Exhibit
10.20


 


FORM
OF FOREIGN EXCHANGE AND OPTIONS


 


MASTER
AGREEMENT


(FEOMA)


 


                MASTER AGREEMENT dated as of October   , 2004 by and between Morgan Stanley
Capital Group Inc., a Delaware corporation and Morgan Stanley Spectrum
Strategic L.P., a Delaware limited partnership.


 


 


SECTION
1.           DEFINITIONS


 


                Unless otherwise required by the
context, the following terms shall have the following meanings in the
Agreement:


 


                “Agreement” has the
meaning given to it in Section 2.2.


 


                “American Style Option”
means an Option which may be exercised on any Business Day up to and including
the Expiration Time.


 


                “Base Currency”, as to a
Party, means the Currency agreed to as such in relation to it in Part VII of
the Schedule.


 


                “Business Day” means for
purposes of: (i) Section 3.2, a day which is a Local Banking Day for the
applicable Designated Office of the Buyer; (ii) Section 5.1 and the definition
of American Style Option, a day which is a Local Banking Day for the applicable
Designated Office of the Seller; (iii) clauses (i), (viii) and (xii) of the
definition of Event of Default, a day which is a Local Banking Day for the
Non-Defaulting Party; (iv) solely in relation to delivery of a Currency, a day
which is a Local Banking Day in relation to that Currency; and (v) any other
provision of the Agreement, a day which is a Local Banking Day for the
applicable Designated Offices of both Parties; provided, however,
that neither Saturday nor Sunday shall be considered a Business Day for any
purpose.


 


                “Buyer” means the owner
of an Option.


 


                “Call” means an Option
entitling, but not obligating (except upon exercise), the Buyer to purchase
from the Seller at the Strike Price a specified quantity of the Call Currency.


 


                “Call Currency” means the
Currency agreed to as such at the time an Option is entered into, as evidenced
in a Confirmation.


 


                “Close-Out Amount” has
the meaning given to it in Section 8.1.


 


                “Close-Out Date” means a
day on which, pursuant to the provisions of Section 8.1, the Non-Defaulting
Party closes out Currency Obligations and/or Options or such close-out occurs
automatically.


 


                “Closing Gain”, as to the
Non-Defaulting Party, means the difference described as such in relation to a
particular Value Date under the provisions of Section 8.1.


 


                “Closing Loss”, as to the
Non-Defaulting Party, means the difference described as such in relation to a
particular Value Date under the provisions of Section 8.1.


 


                “Confirmation” means a
writing (including telex, facsimile or other electronic means from which it is
possible to produce a hard copy) evidencing an FX Transaction or an Option, and
specifying:


 


                (A) in the case of an FX
Transaction, the following information:


 


                                (i)                  the Parties thereto and the
Designated Offices through which they are respectively acting,


 

















 


                                (ii)                 the amounts of the Currencies
being bought or sold and by which Party,


                                (iii)                the Value Date, and


                                (iv)                any other term generally
included in such a writing in accordance with the practice of the relevant
foreign exchange market; and


 


                (B) in the case of
an Option, the following information:


 


                                (i)                  the Parties thereto and the
Designated Offices through which they are respectively acting,


                                (ii)                 whether the Option is a Call or
a Put,


                                (iii)                the Call Currency and the Put
Currency that are the subject of the Option and their respective quantities,


                                (iv)                which Party is the Seller and
which is the Buyer,


                                (v)                 the Strike Price,


                                (vi)                the Premium and the Premium
Payment Date,


                                (vii)               the Expiration Date,


                                (viii)              the Expiration Time,


                                (ix)                whether the Option is an
American Style Option or a European Style Option, and


                                (x)                 such other matters, if any, as
the Parties may agree.


 


                “Credit Support”
has the meaning given to it in Section 8.2.


 


                “Credit Support
Document”, as to a Party (the “first Party”), means a guaranty,
hypothecation agreement, margin or security agreement or document, or any other
document containing an obligation of a third party (“Credit Support Provider”)
or of the first Party in favor of the other Party supporting any obligations of
the first Party under the Agreement.


 


                “Credit Support
Provider” has the meaning given to it in the definition of Credit Support
Document.


 


                “Currency”
means money denominated in the lawful currency of any country or the Ecu.


 


                “Currency
Obligation” means any obligation of a Party to deliver a Currency pursuant
to an FX Transaction, the application of Section 6.3(a) or (b), or an exercised
Option (except, for the purposes of Section 8.1 only, one that is to be settled
at its In-the-Money Amount under Section 5.5).


 


                “Currency Pair”
means the two Currencies which potentially may be exchanged in connection with
an FX Transaction or upon the exercise of an Option, one of which shall be the
Put Currency and the other the Call Currency.


 


                “Custodian”
has the meaning given to it in the definition of Insolvency Proceeding.


 


                “Defaulting
Party” has the meaning given to it in the definition of Event of Default.


 


                “Designated
Office(s)”, as to a Party, means the office or offices specified in Part II
of the Schedule.


 


                “Effective Date”
means the date of this Master Agreement.


 


                “European Style
Option” means an Option for which Notice of Exercise may be given only on
the Option’s Expiration Date up to and including the Expiration Time, unless
otherwise agreed.


 


                “Event of
Default” means the occurrence of any of the following with respect to a
Party (the “Defaulting Party”, the other Party being the “Non-Defaulting
Party”):


 


                (i) the Defaulting
Party shall (A) default in any payment when due under the Agreement (including,
but not limited to, a Premium payment) to the Non-Defaulting Party with respect
to any Currency Obligation or Option and such failure shall continue for two
(2) Business Days after the Non-Defaulting Party has given the Defaulting Party
written notice of non-payment, or (B) fail to perform or comply with any other
obligation assumed by it under the Agreement


 


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and such failure is continuing thirty (30) days after the
Non-Defaulting Party has given the Defaulting Party written notice thereof;


 


                (ii) the
Defaulting Party shall commence a voluntary Insolvency Proceeding or shall take
any corporate action to authorize any such Insolvency Proceeding;


 


                (iii) a
governmental authority or self-regulatory organization having jurisdiction over
either the Defaulting Party or its assets in the country of its organization or
principal office (A) shall commence an Insolvency Proceeding with respect to
the Defaulting Party or its assets or (B) shall take any action under any bankruptcy,
insolvency or other similar law or any banking, insurance or similar law or
regulation governing the operation of the Defaulting Party which may prevent
the Defaulting Party from performing its obligations under the Agreement as and
when due;


 


                (iv) an
involuntary Insolvency Proceeding shall be commenced with respect to the
Defaulting Party or its assets by a person other than a governmental authority
or self-regulatory organization having jurisdiction over either the Defaulting
Party or its assets in the country of its organization or principal office and
such Insolvency Proceeding (A) results in the appointment of a Custodian or a
judgment of insolvency or bankruptcy or the entry of an order for winding-up,
liquidation, reorganization or other similar relief, or (B) is not dismissed
within five (5) days of its institution or presentation;


 


                (v) the Defaulting
Party is bankrupt or insolvent, as defined under any bankruptcy or insolvency
law applicable to it;


 


                (vi) the
Defaulting Party fails, or shall otherwise be unable, to pay its debts as they
become due;


 


                (vii) the
Defaulting Party or any Custodian acting on behalf of the Defaulting Party
shall disaffirm, disclaim or repudiate any Currency Obligation or Option;


 


                (viii) any
representation or warranty made or given or deemed made or given by the
Defaulting Party pursuant to the Agreement or any Credit Support Document shall
prove to have been false or misleading in any material respect as at the time
it was made or given or deemed made or given and one (1) Business Day has
elapsed after the Non-Defaulting Party has given the Defaulting Party written
notice thereof;


 


                (ix) the
Defaulting Party consolidates or amalgamates with or merges into or transfers
all or substantially all its assets to another entity and (A) the
creditworthiness of the resulting, surviving or transferee entity is materially
weaker than that of the Defaulting Party prior to such action, or (B) at the
time of such consolidation, amalgamation, merger or transfer the resulting, surviving
or transferee entity fails to assume all the obligations of the Defaulting
Party under the Agreement by operation of law or pursuant to an agreement
satisfactory to the Non-Defaulting Party;


 


                (x) by reason of
any default, or event of default or other similar condition or event, any
Specified Indebtedness (being Specified Indebtedness of an amount which, when
expressed in the Currency of the Threshold Amount, is in aggregate equal to or
in excess of the Threshold Amount) of the Defaulting Party or any Credit
Support Provider in relation to it: (A) is not paid on the due date therefor
and remains unpaid after any applicable grace period has elapsed, or (B)
becomes, or becomes capable at any time of being declared, due and payable
under agreements or instruments evidencing such Specified Indebtedness before
it would otherwise have been due and payable;


 


                (xi) the
Defaulting Party is in breach of or default under any Specified Transaction and
any applicable grace period has elapsed, and there occurs any liquidation or
early termination of, or acceleration of obligations under, that Specified
Transaction or the Defaulting Party (or any Custodian on its behalf)
disaffirms, disclaims or repudiates the whole or any part of a Specified
Transaction;


 


                (xii) (A) any
Credit Support Provider of the Defaulting Party or the Defaulting Party itself
fails to comply with or perform any agreement or obligation to be complied with
or performed by it in accordance with the applicable Credit Support Document
and such failure is continuing after any applicable grace period has elapsed;
(B) any Credit Support Document relating to the Defaulting Party expires or
ceases to be in full force and effect prior to the satisfaction of all
obligations of the Defaulting Party under the Agreement, unless otherwise
agreed in writing by the Non-Defaulting Party; (C) the Defaulting Party or any
Credit Support Provider of the Defaulting Party (or, in either case, any
Custodian


 


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acting on its behalf) disaffirms, disclaims or repudiates, in whole or
in part, or challenges the validity of, any Credit Support Document; (D) any
representation or warranty made or given or deemed made or given by any Credit
Support Provider of the Defaulting Party pursuant to any Credit Support
Document shall prove to have been false or misleading in any material respect
as at the time it was made or given or deemed made or given and one (1)
Business Day has elapsed after the Non-Defaulting Party has given the Defaulting
Party written notice thereof; or (E) any event set out in (ii) to (vii) or (ix)
to (xi) above occurs in respect of any Credit Support Provider of the
Defaulting Party; or


 


                (xiii) any other
condition or event specified in Part IX of the Schedule or in Section 11.14 if
made applicable to the Agreement in Part XI of the Schedule.


 


                “Exercise Date”,
in respect of any Option, means the day on which a Notice of Exercise received
by the applicable Designated Office of the Seller becomes effective pursuant to
Section 5.1.


 


                “Expiration
Date”, in respect of any Option, means the date agreed to as such at the
time the Option is entered into, as evidenced in a Confirmation.


 


                “Expiration
Time”, in respect of any Option, means the latest time on the Expiration
Date on which the Seller must accept a Notice of Exercise as agreed to at the
time the Option is entered into, as evidenced in a Confirmation.


 


                “FX Transaction”
means any transaction between the Parties for the purchase by one Party of an
agreed amount in one Currency against the sale by it to the other of an agreed
amount in another Currency, both such amounts either being deliverable on the
same Value Date or, if the Parties have so agreed in Part VI of the Schedule,
being cash-settled in a single Currency, which is or shall become subject to
the Agreement and in respect of which transaction the Parties have agreed
(whether orally, electronically or in writing): the Currencies involved, the
amounts of such Currencies to be purchased and sold, which Party will purchase
which Currency and the Value Date.


 


                “In-the-Money
Amount” means (i) in the case of a Call, the excess of the Spot Price over
the Strike Price, multiplied by the aggregate amount of the Call Currency to be
purchased under the Call, where both prices are quoted in terms of the amount
of the Put Currency to be paid for one unit of the Call Currency; and (ii) in
the case of a Put, the excess of the Strike Price over the Spot Price,
multiplied by the aggregate amount of the Put Currency to be sold under the
Put, where both prices are quoted in terms of the amount of the Call Currency
to be paid for one unit of the Put Currency.


 


                “Insolvency
Proceeding” means a case or proceeding seeking a judgment of or arrangement
for insolvency, bankruptcy, composition, rehabilitation, reorganization,
administration, winding-up, liquidation or other similar relief with respect to
the Defaulting Party or its debts or assets, or seeking the appointment of a
trustee, receiver, liquidator, conservator, administrator, custodian or other
similar official (each, a “Custodian”) of the Defaulting Party or any
substantial part of its assets, under any bankruptcy, insolvency or other
similar law or any banking, insurance or similar law governing the operation of
the Defaulting Party.


 


                “LIBOR”,
with respect to any Currency and date, means the average rate at which deposits
in the Currency for the relevant amount and time period are offered by major
banks in the London interbank market as of 11:00 a.m. (London time) on such
date, or, if major banks do not offer deposits in such Currency in the London
interbank market on such date, the average rate at which deposits in the
Currency for the relevant amount and time period are offered by major banks in
the relevant foreign exchange market at such time on such date as may be
determined by the Party making the determination.


 


                “Local Banking
Day” means (i) for any Currency, a day on which commercial banks effect
deliveries of that Currency in accordance with the market practice of the relevant
foreign exchange market, and (ii) for any Party, a day in the location of the
applicable Designated Office of such Party on which commercial banks in that
location are not authorized or required by law to close.


 


                “Master
Agreement” means the terms and conditions set forth in this Master
Agreement, including the Schedule.


 


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                “Matched Pair
Novation Netting Office(s)”, in respect of a Party, means the Designated
Office(s) specified in Part V of the Schedule.


 


                “Non-Defaulting
Party” has the meaning given to it in the definition of Event of Default.


 


                “Notice of
Exercise” means telex, telephonic or other electronic notification
(excluding facsimile transmission) providing assurance of receipt, given by the
Buyer prior to or at the Expiration Time, of the exercise of an Option, which
notification shall be irrevocable.


 


                “Novation
Netting Office(s)”, in respect of a Party, means the Designated Office(s)
specified in Part V of the Schedule.


 


                “Option”
means a currency option which is or shall become subject to the Agreement.


 


                “Parties”
means the parties to the Agreement, including their successors and permitted
assigns (but without prejudice to the application of clause (ix) of the
definition of Event of Default); and the term “Party” shall mean whichever of
the Parties is appropriate in the context in which such expression may be used.


 


                “Premium”,
in respect of any Option, means the purchase price of the Option as agreed upon
by the Parties, and payable by the Buyer to the Seller thereof.


 


                “Premium
Payment Date”, in respect of any Option, means the date on which the
Premium is due and payable, as agreed to at the time the Option is entered
into, as evidenced in a Confirmation.


 


                “Proceedings”
means any suit, action or other proceedings relating to the Agreement, any FX
Transaction or any Option.


 


                “Put” means
an Option entitling, but not obligating (except upon exercise), the Buyer to
sell to the Seller at the Strike Price a specified quantity of the Put Currency.


 


                “Put Currency”
means the Currency agreed to as such at the time an Option is entered into, as
evidenced in a Confirmation.


 


                “Schedule”
means the Schedule attached to and part of this Master Agreement, as it may be
amended from time to time by agreement of the Parties.


 


                “Seller”
means the Party granting an Option.


 


                “Settlement
Date” means, in respect of: (i) an American Style Option, the Spot Date of
the Currency Pair on the Exercise Date of such Option, and (ii) a European
Style Option, the Spot Date of the Currency Pair on the Expiration Date of such
Option; and, where market practice in the relevant foreign exchange market in
relation to the two Currencies involved provides for delivery of one Currency
on one date which is a Local Banking Day in relation to that Currency but not
to the other Currency and for delivery of the other Currency on the next Local
Banking Day in relation to that other Currency, “Settlement Date” means such
two (2) Local Banking Days.


 


                “Settlement
Netting Office(s)”, in respect of a Party, means the Designated Office(s)
specified in Part V of the Schedule.


 


                “Specified
Indebtedness” means any obligation (whether present or future, contingent
or otherwise, as principal or surety or otherwise) in respect of borrowed money,
other than in respect of deposits received.


 


                “Specified
Transaction” means any transaction (including an agreement with respect
thereto) between one Party to the Agreement (or any Credit Support Provider of
such Party) and the other Party to the Agreement (or any Credit Support
Provider of such Party) which is a rate swap transaction, basis swap, forward
rate transaction, commodity swap, commodity option, equity or equity linked
swap, equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate


 


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swap transaction, currency option or any other similar transaction
(including any option with respect to any of these transactions) or any
combination of any of the foregoing.


 


                “Spot Date”
means the spot delivery day for the relevant Currency Pair as generally used by
the relevant foreign exchange market.


 


                “Spot Price”
means the rate of exchange at the time at which such price is to be determined
for foreign exchange transactions in the relevant Currency Pair for value on
the Spot Date, as determined in good faith: (i) by the Seller, for purposes of
Section 5, and (ii) by the Non-Defaulting Party, for purposes of Section 8.


 


                “Strike Price”,
in respect of any Option, means the price at which the Currency Pair may be
exchanged, as agreed to at the time the Option is entered into, as evidenced in
a Confirmation.


 


                “Threshold
Amount” means the amount specified as such for each Party in Part VIII of
the Schedule.


 


                “Value Date”
means, with respect to any FX Transaction, the Business Day (or where market
practice in the relevant foreign exchange market in relation to the two
Currencies involved provides for delivery of one Currency on one date which is
a Local Banking Day in relation to that Currency but not to the other Currency
and for delivery of the other Currency on the next Local Banking Day in
relation to that other Currency (“Split Settlement”) the two (2) Local Banking
Days in accordance with that market practice) agreed by the Parties for
delivery of the Currencies to be purchased and sold pursuant to such FX
Transaction, and, with respect to any Currency Obligation, the Business Day
(or, in the case of Split Settlement, Local Banking Day) upon which the
obligation to deliver Currency pursuant to such Currency Obligation is to be
performed.


 


 


SECTION 2.           FX
TRANSACTIONS AND OPTIONS


 


                2.1           Scope of the Agreement.  The Parties (through their respective
Designated Offices) may enter into (i) FX Transactions, for such quantities of
such Currencies, as may be agreed subject to the terms of the Agreement, and
(ii) Options, for such Premiums, with such Expiration Dates, at such Strike Prices
and for the purchase or sale of such quantities of such Currencies, as may be
agreed subject to the terms of the Agreement; provided that neither
Party shall be required to enter into any FX Transaction or Option with the
other Party (other than in connection with an exercised Option).  Unless otherwise agreed in writing by the
Parties, each FX Transaction and Option entered into between Designated Offices
of the Parties on or after the Effective Date shall be governed by the
Agreement.  Each FX Transaction and
Option between any two Designated Offices of the Parties outstanding on the
Effective Date which is identified in Part I of the Schedule shall also be
governed by the Agreement.


 


                2.2           Single Agreement.  This Master Agreement, the terms agreed between
the Parties with respect to each FX Transaction and Option (and, to the extent
recorded in a Confirmation, each such Confirmation), and all amendments to any
of such items shall together form the agreement between the Parties (the
“Agreement”) and shall together constitute a single agreement between the
Parties. The Parties acknowledge that all FX Transactions and Options are
entered into in reliance upon such fact, it being understood that the Parties
would not otherwise enter into any FX Transaction or Option.


 


                2.3           Confirmations.  FX Transactions and Options shall be
promptly confirmed by the Parties by Confirmations exchanged by mail, telex,
facsimile or other electronic means from which it is possible to produce a hard
copy.  The failure by a Party to issue a
Confirmation shall not prejudice or invalidate the terms of any FX Transaction
or Option.


 


                2.4           Inconsistencies.  In the event of any inconsistency between
the provisions of the Schedule and the other provisions of the Agreement, the
Schedule will prevail.  In the event of
any inconsistency between the terms of a Confirmation and the other provisions
of the Agreement, (i) in the case of an FX Transaction, the other provisions of
the Agreement shall prevail, and the Confirmation shall not modify the other
terms of the Agreement and (ii) in the case of an Option, the terms of the
Confirmation shall prevail, and the other terms of the Agreement shall be
deemed modified with respect to such Option, except for the manner of
confirmation under Section 2.3 and, if applicable, discharge of Options under
Section 4.


 


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SECTION 3.           OPTION
PREMIUM


 


                3.1           Payment of Premium.  Unless otherwise agreed in writing by the
Parties, the Buyer shall be obligated to pay the Premium related to an Option
no later than its Premium Payment Date.


 


                3.2           Late Payment or Non-Payment of
Premium.  If any Premium is not
received on or before the Premium Payment Date, the Seller may elect: (i) to
accept a late payment of such Premium; (ii) to give written notice of such
non-payment and, if such payment shall not be received within two (2) Business
Days of such notice, treat the related Option as void; or (iii) to give written
notice of such non-payment and, if such payment shall not be received within
two (2) Business Days of such notice, treat such non-payment as an Event of
Default under clause (i) of the definition of Event of Default.  If the Seller elects to act under either
clause (i) or (ii) of the preceding sentence, the Buyer shall pay all
out-of-pocket costs and actual damages incurred in connection with such unpaid
or late Premium or void Option, including, without limitation, interest on such
Premium from and including the Premium Payment Date to but excluding the late
payment date in the same Currency as such Premium at overnight LIBOR and any
other losses, costs or expenses incurred by the Seller in connection with such
terminated Option, for the loss of its bargain, its cost of funding, or the
loss incurred as a result of terminating, liquidating, obtaining or
re-establishing a delta hedge or related trading position with respect to such
Option.


 


 


SECTION 4.           DISCHARGE
AND TERMINATION OF OPTIONS; NETTING OF OPTION PREMIUMS


 


                4.1           Discharge and Termination.  If agreed in Part V of the Schedule, any
Call or any Put written by a Party will automatically be discharged and
terminated, in whole or in part, as applicable, against a Call or a Put,
respectively, written by the other Party, such discharge and termination to
occur automatically upon the payment in full of the last Premium payable in
respect of such Options; provided that such discharge and termination
may only occur in respect of Options:


 


                (i)            each being with respect to the same Put Currency and the
same Call Currency;


                (ii)           each having the same Expiration Date and Expiration Time;


                (iii)          each being of the same style, i.e. either both being
American Style Options or both being European Style Options;


                (iv)          each having the same Strike Price;


                (v)           each being transacted by the same pair of Designated
Offices of Buyer and Seller; and


                (vi)          neither of which shall have been exercised by delivery of a
Notice of Exercise;


 


and,
upon the occurrence of such discharge and termination, neither Party shall have
any further obligation to the other Party in respect of the relevant Options
or, as the case may be, parts thereof so discharged and terminated.  Such discharge and termination shall be
effective notwithstanding that either Party may fail to record such discharge
and termination in its books.  In the
case of a partial discharge and termination (i.e., where the relevant Options
are for different amounts of the Currency Pair), the remaining portion of the
Option which is partially discharged and terminated shall continue to be an Option
for all purposes of the Agreement, including this Section 4.1.


 


                4.2           Netting of Option Premiums.  If agreed in Part V of the Schedule and if,
on any date, Premiums would otherwise be payable under the Agreement in the
same Currency between the same respective Designated Offices of the Parties,
then, on such date, each Party’s obligation to make payment of any such Premium
will be automatically satisfied and discharged and, if the aggregate Premium(s)
that would otherwise have been payable by such Designated Office of one Party
exceeds the aggregate Premium(s) that would otherwise have been payable by such
Designated Office of the other Party, replaced by an obligation upon the Party
by whom the larger aggregate Premium(s) would have been payable to pay the
other Party the excess of the larger aggregate Premium(s) over the smaller
aggregate Premium(s) and, if the aggregate Premiums are equal, no payment shall
be made.


 


 


SECTION
5.           EXERCISE AND SETTLEMENT OF
OPTIONS


 


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                5.1           Exercise of Options.  The Buyer may exercise an Option by delivery to the Seller of a
Notice of Exercise.  Subject to Section
5.3, if a Notice of Exercise with respect to an Option has not been received by
the Seller prior to or at the Expiration Time, the Option shall expire and
become void and of no effect.  Any
Notice of Exercise shall (unless otherwise agreed):


 


                (i) in respect of an American
Style Option, (A) if received at or prior to 3:00 p.m. on a Business Day, be
effective upon receipt thereof by the Seller, and (B) if received after 3:00
p.m. on a Business Day, be effective only as of the opening of business of the
Seller on the first Business Day subsequent to its receipt; and


 


                (ii) in respect of a European
Style Option, if received on or, if the parties have so agreed, before the
Expiration Date, prior to or at the Expiration Time, be effective upon receipt
thereof by the Seller.


 


                5.2           No Partial Exercise.  Unless otherwise agreed by the Parties, an Option may be
exercised only in whole.


 


                5.3           Automatic Exercise.  Unless otherwise agreed in Part VI of the Schedule or unless the
Seller is otherwise instructed by the Buyer, if an Option has an In-the-Money
Amount at its Expiration Time that equals or exceeds the product of (x) 1% of
the Strike Price (or such other percentage or amount as may have been agreed by
the Parties) and (y) the amount of the Call Currency or Put Currency, as
appropriate, then the Option shall be deemed automatically exercised.  In such case, the Seller may elect to settle
such Option either in accordance with Section 5.4 or by payment to the Buyer on
the Settlement Date for such Option of the In-the-Money Amount, as determined
at the Expiration Time or as soon thereafter as practicable.  In the latter case, the sole obligations of
the Parties with respect to settlement of such Option shall be to deliver or
receive the In-the-Money Amount of such Option on the Settlement Date.  The Seller shall notify the Buyer of its election
of the method of settlement of an automatically exercised Option as soon as
practicable after the Expiration Time.


 


                5.4           Settlement of Exercised Options.  An exercised Option shall settle on its
Settlement Date.  Subject to Section 5.3
and 5.5, on the Settlement Date, the Buyer shall pay the Put Currency to the
Seller for value on the Settlement Date and the Seller shall pay the Call
Currency to the Buyer for value on the Settlement Date.  An exercised Option shall be treated as an
FX Transaction and a Currency Obligation (except, for the purposes of Section
8.1 only, if it is to be settled at its In-the-Money Amount), and for this
purpose the relevant Settlement Date shall be treated as the Value Date of the
FX Transaction.


 


                5.5           Settlement at In-the-Money Amount.  An Option shall be settled at its
In-the-Money Amount if so agreed by the Parties at the time such Option is
entered into.  In such case, the
In-the-Money Amount shall be determined based upon the Spot Price at the time
of exercise or as soon thereafter as practicable.  The sole obligations of the Parties with respect to settlement of
such Option shall be to deliver or receive the In-the-Money Amount of such
Option on the Settlement Date.


 


 


SECTION
6.           SETTLEMENT AND NETTING OF
FX TRANSACTIONS


 


                6.1           Settlement of FX Transactions.  Subject to Sections 6.2 and 6.3, each Party
shall deliver to the other Party the amount of the Currency to be delivered by
it under each Currency Obligation on the Value Date for such Currency
Obligation.


 


                6.2           Settlement Netting.  If, on any date, more than one delivery of a particular Currency
under Currency Obligations is to be made between a pair of Settlement Netting
Offices, then each Party shall aggregate the amounts of such Currency
deliverable by it and only the difference between these aggregate amounts shall
be delivered by the Party owing the larger aggregate amount to the other Party,
and, if the aggregate amounts are equal, no delivery of the Currency shall be
made.


 


                6.3           Novation Netting. 
(a)  By Currency.  If the Parties enter into an FX Transaction
through a pair of Novation Netting Offices giving rise to a Currency Obligation
for the same Value Date and in the same Currency as a then existing Currency
Obligation between the same pair of Novation Netting Offices, then immediately
upon entering into such FX Transaction, each such Currency Obligation shall
automatically and without further action be individually


 


8

















 


canceled
and simultaneously replaced by a new Currency Obligation for such Value Date
determined as follows:  the amounts of
such Currency that would otherwise have been deliverable by each Party on such
Value Date shall be aggregated and the Party with the larger aggregate amount
shall have a new Currency Obligation to deliver to the other Party the amount
of such Currency by which its aggregate amount exceeds the other Party’s
aggregate amount, provided that if the aggregate amounts are equal, no
new Currency Obligation shall arise. This Section 6.3 shall not affect any
other Currency Obligation of a Party to deliver any different Currency on the
same Value Date.


 


                (b)           By Matched Pair. 
If the Parties enter into an FX Transaction between a pair of Matched
Pair Novation Netting Offices then the provisions of Section 6.3(a) shall apply
only in respect of Currency Obligations arising by virtue of FX Transactions
entered into between such pair of Matched Pair Novation Netting Offices and
involving the same pair of Currencies and the same Value Date.


 


                6.4           General 
(a)  Inapplicability of Sections
6.2 and 6.3.  The provisions of
Sections 6.2 and 6.3 shall not apply if a Close-Out Date has occurred or a
voluntary or involuntary Insolvency Proceeding or action of the kind described
in clause (ii), (iii) or (iv) of the definition of Event of Default has
occurred without being dismissed in relation to either Party.


 


                (b)           Failure to Record. 
The provisions of Section 6.3 
shall apply notwithstanding that either Party may fail to record the new
Currency Obligation in its books.


 


                (c)           Cut-off Date and Time.  The provisions of Section 6.3 are subject to any cut-off date and
cut-off time agreed between the applicable Novation Netting Offices and Matched
Pair Novation Netting Offices of the Parties.


 


 


SECTION
7.           REPRESENTATIONS,
WARRANTIES AND COVENANTS


 


                7.1           Representations and Warranties.  Each Party represents and warrants to the
other Party as of the Effective Date and as of the date of each FX Transaction
and each Option that:  (i) it has
authority to enter into the Agreement (including such FX Transaction or Option,
as the case may be); (ii) the persons entering into the Agreement (including
such FX Transaction or Option, as the case may be) on its behalf have been duly
authorized to do so; (iii) the Agreement (including such FX Transaction or
Option, as the case may be) is binding upon it and enforceable against it in
accordance with its terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors’ rights generally
and applicable principles of equity) and does not and will not violate the
terms of any agreements to which such Party is bound; (iv) no Event of Default,
or event which, with notice or lapse of time or both, would constitute an Event
of Default, has occurred and is continuing with respect to it; (v) it acts as
principal in entering into each FX Transaction and Option and exercising each
and every Option; and (vi) if the Parties have so specified in Part XV of the
Schedule, it makes the representations and warranties set forth in such Part
XV.


 


                7.2           Covenants. 
Each Party covenants to the other Party that:  (i) it will at all times obtain and comply with the terms of and
do all that is necessary to maintain in full force and effect all
authorizations, approvals, licenses and consents required to enable it lawfully
to perform its obligations under the Agreement; (ii) it will promptly notify
the other Party of the occurrence of any Event of Default with respect to
itself or any Credit Support Provider in relation to it; and (iii) if the Parties
have set forth additional covenants in Part XVI of the Schedule, it makes the
covenants set forth in such Part XVI.


 


 


 


 


SECTION
8.           CLOSE-OUT AND LIQUIDATION


 


                8.1           Manner of Close-Out and Liquidation.  (a)  Close-Out.  If an Event of Default has occurred and is
continuing, then the Non-Defaulting Party shall have the right to close out
all, but not less than all, outstanding Currency Obligations (including any
Currency Obligation which has not been performed and in respect of which the
Value Date is on or precedes the Close-Out Date) and Options, except to the
extent that in the good faith opinion of the Non-Defaulting Party certain of
such Currency Obligations or Options may not be closed out under applicable
law.  Such close-out shall be effective
upon receipt by the Defaulting Party of notice that the Non-Defaulting Party is
terminating such Currency


 


9

















 


Obligations
and Options.  Notwithstanding the
foregoing, unless otherwise agreed by the Parties in Part X of the Schedule, in
the case of an Event of Default in clause (ii), (iii) or (iv) of the definition
thereof with respect to a Party and, if agreed by the Parties in Part IX of the
Schedule, in the case of any other Event of Default specified and so agreed in
Part IX with respect to a Party, close-out shall be automatic as to all
outstanding Currency Obligations and Options, as of the time immediately
preceding the institution of the relevant Insolvency Proceeding or action. The
Non-Defaulting Party shall have the right to liquidate such closed-out Currency
Obligations and Options as provided below.


 


                (b)           Liquidation of Currency Obligations.  Liquidation of Currency Obligations
terminated by close-out shall be effected as follows:


 


                (i)            Calculating Closing Gain or Loss.  The Non-Defaulting Party shall calculate in
good faith, with respect to each such terminated Currency Obligation, except to
the extent that in the good faith opinion of the Non-Defaulting Party certain
of such Currency Obligations may not be liquidated as provided herein under
applicable law, as of the Close-Out Date or as soon thereafter as reasonably
practicable, the Closing Gain, or, as appropriate, the Closing Loss, as
follows:


 


                                (A)          for each Currency Obligation calculate
a “Close-Out Amount” as follows:


 


                                                (1)       in the case of a Currency Obligation
whose Value Date is the same as or is later than the Close-Out Date, the amount
of such Currency Obligation; or


 


                                                (2)       in the case of a Currency Obligation
whose Value Date precedes the Close-Out Date, the amount of such Currency
Obligation increased, to the extent permitted by applicable law, by adding
interest thereto from and including the Value Date to but excluding the
Close-Out Date at overnight LIBOR; and


 


                                                (3)       for each such amount in a Currency other
than the Non-Defaulting Party’s Base Currency, convert such amount into the
Non-Defaulting Party’s Base Currency at the rate of exchange at which, at the
time of the calculation, the Non-Defaulting Party can buy such Base Currency
with or against the Currency of the relevant Currency Obligation for delivery
(x) if the Value Date of such Currency Obligation is on or after the Spot Date
as of such time of calculation for the Base Currency, on the Value Date of that
Currency Obligation or (y) if such Value Date precedes such Spot Date, for
delivery on such Spot Date (or, in either case, if such rate of exchange is not
available, conversion shall be accomplished by the Non-Defaulting Party using
any commercially reasonable method); and


 


                                (B)           determine in relation to each Value
Date: (1) the sum of all Close-Out Amounts relating to Currency Obligations
under which the Non-Defaulting Party would otherwise have been entitled to
receive the relevant amount on that Value Date; and (2) the sum of all
Close-Out Amounts relating to Currency Obligations under which the
Non-Defaulting Party would otherwise have been obliged to deliver the relevant
amount to the Defaulting Party on that Value Date; and


 


                                (C)           if the sum determined under (B)(1) is
greater than the sum determined under (B)(2), the difference shall be the
Closing Gain for such Value Date; if the sum determined under (B)(1) is less
than the sum determined under (B)(2), the difference shall be the Closing Loss
for such Value Date.


 


                (ii)           Determining Present Value.  To the extent permitted by applicable law,
the Non-Defaulting Party shall adjust the Closing Gain or Closing Loss for each
Value Date falling after the Close-Out Date to present value by discounting the
Closing Gain or Closing Loss from and including the Value Date to but excluding
the Close-Out Date, at LIBOR with respect to the Non-Defaulting Party’s Base
Currency as at the Close-Out Date or at such other rate as may be prescribed by
applicable law.


 


                (iii)          Netting.  The
Non-Defaulting Party shall aggregate the following amounts so that all such
amounts are netted into a single liquidated amount payable to or by the
Non-Defaulting Party:  (x) the sum of
the Closing Gains for all Value Dates (discounted to present value, where
appropriate, in accordance with the provisions of Section 8.1(b)(ii)) (which
for the purposes of the aggregation shall be a positive figure); and (y) the
sum of the Closing Losses for all Value Dates (discounted to present value,
where appropriate, in accordance with the provisions of Section 8.1(b)(ii))
(which for the purposes of the aggregation shall be a negative figure).


 


10

















 


                (c)           Liquidation of Options.  To liquidate unexercised Options and exercised Options to be
settled at their In-the-Money Amounts that have been terminated by close-out,
the Non-Defaulting Party shall:


 


                (i)            Calculating Settlement Amount.  Calculate in good faith with respect to each
such terminated Option, except to the extent that in the good faith opinion of
the Non-Defaulting Party certain of such Options may not be liquidated as
provided herein under applicable law, as of the Close-Out Date or as soon as
reasonably practicable thereafter a settlement amount for each Party equal to
the aggregate of:


 


                                (A)          with respect to each Option purchased
by such Party, and which the other Party has not elected to treat as void
pursuant to Section 3.2(ii) for lack of payment of the Premium, the current
market premium for such Option;


 


                                (B)           with respect to each Option sold by
such Party and which such Party has not elected to treat as void pursuant to
Section 3.2(ii) for lack of payment of the Premium, any unpaid Premium, provided
that, if the Close-Out Date occurs before the Premium Payment Date, such amount
shall be discounted from and including the Premium Payment Date to but
excluding the Close-Out Date at a rate equal to LIBOR on the Close-Out Date
and, if the Close-Out Date occurs after the Premium Payment Date, to the extent
permitted by applicable law, the settlement amount shall include interest on
any unpaid Premium from and including the Premium Payment Date to but excluding
the Close-Out Date in the same Currency as such Premium at overnight LIBOR;


 


                                (C)           with respect to any exercised Option
to be settled at its In-the-Money Amount (whether or not the Close-Out Date
occurs before the Settlement Date for such Option), any unpaid amount due to
such Party in settlement of such Option and, if the Close-Out Date occurs after
the Settlement Date for such Option, to the extent permitted by applicable law,
interest thereon from and including the applicable Settlement Date to but
excluding the Close-Out Date at overnight LIBOR; and


 


                                (D)          without duplication, the amount that
the Non-Defaulting Party reasonably determines in good faith, as of the
Close-Out Date or as of the earliest date thereafter that is reasonably
practicable, to be its additional losses, costs and expenses in connection with
such terminated Option, for the loss of its bargain, its cost of funding, or
the loss incurred as a result of terminating, liquidating, obtaining or
re-establishing a delta hedge or related trading position with respect to such
Option;


 


                (ii)           Converting to Base Currency.  Convert any settlement amount calculated in
accordance with clause (i) above in a Currency other than the Non-Defaulting
Party’s Base Currency into such Base Currency at the Spot Price at which, at
the time of the calculation, the Non-Defaulting Party could enter into a
contract in the foreign exchange market to buy the Non-Defaulting Party’s Base
Currency in exchange for such Currency (or, if such Spot Price is not
available, conversion shall be accomplished by the Non-Defaulting Party using
any commercially reasonable method); and


 


                (iii)          Netting.  Net
such settlement amounts with respect to each Party so that all such amounts are
netted to a single liquidated amount payable by one Party to the other Party.


 


                (d)           Final Netting. 
The Non-Defaulting Party shall net (or, if both are payable by one Party,
add) the liquidated amounts payable under Sections 8.1(b) and 8.1(c) with
respect to each Party so that such amounts are netted (or added) to a single
liquidated amount payable by one Party to the other Party as a settlement
payment.


 


                8.2           Set-Off Against Credit Support.  Where close-out and liquidation occurs in
accordance with Section 8.1, the Non-Defaulting Party shall also be entitled
(i) to set off the net payment calculated in accordance with Section 8.1(d)
which the Non-Defaulting Party owes to the Defaulting Party, if any, against
any credit support or other collateral (“Credit Support”) held by the
Defaulting Party pursuant to a Credit Support Document or otherwise (including
the liquidated value of any non-cash Credit Support) in respect of the Non-Defaulting
Party’s obligations under the Agreement or (ii) to set off the net payment
calculated in accordance with Section 8.1(d) which the Defaulting Party owes to
the Non-Defaulting Party, if any, against any Credit Support held by the
Non-Defaulting Party (including the liquidated value of any non-cash Credit
Support) in respect of the Defaulting Party’s obligations under the Agreement; provided
that, for purposes of either such set-off, any Credit Support denominated in a
Currency other than the Non-Defaulting Party’s Base Currency shall be converted
into such Base Currency at the rate specified in Section 8.1(c)(ii).


 


11

















 


                8.3           Other Foreign Exchange Transactions and Currency
Options.  Where close-out and
liquidation occurs in accordance with Section 8.1, the Non-Defaulting Party
shall also be entitled to close-out and liquidate, to the extent permitted by
applicable law, any other foreign exchange transaction or currency option
entered into between the Parties which is then outstanding in accordance with
the provisions of Section 8.1, with each obligation of a Party to deliver a
Currency under such a foreign exchange transaction being treated as if it were
a Currency Obligation (including exercised options, provided that cash-settled
options shall be treated analogously to Options to be settled at their
In-the-Money Amount) and each unexercised option being treated as if it were an
Option under the Agreement.


 


                8.4           Payment and Late Interest.  The net amount payable by one Party to the
other Party pursuant to the provisions of Sections 8.1 and 8.3 above shall be
paid by the close of business on the Business Day following the receipt by the
Defaulting Party of notice of the Non-Defaulting Party’s settlement
calculation, with interest at overnight LIBOR from and including the Close-Out
Date to but excluding such Business Day (and converted as required by
applicable law into any other Currency, any costs of conversion to be borne by,
and deducted from any payment to, the Defaulting Party).  To the extent permitted by applicable law,
any amounts owed but not paid when due under this Section 8 shall bear interest
at overnight LIBOR (or, if conversion is required by applicable law into some
other Currency, either overnight LIBOR with respect to such other Currency or
such other rate as may be prescribed by such applicable law) for each day for
which such amount remains unpaid.  Any
addition of interest or discounting required under this Section 8 shall be
calculated on the basis of a year of such number of days as is customary for
transactions involving the relevant Currency in the relevant foreign exchange
market.


 


                8.5           Suspension of Obligations.  Without prejudice to the foregoing, so long
as a Party shall be in default in payment or performance to the other Party
under the Agreement and the other Party has not exercised its rights under this
Section 8, or, if “Adequate Assurances” is specified as applying to the
Agreement in Part XI of the Schedule, during the pendency of a reasonable
request to a Party for adequate assurances of its ability to perform its
obligations under the Agreement, the other Party may, at its election and
without penalty, suspend its obligation to perform under the Agreement.


 


                8.6           Expenses. 
The Defaulting Party shall reimburse the Non-Defaulting Party in respect
of all out-of-pocket expenses incurred by the Non-Defaulting Party (including
fees and disbursements of counsel, including attorneys who may be employees of
the Non-Defaulting Party) in connection with any reasonable collection or other
enforcement proceedings related to the payments required under the Agreement.


 


                8.7           Reasonable Pre-Estimate.  The Parties agree that the amounts recoverable under this Section
8 are a reasonable pre-estimate of loss and not a penalty.  Such amounts are payable for the loss of
bargain and the loss of protection against future risks and, except as
otherwise provided in the Agreement, neither Party will be entitled to recover
any additional damages as a consequence of such losses.


 


                8.8           No Limitation of Other Rights; Set-Off.  The Non-Defaulting Party’s rights under this
Section 8 shall be in addition to, and not in limitation or exclusion of, any
other rights which the Non-Defaulting Party may have (whether by agreement,
operation of law or otherwise), and, to the extent not prohibited by law, the
Non-Defaulting Party shall have a general right of set-off with respect to all
amounts owed by each Party to the other Party, whether due and payable or not
due and payable (provided that any amount not due and payable at the time of
such set-off shall, if appropriate, be discounted to present value in a
commercially reasonable manner by the Non-Defaulting Party).  The Non-Defaulting Party’s rights under this
Section 8.8 are subject to Section 8.7.


 


 


SECTION
9.           FORCE MAJEURE, ACT OF
STATE, ILLEGALITY AND IMPOSSIBILITY


 


                9.1           Force Majeure, Act of State, Illegality and
Impossibility.  If either Party is
prevented from or hindered or delayed by reason of force majeure or act of
state in the delivery or receipt of any Currency in respect of a Currency
Obligation or Option or if it becomes or, in the good faith judgment of one of
the Parties, may become unlawful or impossible for either Party to make or
receive any payment in respect of a Currency Obligation or Option, then the
Party for whom such performance has been prevented, hindered or delayed or has
become illegal or impossible shall promptly give notice thereof to the other
Party and either Party may, by notice to the other Party, require the close-out
and liquidation of each affected Currency Obligation and Option in accordance
with the provisions of Section 8.1 and, for such purposes, the Party unaffected
by such force majeure, act of state, illegality or impossibility (or, if both
Parties are


 


12

















 


so
affected, whichever Party gave the relevant notice) shall perform the
calculation required under Section 8.1 as if it were the Non-Defaulting
Party.  Nothing in this Section 9.1
shall be taken as indicating that the Party treated as the Defaulting Party for
the purpose of calculations required by Section 8.1 has committed any breach or
default.


 


                9.2           Transfer to Avoid Force Majeure, Act of State,
Illegality or Impossibility.  If
Section 9.1 becomes applicable, unless prohibited by law, the Party which has
been prevented, hindered or delayed from performing shall, as a condition to
its right to designate a close-out and liquidation of any affected Currency
Obligation or Option, use all reasonable efforts (which will not require such
Party to incur a loss, excluding immaterial, incidental expenses) to transfer
as soon as practicable, and in any event before the earlier to occur of the
expiration date of the affected Options or twenty (20) days after it gives
notice under Section 9.1, all its rights and obligations under the Agreement in
respect of the affected Currency Obligations and Options to another of its
Designated Offices so that such force majeure, act of state, illegality or
impossibility ceases to exist.  Any such
transfer will be subject to the prior written consent of the other Party, which
consent will not be withheld if such other Party’s policies in effect at such
time would permit it to enter into transactions with the transferee Designated
Office on the terms proposed, unless such transfer would cause the other Party
to incur a material tax or other cost.


 


 


SECTION
10.         PARTIES TO RELY ON THEIR
OWN EXPERTISE


 


                Each Party will be deemed to
represent to the other Party on the date on which it enters into an FX
Transaction or Option that (absent a written agreement between the Parties that
expressly imposes affirmative obligations to the contrary for that FX
Transaction or Option): (i)(A) it is acting for its own account, and it has
made its own independent decisions to enter into that FX Transaction or Option
and as to whether that FX Transaction or Option is appropriate or proper for it
based upon its own judgment and upon advice from such advisors as it has deemed
necessary; (B) it is not relying on any communication (written or oral) of the
other Party as investment advice or as a recommendation to enter into that FX
Transaction or Option, it being understood that information and explanations
related to the terms and conditions of an FX Transaction or Option shall not be
considered investment advice or a recommendation to enter into that FX
Transaction or Option; and (C) it has not received from the other Party any
assurance or guarantee as to the expected results of that FX Transaction or
Option; (ii) it is capable of evaluating and understanding (on its own behalf
or through independent professional advice), and understands and accepts, the
terms, conditions and risks of that FX Transaction or Option; and (iii) the
other Party is not acting as a fiduciary or an advisor for it in respect of
that FX Transaction or Option.


 


 


SECTION
11.         MISCELLANEOUS


 


                11.1         Currency Indemnity. 
The receipt or recovery by either Party (the “first Party”) of any
amount in respect of an obligation of the other Party (the “second Party”) in a
Currency other than that in which such amount was due, whether pursuant to a
judgment of any court or pursuant to Section 8 or 9, shall discharge such
obligation only to the extent that, on the first day on which the first Party
is open for business immediately following such receipt or recovery, the first
Party shall be able, in accordance with normal banking practice, to purchase
the Currency in which such amount was due with the Currency received or
recovered.  If the amount so purchasable
shall be less than the original amount of the Currency in which such amount was
due, the second Party shall, as a separate obligation and notwithstanding any
judgment of any court, indemnify the first Party against any loss sustained by
it. The second Party shall in any event indemnify the first Party against any
costs incurred by it in making any such purchase of Currency.


 


                11.2         Assignment. 
Neither Party may assign, transfer or charge or purport to assign,
transfer or charge its rights or obligations under the Agreement to a third
party without the prior written consent of the other Party and any purported
assignment, transfer or charge in violation of this Section 11.2 shall be void.


 


                11.3         Telephonic Recording.  The Parties agree that each may electronically record all
telephonic conversations between them and that any such recordings may be
submitted in evidence to any court or in any Proceedings for the purpose of
establishing any matters pertinent to the Agreement.


 


                11.4         Notices. 
Unless otherwise agreed, all notices, instructions and other
communications to be given to a Party under the Agreement shall be given to the
address, telex (if confirmed by the appropriate answerback), facsimile


 


13

















 


(confirmed
if requested) or telephone number and to the individual or department specified
by such Party in Part III of the Schedule. 
Unless otherwise specified, any notice, instruction or other
communication given in accordance with this Section 11.4 shall be effective
upon receipt.


 


                11.5         Termination. 
Each of the Parties may terminate the Agreement at any time by seven (7)
days’ prior written notice to the other Party delivered as prescribed in
Section 11.4, and termination shall be effective at the end of such seventh
day; provided, however, that any such termination shall not affect any
outstanding Currency Obligations or Options, and the provisions of the
Agreement shall continue to apply until all the obligations of each Party to
the other under the Agreement have been fully performed.


 


                11.6         Severability. 
In the event any one or more of the provisions contained in the
Agreement should be held invalid, illegal or unenforceable in any respect under
the law of any jurisdiction, the validity, legality and enforceability of the
remaining provisions contained in the Agreement under the law of such
jurisdiction, and the validity, legality and enforceability of such and any
other provisions under the law of any other jurisdiction shall not in any way
be affected or impaired thereby.  The
Parties shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect
of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.


 


                11.7         No Waiver.  No
indulgence or concession granted by a Party and no omission or delay on the
part of a Party in exercising any right, power or privilege under the Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.


 


                11.8         Master Agreement. 
Where one of the Parties to the Agreement is domiciled in the United
States, the Parties intend that the Agreement shall be a master agreement, as
referred to in 11 U.S.C. Section 101(53B)(C) and 12 U.S.C. Section
1821(e)(8)(D)(vii).


 


                11.9         Time of Essence, Etc.  Time shall be of the essence in the Agreement.  Unless otherwise agreed, the times referred
to in the Agreement with respect to Options shall in each case refer to the
local time of the relevant Designated Office of the Seller of the relevant
Option.


 


                11.10       Headings. 
Headings in the Agreement are for ease of reference only.


 


                11.11       Payments Generally. 
All payments to be made under the Agreement shall be made in same day
(or immediately available) and freely transferable funds and, unless otherwise
specified, shall be delivered to such office of such bank, and in favor of such
account as shall be specified by the Party entitled to receive such payment in
Part IV of the Schedule or in a notice given in accordance with Section 11.4.


 


                11.12       Amendments.  No
amendment, modification or waiver of the Agreement will be effective unless in
writing executed by each of the Parties; provided that the Parties may
agree in a Confirmation that complies with Section 2.3 to amend the Agreement
solely with respect to the Option that is the subject of the Confirmation.


 


                11.13       Credit Support. 
A Credit Support Document between the Parties may apply to obligations
governed by the Agreement.  If the
Parties have executed a Credit Support Document, such Credit Support Document
shall be subject to the terms of the Agreement and is hereby incorporated by
reference in the Agreement.  In the
event of any conflict between a Credit Support Document and the Agreement, the
Agreement shall prevail, except for any provision in such Credit Support
Document in respect of governing law.


 


                11.14       Adequate Assurances. 
If the Parties have so agreed in Part XI of the Schedule, the failure by
a Party to give adequate assurances of its ability to perform any of its
obligations under the Agreement within two (2) Business Days of a written
request to do so when the other Party has reasonable grounds for insecurity
shall be an Event of Default under the Agreement.


 


                11.15       Correction of Confirmations.  Unless either Party objects to the terms contained in any
Confirmation sent by the other Party or sends a corrected Confirmation within
three (3) Business Days of receipt of such Confirmation, or such shorter time
as may be appropriate given the Value Date of an FX Transaction, the terms of
such Confirmation


 


14

















 


shall
be deemed correct and accepted absent manifest error.  If the Party receiving a Confirmation sends a corrected
Confirmation within such three (3) Business Days, or shorter period, as
appropriate, then the Party receiving such corrected Confirmation shall have
three (3) Business Days, or shorter period, as appropriate, after receipt
thereof to object to the terms contained in such corrected Confirmation.


 


 


SECTION
12.         LAW AND JURISDICTION


 


                12.1         Governing Law. 
The Agreement shall be governed by, and construed in accordance with,
the laws of the jurisdiction set forth in Part XII of the Schedule without
giving effect to conflict of laws principles.


 


                12.2         Consent to Jurisdiction.  (a)  With respect to any
Proceedings, each Party irrevocably (i) submits to the non-exclusive
jurisdiction of the courts of the jurisdiction set forth in Part XIII of the
Schedule and (ii) waives any objection which it may have at any time to the
laying of venue of any Proceedings brought in any such court, waives any claim
that such Proceedings have been brought in an inconvenient forum and further
waives the right to object, with respect to such Proceedings, that such court
does not have jurisdiction over such Party. 
Nothing in the Agreement precludes either Party from bringing
Proceedings in any other jurisdiction nor will the bringing of Proceedings in
any one or more jurisdictions preclude the bringing of Proceedings in any other
jurisdiction.


 


                (b)  Each Party irrevocably appoints the agent for service of process
(if any) specified with respect to it in Part XIV of the Schedule.  If for any reason any Party’s process agent
is unable to act as such, such Party will promptly notify the other Party and
within thirty (30) days will appoint a substitute process agent acceptable to
the other Party.


 


                12.3         Waiver of Jury Trial.  Each Party irrevocably waives any and all right to trial by jury
in any Proceedings.


 


15

















 


                12.4         Waiver of Immunities.  Each Party irrevocably waives, to the fullest extent permitted by
applicable law, with respect to itself and its revenues and assets
(irrespective of their use or intended use), all immunity on the grounds of
sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.


 


 


	
   

  	
  MORGAN
  STANLEY CAPITAL GROUP INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Morgan
  Stanley Spectrum Strategic L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name:
  Jeffrey A. Rothman

  
	
   

  	
  Title:

  



 


A.


 


16

















 


II.             SCHEDULE


 


Schedule to the
International Foreign Exchange and Options Master Agreement


dated as of October   , 2004 (the “Agreement”)


between Morgan Stanley
Capital Group Inc. (“Party A”)


and Morgan Stanley
Spectrum Strategic L.P. (“Party B”).


 


 


Part I.              Scope of
the Agreement


 


                                                                        The Agreement shall apply to all FX
Transactions outstanding between any two Designated Offices of the Parties on
the Effective Date.


 


Part II.            Designated
Offices


 


                        Each of
the following shall be a Designated Office:


 


                        Party
A:  New York


 


                        Party B:


 


                                                                        Each Party (the “first Party”) that
enters into an FX Transaction through a Designated Office other than its head
or home office represents to the other Party (the “second Party”) that,
notwithstanding the place of booking office or jurisdiction of incorporation or
organization of the first Party, the obligations of the first Party are the
same as if it had entered into the FX Transaction through its head or home
office.  This representation will be
deemed to be repeated by the first Party on each date on which it enters into
an FX Transaction.


 


Part III.           Notices


 


                        If sent to
Party A:


 


                        Address:        Morgan Stanley Capital Group Inc.


                                                1585
Broadway, 4th floor


                                                New
York, New York 10036


 


                        Telephone
Number:     (212)


                        Telex
Number:                   (Answerback: FXMS)


                        Facsimile
Number:        (212)


                        SWIFT Number:           MSNYUS33


                        Name of
Individual or Department


                        to whom
Notices are to be sent:  Foreign
Exchange Trading Department


 


                        If sent to
Party B:


 


                        Address:


 


                        Telephone
Number:


                        Facsimile
Number:


                        Name of
Individual or Department to whom Notices are to be sent:


 


17

















 


Part IV.           Payment
Instructions


 


                                                                        [X]  Name
of Bank and Office, Account Number and Reference with respect to relevant
Currencies:  As specified in the
relevant Confirmation or as otherwise advised.


 


 


                                                                        [X]  With
respect to each Party, as may be set forth in such Standard Settlement
Instructions as may be specified by such Party in a notice given in accordance
with Section 11.4.


 


Part V.            Netting


 


A.                    Discharge
of Options


 


                        Not
Applicable


 


B.                    Netting
of Premiums


 


                                                                        Not Applicable


 


C.                    Settlement
Netting Offices


 


                        Each of
the following shall be a Settlement Netting Office:


 


                        Party
A:  Same as Part II.


 


                        Party
B:  Same as Part II.


 


                                                                        Party A and Party B
agree that, notwithstanding Section 6.2 of the Agreement, obligations to make
payments pursuant to FX Transactions shall only be netted, satisfied and
discharged against obligations to make payments arising out of the same or
other FX Transactions between a pair of Settlement Netting Offices.


 


D.                    Novation
Netting Offices


 


                        Each of
the following shall be a Novation Netting Office:


                        Not
applicable.


 


E.                     Matched
Pair Novation Netting Offices


 


                        Each of
the following shall be a Matched Pair Novation Netting Office:


 


                        Not
applicable.


 


Part VI.           Automatic
Exercise of Options; Cash Settlement of FX Transactions


 


A.                    Automatic
Exercise of Options


 


                                                                        Not Applicable


 


18

















 


B.                    Cash
Settlement of FX Transactions


 


                                                                        The following provision shall apply:


 


                                                                        The definition of FX Transaction in Section
1 shall include foreign exchange transactions for the purchase and sale of one
Currency against another but which shall be settled by the delivery of only one
Currency based on the difference between exchange rates as agreed by the
Parties as evidenced in a Confirmation. 
Section 6.1 is modified so that only one Currency shall be delivered for
any such FX Transaction in accordance with the formula agreed by the
Parties.  Section 8.1(b)(i)(A) is
modified so that the Close-Out Amount for any such FX Transaction for which the
cash settlement amount has been fixed on or before the Close-Out Date pursuant
to the terms of such FX Transaction shall be equal to the Currency Obligation
arising therefrom (increased by adding interest in the manner provided in clause
(A)(2) if the Value Date precedes the Close-Out Date) and for any such FX
Transaction for which the cash settlement amount has not yet been fixed on the
Close-Out Date pursuant to the terms of such FX Transaction, the Close-Out
Amount shall be as reasonably determined by Party A in accordance with market
practice.


 


Part VII.          Base
Currency


 


                        Party A’s
Base Currency is U.S. Dollars.


 


                        Party B’s
Base Currency is U.S. Dollars.


 


Part VIII.        Threshold
Amount


 


                        For
purposes of clause (x) of the definition of Event of Default:


 


                        Party A’s
Threshold Amount is U.S.D. $10,000,000.


 


                        Party B’s
Threshold Amount is U.S.D. $10,000,000.


 


Part IX.           Additional
Events of Default


 


                                                                        Not applicable.


 


Part X.            Automatic
Termination


 


                                                                        The automatic termination provision of
Section 8.1 shall not apply to Party A as Defaulting Party in respect of clause
(ii), (iii) or (iv) of the definition of Event of Default.


 


                                                                        The automatic termination provision of
Section 8.1 shall not apply to Party B as Defaulting Party in respect of clause
(ii), (iii) or (iv) of the definition of Event of Default; provided, however
where the Event of Default specified in clause (ii), (iii), or (iv) is governed
by a system of law which does not permit termination to take place upon or
after the occurrence of the relevant Event of Default in accordance with the
terms of the Agreement, then the automatic termination provisions of Section
8.1 will apply to Party B.


 


                                                                        In addition to, and notwithstanding
anything to the contrary in the preceding sentence, if an Event of Default
occurs as a result of automatic termination, the Defaulting Party hereby agrees
to indemnify the Non-Defaulting Party on demand against all loss or damage that
the Non-Defaulting Party may sustain or incur in respect of the Agreement and
each Currency Obligation (including in relation to terminating, liquidating,
obtaining or reestablishing any hedge or related position to the extent not
already taken into account, in the calculations performed) as a result of
movements in relevant rates, prices, yields, yield curves, volatilities,
spreads or other relevant market data between the Close-Out Date and the
Business Day upon which the Non-Defaulting Party first becomes aware that the
Event of Default has occurred, provided however, that if the Non-Defaulting
Party determines that any such movements have actually resulted in a net, after
tax, gain for the Non-Defaulting Party then the Non-Defaulting Party agrees to
pay


 


19

















 


to the Defaulting
Party the sum of such gain, subject to any rights the Non-Defaulting Party may
have under the Agreement or otherwise.


 


 


Part XI.           Adequate
Assurances


 


                        Adequate
Assurances under Section 11.14 shall not apply to the Agreement.


 


 


Part XII.         Governing Law


 


                                                                        In accordance with
Section 12.1 of the Agreement, the Agreement shall be governed by the laws of
the State of New York.


 


 


Part XIII.        Consent to
Jurisdiction


 


Section 12.2 of
the Agreement is amended by (i) replacing clause (a) with: “submits to the
exclusive jurisdiction of the courts of the
State of New York and the United States District Court located in the Borough
of Manhattan in New York City and” and (ii) deleting the last sentence
thereof.


 


 


Part XIV.        Agent for
Service of Process


 


                                                                        Party A appoints the following as its
agent for service of process in any Proceedings in the State of New York:  Not applicable.


 


                                                                        Party B appoints
the following as its agent for service of process in any Proceedings in State
of New York: Not
applicable.


 


Part XV.         Certain
Regulatory Representations


 


A.                    The
following FDICIA representation shall apply:


 


1.               Party A represents and warrants that it
qualifies as a “financial institution” within the meaning of the Federal
Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) by virtue of
being a:


 


                        [ X ]  broker or dealer within the meaning of
FDICIA;


 


                        [    ] 
depository institution within the meaning of FDICIA;


 


                        [ X ]  futures commission merchant within the
meaning of FDICIA;


 


                        [    ] 
“financial institution” within the meaning of Regulation EE (see below).


 


20

















 


2.               Party B hereby represents and warrants
that it qualifies as a “financial institution” by virtue of being a:


 


                        [    ] 
broker or dealer within the meaning of FDICIA;


 


                        [    ]  depository institution within the meaning of FDICIA;


 


                        [    ] 
futures commission merchant within the meaning of FDICIA;


 


                        [    ] 
“financial institution” within the meaning of Regulation EE (see below).


 


3.               A Party representing that it is a
“financial institution” as that term is defined in 12 C.F.R. Section 231.3 of
Regulation EE issued by the Board of Governors of the Federal Reserve System
(“Regulation EE”) represents that:


 


                                                                        (a)       it is willing to enter into “financial
contracts” as a counterparty “on both sides of one or more financial markets”
as those terms are used in Section 231.3 of Regulation EE; and


 


                                                                        (b)      during the 15-month period immediately
preceding the date it makes or is deemed to make this representation, it has
had on at least one (1) day during such period, with counterparties that are
not its affiliates (as defined in Section 231.2(b) of Regulation EE) either:


 


(i)                                     one or more
financial contracts of a total gross notional principal amount of $1 billion
outstanding; or


 


(ii)                                  total gross mark-to-market
positions (aggregated across counterparties) of $100 million; and


 


                                                                        (c)       agrees that it will notify the other
Party if it no longer meets the requirements for status as a financial
institution under Regulation EE.


 


4.               If both Parties are financial
institutions in accordance with the above, the Parties agree that the Agreement
shall be a netting contract, as defined in 12 U.S.C. Section 4402(14), and each
receipt or payment or delivery obligation under the Agreement shall be a
covered contractual payment entitlement or covered contractual payment
obligation, respectively, as defined in FDICIA.


 


B.                                     The following ERISA
representation shall apply:


 


Each Party continuously
represents that it is not (i) an employee benefit plan (hereinafter an “ERISA Plan”),
as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended (“ERISA”), subject to Title I of ERISA or a plan subject to
Section 4975 of the Internal Revenue Code of 1986, as amended, or subject to
any other statute, regulation, procedure or restriction that is materially
similar to Section 406 of ERISA or Section 4975 of the Code (together with
ERISA Plans, “Plans”), (ii) a person acting on behalf of a Plan or (iii) a
person any of the assets of whom constitute assets of a Plan.  Each Party will provide notice to the other
Party in the event that it is aware that it is in breach of any aspect of this
representation or is aware that with the passing of time, giving of notice or
expiry of any applicable grace period it will breach this representation.


 


C.                                     The following
Commodity Exchange Act representation shall apply:


 


Each Party represents and
warrants that it is an “eligible contract participant” under, and as defined
in, Section 1(a)(12) of the Commodity Exchange Act, and was not formed solely
for the purposes of constituting an “eligible contract participant.”


 


21

















 


Part XVI.        Representations
and Warranties:


1.


                                                      In addition to the
representations and warranties set forth in Section 7.1 of this Agreement, each
Party hereby represents and warrants to the other Party on the date hereof and
on the date of each FX Transaction, as the case may be, that:  (a) it is a sophisticated investor able to
evaluate and assume the risks associated with transactions in currencies as
contemplated by the Agreement; (b) it is not relying upon any representations
(whether written or oral) of the other Party other than the representations
expressly set forth in the Agreement, this Schedule, any Credit Support
Document or in any Confirmation; (c) its execution and delivery of the
Agreement, and its performance of its obligations hereunder, do not and will
not conflict with any law or regulation of the jurisdiction of its organization
or other law or regulation applicable to it, and do not and will not violate,
constitute a default under, or result in the creation or imposition of any lien
or encumbrance on any of its property or assets under any agreement or
instrument to which it is a party or by which its assets are bound; (d) no
consent, authorization or approval (including exchange control approval) or
other action by, and no notice to or filing with, any person or entity,
including any governmental authority or regulatory body, other than any already
obtained, made or filed and remaining in full force and effect, and the
conditions of which have been duly complied with, is required in connection
with the performance of its obligations under the Agreement; and (e) there are
no actions, proceedings or claims pending or, to the best of its knowledge,
threatened, the adverse determination of which might have a materially adverse
effect on its ability to perform its obligations under, or affect the validity
or enforceability of, the Agreement.


 


Part XVII.       Agreement Superseding


 


                                                            A new Section 11.16 shall be added to the
Agreement which shall read as follows: 
“The Agreement shall supersede any other agreement between the Parties
with respect to the subject matter hereof.”


 


Part XVIII.  1998 FX and Currency
Option Definitions.


 


                                                The 1998 FX and Currency Option
Definitions as published by ISDA, EMTA and The Foreign Exchange Committee (the
“Definitions”) shall be applicable to each FX Transaction under the Agreement,
including any FX Transaction outstanding on the date hereof, subject to the
following:


 


A.            Definitions


 


1.                                       The term “Agreement” in Section 2.2 of
the Agreement shall include the Agreement as modified and supplemented by this
Part.


 


2.                                       The term “FX Transaction” in the
Definitions or in a Confirmation shall in all cases be considered references to
an “FX Transaction” under the Agreement.


 


3.                                       All terms in this Part
shall have the meanings given them above or in the Definitions, unless not
defined above or in the Definitions, in which case the term shall have the
meaning given in the Agreement.


 


B.            Scope


 


1.                                       Notwithstanding the absence of any
reference to the Definitions in a Confirmation, this Part and the Definitions
shall be applicable to any FX Transaction covered by the Agreement; provided
that the Parties may agree otherwise for any Transaction as evidenced by a
Confirmation that complies with Section 2.3 of the Agreement.


 


2.                                       In the event of any
inconsistency between the Definitions and a Confirmation, the terms of the
Confirmation shall govern for the purpose of the relevant Transaction.  In the event of any inconsistency between
the Definitions and the Agreement, the Definitions shall prevail.


 


22

















 


C.            Confirmations


 


                                                Notwithstanding Sections 2.4 and 11.12 of
the Agreement, in the event of any inconsistency between the terms of a
Confirmation for an FX Transaction and the Agreement, the terms of the
Confirmation shall prevail.


 


D.            Disruption Events


 


                                                With respect to any Disruption Event that
is applicable to an FX Transaction pursuant to the Definitions or as otherwise
agreed by the Parties as evidenced by a Confirmation, Section 9 of the
Agreement shall not be applicable in respect of such FX Transaction, and the
Parties shall be subject to the Disruption Fallbacks (including but not limited
to No Fault Termination) specified as applicable pursuant to the Definitions or
such Confirmation.


 


E.             Miscellaneous


 


                                                The provisions of Part VI.B of this
Schedule relating to cash settlement of FX Transactions shall apply to
Non-Deliverable FX Transactions.


 


Part XIX.  Force Majeure, Act
of State, Illegality and Impossibility


 


                                                Section 9 of the Agreement is hereby
amended by deleting it in its entirety and inserting in its place the following
replacement Section:


 


                “9.1
Liquidation Rights.  If a Force
Majeure Event occurs and is still in effect, then (but subject to Section 9.2)
either Party may, by notice to the other Party on any day or days after the
Waiting Period expires, require the close-out and liquidation of the Currency
Obligations under any or all of the Affected Transactions in accordance with
the provisions of Section 8.1 and, for such purposes, the Party unaffected by
such Force Majeure Event shall perform the calculation required under Section 8.1
as if it were the Non-Defaulting Party (or, if both Parties are Affected
Parties, but Parties shall so calculate in respect of all Affected Transactions
which either Party determines to liquidate and the average of the amounts so
determined shall be the relevant amount in respect of each Affected
Transaction, except that if a Party fails to so determine an amount, the amount
determined by the other Party shall govern). 
If a Party elects to so liquidate less than all Affected Transactions,
it may liquidate additional Affected Transactions on a later day or days if the
relevant Force Majeure Event is still in effect.


 


9.2  Waiting Period.  If the Value Date of an FX Transaction which
is an Affected Transaction, under Section 9.1 falls during the Waiting Period
of the relevant Force Majeure Event, then such Value Date will be deferred to
the first Business Day (or the first day which, but for such event, would have
been a Business Day) after the end of that Waiting Period (or, in the case of
Split Settlement, the first Local Banking Day or the first day which, but for
such event, would have been a Local Banking Day, after the end of the Waiting
Period).  Compensation for this deferral
shall be at then current market rates as determined in a commercially reasonable
manner by the calculating Party or Parties under Section 9.


 


                9.3  Notice by Affected Party.  If a Force Majeure Event has occurred, an
Affected Party shall promptly give notice thereof to the other Party.


 


                9.4  Force Majeure Event and Event of Default.  Nothing in this Section 9 shall be taken as
indicating that the Party treated as the Defaulting Party for the purpose of
calculations required by Section 8.1 has committed any breach or default.  If an event occurs that would otherwise
constitute both a Force Majeure Event and an Event of Default, that event will
be treated as a Force Majeure Event and will not constitute an Event of
Default.”


 


In addition, the following definitions shall be added
to Section 1 of the Agreement:


 


23

















 


                ““Force
Majeure Event”, on any day determined as if such day were a Value Date of
an FX Transaction (even if it is not), means (i) either Party, by reason of
force majeure or act of state, is prevented from or hindered or delayed in
delivering or receiving, or it is impossible to deliver or receive, any
Currency in respect of a Currency Obligation, and which event is beyond the
control of such Party and which such Party, with reasonable diligence, cannot
overcome, or (ii) it is unlawful for either Party to deliver or receive a
payment of any Currency in respect of a Currency Obligation.  A Party whose delivery or receipt of
Currency has been or would be so prevented, hindered or delayed or made
unlawful or impossible is an “Affected Party”, and an FX Transaction under
which performance has been or would be so prevented, hindered or delayed or
made unlawful or impossible is an “Affected Transaction”, unless the Parties
have expressly agreed in an Agreement, another writing or in regard to a
particular FX Transaction that other disruption events or disruption fallbacks
will apply to that FX Transaction; in such event, that FX Transaction will be
subject to such disruption events or disruption fallbacks as the Parties have
otherwise agreed.


 


                “Waiting
Period”, in respect of a Force Majeure Event, means that first three days
after such event occurs which are Business Days or which, but for such event,
would have been Business Days.”“


 


 


Part XX. Margin
and Security


 


A.                                                           Party B shall at all times maintain with
Party A cash and securities acceptable to Party A (together, the “Margin”) in
order to secure the obligations of Party B under all open FX Transactions
entered into under the Agreement.  The amount
of Margin which Party B shall maintain with Party A shall be determined by
Party A in its reasonable judgment (which determination shall be conclusive in
the absence of manifest error), on a risk adjusted basis, taking into account
historical volatility, imputed volatility and/or such other factors as Party A
reasonably deems relevant to this determination (the “Aggregate Margin
Requirement”).  On or prior to the date
of the Agreement, Party B shall have established a pledge account with Party A
(the “Account”) for the purpose of holding custody of the Margin in accordance
with the provisions of the Agreement. Party B’s failure to deposit Margin or to
establish the Account as required herein shall be an Event of Default for all
purposes under the Agreement (it being understood that there shall be no grace
period with respect to obligations of Party B pursuant to this Part XX.  Party A shall settle all FX Transactions
with Party B on a secured basis only, such that Party A’s payment obligations
to Party B shall be made (a) prior to receipt of Party B’s counterpayment
thereunder, only to the extent that the amount by which Margin in the Account
exceeds the Aggregate Margin Requirement is greater than such counterpayment or
the U.S. Dollar equivalent thereof, or (b) after Party A has confirmed receipt
of Party B’s counterpayment thereunder.


 


B.                                                             Whenever such Aggregate Margin
Requirement shall exceed the market value of Margin on deposit with Party A in
the Account as determined by Party A at such time in its reasonable judgment
and which determination shall be conclusive in the absence of manifest error
(the “Margin Balance”, and the difference between such Aggregate Margin
Requirement and the Margin Balance being the “Shortfall”), then Party B shall
deposit immediately upon Party A’s request, additional Margin in an amount at
least equal to such Shortfall.


 


C.                                                             In furtherance of the foregoing, as
security for the prompt and complete payment when due and the performance by
Party B of all of its obligations to Party A under the Agreement, Party B hereby
grants to Party A a continuing first priority security interest in and to all
of Party B’s right, title and interest in and to the Margin, the Account, all
financial assets, investment property and other property and assets which are
deposited from time to time in, or credited from time to time to, the Account,
all security entitlements in respect thereof, all income and profits thereon,
all interest, dividends and other payments and distributions with respect
thereto, and all proceeds of any of the foregoing (the “Margin
Collateral”).  In addition, Party B
hereby grants to Party A and its affiliates a first priority security interest
in and to any property of Party B at any time held by Party A or any affiliate
of Party A for any purpose, including, without limitation, any property of
Party B held in any account with Party A or any affiliate of Party A, any
financial assets, investment property and other property and assets which are
deposited from time to time in, or credited from time to time to, any such
account, all security entitlements in respect thereof, all income and profits


 


24

















 


thereon, all
interest, dividends and other payments and distributions with respect thereto,
and all proceeds of any of the foregoing (the “Collateral”), to secure all
obligations of Party B to Party A.  If
Collateral was delivered in connection with a particular agreement between
Party B and Party A or any of its affiliates, then such Collateral shall secure
first the obligations of Party B with respect to such agreement and second all
other obligations of Party B to Party A or any of its affiliates (in such order
as Party A shall determine in its sole discretion).  Party A and its affiliates and Party B hereby each acknowledge
and agree that each of Party A and its affiliates which holds Collateral holds
such Collateral for itself and also as agent and bailee for all other of Party
A and its affiliates which are secured parties hereunder or under any agreement
between Party B and Party A or any of its affiliates.  If an Event of Default hereunder shall occur, then each of Party
A and its affiliates shall be entitled to retain or sell all Collateral as
security for Party B’s obligations, even if otherwise required pursuant to the
terms of an agreement or otherwise to deliver any Collateral to Party B or
Party B’s order. The parties agree that Party A and its affiliates shall have
the rights and remedies of a secured creditor under the New York Uniform
Commercial Code (the “UCC”) and under any other applicable law or agreement to
exercise any right with respect to the Margin Collateral and the Collateral
subject to the security interest granted under the Agreement.  Each of Party A or any of its affiliates
shall have free and unrestricted use of any Margin Collateral and/or Collateral
which it holds hereunder, including, without limitation, the right, from time
to time and without notice to Party B, to sell, pledge, repledge, hypothecate,
rehypothecate, assign, invest, use, commingle or otherwise dispose of, or
otherwise use in its business any Margin Collateral and/or Collateral
separately or in common with other securities, commodities or other property,
for the sum due to any of Party A or any of its affiliates or for a greater sum
on terms which may otherwise impair the right of Party B to redeem such Margin
Collateral and/or Collateral, and free from any other right of claim of any
nature whatsoever of Party B, and without retaining possession and control for
delivery a like amount of similar securities, commodities, or other property.


 


D.                                                            Party B represents and warrants that it
owns the Margin Collateral and the Collateral to be pledged and assigned to
each of Party A and its affiliates hereunder and under any other agreement between
Party B and Party A or any of its affiliates, free and clear of any liens,
equities, claims (including, without limitation, participation interests) and
transfer restrictions.  Party B
covenants and agrees that it will not sell, assign, transfer, exchange or
otherwise dispose of, or grant any option with respect to, any of the Margin
Collateral or the Collateral, nor will it create, incur or permit to exist any
lien on or with respect to any of the Margin Collateral or the Collateral, any
interest therein, or any proceeds thereof, except for the security interests
created under this Agreement or otherwise under any agreement between Party B
and Party A or any of its affiliates. 
Any purported sale, assignment, transfer, exchange, disposition, grant
or lien of the Margin Collateral or the Collateral by Party B that is not
permitted under the foregoing sentence shall be null and void and shall
constitute an Event of Default hereunder and under any agreement between Party
B and Party A or any of its affiliates immediately prior to the taking of any
such action,  if Party A so deems (it
being understood that there shall be no grace period with respect to
obligations of Party B pursuant to this Part XX).


 


E.                                                              Party B shall, in its sole expense and as
Party A in its sole discretion may deem necessary or advisable from time to
time, (i) to create, preserve, protect and perfect the security interests
granted under the Agreement and (ii) to enable Party A to exercise and enforce
its rights with respect to such security interests, do all acts and things and
execute and deliver all documents and instruments in such manner and form as
Party A may require, including without limitation UCC financing statements and
continuation statements.  Party B hereby
appoints Party A as its true and lawful attorney-in-fact, including without
limitation, to sign and file such documents and instruments on Party B’s behalf
and without Party B’s signature; such appointment, being coupled with an
interest, shall be irrevocable.  Without
limitation on the foregoing, Party B agrees to take such action as Party A in
its sole discretion may deem necessary or advisable in the event of any change
in applicable law, including, without limitation, Articles 8 and 9 of the UCC
and the Regulations of the Department of the Treasury and other governmental
bodies governing transfers of interests in U.S. marketable treasury securities
in book-entry form.


 


25

















 


F.                                                              The parties hereto agree that each of the
Account and any account in which any Collateral is held or to which any
Collateral is credited (a “Collateral Account”) is a “securities account”
within the meaning of Article 8 of the UCC and that all property and assets
(including, without limitation, cash) held in or credited to (i) the Account or
(ii) any Collateral Account shall be treated as a “financial asset” for
purposes of Article 8 of the UCC.


 


Part XXI.                Miscellaneous


 


                                                Trading
Authorization for FX Transactions and Options


 


Party B hereby makes the following additional representations and
warranties, which shall continue during the term of any FX Transaction and
Option:


 


(i)                                     Party B has duly
authorized [ADVISOR] (the “Agent”) to enter into FX Transactions and Options on
its behalf and to take all requisite action on behalf of Party B contemplated
by and in connection with the Agreement. 
Party B has designated the Agent as its agent for performance of its
obligations to Party A and for receipt of performance by Party A of its
obligations to Party B in connection with any FX Transactions and Options under
the Agreement (including, among other things, as agent for Party B in
connection with transfers of cash or other property and as agent for giving and
receiving of all notices under the Agreement). 
Party B hereby agrees that it shall have in connection with any FX
Transaction and Option entered into by the Agent on its behalf, the rights,
responsibilities, privileges and obligations of a “Party” directly entering
into such FX Transactions with Party A under the Agreement.


 


(ii)                                  Party B shall
indemnify Party A against any damages incurred by Party A as a consequence of
the failure of the above representations made by Party B to be true at any time
made or deemed to be made, or for Agent’s failure to act as contemplated by the
Agreement.


 


(iii)                               This
authorization shall continue in full force and effect, and may be relied upon
by Party A, unless terminated by Party B by giving two (2) Business Day’s
written notice (by telex or facsimile) of such termination to Party A. Party B
will remain fully responsible for any transactions effected by Party A for
Party B prior to the valid termination of this authority.


 


 


 


 


 


	
   

  	
  MORGAN
  STANLEY GROUP INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  Morgan
  Stanley Spectrum Strategic L.P., as Party B

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
				



 


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