17 October 2006
ISDA COVERED BONDS PROJECT - AUSTRIA
THIS DOCUMENT DOES NOT CONSTITUTE AND SHALL NOT BE CONSTRUED AS
LEGAL ADVICE BY EITHER OF INTERNATIONAL SWAPS AND DERIVATIVES
ASSOCIATION, INC. ("ISDA") OR SCHÖNHERR RECHTSANWÄLTE GMBH
("SCHÖNHERR") AND NEITHER ISDA NOR SCHÖNHERR ACCEPTS ANY
RESPONSIBILITY AS TO WHETHER THIS DOCUMENT IS APPROPRIATE FOR
THE PARTIES OR THE TRANSACTIONS THEY INTEND TO ENTER INTO.
PARTIES SHOULD CONSULT WITH THEIR LEGAL ADVISERS AND ANY OTHER
ADVISER THEY DEEM APPROPRIATE BEFORE USING THIS DOCUMENT.
PARTIES SHOULD ALSO CONSIDER THAT THIS DOCUMENT FOCUSES ON
AMENDMENTS REQUIRED AND/OR APPROPRIATE FROM AN AUSTRIAN LAW
PERSPECTIVE; IT DOES NOT TAKE INTO ACCOUNT TRANSACTION SPECIFIC
PROVISIONS THAT MAY BE RELEVANT IN A PARTICULAR CASE.
Rider1 for the Schedule to the 1992/2002 ISDA Master Agreement
[…]
Part [●]
(a)
Covered Bond-Related Provisions.
Purpose and Scope of the Covered Bond-Related Provisions.
The following sections of this Part [●] of the Schedule shall apply to one or more
Transactions which are intended to be used by Party A and/or Party B as cover
assets for [covered bonds (fundierte Bankschuldverschreibungen) pursuant to
the Austrian Covered Bonds Act (Gesetz vom 27. Dezember 1905 betreffend
fundierte Bankschuldverschreibungen – "FBSchVG")] / [mortgage bonds (Pfandbriefe) pursuant to the Austrian Mortgage Bonds Act (Gesetz über die Pfandbriefe und verwandten Schuldverschreibungen öffentlich-rechtlicher Kreditanstalten vom 21.12.1927 – "PfandbriefG")] / [mortgage bonds (Pfandbriefe) pursuant
to the Austrian Mortgage Bank Act (Hypothekenbankgesetz – "HypBG")]2.
(b)
Separate Master Agreement for Cover Transactions.
The parties agree that hereby a separate and independent Master Agreement is
entered into, the content of which, subject to the following, is identical with the
Master Agreement referred to above and by which all Transactions registered in
1
2
To be inserted at the end of the relevant Schedule.
Amend as appropriate.
Copyright © 2006 by International Swaps and Derivatives Association, Inc
2
a [cover register for [covered] / [mortgage] bonds (Deckungsregister)]3 / [mortgage register for mortgage bonds (Hypothekenregister)]4 (the "Cover Register")
(each a "Cover Transaction") (and, where the context so requires, Transactions
intended to be registered in the Cover Register) shall be governed (the "Master
Agreement for Cover Transactions").
Unless expressly set out otherwise herein, (i) any references in the Master
Agreement referred to above to "Master Agreement" or "Agreement" shall be
deemed to be references to this Master Agreement for Cover Transactions,
(ii) any references in the Master Agreement referred to above to "Transaction"
shall be deemed to be references to Cover Transactions, (iii) the rights and duties arising under this Master Agreement for Cover Transactions shall only apply
to the Cover Transactions and (iv) only the Cover Transactions and this Master
Agreement for Cover Transactions constitute a single agreement as described by
Section 1(c) of the Master Agreement.
References to "Covered Bonds" when used herein shall mean [covered bonds] /
[mortgage bonds]5 covered by assets that are registered in the Cover Register
("Cover Assets").
Terms defined in this Part [●] (Covered Bond-Related Provisions) shall apply only
to this Master Agreement for Cover Transactions.
(c)
Amendments to Master Agreement for Cover Transactions.
(i)
The following provisions shall apply to Cover Transactions in addition to (or
where expressly set out in lieu of) the provisions contained in the Agreement:
(AA) Additional Representations.
[The Parties agree that the following representations shall be inserted at
the end of Section 3 (Representations):]6 / [Additional Representation will
apply. For the purpose of Section 3 of this Agreement, the following will
constitute an Additional Representation, which will be deemed to be repeated on each date on which a Cover Transaction is entered into:]7
X represents to Y that:
([●]) License. All regulatory and other licenses, authorisations, consents
and approvals that are required by it to lawfully issue Covered Bonds
3
Deckungsregister is the term used in the FBSchVG and the PfandbriefG.
Hypothekenregister is the term used in the HypBG.
5 Amend as appropriate.
6 ISDA Master Agreement 1992.
7 ISDA Master Agreement 2002.
4
3
have been obtained by it and are in full force and effect and all conditions (Auflagen) of any such consents have been complied with; and
([●]) Hedging Purposes. The Cover Transactions are entered into for the
sole purpose of hedging interest, currency or counterparty risks in the
Cover Pool in relation to the Covered Bonds and not for speculative
purposes; and
([●]) Relation to Covered Bonds and Cover Pool. The Cover Transactions only relate to Covered Bonds and to Cover Assets.
([●]) Pari Passu. The payment obligations of X under this Agreement rank
at least pari passu with all other present and future obligations of X
towards any other hedge counterparty of X registered in the Cover
Register (Y and each such hedge counterparty a "Preferred Hedge
Counterparty") in respect of transactions entered into for the purpose of hedging interest, currency or counterparty risks in the Cover
Pool in relation to the Covered Bonds (the Cover Transactions and
each such transaction a "Preferred Hedge Transaction") and all
(master) agreements entered into in respect of Preferred Hedge
Transactions provide for substantially similar rights and claims of the
Preferred Hedge Counterparties in case of an Event of Default or
Termination Event or equivalent event (howsoever described) under
the relevant (master) agreement.
(BB) Additional Agreements.
The Parties agree that the following shall be inserted at the end of Section
4 (Agreements) of this Agreement:
8
9
(f)
Entries of Transactions in Cover Register. If a Party ("Y"), in its
absolute discretion, has consented to the registration by the other
party ("X") of the Transaction (the "Registration Consent") in the
Cover Register (the "Entry") by including language to this effect in the
relevant Confirmation, then X (i) shall procure the consent of the
[government commissioner (Regierungskommissär)]8 / [trustee
(Treuhänder)]9 (the "Cover Pool Trustee") to the Entry (the "Trustee
Registration Consent") and (ii) promptly upon receipt of the Trustee
Registration Consent shall perform the Entry.
(g)
De-registration of Transactions from Cover Register. X agrees
that it will not effect or permit to be effected the de-registration of a
Cover Transaction from the Cover Register (the "De-registration")
Regierungskommissär is the term used in the FBSchVG.
Treuhänder is the term used in the PfandbriefG and the HypBG.
4
except (i) upon the occurrence of the Additional Termination Event
specified in Part [●](c)(i)(DD)(IV)(ee) (Discharge of Obligations under
Covered Bonds) of this Schedule or (ii) with the prior written consent
of Y (the "De-registration Consent") and the Cover Pool Trustee
(the "Trustee De-registration Consent"). Promptly upon receipt of
the De-registration Consent X shall (x) procure the Trustee Deregistration Consent and (y) perform the De-registration.
(CC) Dis-Application of Certain Events of Default.
(I)
Bankruptcy. Subject to Part [●](d) of this Schedule, paragraphs (1),
(2), (3), (4), (5) and (6), to the extent analogous thereto, paragraph
(8) and, to the extent relating thereto, paragraph (9) of Section
5(a)(vii) will not apply to X. Paragraph (7) and, to the extent analogous thereto, paragraph (8) and, to the extent relating thereto, paragraph (9) of Section 5(a)(vii) will only apply in respect of Cover Assets.
(DD) Amendments to Certain other Events of Default and Termination Events
and related Definitions.
(I)
The "Cross Default" provisions of Section 5(a)(vi) will apply to X and
will apply to Y.
In respect of X only, "Specified Indebtedness" means any obligation
(whether present or future, contingent or otherwise, as principal) in
respect of money owed under the Covered Bonds and the Preferred
Hedge Transactions.
(II)
Merger Without Assumption. In respect of X only, Section 5(a)(viii)
(Merger Without Assumption) shall be amended by deleting "all or
substantially all its assets" in line two thereof and inserting " the pool
of Cover Assets (the "Cover Pool") (in whole but not in part) pursuant
to [§ 3 (4) FBSchVG] / [§ 35 (4) HypBG] / [§ 6 (4) PfandbriefG]10" in
lieu.
(III)
The "Credit Event Upon Merger" provisions of Section 5(b)(iv)11 /
Section 5(b)(v)12 will apply to X [but will not apply to Y].
In respect of X only, [Section 5(b)(iv) shall be amended by deleting
"consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets" in line three thereof and inserting
10
Amend as appropriate.
ISDA Master Agreement 1992.
12 ISDA Master Agreement 2002.
11
5
"transfers a Cover Transaction" in lieu and by deleting "the resulting,
surviving or" in line five thereof]13 / [the definition of Designated Event
shall be amended by deleting "consolidates or amalgamates with, or
merges with or into, or transfers all or substantially all its assets (or
any substantial part of the assets comprising the business conducted
by X as of the date of this Master Agreement) to, or reorganises, reincorporates or reconstitutes into or as, another entity" in Section
5(b)(v)(1) and inserting "transfers a Cover Transaction to another entity" in lieu and by deleting Sections 5(b)(v)(2) and 5(b)(v)(3).]14
(IV) Additional Termination Event will apply to X.
Each of the following events shall constitute Additional Termination
Events pursuant to Section [5(b)(v)]15/[5(b)(vi)]16:
(aa) Failure to register Entry in Cover Register. If, for whatever
reason, Y has not received copies of (x) the relevant page of
the Cover Register containing evidence of the Entry and (y) the
Trustee Registration Consent on its due date for delivery in accordance with Part 3(b) of this Schedule.
(bb) Cessation of registration of Entry in Cover Register. If a
Cover Transaction ceases to be registered with the Cover Register other than (x) with the prior written consent of Y or (y) as a
result of the occurrence of the Additional Termination Event
specified in Part [●](c)(i)(DD)(IV)(ee) (Discharge of Obligations
under Covered Bonds) of this Schedule.
(cc) De-registration of Cover Transaction. If, for whatever reason,
Y has not received notice of the De-registration on its due date
for delivery in accordance with Part 3(b) of this Schedule.
(dd) Realisation of Cover Pool. If, Following an Event of Default
specified at Section 5(a)(vii) in respect of X (not taking into account Part [●](c)(i)(CC)(I) above), (x) the Cover Transaction is
surrendered (überlassen)
to the bankruptcy estate
(Konkursmasse) of X in accordance with [§ 3 (5) FBSchVG] /
[§ 35 (5) HypBG] / [§ 6 (5) PfandbriefG]17 or (y) the Cover Pool
is realised in accordance with [§ 3 (8) FBSchVG] / [§ 35 (8)
HypBG] / [§ 6 (8) PfandbriefG]18.
13
ISDA Master Agreement 1992.
ISDA Master Agreement 2002.
15 ISDA Master Agreement 1992.
16 ISDA Master Agreement 2002.
17 Amend as appropriate.
18 Amend as appropriate.
14
6
(ee) Discharge of Obligations under Covered Bonds. If all obligations of X under the Covered Bonds have been irrevocably and
unconditionally discharged.
If an event specified in sub-paragraphs (aa) to (ee) (inclusive) occurs,
the "Affected Party" shall be X and the "Affected Transaction" shall be
the Cover Transaction (or, in case of sub-paragraph (aa), the unregistered Transaction) affected by the occurrence of the Additional
Termination Event. [The notice period under Section 6(b)(iv)19/Section
6(b)(iv)(1)20 shall be a [two] Business Days notice.]
(V)
Un-registered Transactions. If an event specified in sub-paragraphs
(aa) and (bb) occurs, the un-registered Transaction (or the deregistered Cover Transaction, as the case may be) shall constitute a
Transaction for all purposes of this Agreement (without giving effect
to the provisions of this Master Agreement for Cover Transactions
that relate to Cover Transactions).
(VI) Events of Default and Termination Events Relating to Cover
Transactions Only. For the avoidance of Doubt, an Event of Default
and Termination Event that occurs with respect to a Cover Transaction shall only constitute an Event of Default or Termination Event (as
applicable) under this Master Agreement for Cover Transactions.
(VII) Cover Transactions Unaffected. For the avoidance of doubt and unless expressly set out otherwise herein (x) no Event of Default or
Termination Event that occurs under the Agreement with respect to a
Transaction that does not constitute a Cover Transaction and (y) no
event that occurs under the Agreement with respect to a Credit Support Provider (if any) or Specified Entity (if any) of X shall constitute
an Event of Default or Termination Event under this Master Agreement for Cover Transactions.
(ii)
In Part 3(b) of this Schedule the following shall be inserted:
Party required to
deliver Document
Form/Document/
Certificate
X
A copy of the Trus- [●] Local Business Yes
tee
Registration Days from (and
Consent
including) the Reg-
19
20
ISDA Master Agreement 1992.
ISDA Master Agreement 2002.
Date by which
to be delivered
Covered by Section 3(d) Representation
7
istration Consent
X
A copy of the relevant page of the
Cover
Register
containing evidence
of the Entry
X
A notice of
registration
(d)
[●] Local Business Yes
Days from (and
including) the Registration Consent
De- [●] Local Business Yes
Days from (and
including) the Deregistration
Consent
Recourse Against Non-Cover Assets; Uncovered Exposure.
(i)
Nothing contained in this Master Agreement for Cover Transactions shall
adversely affect the Parties' rights, duties and obligations with respect to
Transactions other than Cover Transactions or with respect to either Party's
assets other than Cover Assets.
(ii)
The Uncovered Exposure will be deemed to be an Unpaid Amount due to Y
under this Agreement (without giving effect to the provisions of this Master
Agreement for Cover Transactions).
For the purposes of this Part [●](d)(ii):
"Base Currency" means United States Dollars unless otherwise specified here:
……………………………………………
"Cover Ratio" means the ratio established by dividing the Value (as numerator)
by the Preferred Claims (as denominator).
"Exposure" or "E" means, with respect to Y on the Valuation Date the amount, if
any, that would be payable by X to Y pursuant to Section 6(e)(ii)(1) of this Master
Agreement for Cover Transactions if all Cover Transactions were being terminated as of the relevant Valuation Time, on the basis that (i) Y is not the Affected
Party and (ii) the Base Currency is the Termination Currency.
"Preferred Claims" or "PC" means an amount denominated in the Base Currency corresponding to (i) the Exposure plus (ii) any other claims of Preferred Hedge
Counterparties (other than Y) under Preferred Hedge Transactions plus (iii) any
claims of the holders of the Covered Bonds under the Covered Bonds.
8
"Uncovered Exposure" or "UE" means an amount calculated by multiplying the
Exposure by the Cover Ratio and deducting the resulting figure from the Exposure, i.e.:
UE = E - ( E x
V
)
PC
"Valuation Date" means the date on which the opening of bankruptcy proceedings (Konkursverfahren) in respect of X becomes effective.
"Valuation Time" means: [●].
"Value" or "V" means, for the Valuation Date with respect to the Cover Pool, the
aggregated values of the Cover Assets as determined in accordance with the
[FBSchVG] / [HypBG] / [PfandbriefG]21 and the [insert reference to appropriate
document under Covered Bond issue] less any amounts that are to be paid in
priority to the Preferred Claims.
(e)
Consent to Transfer.
Without prejudice to any of its rights under this Master Agreement for Cover
Transactions, Y herewith consents to the transfer of its interests and obligations
in or under this Master Agreement for Covered Transactions in accordance with
[§ 3 (4) FBSchVG] / [§ 35 (4) HypBG] / [§ 6 (4) PfandbriefG]22 only.
(f)
Divisions of the Cover Register.
To the extent that a Party has subdivided its Cover Register into main registers
and sub-registers, these main registers and sub-registers shall altogether constitute one Cover Register for the purpose of this Master Agreement for Cover
Transactions.
(g)
Set-off
(i)
21
Y acknowledges and agrees that pursuant to applicable law23 it shall not
have a right of set-off or netting against amounts payable by Y to X except
as specifically provided for in this Master Agreement for Cover Transactions (including, without limitation, Sections [2(c) and 6(e)]24 / [2(c), 6(e) and
6(f)]25.
Amend as appropriate.
Amend as appropriate.
23 § 2 (2) FBSchVG, § 34a (2) HypBG and § 5 (2) PfandbriefG.
24 ISDA Master Agreement 1992.
25 ISDA Master Agreement 2002.
22
9
(ii)
[The following sentence in Section 6 (e): "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."]26 / [Section 6 (f) (Set-off)]27 shall only apply
in respect of amounts payable under this Master Agreement for Cover
Transactions.
[…]28
26
ISDA Master Agreement 1992.
ISDA Master Agreement 2002.
28 Parties may add individual language here.
27
10
Rider for Cover Transaction Confirmations1
[…]
This Confirmation confirms a Cover Transaction as defined in the Schedule to the
Agreement.
[You] / [We] hereby [consent] / [confirm that [you] / [we] have given [your] / [our] consent] to the entry of this Transaction into [our] / [your] Cover Register.
[…]
1
To be inserted at the end of the introduction of the relevant Confirmation.