MASTER REPURCHASE AGREEMENT - KENYA
Between:
("Party A")
Of Post Office Box Number ,
and
("Party B”)
Of Post Office Box Number ,
1) Applicability
a) From time to time the parties hereto may enter into transactions in which one
party, acting through a Designated Office, ("Seller") agrees to sell to the other,
acting through a Designated Office, ("Buyer") securities and financial instruments
("Securities") (subject to paragraph 1(c), other than equities and Net Paying
Securities) against the payment of the purchase price by Buyer to Seller, with a
simultaneous agreement by Buyer to sell to Seller Securities equivalent to such
Securities at a date certain or on demand against the payment of the repurchase
price by Seller to Buyer.
b) Each such transaction (which may be a repurchase transaction ("Repurchase
Transaction") or a buy and sell back transaction ("Buy/Sell Back Transaction"))
shall be referred to herein as a "Transaction" and shall be governed by this
Agreement, including any supplemental terms or conditions contained in Annex 2
hereto, unless otherwise agreed in writing.
c) If this Agreement may be applied to –
i) Buy/Sell Back Transactions, this shall be specified in Annex 2 hereto, and
the provisions of the Buy/Sell Back Annex shall apply to such Buy/Sell
Back Transactions;
ii) Net Paying Securities, this shall be specified in Annex 2 hereto and the
provisions of Annex 2 , paragraph 1(b) shall apply to Transactions
involving Net Paying Securities.
d) If Transactions are to be effected under this Agreement by either party as an
agent, this shall be specified in Annex 2 hereto, and the provisions of the Agency
Annex shall apply to such Agency Transactions.

2) Definitions
a) "Act of Insolvency" shall occur with respect to any party hereto upon -
i) its making a general assignment for the benefit of, entering into a
reorganisation, arrangement, or composition with creditors; or
ii) its admitting in writing that it is unable to pay its debts as they become due;
or
iii) its seeking, consenting to or acquiescing in the appointment of any trustee,
administrator, receiver or liquidator or analogous officer of it or any
material part of its property; or
iv) the presentation or filing of a petition in respect of it (other than by the
counterparty to this Agreement in respect of any obligation under this
Agreement) in any court or before any agency alleging or for the
bankruptcy, winding-up or insolvency of such party (or any analogous
proceeding) or seeking any reorganisation, arrangement, composition, readjustment, administration, liquidation, dissolution or similar relief under
any present or future statute, law or regulation, such petition (except in the
case of a petition for winding-up or any analogous proceeding, in respect
of which no such 30 day period shall apply) not having been stayed or
dismissed within 30 days of its filing; or
v) the appointment of a receiver, administrator, liquidator or trustee or
analogous officer of such party or over all or any material part of such
party's property; or
vi) the convening of any meeting of its creditors for the purposes of
considering a voluntary winding up of and by such (or any analogous
proceeding);
b) "Agency Transaction", the meaning specified in paragraph 1 of the Agency
Annex;
c) "Appropriate Market", the meaning specified in paragraph 10;
d) "Base Currency", shall mean the Kenya Shilling.
e) “Bank” for the purposes of this Agreement means the Central Bank of Kenya
established under Article 231 of The Constitution of Kenya, 2010.

f) "Business Day" means a day which participant banks and the Bank are open for
general banking business in Kenya and on which the KEPSS is operating to
process Payment Instructions and Account Transfers.
g) “Cash Margin", a cash sum paid to Buyer or Seller in accordance with paragraph
4;
h) “Central Bank Rate” (CBR), means the lowest rate of interest the Bank shall
charge on loans to banks as lender of last resort:
i) "CDS”, the Central Depository System which means a depository system for
Government securities;
j) "Confirmation", the meaning specified in paragraph 3(b);
k) "Contractual Currency", the meaning specified in paragraph 7(a);
l) "Defaulting Party", the meaning specified in paragraph 10;
m) "Default Market Value", the meaning specified in paragraph 10;
n) "Default Notice", a written notice served by the non-Defaulting Party on the
Defaulting Party under paragraph 10 stating that an event shall be treated as an
Event of Default for the purposes of this Agreement;
o) "Default Valuation Notice", the meaning specified in paragraph 10;
p) "Default Valuation Time", the meaning specified in paragraph 10;
q) "Deliverable Securities", the meaning specified in paragraph 10;
r) "Designated Office", with respect to a party, a branch or office of that party which
is specified as such in Annex 2 hereto or such other branch or office as may be
agreed to by the parties;
s) "Distributions", the meaning specified in sub-paragraph (w) below;
t) "Equivalent Margin Securities", Securities equivalent to Securities previously
transferred as Margin Securities;
u) "Equivalent Securities", with respect to a Transaction, Securities equivalent to
Purchased Securities under that Transaction. If and to the extent that such
Purchased Securities have been redeemed, the expression shall mean a sum of
money equivalent to the proceeds of the redemption;

v) Securities are "equivalent to" other Securities for the purposes of this Agreement
if they are: (i) of the same issuer; (ii) part of the same issue; and (iii) of an
identical type, nominal value, description and (except where otherwise stated)
amount as those other Securities, provided that –
A) Securities will be equivalent to other Securities notwithstanding that those
Securities have been redenominated into any other currency or that the
nominal value of those Securities has changed in connection with such
redenomination; and
B) where Securities have been converted, subdivided or consolidated or
have become the subject of a takeover or the holders of Securities have
become entitled to receive or acquire other Securities or other property or
the Securities have become subject to any similar event, the expression
"equivalent to" shall mean Securities equivalent to (as defined in the
provisions of this definition preceding the proviso) the original Securities
together with or replaced by a sum of money or Securities or other
property equivalent to (as so defined) that receivable by holders of such
original Securities resulting from such event;
w) "Event of Default", the meaning specified in paragraph 10;
x) "Income", with respect to any Security at any time, all interest, dividends or other
distributions thereon, but excluding distributions which are a payment or
repayment of principal in respect of the relevant securities ("Distributions");
y) "Income Payment Date", with respect to any Securities, the date on which
Income is paid in respect of such Securities or, in the case of registered
Securities, the date by reference to which particular registered holders are
identified as being entitled to payment of Income;
z) “KEPSS”, the Kenya Electronic Payments and Settlement System.
aa) "Register”, means the Domestic Debt Register that contains a record of all
Government securities.
bb) "Margin Ratio", with respect to a Transaction, the Market Value of the Purchased
Securities at the time when the Transaction was entered into divided by the
Purchase Price (and so that, where a Transaction relates to Securities of
different descriptions and the Purchase Price is apportioned by the parties
among Purchased Securities of each such description, a separate Margin Ratio
shall apply in respect of Securities of each such description), or such other
proportion as the parties may agree with respect to that Transaction;

cc) "Margin Securities", in relation to a Margin Transfer, Securities reasonably
acceptable to the party calling for such Margin Transfer;
dd) "Margin Transfer", any, or any combination of, the payment or repayment of
Cash Margin and the transfer of Margin Securities or Equivalent Margin
Securities;
ee) "Market Value", with respect to any Securities as of any time on any date, the
price for such Securities at such time on such date obtained from a generally
recognized source agreed to by the parties (and where different prices are
obtained for different delivery dates, the price so obtainable for the earliest
available such delivery date) (provided that the price of Securities that are
suspended shall (for the purposes of paragraph 4) be nil unless the parties
otherwise agree and (for all other purposes) shall be the price of those Securities
as of close of business on the dealing day in the relevant market last preceding
the date of suspension) plus the aggregate amount of Income which, as of such
date, has accrued but not yet been paid in respect of the Securities to the extent
not included in such price as of such date, and for these purposes any sum in a
currency other than the Contractual Currency for the Transaction in question
shall be converted into such Contractual Currency at the Spot Rate prevailing at
the relevant time;
ff) "Net Exposure", the meaning specified in paragraph 4(c);
gg) the "Net Margin" provided to a party at any time, the excess (if any) at that time
of (i) the sum of the amount of Cash Margin paid to that party (including accrued
interest on such Cash Margin which has not been paid to the other party) and the
Market Value of Margin Securities transferred to that party under paragraph 4(a)
(excluding any Cash Margin which has been repaid to the other party and any
Margin Securities in respect of which Equivalent Margin Securities have been
transferred to the other party) over (ii) the sum of the amount of Cash Margin
paid to the other party (including accrued interest on such Cash Margin which
has not been paid by the other party) and the Market Value of Margin Securities
transferred to the other party under paragraph 4(a) (excluding any Cash Margin
which has been repaid by the other party and any Margin Securities in respect of
which Equivalent Margin Securities have been transferred by the other party) and
for this purpose any amounts not denominated in the Base Currency shall be
converted into the Base Currency at the Spot Rate prevailing at the relevant time;
hh) "Net Paying Securities", Securities which are of a kind such that, were they to be
the subject of a Transaction to which paragraph 5 applies, any payment made by
Buyer under paragraph 5 would be one in respect of which either Buyer would or
might be required to make a withholding or deduction for or on account of taxes
or duties or Seller might be required to make or account for a payment for or on
account of taxes or duties (in each case other than tax on overall net income) by
reference to such payment;

ii) "Net Value", the meaning specified in paragraph 10;
jj) "New Purchased Securities", the meaning specified in paragraph 8(a);
kk) "Price Differential", with respect to any Transaction as of any date, the aggregate
amount obtained by daily application of the Pricing Rate for such Transaction to
the Purchase Price for such Transaction (on a 360 day basis or 365 day basis in
accordance with the applicable ISMA convention, unless otherwise agreed
between the parties for the Transaction), for the actual number of days during the
period commencing on (and including) the Purchase Date for such Transaction
and ending on (but excluding) the date of calculation or, if earlier, the
Repurchase Date;
ll) "Pricing Rate", with respect to any Transaction, the per annum percentage rate
for calculation of the Price Differential agreed to by Buyer and Seller in relation to
that Transaction;
mm) "Purchase Date", with respect to any Transaction, the date on which Purchased
Securities are to be sold by Seller to Buyer in relation to that Transaction;
nn) "Purchase Price", on the Purchase Date, the price at which Purchased Securities
are sold or are to be sold by Seller to Buyer;
oo) "Purchased Securities", with respect to any Transaction, the Securities sold or to
be sold by Seller to Buyer under that Transaction, and any New Purchased
Securities transferred by Seller to Buyer under paragraph 8 in respect of that
Transaction;
pp) "Receivable Securities", the meaning specified in paragraph 10;
qq) "Repurchase Date", with respect to any Transaction, the date on which Buyer is
to sell Equivalent Securities to Seller in relation to that Transaction;
rr) "Repurchase Price", with respect to any Transaction and as of any date, the sum
of the Purchase Price and the Price Differential as of such date;
ss) "Special Default Notice", the meaning specified in paragraph 14;
tt) "Spot Rate", where an amount in one currency is to be converted into a second
currency on any date, unless the parties otherwise agree, the foreign currency
indicative rate for the day quoted by the Bank for the sale by it of such second
currency against a purchase by it of such first currency;
uu) "Term", with respect to any Transaction, the interval of time commencing with the
Purchase Date and ending with the Repurchase Date;

vv) "Termination", with respect to any Transaction, refers to the requirement with
respect to such Transaction for Buyer to sell Equivalent Securities against
payment by Seller of the Repurchase Price in accordance with paragraph 3(f),
and reference to a Transaction having a "fixed term" or being "terminable upon
demand" shall be construed accordingly;
ww) "Transaction Costs", the meaning specified in paragraph 10;
xx) "Transaction Exposure", with respect to any Transaction at any time during the
period from the Purchase Date to the Repurchase Date (or, if later, the date on
which Equivalent Securities are delivered to Seller or the Transaction is
terminated under paragraph 10(g) or 10(h)), the difference between (i) the
Repurchase Price at such time multiplied by the applicable Margin Ratio (or,
where the Transaction relates to Securities of more than one description to which
different Margin Ratios apply, the amount produced by multiplying the
Repurchase Price attributable to Equivalent Securities of each such description
by the applicable Margin Ratio and aggregating the resulting amounts, the
Repurchase Price being for this purpose attributed to Equivalent Securities of
each such description in the same proportions as those in which the Purchase
Price was apportioned among the Purchased Securities) and (ii) the Market
Value of Equivalent Securities at such time. If (i) is greater than (ii), Buyer has a
Transaction Exposure for that Transaction equal to that excess. If (ii) is greater
than (i), Seller has a Transaction Exposure for that Transaction equal to that
excess; and
yy) except in paragraphs 14(b)(i) and 18, references in this Agreement to "written"
communications and communications "in writing" include communications made
through any electronic system agreed between the parties which is capable of
reproducing such communication in hard copy form.
3) Initiation; Confirmation; Termination
a) A Transaction may be entered into orally or in writing at the initiation of either
Buyer or Seller.
b) Upon agreeing to enter into a Transaction hereunder Buyer or Seller (or both), as
shall have been agreed, shall promptly deliver to the other party written
confirmation of such Transaction (a "Confirmation").
The Confirmation shall describe the Purchased Securities (including CUSIP
Number ie. Committee on Uniform Securities Identification Procedures Number
or ISIN ie. International Securities Identification Number or other identifying
number or numbers, if any), identify Buyer and Seller and set forth –
(i) the Purchase Date;

(ii) the Purchase Price;
(iii) the Repurchase Date, unless the Transaction is to be terminable on
demand (in which case the Confirmation shall state that it is terminable on
demand);
(iv) the Pricing Rate applicable to the Transaction;
(v) in respect of each party the details of the bank account[s] to which
payments to be made hereunder are to be credited;
(vi) where the Buy/Sell Back Annex applies, whether the Transaction is a
Repurchase Transaction or a Buy/Sell Back Transaction;
(vii) where the Agency Annex applies, whether the Transaction is an Agency
Transaction and, if so, the identity of the party which is acting as agent
and the name, code or identifier of the Principal; and
(viii) any additional terms or conditions of the Transaction; and may be in the
form of Annex II hereto or may be in any other form to which the parties
agree.
The Confirmation relating to a Transaction shall, together with this Agreement,
constitute prima facie evidence of the terms agreed between Buyer and Seller for
that Transaction, unless objection is made with respect to the Confirmation promptly
after receipt thereof. In the event of any conflict between the terms of such
Confirmation and this Agreement, the Confirmation shall prevail in respect of that
Transaction and those terms only.
c) On the Purchase Date for a Transaction, Seller shall transfer the Purchased
Securities to Buyer or its agent against the payment of the Purchase Price by
Buyer.
d) Termination of a Transaction will be effected, in the case of on demand
Transactions, on the date specified for Termination in such demand, and, in
the case of fixed term Transactions, on the date fixed for Termination.
e) In the case of on demand Transactions, demand for Termination shall be
made by Buyer or Seller, by telephone or otherwise, and shall provide for
Termination to occur after not less than the minimum period as is customarily
required for the settlement or delivery of money or Equivalent Securities of
the relevant kind.
f) On the Repurchase Date, Buyer shall transfer to Seller or its agent Equivalent
Securities against the payment of the Repurchase Price by Seller (less any
amount then payable and unpaid by Buyer to Seller pursuant to paragraph 5).

4) Margin Maintenance
a) If at any time either party has a Net Exposure in respect of the other party it
may by notice to the other party require the other party to make a Margin
Transfer to it of an aggregate amount or value at least equal to that Net
Exposure.
b) A notice under sub-paragraph (a) above may be given orally or in writing.
c) For the purposes of this Agreement a party has a Net Exposure in respect of
the other party if the aggregate of all the first party's Transaction Exposures
plus any amount payable to the first party under paragraph 5 but unpaid less
the amount of any Net Margin provided to the first party exceeds the
aggregate of all the other party's Transaction Exposures plus any amount
payable to the other party under paragraph 5 but unpaid less the amount of
any Net Margin provided to the other party; and the amount of the Net
Exposure is the amount of the excess. For this purpose any amounts not
denominated in the Base Currency shall be converted into the Base Currency
at the Spot Rate prevailing at the relevant time.
d) To the extent that a party calling for a Margin Transfer has previously paid
Cash Margin which has not been repaid or delivered Margin Securities in
respect of which Equivalent Margin Securities have not been delivered to it,
that party shall be entitled to require that such Margin Transfer be satisfied
first by the repayment of such Cash Margin or the delivery of Equivalent
Margin Securities but, subject to this, the composition of a Margin Transfer
shall be at the option of the party making such Margin Transfer.
e) Any Cash Margin transferred shall be in the Base Currency or such other
currency as the parties may agree.
f) A payment of Cash Margin shall give rise to a debt owing from the party
receiving such payment to the party making such payment. Such debt shall
bear interest at such rate, payable at such times, as may be specified in
Annex 2 hereto in respect of the relevant currency or otherwise agreed
between the parties, and shall be repayable subject to the terms of this
Agreement.
g) Where Seller or Buyer becomes obliged under sub-paragraph (a) above to
make a Margin Transfer, it shall transfer Cash Margin or Margin Securities or
Equivalent Margin Securities within the minimum period specified in Annex 2
hereto or, if no period is there specified, such minimum period as is
customarily required for the settlement or delivery of money, Margin
Securities or Equivalent Margin Securities of the relevant kind.

h) The parties may agree that, with respect to any Transaction, the provisions of
subparagraphs (a) to (g) above shall not apply but instead that margin may be
provided separately in respect of that Transaction in which case –
(i) that Transaction shall not be taken into account when calculating
whether either party has a Net Exposure;
(ii) margin shall be provided in respect of that Transaction in such manner
as the parties may agree; and
(iii) margin provided in respect of that Transaction shall not be taken into
account for the purposes of sub-paragraphs (a) to (g) above.
i) The parties may agree that any Net Exposure which may arise shall be
eliminated not by Margin Transfers under the preceding provisions of this
paragraph but by the repricing of Transactions under sub-paragraph (j) below,
the adjustment of Transactions under sub-paragraph (k) below or a
combination of both these methods.
j) Where the parties agree that a Transaction is to be repriced under this subparagraph, such repricing shall be effected as follows –
(i) the Repurchase Date under the relevant Transaction (the "Original
Transaction") shall be deemed to occur on the date on which the
repricing is to be effected (the "Repricing Date");
(ii) the parties shall be deemed to have entered into a new Transaction
(the "Repriced Transaction") on the terms set out in (iii) to (vi) below;
(iii) the Purchased Securities under the Repriced Transaction shall be
Securities equivalent to the Purchased Securities under the Original
Transaction;
(iv) the Purchase Date under the Repriced Transaction shall be the
Repricing Date;
(v) the Purchase Price under the Repriced Transaction shall be such
amount as shall, when multiplied by the Margin Ratio applicable to the
Original Transaction, be equal to the Market Value of such Securities
on the Repricing Date;
(vi) the Repurchase Date, the Pricing Rate, the Margin Ratio and, subject
as aforesaid, the other terms of the Repriced Transaction shall be
identical to those of the Original Transaction; (vii) the obligations of the
parties with respect to the delivery of the Purchased Securities and the
payment of the Purchase Price under the Repriced Transaction shall

be set off against their obligations with respect to the delivery of
Equivalent Securities and payment of the Repurchase Price under the
Original Transaction and accordingly only a net cash sum shall be paid
by one party to the other. Such net cash sum shall be paid within the
period specified in sub-paragraph (g) above.
k) The adjustment of a Transaction (the "Original Transaction") under this subparagraph shall be effected by the parties agreeing that on the date on which
the adjustment is to be made (the "Adjustment Date") the Original Transaction
shall be terminated and they shall enter into a new Transaction (the
"Replacement Transaction") in accordance with the following provisions –
(i) the Original Transaction shall be terminated on the Adjustment Date on
such terms as the parties shall agree on or before the Adjustment Date;
(ii) the Purchased Securities under the Replacement Transaction shall be
such Securities as the parties shall agree on or before the Adjustment
Date (being Securities the aggregate Market Value of which at the
Adjustment Date is substantially equal to the Repurchase Price under
the Original Transaction at the Adjustment Date multiplied by the
Margin Ratio applicable to the Original Transaction);
(iii) the Purchase Date under the Replacement Transaction shall be the
Adjustment Date;
(iv) the other terms of the Replacement Transaction shall be such as the
parties shall agree on or before the Adjustment Date; and
(v) the obligations of the parties with respect to payment and delivery of
Securities on the Adjustment Date under the Original Transaction and
the Replacement Transaction shall be settled in accordance with
paragraph 6 within the minimum period specified in sub-paragraph (g)
above.
5) Income Payments
Unless otherwise agreed –
i) where the Term of a particular Transaction extends over an Income Payment
Date in respect of any Securities subject to that Transaction, Buyer shall on the
date such Income is paid by the issuer transfer to or credit to the account of
Seller an amount equal to (and in the same currency as) the amount paid by the
issuer;
ii) where Margin Securities are transferred from one party ("the first party") to the
other party ("the second party") and an Income Payment Date in respect of such

Securities occurs before Equivalent Margin Securities are transferred by the
second party to the first party, the second party shall on the date such Income is
paid by the issuer transfer to or credit to the account of the first party an amount
equal to (and in the same currency as) the amount paid by the issuer;
and for the avoidance of doubt references in this paragraph to the amount of any
Income paid by the issuer of any Securities shall be to an amount paid without any
withholding or deduction for or on account of taxes or duties notwithstanding that a
payment of such Income made in certain circumstances may be subject to such a
withholding or deduction.
6) Payment and Transfer
a) Unless otherwise agreed, all money paid hereunder shall be in immediately
available freely convertible funds of the relevant currency. All Securities to be
transferred hereunder (i) shall be in suitable form for transfer and shall be
accompanied by duly executed instruments of transfer or assignment in blank
(where required for transfer) and such other documentation as the transferee
may reasonably request, or (ii) shall be transferred through the Register, or (iii)
shall be transferred through any other agreed securities clearance system or (iv)
shall be transferred by any other method mutually acceptable to Seller and Buyer.
b) Unless otherwise agreed, all money payable by one party to the other in respect
of any Transaction shall be paid free and clear of, and without withholding or
deduction for, any taxes or duties of whatsoever nature imposed, levied,
collected, withheld or assessed by any authority having power to tax, unless the
withholding or deduction of such taxes or duties is required by law. In that event,
unless otherwise agreed, the paying party shall pay such additional amounts as
will result in the net amounts receivable by the other party (after taking account of
such withholding or deduction) being equal to such amounts as would have been
received by it had no such taxes or duties been required to be withheld or
deducted.
c) Unless otherwise agreed in writing between the parties, under each Transaction
transfer of Purchased Securities by Seller and payment of Purchase Price by
Buyer against the transfer of such Purchased Securities shall be made
simultaneously and transfer of Equivalent Securities by Buyer and payment of
Repurchase Price payable by Seller against the transfer of such Equivalent
Securities shall be made simultaneously.
d) Subject to and without prejudice to the provisions of sub-paragraph 6(c), either
party may from time to time in accordance with market practice and in recognition
of the practical difficulties in arranging simultaneous delivery of Securities and
money waive in relation to any Transaction its rights under this Agreement to
receive simultaneous transfer and/or payment provided that transfer and/or
payment shall, notwithstanding such waiver, be made on the same day and

provided also that no such waiver in respect of one Transaction shall affect or
bind it in respect of any other Transaction.
e) The parties shall execute and deliver all necessary documents and take all
necessary steps to procure that all right, title and interest in any Purchased
Securities, any Equivalent Securities, any Margin Securities and any Equivalent
Margin Securities shall pass to the party to which transfer is being made upon
transfer of the same in accordance with this Agreement, free from all liens,
claims, charges and encumbrances.
f) Notwithstanding the use of expressions such as "Repurchase Date",
"Repurchase Price", "margin", "Net Margin", "Margin Ratio" and "substitution",
which are used to reflect terminology used in the market for transactions of the
kind provided for in this Agreement, all right, title and interest in and to Securities
and money transferred or paid under this Agreement shall pass to the transferee
upon transfer or payment, the obligation of the party receiving Purchased
Securities or Margin Securities being an obligation to transfer Equivalent
Securities or Equivalent Margin Securities.
g) Time shall be of the essence in this Agreement.
h) Subject to paragraph 10, all amounts in the same currency payable by each party
to the other under any Transaction or otherwise under this Agreement on the
same date shall be combined in a single calculation of a net sum payable by one
party to the other and the obligation to pay that sum shall be the only obligation
of either party in respect of those amounts.
i) Subject to paragraph 10, all Securities of the same issue, denomination, currency
and series, transferable by each party to the other under any Transaction or
hereunder on the same date shall be combined in a single calculation of a net
quantity of Securities transferable by one party to the other and the obligation to
transfer the net quantity of Securities shall be the only obligation of either party in
respect of the Securities so transferable and receivable.
j) If the parties have specified in Annex 2 hereto that this paragraph 6(j) shall apply,
each obligation of a party under this Agreement (other than an obligation arising
under paragraph 10) is subject to the condition precedent that none of those
events specified in paragraph 10(a) which are identified in Annex 2 hereto for the
purposes of this paragraph 6(j) (being events which, upon the serving of a
Default Notice, would be an Event of Default with respect to the other party) shall
have occurred and be continuing with respect to the other party.

7) Contractual Currency
a) All the payments made in respect of the Purchase Price or the Repurchase Price
of any Transaction shall be made in the currency of the Purchase Price (the
"Contractual Currency") save as provided in paragraph 10(c)(ii). Notwithstanding
the foregoing, the payee of any money may, at its option, accept tender thereof in
any other currency, provided, however, that, to the extent permitted by applicable
law, the obligation of the payer to pay such money will be discharged only to the
extent of the amount of the Contractual Currency that such payee may,
consistent with normal banking procedures, purchase with such other currency
(after deduction of any premium and costs of exchange) for delivery within the
customary delivery period for spot transactions in respect of the relevant
currency.
b) If for any reason the amount in the Contractual Currency received by a party,
including amounts received after conversion of any recovery under any judgment
or order expressed in a currency other than the Contractual Currency, falls short
of the amount in the Contractual Currency due and payable, the party required to
make the payment will, as a separate and independent obligation, to the extent
permitted by applicable law, immediately transfer such additional amount in the
Contractual Currency as may be necessary to compensate for the shortfall.
c) If for any reason the amount in the Contractual Currency received by a party
exceeds the amount of the Contractual Currency due and payable, the party
receiving the transfer will refund promptly the amount of such excess.
8) Substitution
a) A Transaction may at any time between the Purchase Date and Repurchase
Date, if Seller so requests and Buyer so agrees and with the concurrence of the
Bank, be varied by the transfer by Buyer to Seller of Securities equivalent to the
Purchased Securities, or to such of the Purchased Securities as shall be agreed,
in exchange for the transfer by Seller to Buyer of other Securities of such amount
and description as shall be agreed ("New Purchased Securities") (being
Securities having a Market Value at the date of the variation at least equal to the
Market Value of the Equivalent Securities transferred to Seller).
b) Any variation under sub-paragraph (a) above shall be effected, subject to
paragraph 6(d), by the simultaneous transfer of the Equivalent Securities and
New Purchased Securities concerned.
c) A Transaction which is varied under sub-paragraph (a) above shall thereafter
continue in effect as though the Purchased Securities under that Transaction
consisted of or included the New Purchased Securities instead of the Securities
in respect of which Equivalent Securities have been transferred to Seller.

d) Where either party has transferred Margin Securities to the other party it may at
any time before Equivalent Margin Securities are transferred to it under
paragraph 4 request the other party to transfer Equivalent Margin Securities to it
in exchange for the transfer to the other party of new Margin Securities having a
Market Value at the time of transfer at least equal to that of such Equivalent
Margin Securities. If the other party agrees to the request, the exchange shall be
effected, subject to paragraph 6(d), by the simultaneous transfer of the
Equivalent Margin Securities and new Margin Securities concerned. Where either
or both of such transfers is or are effected through a settlement system in
circumstances which under the rules and procedures of that settlement system
give rise to a payment by or for the account of one party to or for the account of
the other party, the parties shall cause such payment or payments to be made
outside that settlement system, for value the same day as the payments made
through that settlement system, as shall ensure that the exchange of Equivalent
Margin Securities and new Margin Securities effected under this sub-paragraph
does not give rise to any net payment of cash by either party to the other.
9) Representations
Each party represents and warrants to the other that –
a) it is duly authorised to execute and deliver this Agreement, to enter into the
Transactions contemplated hereunder and to perform its obligations hereunder
and thereunder and has taken all necessary action to authorise such execution,
delivery and performance;
b) it will engage in this Agreement and the Transactions contemplated hereunder
(other than Agency Transactions) as principal;
c) the person signing this Agreement on its behalf is, and any person representing it
in entering into a Transaction will be, duly authorised to do so on its behalf;
d) it has obtained all authorisations of any governmental or regulatory body required
in connection with this Agreement and the Transactions contemplated hereunder
and such authorisations are in full force and effect;
e) the execution, delivery and performance of this Agreement and the Transactions
contemplated hereunder will not violate any law, ordinance, charter, by-law or
rule applicable to it or any agreement by which it is bound or by which any of its
assets are affected;
f) it has satisfied itself and will continue to satisfy itself as to the tax implications of
the Transactions contemplated hereunder;
g) in connection with this Agreement and each Transaction –

i) unless there is a written agreement with the other party to the contrary, it
is not relying on any advice (whether written or oral) of the other party,
other than the representations expressly set out in this Agreement;
ii) it has made and will make its own decisions regarding the entering into of
any Transaction based upon its own judgment and upon advice from such
professional advisers as it has deemed it necessary to consult;
iii) it understands the terms, conditions and risks of each Transaction and is
willing to assume (financially and otherwise) those risks; and
h) at the time of transfer to the other party of any Securities it will have the full and
unqualified right to make such transfer and that upon such transfer of Securities
the other party will receive all right, title and interest in and to those Securities
free of any lien, claim, charge or encumbrance.
On the date on which any Transaction is entered into pursuant hereto, and on
each day on which Securities, Equivalent Securities, Margin Securities or
Equivalent Margin Securities are to be transferred under any Transaction, Buyer
and Seller shall each be deemed to repeat all the foregoing representations. For
the avoidance of doubt and notwithstanding any arrangements which Seller or
Buyer may have with any third party, each party will be liable as a principal for its
obligations under this Agreement and each Transaction.
10) Events of Default
a) If any of the following events (each an "Event of Default") occurs in relation to
either party (the "Defaulting Party", the other party being the "non-Defaulting
Party") whether acting as Seller or Buyer –
i) Buyer fails to pay the Purchase Price upon the applicable Purchase Date
or Seller fails to pay the Repurchase Price upon the applicable
Repurchase Date, and the non-Defaulting Party serves a Default Notice
on the Defaulting Party; or
ii) if the parties have specified in Annex 2 hereto that this sub-paragraph
shall apply, Seller fails to deliver Purchased Securities on the Purchase
Date or Buyer fails to deliver Equivalent Securities on the Repurchase
Date, and the non-Defaulting Party serves a Default Notice on the
Defaulting Party; or
iii) Seller or Buyer fails to pay when due any sum payable under subparagraph (g) or (h) below, and the non-Defaulting Party serves a Default
Notice on the Defaulting Party; or

iv) Seller or Buyer fails to comply with paragraph 4 and the non-Defaulting
Party serves a Default Notice on the Defaulting Party; or
v) Seller or Buyer fails to comply with paragraph 5 and the non-Defaulting
Party serves a Default Notice on the Defaulting Party; or
vi) an Act of Insolvency occurs with respect to Seller or Buyer and (except in
the case of an Act of Insolvency which is the presentation of a petition for
winding-up or any analogous proceeding or the appointment of a liquidator
or analogous officer of the Defaulting Party in which case no such notice
shall be required) the non-Defaulting Party serves a Default Notice on the
Defaulting Party; or
vii) any representations made by Seller or Buyer are incorrect or untrue in any
material respect when made or repeated or deemed to have been made
or repeated, and the non-Defaulting Party serves a Default Notice on the
Defaulting Party; or
viii) Seller or Buyer admits to the other that it is unable to, or intends not to,
perform any of its obligations hereunder and/or in respect of any
Transaction and the non-Defaulting Party serves a Default Notice on the
Defaulting Party; or
ix) Seller or Buyer is suspended or expelled from membership of or
participation in any securities exchange or association or other self
regulating organization, or suspended from dealing in securities by any
government agency, or any of the assets of either Seller or Buyer or the
assets of investors held by, or to the order of, Seller or Buyer are
transferred or ordered to be transferred to a trustee by a regulatory
authority pursuant to any securities regulating legislation and the nonDefaulting Party serves a Default Notice on the Defaulting Party; or
x) Seller or Buyer fails to perform any other of its obligations hereunder and
does not remedy such failure within 30 days after notice is given by the
non- Defaulting Party requiring it to do so, and the non-Defaulting Party
serves a Default Notice on the Defaulting Party;
then sub-paragraphs (b) to (f) below shall apply.
b) The Repurchase Date for each Transaction hereunder shall be deemed
immediately to occur and, subject to the following provisions, all Cash Margin
(including interest accrued) shall be immediately repayable and Equivalent
Margin Securities shall be immediately deliverable (and so that, where this subparagraph applies, performance of the respective obligations of the parties with
respect to the delivery of Securities, the payment of the Repurchase Prices for

any Equivalent Securities and the repayment of any Cash Margin shall be
effected only in accordance with the provisions of sub-paragraph (c) below).
c) i) The Default Market Values of the Equivalent Securities and any
Equivalent Margin Securities to be transferred, the amount of any Cash
Margin (including the amount of interest accrued) to be transferred and the
Repurchase Prices to be paid by each party shall be established by the
non-Defaulting Party for all Transactions as at the Repurchase Date; and
ii) on the basis of the sums so established, an account shall be taken (as at
the Repurchase Date) of what is due from each party to the other under
this Agreement (on the basis that each party's claim against the other in
respect of the transfer to it of Equivalent Securities or Equivalent Margin
Securities under this Agreement equals the Default Market Value therefor)
and the sums due from one party shall be set off against the sums due
from the other and only the balance of the account shall be payable (by
the party having the claim valued at the lower amount pursuant to the
foregoing) and such balance shall be due and payable on the next
following Business Day. For the purposes of this calculation, all sums not
denominated in the Base Currency shall be converted into the Base
Currency on the relevant date at the Spot Rate prevailing at the relevant
time.
d) For the purposes of this Agreement, the "Default Market Value" of any Equivalent
Securities or Equivalent Margin Securities shall be determined in accordance
with sub-paragraph (e) below, and for this purpose –
i) the "Appropriate Market" means, in relation to Securities of any description,
the market which is the most appropriate market for Securities of that
description, as determined by the non-Defaulting Party;
ii) the "Default Valuation Time" means, in relation to an Event of Default, the
close of business in the Appropriate Market on the fifth dealing day after
the day on which that Event of Default occurs or, where that Event of
Default is the occurrence of an Act of Insolvency in respect of which under
paragraph 10(a) no notice is required from the non-Defaulting Party in
order for such event to constitute an Event of Default, the close of
business on the fifth dealing day after the day on which the non-Defaulting
Party first became aware of the occurrence of such Event of Default;
iii) "Deliverable Securities" means Equivalent Securities or Equivalent Margin
Securities to be delivered by the Defaulting Party;
iv) "Net Value" means at any time, in relation to any Deliverable Securities or
Receivable Securities, the amount which, in the reasonable opinion of the
non-Defaulting Party, represents their fair market value, having regard to

such pricing sources and methods (which may include, without limitation,
available prices for Securities with similar maturities, terms and credit
characteristics as the relevant Equivalent Securities or Equivalent Margin
Securities) as the non-Defaulting Party considers appropriate, less, in the
case of Receivable Securities, or plus, in the case of Deliverable
Securities, all Transaction Costs which would be incurred in connection
with the purchase or sale of such Securities;
v) "Receivable Securities" means Equivalent Securities or Equivalent Margin
Securities to be delivered to the Defaulting Party; and
vi) "Transaction Costs" in relation to any transaction contemplated in
paragraph 10(d) or (e) means the reasonable costs, commission, fees and
expenses (including any mark-up or mark-down) that would be incurred in
connection with the purchase of Deliverable Securities or sale of
Receivable Securities, calculated on the assumption that the aggregate
thereof is the least that could reasonably be expected to be paid in order
to carry out the transaction;
e) i) If between the occurrence of the relevant Event of Default and the Default
Valuation Time the non-Defaulting Party gives to the Defaulting Party a
written notice (a "Default Valuation Notice") which –
A) states that, since the occurrence of the relevant Event of Default, the nonDefaulting Party has sold, in the case of Receivable Securities, or
purchased, in the case of Deliverable Securities, Securities which form
part of the same issue and are of an identical type and description as
those Equivalent Securities or Equivalent Margin Securities, and that the
non-Defaulting Party elects to treat as the Default Market Value -
aa in the case of Receivable Securities, the net proceeds of such sale
after deducting all reasonable costs, fees and expenses incurred in
connection therewith (provided that, where the Securities sold are
not identical in amount to the Equivalent Securities or Equivalent
Margin Securities, the non-Defaulting Party may either (x) elect to
treat such net proceeds of sale divided by the amount of Securities
sold and multiplied by the amount of the Equivalent Securities or
Equivalent Margin Securities as the Default Market Value or (y)
elect to treat such net proceeds of sale of the Equivalent Securities
or Equivalent Margin Securities actually sold as the Default Market
Value of that proportion of the Equivalent Securities or Equivalent
Margin Securities, and, in the case of (y), the Default Market Value
of the balance of the Equivalent Securities or Equivalent Margin
Securities shall be determined separately in accordance with the
provisions of this paragraph 10(e) and accordingly may be the

subject of a separate notice (or notices) under this paragraph
10(e)(i)); or
bb in the case of Deliverable Securities, the aggregate cost of such
purchase, including all reasonable costs, fees and expenses
incurred in connection therewith (provided that, where the
Securities purchased are not identical in amount to the Equivalent
Securities or Equivalent Margin Securities, the non-Defaulting Party
may either (x) elect to treat such aggregate cost divided by the
amount of Securities sold and multiplied by the amount of the
Equivalent Securities or Equivalent Margin Securities as the Default
Market Value or (y) elect to treat the aggregate cost of purchasing
the Equivalent Securities or Equivalent Margin Securities actually
purchased as the Default Market Value of that proportion of the
Equivalent Securities or Equivalent Margin Securities, and, in the
case of (y), the Default Market Value of the balance of the
Equivalent Securities or Equivalent Margin Securities shall be
determined separately in accordance with the provisions of this
paragraph 10(e) and accordingly may be the subject of a separate
notice (or notices) under this paragraph 10(e)(i));
B) states that the non-Defaulting Party has received, in the case of
Deliverable Securities, offer quotations or, in the case of Receivable
Securities, bid quotations in respect of Securities of the relevant
description from two or more market makers or regular dealers in the
Appropriate Market in a commercially reasonable size (as determined by
the non-Defaulting Party) and specifies –
aa the price or prices quoted by each of them for, in the case of
Deliverable Securities, the sale by the relevant market marker or
dealer of such Securities or, in the case of Receivable Securities,
the purchase by the relevant market maker or dealer of such
Securities;
bb the Transaction Costs which would be incurred in connection with
such a transaction; and
cc that the non-Defaulting Party elects to treat the price so quoted (or,
where more than one price is so quoted, the arithmetic mean of the
prices so quoted), after deducting, in the case of Receivable
Securities, or adding, in the case of Deliverable Securities, such
Transaction Costs, as the Default Market Value of the relevant
Equivalent Securities or Equivalent Margin Securities; or
C) states –

aa that either (x) acting in good faith, the non-Defaulting Party has
endeavored but has been unable to sell or purchase Securities in
accordance with sub-paragraph (i)(A) above or to obtain quotations
in accordance with sub-paragraph (i)(B) above (or both) or (y) the
non-Defaulting Party has determined that it would not be
commercially reasonable to obtain such quotations, or that it would
not be commercially reasonable to use any quotations which it has
obtained under sub-paragraph (i)(B) above; and
bb that the non-Defaulting Party has determined the Net Value of the
relevant Equivalent Securities or Equivalent Margin Securities
(which shall be specified) and that the non- Defaulting Party elects
to treat such Net Value as the Default Market Value of the relevant
Equivalent Securities or Equivalent Margin Securities,
then the Default Market Value of the relevant Equivalent Securities or
Equivalent Margin Securities shall be an amount equal to the Default
Market Value specified in accordance with (A), (B)(cc) or, as the case may
be, (C)(bb) above.
ii) If by the Default Valuation Time the non-Defaulting Party has not given a
Default Valuation Notice, the Default Market Value of the relevant
Equivalent Securities or Equivalent Margin Securities shall be an amount
equal to their Net Value at the Default Valuation Time; provided that, if at
the Default Valuation Time the non-Defaulting Party reasonably
determines that, owing to circumstances affecting the market in the
Equivalent Securities or Equivalent Margin Securities in question, it is not
possible for the non-Defaulting Party to determine a Net Value of such
Equivalent Securities or Equivalent Margin Securities which is
commercially reasonable, the Default Market Value of such Equivalent
Securities or Equivalent Margin Securities shall be an amount equal to
their Net Value as determined by the non-Defaulting Party as soon as
reasonably practicable after the Default Valuation Time.
f) The Defaulting Party shall be liable to the non-Defaulting Party for the amount of
all reasonable legal and other professional expenses incurred by the nonDefaulting Party in connection with or as a consequence of an Event of Default,
together with interest thereon at the Central Bank Rate or, in the case of an
expense attributable to a particular Transaction, the Pricing Rate for the relevant
Transaction if that Pricing Rate is greater than the Central Bank Rate.
g) If Seller fails to deliver Purchased Securities to Buyer on the applicable Purchase
Date Buyer may –
i) if it has paid the Purchase Price to Seller, require Seller immediately to
repay the sum so paid;

ii) if Buyer has a Transaction Exposure to Seller in respect of the relevant
Transaction, require Seller from time to time to pay Cash Margin at least
equal to such Transaction Exposure;
iii) at any time while such failure continues, terminate the Transaction by
giving written notice to Seller. On such termination the obligations of Seller
and Buyer with respect to delivery of Purchased Securities and Equivalent
Securities shall terminate and Seller shall pay to Buyer an amount equal
to the excess of the Repurchase Price at the date of Termination over the
Purchase Price.
h) If Buyer fails to deliver Equivalent Securities to Seller on the applicable
Repurchase Date Seller may –
i) if it has paid the Repurchase Price to Buyer, require Buyer immediately to
repay the sum so paid;
ii) if Seller has a Transaction Exposure to Buyer in respect of the relevant
Transaction, require Buyer from time to time to pay Cash Margin at least
equal to such Transaction Exposure;
iii) at any time while such failure continues, by written notice to Buyer declare
that that Transaction (but only that Transaction) shall be terminated
immediately in accordance with sub-paragraph (c) above (disregarding for
this purpose references in that sub-paragraph to transfer of Cash Margin
and delivery of Equivalent Margin Securities and as if references to the
Repurchase Date were to the date on which notice was given under this
subparagraph).
i) The provisions of this Agreement constitute a complete statement of the
remedies available to each party in respect of any Event of Default.
j) Subject to paragraph 10(k), neither party may claim any sum by way of
consequential loss or damage in the event of a failure by the other party to
perform any of its obligations under this Agreement.
k) i) Subject to sub-paragraph (ii) below, if as a result of a Transaction
terminating before its agreed Repurchase Date under paragraphs 10(b),
10(g)(iii) or 10(h)(iii), the non-Defaulting Party, in the case of paragraph
10(b), Buyer, in the case of paragraph 10(g)(iii), or Seller, in the case of
paragraph 10(h)(iii), (in each case the "first party") incurs any loss or
expense in entering into replacement transactions, the other party shall be
required to pay to the first party the amount determined by the first party in
good faith to be equal to the loss or expense incurred in connection with
such replacement transactions (including all fees, costs and other

expenses) less the amount of any profit or gain made by that party in
connection with such replacement transactions; provided that if that
calculation results in a negative number, an amount equal to that number
shall be payable by the first party to the other party.
ii) If the first party reasonably decides, instead of entering into such
replacement transactions, to replace or unwind any hedging transactions
which the first party entered into in connection with the Transaction so
terminating, or to enter into any replacement hedging transactions, the
other party shall be required to pay to the first party the amount
determined by the first party in good faith to be equal to the loss or
expense incurred in connection with entering into such replacement or
unwinding (including all fees, costs and other expenses) less the amount
of any profit or gain made by that party in connection with such
replacement or unwinding; provided that if that calculation results in a
negative number, an amount equal to that number shall be payable by the
first party to the other party.
l) Each party shall immediately notify the other if an Event of Default, or an event
which, upon the serving of a Default Notice, would be an Event of Default, occurs
in relation to it.
11) Tax Event
a) This paragraph shall apply if either party notifies the other that –
i) any action taken by a taxing authority or brought in a court of
competent jurisdiction (regardless of whether such action is taken or
brought with respect to a party to this Agreement); or
ii) a change in the fiscal or regulatory regime (including, but not limited to,
a change in law or in the general interpretation of law but excluding
any change in any rate of tax),
has or will, in the notifying party's reasonable opinion, have a material adverse
effect on that party in the context of a Transaction.
b) If so requested by the other party, the notifying party will furnish the other with
an opinion of a suitably qualified adviser that an event referred to in subparagraph (a)(i) or (ii) above has occurred and affects the notifying party.
c) Where this paragraph applies, the party giving the notice referred to in subparagraph (a) may, subject to sub-paragraph (d) below, terminate the
Transaction with effect from a date specified in the notice, not being earlier
(unless so agreed by the other party) than 30 days after the date of the notice,
by nominating that date as the Repurchase Date.

d) If the party receiving the notice referred to in sub-paragraph (a) so elects, it
may override that notice by giving a counter-notice to the other party. If a
counter-notice is given, the party which gives the counter-notice will be
deemed to have agreed to indemnify the other party against the adverse
effect referred to in sub-paragraph (a) so far as relates to the relevant
Transaction and the original Repurchase Date will continue to apply.
e) Where a Transaction is terminated as described in this paragraph, the party
which has given the notice to terminate shall indemnify the other party against
any reasonable legal and other professional expenses incurred by the other
party by reason of the termination, but the other party may not claim any sum
by way of consequential loss or damage in respect of a termination in
accordance with this paragraph.
f) This paragraph is without prejudice to paragraph 6(b) (obligation to pay
additional amounts if withholding or deduction required); but an obligation to
pay such additional amounts may, where appropriate, be a circumstance
which causes this paragraph to apply.
12) Interest
To the extent permitted by applicable law, if any sum of money payable hereunder or
under any Transaction is not paid when due, interest shall accrue on the unpaid sum as
a separate debt at the greater of the Pricing Rate for the Transaction to which such sum
relates (where such sum is referable to a Transaction) and the Central Bank Rate on a
360 day basis or 365 day basis in accordance with the applicable ISMA convention, for
the actual number of days during the period from and including the date on which
payment was due to, but excluding, the date of payment.
13) Single Agreement
Each party acknowledges that, and has entered into this Agreement and will enter into
each Transaction hereunder in consideration of and in reliance upon the fact that all
Transactions hereunder constitute a single business and contractual relationship and
are made in consideration of each other. Accordingly, each party agrees (i) to perform
all of its obligations in respect of each Transaction hereunder, and that a default in the
performance of any such obligations shall constitute a default by it in respect of all
Transactions hereunder, and (ii) that payments, deliveries and other transfers made by
either of them in respect of any Transaction shall be deemed to have been made in
consideration of payments, deliveries and other transfers in respect of any other
Transactions hereunder.
14) Notices and Other Communications
a) Any notice or other communication to be given under this Agreement –

i) shall be in the English language, and except where expressly otherwise
provided in this Agreement, shall be in writing;
ii) may be given in any manner described in sub-paragraphs (b) and (c)
below;
iii) shall be sent to the party to whom it is to be given at the address or
number, or in accordance with the electronic messaging details, set out in
Annex 2 hereto.
b) Subject to sub-paragraph (c) below, any such notice or other communication
shall be effective –
i) if in writing and delivered in person or by courier, at the time when it is
delivered;
ii) if sent by telex, at the time when the recipient's answerback is received;
iii) if sent by facsimile transmission, at the time when the 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), at the time when that mail is delivered or its
delivery is attempted;
v) if sent by electronic messaging system, at the time that electronic
message is received;
except that any notice or communication which is received, or delivery of which is
attempted, after close of business on the date of receipt or attempted delivery or
on a day which is not a day on which commercial banks are open for business in
the place where that notice or other communication is to be given shall be treated
as given at the opening of business on the next following day which is such a day.
c) If –
i) there occurs in relation to either party an event which, upon the service of
a Default Notice, would be an Event of Default; and
ii) the non-Defaulting Party, having made all practicable efforts to do so,
including having attempted to use at least two of the methods specified in
sub-paragraph (b)(ii), (iii) or (v), has been unable to serve a Default Notice

by one of the methods specified in those sub-paragraphs (or such of those
methods as are normally used by the non-Defaulting Party when
communicating with the Defaulting Party),
the non-Defaulting Party may sign a written notice (a "Special Default Notice")
which –
aa specifies the relevant event referred to in paragraph 10(a) which has
occurred in relation to the Defaulting Party;
bb states that the non-Defaulting Party, having made all practicable
efforts to do so, including having attempted to use at least two of the
methods specified in sub-paragraph (b)(ii), (iii) or (v), has been
unable to serve a Default Notice by one of the methods specified in
those sub-paragraphs (or such of those methods as are normally
used by the non-Defaulting Party when communicating with the
Defaulting Party);
cc specifies the date on which, and the time at which, the Special
Default Notice is signed by the non-Defaulting Party; and
dd states that the event specified in accordance with sub-paragraph (aa)
above shall be treated as an Event of Default with effect from the
date and time so specified.
On the signature of a Special Default Notice the relevant event shall be
treated with effect from the date and time so specified as an Event of
Default in relation to the Defaulting Party, and accordingly references in
paragraph 10 to a Default Notice shall be treated as including a Special
Default Notice. A Special Default Notice shall be given to the Defaulting
Party as soon as practicable after it is signed.
d) 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.
15) Entire Agreement; Severability
This Agreement shall supersede any existing agreements between the parties
containing general terms and conditions for Transactions. Each provision and
agreement herein shall be treated as separate from any other provision or agreement
herein and shall be enforceable notwithstanding the unenforceability of any such other
provision or agreement. This Agreement may not be modified, amended or changed
without the written consent of both parties

16) Non-assignability; Termination
(a) Subject to sub-paragraph (b) below, neither party may assign, charge or
otherwise deal with (including without limitation any dealing with any interest in or
the creation of any interest in) its rights or obligations under this Agreement or
under any Transaction without the prior written consent of the other party.
Subject to the foregoing, this Agreement and any Transactions shall be binding
upon and shall inure to the benefit of the parties and their respective successors
and assigns.
(b) Sub-paragraph (a) above shall not preclude a party from assigning, charging or
otherwise dealing with all or any part of its interest in any sum payable to it under
paragraph 10(c) or (f) above.
(c) Either party may terminate this Agreement by giving written notice to the other,
except that this Agreement shall, notwithstanding such notice, remain applicable
to any Transactions then outstanding.
(d) All remedies hereunder shall survive Termination in respect of the relevant
Transaction and termination of this Agreement.
17) Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
Kenya (including any governmental acts, orders, decrees and regulations) and shall be
excused by laws, act of war or civil strife or other events beyond the control of the
affected Party which prevents its performance. Buyer and Seller hereby irrevocably
submit for all purposes of or in connection with this Agreement and each Transaction to
the jurisdiction of the Courts of Kenya.
Party A hereby appoints the person identified in Annex 2 hereto as its agent to receive
on its behalf service of process in such courts. If such agent ceases to be its agent,
Party A shall promptly appoint, and notify Party B of the identity of, a new agent in
Kenya.
Party B hereby appoints the person identified in Annex 2 hereto as its agent to receive
on its behalf service of process in such courts. If such agent ceases to be its agent,
Party B shall promptly appoint, and notify Party A of the identity of, a new agent in
Kenya.
Each party shall deliver to the other, within 30 days of the date of this Agreement in the
case of the appointment of a person identified in Annex 2 or of the date of the
appointment of the relevant agent in any other case, evidence of the acceptance by the
agent appointed by it pursuant to this paragraph of such appointment.

Nothing in this paragraph shall limit the right of any party to take proceedings in the
courts of any other country of competent jurisdiction.
18) No Waivers, etc.
No express or implied waiver of any Event of Default by either party shall constitute a
waiver of any other Event of Default and no exercise of any remedy hereunder by any
party shall constitute a waiver of its right to exercise any other remedy hereunder. No
modification or waiver of any provision of this Agreement and no consent by any party
to a departure herefrom shall be effective unless and until such modification, waiver or
consent shall be in writing and duly executed by both of the parties hereto. Without
limitation on any of the foregoing, the failure to give a notice pursuant to paragraph 4(a)
hereof will not constitute a waiver of any right to do so at a later date.
19) Waiver of Immunity
Each party hereto hereby waives, to the fullest extent permitted by applicable law, all
immunity (whether on the basis of sovereignty or otherwise) from jurisdiction,
attachment (both before and after judgment) and execution to which it might otherwise
be entitled in any action or proceeding in the Courts of Kenya or of any other country or
jurisdiction, relating in any way to this Agreement or any Transaction, and agrees that it
will not raise, claim or cause to be pleaded any such immunity at or in respect of any
such action or proceeding.
20) Recording
The parties agree that each may electronically record all telephone conversations
between them.

21) Execution
This Agreement has been signed on
SIGNED and SEALED WITH THE COMMON SEAL OF}
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In the presence of )
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DIRECTOR )
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DIRECTOR/SECRETARY ) AFFIX COMMON SEAL
SIGNED and SEALED WITH THE COMMON SEAL OF}
......................................................... )
In the presence of )
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DIRECTOR )
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DIRECTOR/SECRETARY ) AFFIX COMMON SEAL

ANNEX 1
Supplementary Annex to the Horizontal Master Repurchase Agreement
The following Clauses of the MRA are amended as enumerated hereunder:
1. Clause 1: Applicability. It is hereby agreed that the ‘Securities’ eligible for utilization
under this Agreement shall be Government of Kenya securities. It is further agreed that
under this phase:
(i) The MRA will not be utilized by counterparties, for transactions involving
any other securities or financial instruments; and
(ii) The counterparties that will execute the MRA shall only be ‘institutions’ as
defined in the Banking Act, Chapter 488 of the Laws of Kenya.
2 Payment and Transfer.
a. Clause 6(e) and (f): It is hereby agreed that securities transferred under Clause 6e)
and 6f) shall become absolute and unencumbered in the event of default and that
every transfer of listed securities in default cases shall be effected through the
securities exchange viz. The Nairobi Stock Exchange as provided for under the
Capital Markets Act.
b) Clause 6h) and 6i): It is agreed that paragraph 6h) and 6i) shall not apply to this
Agreement.
Rationale: The GMRA is structured as a master netting agreement. Accordingly,
Clauses 6h) and i) replace gross payment or delivery obligations in respect of one or
more transactions between parties with a net payment or delivery. The existing payment
and settlement systems at the Central Bank of Kenya are however configured for gross
payment and settlement. It is therefore necessary to set aside application of the above
Clauses until the requisite payment and settlement system infrastructure is in place.
3 Clause 10: Events of Default and close out netting. It is agreed, that the provisions of
the Agreement that provide for ‘close out netting’ shall, in so far as they conflict with the
prevailing laws in Kenya on statutory management and insolvency, not apply to this Agreement.
Rationale: Close out netting provisions seek to reduce credit exposure both within and
without the insolvency context. Within insolvency, close out netting provisions ease
credit exposure by reducing the risk of a statutory manager or liquidator of a party under
statutory management or insolvency insisting that the solvent party performs his
obligations in full in respect of the transactions which are profitable to the insolvent party
and require that the solvent party claims as an unsecured creditor for the transactions
that are onerous to the insolvent party. Netting provisions/ agreements are not
recognized under the current Kenyan laws on insolvency or statutory management.
Initiatives are however underway to seek to recognize netting agreements under
Kenyan insolvency legislation. Until these laws are finalized and enacted, current laws
will apply to this Agreement.
4. Annex 2: Clause 1f): is standardized as follows:

(f) Paragraph 2(ee). The pricing source for calculation of Market Value shall
be based on pricing data disseminated on a daily basis by the Department
within the Bank, responsible for Monetary Operations and Debt Market
Operations.

ANNEX 2
Supplemental Terms or Conditions
Paragraph references are to paragraphs in the Agreement.
1. The following elections shall apply -
[(a) paragraph 1(c)(i). Buy/Sell Back Transactions [ may/ may not] be effected under this
Agreement, and accordingly the Buy/Sell Back Annex [ shall/ shall not] apply.]*
[(b) paragraph 1(c)(ii). Transactions in Net Paying Securities [may/may not] be effected
under this Agreement, and accordingly the provisions of sub-paragraphs (i) and (ii)
below [ shall/ shall not] apply.
(i) The phrase "other than equities and Net Paying Securities" shall be replaced by
the phrase "other than equities".
(ii) In the Buy/Sell Back Annex the following words shall be added to the end of the
definition of the expression "IR": "and for the avoidance of doubt the reference to
the amount of Income for these purposes shall be to an amount paid without
withholding or deduction for or on account of taxes or duties notwithstanding that
a payment of such Income made in certain circumstances may be subject to
such a withholding or deduction".]*
[(c) paragraph 1(d). Agency Transactions [ may/ may not] be effected under this Agreement,
and accordingly the Agency Annex [ shall/ shall not] apply.]*
(d) paragraph 2(d). The Base Currency shall mean the Kenya Shilling.
(e) paragraph 2(r). [list Buyer’s and Seller’s Designated Offices]
(f) paragraph 2(ee). The pricing source for calculation of Market Value shall be: .
(g) paragraph 2(tt). Spot rate to be: .
(h) paragraph 3(b). [Seller/Buyer/both Seller and Buyer]* to deliver Confirmation.
(i) paragraph 4(f). Interest rate on Cash Margin to be [ ]% for currency.
[ ]% for currency.
Interest to be payable [payment intervals and dates].
(j) paragraph 4(g). Delivery period for margin calls to be: .

* * Delete as appropriate
[(k) paragraph 6(j). Paragraph 6(j) shall apply and the events specified in paragraph 10(a)
identified for the purposes of paragraph 6(j) shall be those set out in sub paragraphs [ ]
of paragraph 10(a) of the Agreement.]*
[(l) paragraph 10(a)(ii). Paragraph 10(a)(ii) shall apply.]*
(m) paragraph 14. For the purposes of paragraph 14 of this Agreement –
(i) Address for notices and other communications for Party A –
Address: (Address should contain both physical and postal details)
Attention: Authorized dealers of (insert name of commercial bank)
Telephone:
Facsimile:
Swift Address:
:
Other : Kenya Electronic Payment Settlement System (KEPSS)
: Any other communication system that may from time to time be approved
by the Bank.
(ii) Address for notices and other communications for Party B –
Address: (Address should contain both physical and postal details)
Attention: Authorized dealers of (insert name of commercial bank)
Telephone:
Facsimile:
Telex: Swift Address:
Other : Kenya Electronic Payment Settlement System (KEPSS)
: Any other communication system that may from time to time be approved
by the Bank
[(n) paragraph 17. For the purposes of paragraph 17 of this Agreement –
(i) Party A appoints [ ] as its agent for service of process;
(ii) Party B appoints [ ] as its agent for service of process.]* *
2. The following supplemental terms and conditions shall apply –
[Existing Transactions
(a) The parties agree that this Agreement shall apply to all transactions which are subject to
the Master Repurchase Agreement between them dated and which are
outstanding as at the date of this Agreement so that such transactions shall be treated
as if they had been entered into under this Agreement, and the terms of such
transactions are amended accordingly with effect from the date of this Agreement.]*
* * Delete as appropriate

[Forward Transactions
(b) The parties agree that Forward Transactions (as defined in sub-paragraph (i)(A) below)
may be effected under this Agreement and accordingly the provisions of subparagraphs (i) to (iv) below shall apply.
(i) The following definitions shall apply –
(A) "Forward Transaction", a Transaction in respect of which the Purchase Date
is at least [three] Business Days after the date on which the Transaction was
entered into and has not yet occurred;
(B) "Forward Repricing Date", with respect to any Forward Transaction the date
which is such number of Business Days before the Purchase Date as is equal to
the minimum period for the delivery of margin applicable under paragraph 4(g). (ii
(ii) The Confirmation relating to any Forward Transaction may describe the
Purchased Securities by reference to a type or class of Securities, which, without
limitation, may be identified by issuer or class of issuers and a maturity or range
of maturities. Where this paragraph applies, the parties shall agree the actual
Purchased Securities not less than two Business Days before the Purchase Date
and Buyer or Seller (or both), as shall have been agreed, shall promptly deliver to
the other party a Confirmation which shall describe such Purchased Securities. *
(iii) At any time between the Forward Repricing Date and the Purchase Date for any
Forward Transaction the parties may agree either –
(A) to adjust the Purchase Price under that Forward Transaction; or
(B) to adjust the number of Purchased Securities to be sold by Seller to Buyer
under that Forward Transaction.
(iv) Where the parties agree to an adjustment under paragraph (iii) above, Buyer or
Seller (or both), as shall have been agreed, shall promptly deliver to the other
party a Confirmation of the Forward Transaction, as adjusted under paragraph (iii)
above.
(c) Where the parties agree that this paragraph shall apply, paragraphs 2 and 4 of the
Agreement are amended as follows.
(i) Paragraph 2(xx) is deleted and replaced by the following –
"(xx) "Transaction Exposure" means –
* Delete as appropriate

(i) with respect to any Forward Transaction at any time between the Forward
Repricing Date and the Purchase Date, the difference between (A) the
Market Value of the Purchased Securities at the relevant time and (B) the
Purchase Price;
(ii) with respect to any Transaction at any time during the period (if any) from
the Purchase Date to the date on which the Purchased Securities are
delivered to Buyer or, if earlier, the date on which the Transaction is
terminated under paragraph 10(g), the difference between (A) the Market
Value of the Purchased Securities at the relevant time and (B) the
Repurchase Price at the relevant time;
(iii) with respect to any Transaction at any time during the period from the
Purchase Date (or, if later, the date on which the Purchased Securities are
delivered to Buyer or the Transaction is terminated under paragraph 10(g))
to the Repurchase Date (or, if later, the date on which Equivalent
Securities are delivered to Seller or the Transaction is terminated under
paragraph 10(h)), the difference between (A) the Repurchase Price at the
relevant time multiplied by the applicable Margin Ratio (or, where the
Transaction relates to Securities of more than one description to which
different Margin Ratios apply, the amount produced by multiplying the
Repurchase Price attributable to Equivalent Securities of each such
description by the applicable Margin Ratio and aggregating the resulting
amounts, the Repurchase Price being for this purpose attributed to
Equivalent Securities of each such description in the same proportions as
those in which the Purchase Price was apportioned among the Purchased
Securities) and (B) the Market Value of Equivalent Securities at the
relevant time.
In each case, if (A) is greater than (B), Buyer has a Transaction Exposure for that
Transaction equal to the excess, and if (B) is greater than (A), Seller has a Transaction
Exposure to Buyer equal to the excess."
(ii) In paragraph 4(c) –
(aa) the words "any amount payable to the first party under paragraph 5 but
unpaid" are deleted and replaced by "any amount which will become payable to
the first party under paragraph 5 during the period after the time at which the
calculation is made which is equal to the minimum period for the delivery of
margin applicable under paragraph 4(g) or which is payable to the first party
under paragraph 5 but unpaid"; and
(bb) the words "any amount payable to the other party under paragraph 5 but
unpaid" are deleted and replaced by "any amount which will become payable to
the other party under paragraph 5 during the period after the time at which the
calculation is made which is equal to the minimum period for the delivery of
margin applicable under paragraph 4(g) or which is payable to the other party
under paragraph 5 but unpaid".]*

ANNEX 3
Form of Confirmation
To:
From:
Date:
Subject: [ Repurchase][ Buy/Sell Back]* Transaction
(Reference Number: )
Dear Sirs,
The purpose of this [ letter]/ facsimile]/ telex], a "Confirmation" for the purposes of the
Agreement, is to set forth the terms and conditions of the above repurchase transaction
entered into between us on the Contract Date referred to below.
This Confirmation supplements and forms part of, and is subject to, the Master Repurchase
Agreement as entered into between us as of [ ] as the same may be amended from time to
time (the "Agreement"). All provisions contained in the Agreement govern this Confirmation
except as expressly modified below. Words and phrases defined in the Agreement and used in
this Confirmation shall have the same meaning herein as in the
Agreement.
1. Contract Date:
2. Purchased Securities [state type[s] and nominal value[s]]:
3. CUSIP, ISIN or other identifying number[s]:
4. Buyer:
5. Seller:
6. Purchase Date:
7. Purchase Price:
8. Contractual Currency:
* * Delete as appropriate
[9. Repurchase Date]:*

[10. Terminable on demand]:*
11. Pricing Rate:
[12. Sell Back Price:]*
13. Buyer's Bank Account[s] Details:
14. Seller's Bank Account[s] Details:
[15. The Transaction is an Agency Transaction. [Name of Agent] is acting as agent for
[name or identifier of Principal]]:*
16. Additional Terms]:*
Yours faithfully,
* Delete as appropriate