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statement of the general conditions governing all swap contracts
between counterparties to the agreements. Customized individual
payment terms could be negotiated by the parties to a particular
swap, and those terms would be memorialized in the form of a
confirmation letter. During the relevant years, many dealers,
including FNBC, required that each of their swaps have a
confirmation.
The ISDA had two form agreements (collectively, ISDA form
agreements); namely, the 1987 ISDA interest rate swap agreement
and the 1992 ISDA master agreement (1992 ISDA form agreement).
The ISDA form agreements contained a number of standard terms but
also allowed the parties a great deal of flexibility in
structuring specific transactions. The ISDA form agreements were
relied upon in the industry as uniform and accepted contracts
with easily understood terms.
Under the ISDA form agreements, a party thereto had the
unilateral right to terminate a swap agreement before maturity
only in the case of default. The ISDA form agreements also
allowed a swap contract to be terminated before maturity in the
case of certain events generally not within the control of either
party; e.g., if a law was enacted that made it illegal for one or
both parties to the contract to perform under the contract. A
swap could also be terminated if it contained a credit trigger
calling for early termination upon a credit downgrade or other
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