDITIONAL TERMS
Structuring Fee: On each Structuring Fee Payment Date, Party
B will pay Party A a Structuring Fee
calculated in accordance with the following
formula:
[omitted and filed separately with the
Securites and Exchange Commission]
Structuring Fee Payment Date: The 29th day of each November, February, May
and August, (commencing 29 November 2000)
(subject to adjustment in accordance with
the Modified Following Business Day
Convention).
Early Exercise: Party B may exercise one or more Call
Transactions on or after 29 February 2001 in
accordance with this Early Exercise
provision:
To exercise one or more Call Transactions
pursuant to this Early Exercise provision,
Party B must give Party A 30 Exchange
Business Days prior irrevocable written
notice (the "Early Exercise Notice") of
Party B's election to exercise early. The
notice should specify the early exercise
date (the "Early Exercise Date") and the
number of Call Transactions to be exercised
early (the "Early Exercise Call
Transactions"). Following such an election
to exercise early, the Early Exercise Date
shall be deemed to be the Expiration Date in
respect of those Early Exercised Call
Transactions and payment and delivery
obligations calculated accordingly. In
addition, on the Early Exercise Date, Party
B must pay Party A an Early Exercise Fee
calculated in accordance with the following
formula:
0.32% x Initial Price x number of Call
Transactions exercised on the relevant Early
Exercise Date.
In addition, in respect of each Early
Exercise, a pro-rata structuring fee
calculated in accordance with the following
formula is also payable by Party B in
respect of the number of Call Transactions
exercised on the relevant Early Exercise
Date
[omitted and filed separately with the
Securites and Exchange Commission]
where
'Pro Rata Fraction' equals (the number of
days which have elapsed from (but excluding)
the Structuring Fee Payment Date immediately
preceding the relevant Early Exercise Date
to (and including) the relevant Early
Exercise Date) / 360
Put and Call Correlation: The early exercise of one or more Call
Transactions automatically terminates a
corresponding number of Put Transactions.
Representation on
Physical Settlement: Upon the exercise of either the Call
Transaction or the Put Transaction, for the
purposes of Regulation S under the
Securities Act of 1933, as amended (the
"1933 Act"), Party B represents to Party A
that Party B is not a "U.S. Person" as that
term is defined in Regulation S under the
1933 Act.
Conditions precedent to,
Cash Settlement: Party B's right to elect Cash Settlement is
subject to satisfaction of the following
conditions precedent:
1) As of the date Party B seeks to make such
election, Party A determines in its sole
discretion that the Shares then owned by
Party A (or any affiliate of Party A) in
connection with its hedge for the
Transaction, are, and on the Settlement Date
will be, eligible for resale pursuant to
Rule 144(k) of the 1933 Act; and
2) Party B has no reason to believe that the
Issuer does not meet the current public
information requirements of Rule 144(c) of
the 1933 Act. Party B will be deemed to have
no reason to so believe by virtue of making
an election to cash settle; and
3) Party A determines in its sole discretion
that the Shares then owned by Party A (or
any affiliate of Party A) in connection with
its hedge for the Transaction, are not
subject to any restriction on transfer other
than those arising under federal and state
securities laws and any legend contained on
the certificates evidencing such Shares.
Transfer: Neither party may transfer the Transaction,
in whole or in part, directly or indirectly,
without the prior written consent of the
non-transferring party.
Party A Undertaking: As required by Section 10.1(f)(iii) of the
Registration Rights and Stockholders'
Agreement dated August 11, 2000 between,
among others, the Issuer and Banco Itau,
S.A. (the "Registration Rights Agreement"),
Party A agrees (A) to comply with the
provisions of Section 10.1 of the
Registration Rights Agreement and the
restrictions contained in the Stock
Subscription Agreement (as defined in the
Registration Rights Agreement) with respect
to all Shares subject to this Transaction,
and to inform any transferee of any such
Shares in writing of the existence and exact
nature of such restrictions and require any
transferee to agree in writing to be bound
by such restrictions, (B) to hold all such
shares free and clear of all liens, claims
and encumbrances of any kind or nature,
other than those securing Party B's
obligations under this Transaction, (C) not
to assign or transfer this Transaction or
any of its rights, duties or obligations
thereunder other than in compliance with
Section 10.1(f)(iii)(C) of the Registration
Rights Agreement, (D) that the Issuer shall
have a right to approve any proposed
transferee of Shares or assignee of this
Transaction or any of Party A's rights,
duties or obligations thereunder, including
without limitation any Affiliate (as defined
in the Registration Rights Agreement) of
Party A, such approval not to be withheld or
delayed unreasonably. Party A represents
that the Issuer is a third party beneficiary
of this Party A Undertaking.
CREDIT SUPPORT
Credit Support Document: The ISDA Credit Support Annex dated October
23, 1997, as amended from time to time,
between Party A and Party B (the "Credit
Support Annex"), together with the following
elections and modifications:
Nothing herein shall be construed as
creating any obligation on Party B to post
collateral in connection with any
transaction other than this Transaction. For
purposes of this Transaction only, for
purposes of Paragraph 13 of the Credit
Support Annex: 1. Party B shall deliver to
Party A, on the Effective Date, as security
for its obligations under this Transaction,
an amount of USD cash equal to the Strike
Price multiplied by the Number of Options.
Party A shall deliver to Party B, on the
Effective Date, as security for its
obligations under this Transaction, a number
of Shares equal to the Number of Options.
EXPOSURE: means zero.
CREDIT SUPPORT AMOUNT: means the Independent
Amount.
INDEPENDENT AMOUNT: in respect of Party A
means, a number of Shares equal to the
Number of Options; and in respect of Party B
means, an amount of USD cash equal to the
Strike Price multiplied by the Number of
Options, PROVIDED THAT, in the event of an
Early Exercise by Party B of one or more
Call Transactions, the Independent Amount
will be amended so that, as of the relevant
Early Exercise Date the Independent Amount
in respect of Party A will mean, a number of
Shares equal the Number of Options
outstanding and unexercised as of the Early
Exercise Date; and in respect of Party B
means, an amount of USD cash equal to the
Strike Price multiplied by the Number of
Options outstanding and unexercised as of
the Early Exercise Date.
ELIGIBLE COLLATERAL: in respect of Party A
means, Shares; and in respect of Party B
means, Cash.
CUSTODIAN: Party B appoints UBS AG, Stamford
Branch as its Custodian, to hold Posted
Collateral for Party B.
2. Voting Rights.
Unless a Potential Event of Default or Event
of Default shall have occurred and be
continuing, Party B shall have the right,
from time to time, to vote and to give
consents, ratifications and waivers with
respect to the Shares held by or on behalf
of Party B as Posted Collateral, and the
Custodian shall, upon receiving a written
request from Party B accompanied by a
certificate of an authorized officer of
Party B stating that no Potential Event of
Default or Event of Default has occurred and
is continuing, deliver to Party B or as
specified in such request such proxies,
powers of attorney, consents, ratifications
and waivers in respect of any of such Posted
Collateral that is registered, or held
through a securities intermediary, in the
name of the Custodian or its nominee as
shall be specified in such request and be in
form and substance satisfactory to the
Custodian.
If a Potential Event of Default or Event of
Default shall have occurred and be
continuing, Party A shall have the right, to
the extent permitted by law, and Party B
shall take all such action as may be
necessary or appropriate to give effect to
such right, to vote and to give consents,
ratifications and waivers, and to take any
other action with respect to any or all of
the Posted Collateral with the same force
and effect as if Party A were the absolute
and sole owner thereof.
3. Interest Amounts. Paragraph 13(h) is
deleted and replaced with,
"Interest Amount. No Interest Amount will be
paid on Posted Collateral held by Party A."
4. The paragraph titled, "Agreement as to
Single Secured Party and Pledgor" of
Paragraph 13(m) is deleted".
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 (in the absence of a written
agreement between the parties which expressly imposes affirmative
obligations to the contrary for that transaction):-
(A) Non-Reliance. Each party is acting for its own account, and has made
its own independent decisions to enter into that transaction and that such
transaction is appropriate or proper for it based upon its own judgment and
upon advice from such advisers as it has deemed necessary. Each party 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 explanation relating 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) with the exception of the Agreement or the Confirmation, received
from the other party shall be deemed to be an assurance or guarantee as to
the expected results of that transaction.
(B) Assessment And Understanding. Each party is capable of assessing the
merits of and understands (on its own behalf or through independent
professional advice), and accepts, the terms, conditions and risks of that
transaction. Each party is also capable of assuming and assumes, the risks
of that transaction.
(C) Status of the Parties. Neither party is acting as a fiduciary or an
adviser to the other in respect of that transaction.
Please confirm that the foregoing correctly sets forth the terms
and conditions of our agreement by executing the copy of this Confirmation
enclosed for that purpose and returning it to us by facsimile
(+ 44 20 7568 9251) at your earliest convenience.
Yours faithfully,
UBS AG, London Branch
By: /s/ Ben Hunter By: /s/ S. Edmonston
--------------- ----------------
Name: Ben Hunter Name: Sara Edmonston
Title: Authorized Signatory Title: Director
Agreed and accepted with effect as of the date first written above
Banco Itau S.A., Cayman Islands Branch
By: /s/ Rodolfo Henrique Fischer By: /s/ Fernando Antonio Neves Lima
---------------------------- -------------------------------
Name: Rodolfo Henrique Fischer Name: Fernando Antonio Neves Lima
Title: Executive Director Title: Managing Director
Reference: 1312297
UBS Warburg
100 Liverpool Street
London EC2M 2HR
UBS WARBURG IS A BUSINESS GROUP OF UBS AG
UBS AG is registered as a branch in England and Wales Branch No. BR004507
(A public company limited by shares, incorporated in Switzerland whose
registered offices are at Aeschenvorstadt 1, CH-4051, Basel and
Bahnhofstrasse 45, CH-8001 Zurich) Registered Address: 1 Finsbury Avenue
London EC2M 2PP Regulated in the UK by the Securities and Futures
Authority. A member of the London Stock Exchange.
TRANCHE 4
Date: 1 September 2000
To: Banco Itau, S.A., Cayman Islands Branch ("Party B")
Attention: Rodolfo Henrique Fischer
Fax No.: 55 11 237 2594
From: UBS AG, London Branch ("Party A")
Re: Share Option Transaction - UBS Ref : 1312297
------------------------------------------------------------------------------
Dear Sirs
The purpose of this communication is to confirm the terms and conditions of
put options (each a "Put Transaction") and call options (each a "Call
Transaction") entered into between us on the Trade Date specified below
(the Put Transactions and the Call Transactions are hereinafter
collectively referred to as the "Transactions"). This communication
constitutes a "Confirmation" as referred to in the Master Agreement
specified below.
The definitions contained in the 1991 ISDA Definitions (as amended and
supplemented by the 1998 Supplement) (the "1991 Definitions") and the 1996
ISDA Equity Derivatives Definitions (the "Equity Definitions") (as amended
and supplemented by the 1998 ISDA Euro Definitions) all as published by the
International Swaps and Derivatives Association, Inc., are incorporated
into this Confirmation. In the event of any inconsistency between the 1991
Definitions, the Equity Definitions and this Confirmation, this
Confirmation will govern.
This Confirmation supplements, forms part of, and is subject to, the ISDA
Master Agreement dated as of October 23, 1997, 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.
Each party hereby agrees to make each payment specified in this
Confirmation as being payable by it, not later than the due date in place
of the account specified below (or as specified in writing to the other
party at the address specified below), in freely transferable funds and in
the manner customary for payments in the applicable currency.
CALL TRANSACTION
The following terms relate to the Call Transactions:
Option Type: Call
Seller: Party A
Buyer: Party B
Premium: USD00.00% of the Initial Price
Premium Payment Date: The third Business Day after the Trade Date.
PUT TRANSACTION
The following terms relate to the Put Transactions:
Option Type: Put
Seller: Party B
Buyer: Party A
Premium: USD00.00% of the Initial Price.
Premium Payment Date: The third Business Day after the Trade Date.
The remaining provisions of this Confirmation are applicable to both the
Put Transactions and the Call Transactions.
Trade Date: 29 August 2000 (time of execution
available upon request)
Effective Date: 1 September 2000
Option Style: European
Number of Options: 3,963,292
Option Entitlement: One Share per Option
Initial Price: USD8.00
Strike Price: The Initial Price, as adjusted in
accordance with this Confirmation.
Shares: Common stock (Bloomberg code: AOLA) of
America Online Latin America, Inc (the
"Issuer")
Exchange: NASDAQ National Market
Related Exchange: The principal options exchange (if any)
with respect to the Shares
Calculation Agent: Party A
PROCEDURE FOR EXERCISE
Expiration Time: 16.00 hrs (local time in New York)
Expiration Date: 29 August 2004
Automatic Exercise: Applicable
Reference Price: The closing price per Share (without
regard to any after-hours trading) on the
Expiration Date, as determined by the
Calculation Agent
SETTLEMENT TERMS
Physical Settlement: Applicable; provided, however, that
(subject to satisfaction of the
"Conditions precedent to Cash
Settlement") Party B may elect to cash
settle the Transaction by giving notice
to Party A of such election on a day (the
"Election Date") no earlier than 60
Business Days before, and no later than
45 Business Days before, the Expiration
Date.
Settlement Price: If Physical Settlement is applicable, the
Settlement Price shall be the amount
determined in accordance with Section
2.1(g)(iii) of the Equity Definitions. If
Cash Settlement is applicable, the
Settlement Price shall be the price
determined in accordance with Section
4.4(b)(i) of the Equity Definitions.
Physical Settlement Date: The Settlement Date shall be the date
determined in accordance with Section 6.2
of the Equity Definitions.
Cash Settlement
Payment Date: If Cash Settlement is applicable, three
Currency Business Days after the
Valuation Date
Failure to Deliver: Applicable
VALUATION FOR CASH SETTLEMENT
Valuation Time: At the close of trading on the Exchange.
Relevant Price: The last reported sale price on the
Exchange as of the Valuation Time.
Averaging Dates: The Valuation Date and each of the thirty
Exchange Business Days preceding the
Valuation Date.
Averaging Date
Market Disruption: Modified Postponement
ADJUSTMENTS
Method of Adjustment: Calculation Agent Adjustment
Potential Adjustment Event: Section 9.1(e)(iii) of the Equity
Definitions is amended to read as
follows:
"(iii) any dividend declared by the
Issuer"
EXTRAORDINARY EVENTS
Consequences of Merger Events:
(a) Share-for-Share: Alternative Obligation, provided that
Cancellation and Payment will apply if
the New Shares are NOT listed on a
national securities exchange or quoted on
the NASDAQ Stock Market.
(b) Share-for-Other: At Party A's sole discretion,
Cancellation and Payment
(c) Share-for-Combined: At Party A's sole discretion,
Cancellation and Payment
Nationalization or Insolvency: Cancellation and Payment
ACCOUNT DETAILS
Account for payments to Party B: (please advise)
ADDITIONAL TERMS
Structuring Fee: On each Structuring Fee Payment Date,
Party B will pay Party A a Structuring
Fee calculated in accordance with the
following formula:
[omitted and filed separately with the
Securities and Exchange Commission]
Structuring Fee Payment Date: The 29th day of each November, February,
May and August, (commencing 29 November
2000) (subject to adjustment in
accordance with the Modified Following
Business Day Convention).
Early Exercise: Party B may exercise one or more Call
Transactions on or after 29 February 2001
in accordance with this Early Exercise
provision:
To exercise one or more Call Transactions
pursuant to this Early Exercise
provision, Party B must give Party A 30
Exchange Business Days prior irrevocable
written notice (the "Early Exercise
Notice") of Party B's election to
exercise early. The notice should specify
the early exercise date (the "Early
Exercise Date") and the number of Call
Transactions to be exercised early (the
"Early Exercise Call Transactions").
Following such an election to exercise
early, the Early Exercise Date shall be
deemed to be the Expiration Date in
respect of those Early Exercised Call
Transactions and payment and delivery
obligations calculated accordingly. In
addition, on the Early Exercise Date,
Party B must pay Party A an Early
Exercise Fee calculated in accordance
with the following formula:
0.32% x Initial Price x number of Call
Transactions exercised on the relevant
Early Exercise Date.
In addition, in respect of each Early
Exercise, a pro-rata structuring fee
calculated in accordance with the
following formula is also payable by
Party B in respect of the number of Call
Transactions exercised on the relevant
Early Exercise Date
[omitted and filed separately with the
Securities and Exchange Commission]
where
'Pro Rata Fraction' equals (the number of
days which have elapsed from (but
excluding) the Structuring Fee Payment
Date immediately preceding the relevant
Early Exercise Date to (and including)
the relevant Early Exercise Date) / 360
Put and Call Correlation: The early exercise of one or more Call
Transactions automatically terminates a
corresponding number of Put Transactions.
Representation on
Physical Settlement: Upon the exercise of either the Call
Transaction or the Put Transaction, for
the purposes of Regulation S under the
Securities Act of 1933, as amended (the
"1933 Act"), Party B represents to Party
A that Party B is not a "U.S. Person" as
that term is defined in Regulation S
under the 1933 Act.
Conditions precedent to,
Cash Settlement: Party B's right to elect Cash Settlement
is subject to satisfaction of the
following conditions precedent:
1) As of the date Party B seeks to make
such election, Party A determines in its
sole discretion that the Shares then
owned by Party A (or any affiliate of
Party A) in connection with its hedge for
the Transaction, are, and on the
Settlement Date will be, eligible for
resale pursuant to Rule 144(k) of the
1933 Act; and
2) Party B has no reason to believe that
the Issuer does not meet the current
public information requirements of Rule
144(c) of the 1933 Act. Party B will be
deemed to have no reason to so believe by
virtue of making an election to cash
settle; and
3) Party A determines in its sole
discretion that the Shares then owned by
Party A (or any affiliate of Party A) in
connection with its hedge for the
Transaction, are not subject to any
restriction on transfer other than those
arising under federal and state
securities laws and any legend contained
on the certificates evidencing such
Shares.
Transfer: Neither party may transfer the
Transaction, in whole or in part,
directly or indirectly, without the prior
written consent of the non-transferring
party.
Party A Undertaking: As required by Section 10.1(f)(iii) of
the Registration Rights and Stockholders'
Agreement dated August 11, 2000 between,
among others, the Issuer and Banco Itau,
S.A. (the "Registration Rights
Agreement"), Party A agrees (A) to comply
with the provisions of Section 10.1 of
the Registration Rights Agreement and the
restrictions contained in the Stock
Subscription Agreement (as defined in the
Registration Rights Agreement) with
respect to all Shares subject to this
Transaction, and to inform any transferee
of any such Shares in writing of the
existence and exact nature of such
restrictions and require any transferee
to agree in writing to be bound by such
restrictions, (B) to hold all such shares
free and clear of all liens, claims and
encumbrances of any kind or nature, other
than those securing Party B's obligations
under this Transaction, (C) not to assign
or transfer this Transaction or any of
its rights, duties or obligations
thereunder other than in compliance with
Section 10.1(f)(iii)(C) of the
Registration Rights Agreement, (D) that
the Issuer shall have a right to approve
any proposed transferee of Shares or
assignee of this Transaction or any of
Party A's rights, duties or obligations
thereunder, including without limitation
any Affiliate (as defined in the
Registration Rights Agreement) of Party
A, such approval not to be withheld or
delayed unreasonably. Party A represents
that the Issuer is a third party
beneficiary of this Party A Undertaking.
CREDIT SUPPORT
Credit Support Document: The ISDA Credit Support Annex dated
October 23, 1997, as amended from time to
time, between Party A and Party B (the
"Credit Support Annex"), together with
the following elections and
modifications:
Nothing herein shall be construed as
creating any obligation on Party B to
post collateral in connection with any
transaction other than this Transaction.
For purposes of this Transaction only,
for purposes of Paragraph 13 of the
Credit Support Annex: 1. Party B shall
deliver to Party A, on the Effective
Date, as security for its obligations
under this Transaction, an amount of USD
cash equal to the Strike Price multiplied
by the Number of Options. Party A shall
deliver to Party B, on the Effective
Date, as security for its obligations
under this Transaction, a number of
Shares equal to the Number of Options.
EXPOSURE: means zero.
CREDIT SUPPORT AMOUNT: means the
Independent Amount.
INDEPENDENT AMOUNT: in respect of Party A
means, a number of Shares equal to the
Number of Options; and in respect of
Party B means, an amount of USD cash
equal to the Strike Price multiplied by
the Number of Options, PROVIDED THAT, in
the event of an Early Exercise by Party B
of one or more Call Transactions, the
Independent Amount will be amended so
that, as of the relevant Early Exercise
Date the Independent Amount in respect of
Party A will mean, a number of Shares
equal the Number of Options outstanding
and unexercised as of the Early Exercise
Date; and in respect of Party B means, an
amount of USD cash equal to the Strike
Price multiplied by the Number of Options
outstanding and unexercised as of the
Early Exercise Date.
ELIGIBLE COLLATERAL: in respect of Party
A means, Shares; and in respect of Party
B means, Cash.
CUSTODIAN: Party B appoints UBS AG,
Stamford Branch as its Custodian, to hold
Posted Collateral for Party B.
2. Voting Rights.
Unless a Potential Event of Default or
Event of Default shall have occurred and
be continuing, Party B shall have the
right, from time to time, to vote and to
give consents, ratifications and waivers
with respect to the Shares held by or on
behalf of Party B as Posted Collateral,
and the Custodian shall, upon receiving a
written request from Party B accompanied
by a certificate of an authorized officer
of Party B stating that no Potential
Event of Default or Event of Default has
occurred and is continuing, deliver to
Party B or as specified in such request
such proxies, powers of attorney,
consents, ratifications and waivers in
respect of any of such Posted Collateral
that is registered, or held through a
securities intermediary, in the name of
the Custodian or its nominee as shall be
specified in such request and be in form
and substance satisfactory to the
Custodian.
If a Potential Event of Default or Event
of Default shall have occurred and be
continuing, Party A shall have the right,
to the extent permitted by law, and Party
B shall take all such action as may be
necessary or appropriate to give effect
to such right, to vote and to give
consents, ratifications and waivers, and
to take any other action with respect to
any or all of the Posted Collateral with
the same force and effect as if Party A
were the absolute and sole owner thereof.
3. Interest Amounts. Paragraph 13(h) is
deleted and replaced with,
"Interest Amount. No Interest Amount will
be paid on Posted Collateral held by
Party A."
4. The paragraph titled, "Agreement as to
Single Secured Party and Pledgor" of
Paragraph 13(m) is deleted".
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 (in the absence of a written
agreement between the parties which expressly imposes affirmative
obligations to the contrary for that transaction):-
(A) Non-Reliance. Each party is acting for its own account, and has made
its own independent decisions to enter into that transaction and that such
transaction is appropriate or proper for it based upon its own judgment and
upon advice from such advisers as it has deemed necessary. Each party 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 explanation relating 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) with the exception of the Agreement or the Confirmation, received
from the other party shall be deemed to be an assurance or guarantee as to
the expected results of that transaction.
(B) Assessment And Understanding. Each party is capable of assessing the
merits of and understands (on its own behalf or through independent
professional advice), and accepts, the terms, conditions and risks of that
transaction. Each party is also capable of assuming and assumes, the risks
of that transaction.
(C) Status of the Parties. Neither party is acting as a fiduciary or an
adviser to the other in respect of that transaction.
Please confirm that the foregoing correctly sets forth the terms
and conditions of our agreement by executing the copy of this Confirmation
enclosed for that purpose and returning it to us by facsimile
(+ 44 20 7568 9251) at your earliest convenience.
Yours faithfully,
UBS AG, London Branch
By: /s/ Ben Hunter By: /s/ S. Edmonston
--------------- ----------------
Name: Ben Hunter Name: Sara Edmonston
Title: Authorized Signatory Title: Director
Agreed and accepted with effect as of the date first written above
Banco Itau S.A., Cayman Islands Branch
By: /s/ Rodolfo Henrique Fischer By: /s/ Fernando Antonio Neves Lima
---------------------------- -------------------------------
Name: Rodolfo Henrique Fischer Name: Fernando Antonio Neves Lima
Title: Executive Director Title: Managing Director
Reference: 1312296
UBS Warburg
100 Liverpool Street
London EC2M 2HR
UBS WARBURG IS A BUSINESS GROUP OF UBS AG UBS AG is registered as
a branch in England and Wales Branch No. BR004507 (A public company limited
by shares, incorporated in Switzerland whose registered offices are at
Aeschenvorstadt 1, CH-4051, Basel and Bahnhofstrasse 45, CH-8001 Zurich)
Registered Address: 1 Finsbury Avenue London EC2M 2PP Regulated in the UK
by the Securities and Futures Authority. A member of the London Stock
Exchange.
TRANCHE 5
Date: 1 September 2000
To: Banco Itau, S.A., Cayman Islands Branch
("Party B")
Attention: Rodolfo Henrique Fischer
Fax No.: 55 11 237 2594
From: UBS AG, London Branch ("Party A")
Re: Share Option Transaction - UBS Ref : 1312296
----------------------------------------------------------------------
Dear Sirs
The purpose of this communication is to confirm the terms and conditions of
put options (each a "Put Transaction") and call options (each a "Call
Transaction") entered into between us on the Trade Date specified below
(the Put Transactions and the Call Transactions are hereinafter
collectively referred to as the "Transactions"). This communication
constitutes a "Confirmation" as referred to in the Master Agreement
specified below.
The definitions contained in the 1991 ISDA Definitions (as amended and
supplemented by the 1998 Supplement) (the "1991 Definitions") and the 1996
ISDA Equity Derivatives Definitions (the "Equity Definitions") (as amended
and supplemented by the 1998 ISDA Euro Definitions) all as published by the
International Swaps and Derivatives Association, Inc., are incorporated
into this Confirmation. In the event of any inconsistency between the 1991
Definitions, the Equity Definitions and this Confirmation, this
Confirmation will govern.
This Confirmation supplements, forms part of, and is subject to, the ISDA
Master Agreement dated as of October 23, 1997, 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.
Each party hereby agrees to make each payment specified in this
Confirmation as being payable by it, not later than the due date in place
of the account specified below (or as specified in writing to the other
party at the address specified below), in freely transferable funds and in
the manner customary for payments in the applicable currency.
CALL TRANSACTION
The following terms relate to the Call Transactions:
Option Type: Call
Seller: Party A
Buyer: Party B
Premium: USD00.00% of the Initial Price
Premium Payment Date: The third Business Day after the Trade Date.
PUT TRANSACTION
The following terms relate to the Put Transactions:
Option Type: Put
Seller: Party B
Buyer: Party A
Premium: USD00.00% of the Initial Price.
Premium Payment Date: The third Business Day after the Trade Date.
The remaining provisions of this Confirmation are applicable to both the
Put Transactions and the Call Transactions.
Trade Date: 29 August 2000 (time of execution available
upon request)
Effective Date: 1 September 2000
Option Style: European
Number of Options: 1,980,459
Option Entitlement: One Share per Option
Initial Price: USD8.00
Strike Price: The Initial Price, as adjusted in accordance with
this Confirmation.
Shares: Common stock (Bloomberg code: AOLA) of
America Online Latin America, Inc (the
"Issuer")
Exchange: NASDAQ National Market
Related Exchange: The principal options exchange (if any) with
respect to the Shares
Calculation Agent: Party A
PROCEDURE FOR EXERCISE
Expiration Time: 16.00 hrs (local time in New York)
Expiration Date: 29 August 2005
Automatic Exercise: Applicable
Reference Price: The closing price per Share (without regard to any
after-hours trading) on the Expiration Date, as
determined by the Calculation Agent
SETTLEMENT TERMS
Physical Settlement: Applicable; provided, however, that (subject to
satisfaction of the "Conditions precedent to Cash
Settlement") Party B may elect to cash settle the
Transaction by giving notice to Party A of such
election on a day (the "Election Date") no earlier
than 60 Business Days before, and no later than 45
Business Days before, the Expiration Date.
Settlement Price: If Physical Settlement is applicable, the
Settlement Price shall be the amount determined in
accordance with Section 2.1(g)(iii) of the Equity
Definitions. If Cash Settlement is applicable, the
Settlement Price shall be the price determined in
accordance with Section 4.4(b)(i) of the Equity
Definitions.
Physical Settlement
Date: The Settlement Date shall be the date determined in
accordance with Section 6.2 of the Equity
Definitions.
Cash Settlement
Payment Date: If Cash Settlement is applicable, three Currency
Business Days after the Valuation Date
Failure to Deliver: Applicable
VALUATION FOR CASH SETTLEMENT
Valuation Time: At the close of trading on the Exchange.
Relevant Price: The last reported sale price on the Exchange as of
the Valuation Time.
Averaging Dates: The Valuation Date and each of the thirty Exchange
Business Days preceding the Valuation Date.
Averaging Date
Market Disruption: Modified Postponement
ADJUSTMENTS
Method of Adjustment: Calculation Agent Adjustment
Potential Adjustment
Event: Section 9.1(e)(iii) of the Equity
Definitions is amended to read as follows:
"(iii)any dividend declared by the Issuer"
EXTRAORDINARY EVENTS
Consequences of Merger Events:
(a) Share-for-Share: Alternative Obligation, provided that Cancellation
and Payment will apply if the New Shares are NOT
listed on a national securities exchange or quoted
on the NASDAQ Stock Market.
(b) Share-for-Other: At Party A's sole discretion, Cancellation
and Payment
(c) Share-for-Combined: At Party A's sole discretion, Cancellation
and Payment
Nationalization or
Insolvency: Cancellation and Payment
ACCOUNT DETAILS
Account for payments
to Party B: (please advise)
ADDITIONAL TERMS
Structuring Fee: On each Structuring Fee Payment Date, Party B will
pay Party A a Structuring Fee calculated in
accordance with the following formula:
[omitted and filed separately with the Securities
and Exchange Commission]
Structuring Fee
Payment Date: The 29th day of each November, February, May and
August, (commencing 29 November 2000) (subject to
adjustment in accordance with the Modified
Following Business Day Convention).
Early Exercise: Party B may exercise one or more Call Transactions
on or after 29 February 2001 in accordance with
this Early Exercise provision:
To exercise one or more Call Transactions pursuant
to this Early Exercise provision, Party B must give
Party A 30 Exchange Business Days prior irrevocable
written notice (the "Early Exercise Notice") of
Party B's election to exercise early. The notice
should specify the early exercise date (the "Early
Exercise Date") and the number of Call Transactions
to be exercised early (the "Early Exercise Call
Transactions"). Following such an election to
exercise early, the Early Exercise Date shall be
deemed to be the Expiration Date in respect of
those Early Exercised Call Transactions and payment
and delivery obligations calculated accordingly. In
addition, on the Early Exercise Date, Party B must
pay Party A an Early Exercise Fee calculated in
accordance with the following formula:
0.32% x Initial Price x number of Call Transactions
exercised on the relevant Early Exercise Date.
In addition, in respect of each Early Exercise, a
pro-rata structuring fee calculated in accordance
with the following formula is also payable by Party
B in respect of the number of Call Transactions
exercised on the relevant Early Exercise Date
[omitted and filed separately with the Securities
and Exchange Commission]
where
'Pro Rata Fraction' equals (the number of days
which have elapsed from (but excluding) the
Structuring Fee Payment Date immediately preceding
the relevant Early Exercise Date to (and including)
the relevant Early Exercise Date) / 360
Put and Call
Correlation: The early exercise of one or more Call
Transactions automatically terminates a
corresponding number of Put Transactions.
Representation on
Physical Settlement: Upon the exercise of either the Call Transaction or
the Put Transaction, for the purposes of Regulation
S under the Securities Act of 1933, as amended (the
"1933 Act"), Party B represents to Party A that
Party B is not a "U.S. Person" as that term is
defined in Regulation S under the 1933 Act.
Conditions precedent to,
Cash Settlement: Party B's right to elect Cash Settlement is subject
to satisfaction of the following conditions
precedent:
1) As of the date Party B seeks to make such
election, Party A determines in its sole discretion
that the Shares then owned by Party A (or any
affiliate of Party A) in connection with its hedge
for the Transaction, are, and on the Settlement
Date will be, eligible for resale pursuant to Rule
144(k) of the 1933 Act; and
2) Party B has no reason to believe that the Issuer
does not meet the current public information
requirements of Rule 144(c) of the 1933 Act. Party
B will be deemed to have no reason to so believe by
virtue of making an election to cash settle; and
3) Party A determines in its sole discretion that
the Shares then owned by Party A (or any affiliate
of Party A) in connection with its hedge for the
Transaction, are not subject to any restriction on
transfer other than those arising under federal and
state securities laws and any legend contained on
the certificates evidencing such Shares.
Transfer: Neither party may transfer the Transaction, in
whole or in part, directly or indirectly, without
the prior written consent of the non-transferring
party.
Party A Undertaking: As required by Section 10.1(f)(iii) of the
Registration Rights and Stockholders' Agreement
dated August 11, 2000 between, among others, the
Issuer and Banco Itau, S.A. (the "Registration
Rights Agreement"), Party A agrees (A) to comply
with the provisions of Section 10.1 of the
Registration Rights Agreement and the restrictions
contained in the Stock Subscription Agreement (as
defined in the Registration Rights Agreement) with
respect to all Shares subject to this Transaction,
and to inform any transferee of any such Shares in
writing of the existence and exact nature of such
restrictions and require any transferee to agree in
writing to be bound by such restrictions, (B) to
hold all such shares free and clear of all liens,
claims and encumbrances of any kind or nature,
other than those securing Party B's obligations
under this Transaction, (C) not to assign or
transfer this Transaction or any of its rights,
duties or obligations thereunder other than in
compliance with Section 10.1(f)(iii)(C) of the
Registration Rights Agreement, (D) that the Issuer
shall have a right to approve any proposed
transferee of Shares or assignee of this
Transaction or any of Party A's rights, duties or
obligations thereunder, including without
limitation any Affiliate (as defined in the
Registration Rights Agreement) of Party A, such
approval not to be withheld or delayed
unreasonably. Party A represents that the Issuer is
a third party beneficiary of this Party A
Undertaking.
CREDIT SUPPORT
Credit Support Document: The ISDA Credit Support Annex
dated October 23, 1997, as amended from time to
time, between Party A and Party B (the "Credit
Support Annex"), together with the following
elections and modifications:
Nothing herein shall be construed as creating any
obligation on Party B to post collateral in
connection with any transaction other than this
Transaction. For purposes of this Transaction only,
for purposes of Paragraph 13 of the Credit Support
Annex:
1. Party B shall deliver to Party A, on the
Effective Date, as security for its obligations
under this Transaction, an amount of USD cash equal
to the Strike Price multiplied by the Number of
Options. Party A shall deliver to Party B, on the
Effective Date, as security for its obligations
under this Transaction, a number of Shares equal to
the Number of Options.
EXPOSURE: means zero.
CREDIT SUPPORT AMOUNT: means the Independent
Amount.
INDEPENDENT AMOUNT: in respect of Party A means, a
number of Shares equal to the Number of Options;
and in respect of Party B means, an amount of USD
cash equal to the Strike Price multiplied by the
Number of Options, PROVIDED THAT, in the event of
an Early Exercise by Party B of one or more Call
Transactions, the Independent Amount will be
amended so that, as of the relevant Early Exercise
Date the Independent Amount in respect of Party A
will mean, a number of Shares equal the Number of
Options outstanding and unexercised as of the Early
Exercise Date; and in respect of Party B means, an
amount of USD cash equal to the Strike Price
multiplied by the Number of Options outstanding and
unexercised as of the Early Exercise Date.
ELIGIBLE COLLATERAL: in respect of Party A means,
Shares; and in respect of Party B means, Cash.
CUSTODIAN: Party B appoints UBS AG, Stamford Branch
as its Custodian, to hold Posted Collateral for
Party B.
2. Voting Rights.
Unless a Potential Event of Default or Event of
Default shall have occurred and be continuing,
Party B shall have the right, from time to time, to
vote and to give consents, ratifications and
waivers with respect to the Shares held by or on
behalf of Party B as Posted Collateral, and the
Custodian shall, upon receiving a written request
from Party B accompanied by a certificate of an
authorized officer of Party B stating that no
Potential Event of Default or Event of Default has
occurred and is continuing, deliver to Party B or
as specified in such request such proxies, powers
of attorney, consents, ratifications and waivers in
respect of any of such Posted Collateral that is
registered, or held through a securities
intermediary, in the name of the Custodian or its
nominee as shall be specified in such request and
be in form and substance satisfactory to the
Custodian.
If a Potential Event of Default or Event of Default
shall have occurred and be continuing, Party A
shall have the right, to the extent permitted by
law, and Party B shall take all such action as may
be necessary or appropriate to give effect to such
right, to vote and to give consents, ratifications
and waivers, and to take any other action with
respect to any or all of the Posted Collateral with
the same force and effect as if Party A were the
absolute and sole owner thereof.
3. Interest Amounts. Paragraph 13(h) is deleted and
replaced with,
"Interest Amount. No Interest Amount
will be paid on Posted Collateral held by
Party A."
4. The paragraph titled, "Agreement as to Single
Secured Party and Pledgor" of Paragraph 13(m) is
deleted".
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 (in the absence of a written
agreement between the parties which expressly imposes affirmative
obligations to the contrary for that transaction):-
(A) Non-Reliance. Each party is acting for its own account, and has made
its own independent decisions to enter into that transaction and that such
transaction is appropriate or proper for it based upon its own judgment and
upon advice from such advisers as it has deemed necessary. Each party 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 explanation relating 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) with the exception of the Agreement or the Confirmation, received
from the other party shall be deemed to be an assurance or guarantee as to
the expected results of that transaction.
(B) Assessment And Understanding. Each party is capable of assessing the
merits of and understands (on its own behalf or through independent
professional advice), and accepts, the terms, conditions and risks of that
transaction. Each party is also capable of assuming and assumes, the risks
of that transaction.
(C) Status of the Parties. Neither party is acting as a fiduciary or an
adviser to the other in respect of that transaction.
Please confirm that the foregoing correctly sets forth the terms and
conditions of our agreement by executing the copy of this Confirmation
enclosed for that purpose and returning it to us by facsimile
(+ 44 20 7568 9251) at your earliest convenience.
Yours faithfully,
UBS AG, London Branch
By: /s/ Ben Hunter By: /s/ S. Edmonston
--------------- ----------------
Name: Ben Hunter Name: Sara Edmonston
Title: Authorized Signatory Title: Director
Agreed and accepted with effect as of the date first written above
Banco Itau S.A., Cayman Islands Branch
By: /s/ Rodolfo Henrique Fischer By: /s/ Fernando Antonio Neves Lima
---------------------------- -------------------------------
Name: Rodolfo Henrique Fischer Name: Fernando Antonio Neves Lima
Title: Executive Director Title: Managing Director
