EEI MASTER NETTING AGREEMENT Default and Remedies Options MASTER NETTING AGREEMENT Default and Remedies Options ©COPYRIGHT 2002 BY JONES DAY. ALL RIGHTS

EEIEEI

MASTER NETTING AGREEMENT

Default and Remedies Options

MASTER NETTING AGREEMENT

Default and Remedies Options

©COPYRIGHT 2002 BY JONES DAY. ALL RIGHTS RESERVED UNDER U.S. AND FOREIGN LAW, TREATIES AND CONVENTIONS. AUTOMATIC LICENSE – PERMISSION OF THE COPYRIGHT OWNER IS GRANTED FOR REPRODUCTION BY DOWNLOADING FROM A COMPUTER AND PRINTING ELECTRONIC COPIES OF THE WORK. NO AUTHORIZED COPY MAY BE SOLD.

2

Uniform cross-default, cross-netting and cross setoff provisions acrossportfolio of contracts

• reduce credit exposure, resulting in need for less collateral, which ultimately increases liquidity, and

• reduce uncertainty in default/near default situations.

Uniform cross-default, cross-netting and cross setoff provisions acrossportfolio of contracts

• reduce credit exposure, resulting in need for less collateral, which ultimately increases liquidity, and

• reduce uncertainty in default/near default situations.

Master Netting Agreement Risk Reduction and Single Agreement Concept

Master Netting Agreement Risk Reduction and Single Agreement Concept

All contracts subject to Master Netting Agreement are integrated into a single agreement “for the purposes set forth [t]herein”.

For purposes other than those set forth in the Master Netting Agreement, the underlying contracts remain separate.

All contracts subject to Master Netting Agreement are integrated into a single agreement “for the purposes set forth [t]herein”.

For purposes other than those set forth in the Master Netting Agreement, the underlying contracts remain separate.

3

MNA = EEI Master Netting, Setoff, Security and Collateral Agreement

UMAs = Underlying Master Agreements

MNA Defaults = depending on a user's selection of MNA Default Option A, B or C, § 3(d) defaults and defaults under UMAs that may be recharacterized as MNA Defaults (if MNA Default Option C is selected), which permit the Close-Out of all (and not less than all) Transactions under all UMAs

Comparable Provision = any default, termination event or similar provision under a UMA that is fundamentally the same or similar to a §3(d) default, BUT excluding NFTEs

UMA Defaults = If MNA Default Option A is selected, defaults under UMAs that are not (i) Comparable Provisions or (ii) NFTEs

No-Fault Termination = events or circumstances the remedy for which

Events/NFTEs includes the Close-Out of less than all (i.e., only “affected”) Transactions under a UMA

MNA = EEI Master Netting, Setoff, Security and Collateral Agreement

UMAs = Underlying Master Agreements

MNA Defaults = depending on a user's selection of MNA Default Option A, B or C, § 3(d) defaults and defaults under UMAs that may be recharacterized as MNA Defaults (if MNA Default Option C is selected), which permit the Close-Out of all (and not less than all) Transactions under all UMAs

Comparable Provision = any default, termination event or similar provision under a UMA that is fundamentally the same or similar to a §3(d) default, BUT excluding NFTEs

UMA Defaults = If MNA Default Option A is selected, defaults under UMAs that are not (i) Comparable Provisions or (ii) NFTEs

No-Fault Termination = events or circumstances the remedy for which

Events/NFTEs includes the Close-Out of less than all (i.e., only “affected”) Transactions under a UMA

Master Netting Agreement Defined Terms

Master Netting Agreement Defined Terms

4

Master Netting Agreement Defaults -- § 3(d)Master Netting Agreement Defaults -- § 3(d)

(i) Nonpayment(s) under UMAs Aggregate Delinquency Amount.

(ii) Breach of rep or warranty in MNA or UMA.

(iii) Nonperformance of material obligations (if not covered by a separately enumerated MNA Default, and excluding physical delivery/receipt obligations where cover is exclusive remedy) in MNA or UMA and no cure (if curable) within 3 Business Days.

(iv) Bankruptcy of Party or Material Affiliate.(v) Merger [and if selected, transfer of

assets,] if surviving [or transferee] entity shall not assume all MNA/UMA obligations or if any guaranty shall not continue or [if selected] surviving [or transferee] entity credit quality is materially weaker.

(i) Nonpayment(s) under UMAs Aggregate Delinquency Amount.

(ii) Breach of rep or warranty in MNA or UMA.

(iii) Nonperformance of material obligations (if not covered by a separately enumerated MNA Default, and excluding physical delivery/receipt obligations where cover is exclusive remedy) in MNA or UMA and no cure (if curable) within 3 Business Days.

(iv) Bankruptcy of Party or Material Affiliate.(v) Merger [and if selected, transfer of

assets,] if surviving [or transferee] entity shall not assume all MNA/UMA obligations or if any guaranty shall not continue or [if selected] surviving [or transferee] entity credit quality is materially weaker.

(vi) [If selected] cross default to Indebtedness of, or nonpayment by, Party or Material Affiliate Cross Default Amount.

(vii) [If selected] failure to provide adequate assurance.

(viii) Failure to Transfer Performance Assurance or other UMA credit support or comply with restrictions on use of Performance Assurance or other UMA credit support.

(ix) Guarantor defaults.(x) Other defaults specified on Cover

Sheet.

(vi) [If selected] cross default to Indebtedness of, or nonpayment by, Party or Material Affiliate Cross Default Amount.

(vii) [If selected] failure to provide adequate assurance.

(viii) Failure to Transfer Performance Assurance or other UMA credit support or comply with restrictions on use of Performance Assurance or other UMA credit support.

(ix) Guarantor defaults.(x) Other defaults specified on Cover

Sheet.

5

Master Netting AgreementDefault Options -- §§ 3(a) and 3(b)


• “ MNA Default” to have EXCLUSIVELY the 3(d) meaning (taking into account a user’s 3(d) elections).


Option A(Comparable Provisions

Conformed)


Conformed)

• All UMA “Comparable Provisions” to 3(d) provisions (except 3(d)(i) [nonpayment]) are CONFORMED to 3(d) language.


• Defaults in UMA that are not Comparable Provisions (including nonpayment) are preserved as “UMA Defaults.”


• NFTEs are preserved.• NFTEs are preserved.

Option B(Complete Replacement)




• 3(d) MNA Defaults (including 3(d)(i) [nonpayment]) replace and supercede ALL defaults in all UMAs.


• Defaults in UMAs that are not Comparable Provisions (including sub-threshold payment defaults) are eliminated.



• “ MNA Default” = 3(d)(ii) - breach of R/W in MNA. 3(d)(iii) - non-performance of obligation in MNA. 3(d)(viii) - failure to Transfer (or comply with restrictions on use of) Performance Assurance /other credit support. Any UMA total Close-Out event.

• Defaults in UMAs are all preserved as MNA Defaults.



Option C(Rely on UMA defaults;

provides cross-default and cross netting only)




6






Conformed)


Conformed)
























7

Defaults under UMAs other than Comparable Provisions

Accordingly, remedies for UMA Defaults under UMAs are preserved under MNA Default Option A.

No-Fault Termination Events survive unamended, regardless of which MNA Default Option is selected.

Accordingly, remedies for No-Fault Termination Events under UMAs are preserved, regardless of which MNA Default Option is selected.

Defaults under UMAs other than Comparable Provisions

Accordingly, remedies for UMA Defaults under UMAs are preserved under MNA Default Option A.

No-Fault Termination Events survive unamended, regardless of which MNA Default Option is selected.

Accordingly, remedies for No-Fault Termination Events under UMAs are preserved, regardless of which MNA Default Option is selected.

Master Netting Agreement UMA Defaults and No-Fault Termination Events -- § 3(c)

Master Netting Agreement UMA Defaults and No-Fault Termination Events -- § 3(c)

• survive as UMA Defaults and give rise solely to UMA Remedies if MNA Default Option A is selected

• are eliminated if MNA Default Option B is selected

• become (along with any other defaults under UMAs that permit total Close-Out) MNA Defaults if MNA Default Option C is selected

• survive as UMA Defaults and give rise solely to UMA Remedies if MNA Default Option A is selected

• are eliminated if MNA Default Option B is selected

• become (along with any other defaults under UMAs that permit total Close-Out) MNA Defaults if MNA Default Option C is selected

8

Master Netting AgreementRemedies Options -- §§ 4(a) and 4(b)

Master Netting AgreementRemedies Options -- §§ 4(a) and 4(b)

Option AOn MNA Default and Potential MNA Default (subject to the Suspension Opt Out Option), MNA Remedies supersede those in UMAs, other than (“the 4 Exceptions”):

(i) if Settlement Amount Option A selected,calculation of Settlement Amount,

(ii) expense reimbursement and indemnification

(iii) setoff, netting or recoupment or(iv) the realization or application of collateral

Unless opted out (in which case any UMA suspension rights are preserved):

(a) on Potential MNA Default, Non-defaultingParty may suspend payment/performanceunder any/all UMAs for 5 days.

(b) on MNA Default, Non-defaulting Partymay suspend payment/performanceunder any/all UMAs for 14 days.

And in addition, on MNA Default, Non-defaulting Party may also:

(1) setoff, net and recoup per MNA or UMAs, (2) liquidate/apply Performance Assurance, (3) designate an Early Termination Date for

Close-Out of all Transactions, or (4) take any other action permitted at law or

in equity.

Option AOn MNA Default and Potential MNA Default (subject to the Suspension Opt Out Option), MNA Remedies supersede those in UMAs, other than (“the 4 Exceptions”):

(i) if Settlement Amount Option A selected,calculation of Settlement Amount,

(ii) expense reimbursement and indemnification

(iii) setoff, netting or recoupment or(iv) the realization or application of collateral

Unless opted out (in which case any UMA suspension rights are preserved):

(a) on Potential MNA Default, Non-defaultingParty may suspend payment/performanceunder any/all UMAs for 5 days.

(b) on MNA Default, Non-defaulting Partymay suspend payment/performanceunder any/all UMAs for 14 days.

And in addition, on MNA Default, Non-defaulting Party may also:

(1) setoff, net and recoup per MNA or UMAs, (2) liquidate/apply Performance Assurance, (3) designate an Early Termination Date for

Close-Out of all Transactions, or (4) take any other action permitted at law or

in equity.

Option BOn MNA Default, Non-defaulting Party may: (A) exercise rights/remedies under applicable UMAs -- other than Close-Out right, (B) liquidate/apply Performance

Assurance, (C) take any other action permitted at law or in equity, or (D) designate Early Termination Date for

Close-Out of all Transactions.

Upon designation of Early Termination Date, rights/ remedies in UMAs superseded, other than the 4 Exceptions.

Option BOn MNA Default, Non-defaulting Party may: (A) exercise rights/remedies under applicable UMAs -- other than Close-Out right, (B) liquidate/apply Performance

Assurance, (C) take any other action permitted at law or in equity, or (D) designate Early Termination Date for

Close-Out of all Transactions.

Upon designation of Early Termination Date, rights/ remedies in UMAs superseded, other than the 4 Exceptions.

9

Master Netting AgreementRemedies Provisions Common to

Remedies Option A and Remedies Option B-- §§ 4(c) and 4(d)

Master Netting AgreementRemedies Provisions Common to

Remedies Option A and Remedies Option B-- §§ 4(c) and 4(d)

After designation of an Early Termination Date, Non-defaulting Party may:(i) suspend payment/performance under any/all UMAs,(ii) liquidate/apply Performance Assurance,(iii) setoff, net and recoup under MNA or UMAs, or(iv) take any other action permitted at law or in equity.

If any Transaction under any UMA has automatically Closed-Out on or prior to Early Termination Date, the Settlement Amount is nonetheless included in MNA Final Settlement Amount.

After designation of an Early Termination Date, Non-defaulting Party may:(i) suspend payment/performance under any/all UMAs,(ii) liquidate/apply Performance Assurance,(iii) setoff, net and recoup under MNA or UMAs, or(iv) take any other action permitted at law or in equity.


10

Master Netting AgreementClose-Out Settlement Procedures -- § 5

Master Netting AgreementClose-Out Settlement Procedures -- § 5

All Transactions Closed-Out on Early Termination Date:

(i) unless commercially impracticable or illegal, then “as soon as reasonablypracticable”; estimates permitted, subject to true-up obligation.

(ii) all means all -- no cherry-picking

UMA Final Settlement Amount calculated for each UMA.

MNA Final Settlement Amount calculated by Non-defaulting Party and notice with statement showing calculation of all Settlement Amounts provided to Defaulting Party.

Payment due 3 Business Days after notice, with interest from Early Termination Date. Disputed amounts required to be paid in full, subject to true-up obligation.

If Non-defaulting Party owes MNA Final Settlement Amount to Defaulting Party, payment may be withheld until:

(x) confirmation that all other obligations of Defaulting Party and its SpecifiedAffiliates owed to Non-defaulting Party and its Specified Affiliates are paid in full and

(y) Defaulting Party executes a release.

All Transactions Closed-Out on Early Termination Date:

(i) unless commercially impracticable or illegal, then “as soon as reasonablypracticable”; estimates permitted, subject to true-up obligation.

(ii) all means all -- no cherry-picking

UMA Final Settlement Amount calculated for each UMA.

MNA Final Settlement Amount calculated by Non-defaulting Party and notice with statement showing calculation of all Settlement Amounts provided to Defaulting Party.

Payment due 3 Business Days after notice, with interest from Early Termination Date. Disputed amounts required to be paid in full, subject to true-up obligation.

If Non-defaulting Party owes MNA Final Settlement Amount to Defaulting Party, payment may be withheld until:

(x) confirmation that all other obligations of Defaulting Party and its SpecifiedAffiliates owed to Non-defaulting Party and its Specified Affiliates are paid in full and

(y) Defaulting Party executes a release.

11

Master Netting Agreement Setoff Rights -- § 6

Master Netting Agreement Setoff Rights -- § 6

Non-defaulting Party may set off MNA Final Settlement Amount or UMA Final Settlement Amounts against:

(i) any amounts owed by Defaulting Party or its Specified Affiliates toNon-defaulting Party or its Specified Affiliates under any otheragreement, and

(ii) any amounts owed by Non-defaulting Party or its Specified Affiliates toDefaulting Party or its Specified Affiliates under any other agreement.

Broadens Non-defaulting Party’s §5 settlement-related setoff rights (which apply in respect of all amounts owed between Non-defaulting Party and Defaulting Party under the UMAs and MNA).

Non-defaulting Party may set off MNA Final Settlement Amount or UMA Final Settlement Amounts against:

(i) any amounts owed by Defaulting Party or its Specified Affiliates toNon-defaulting Party or its Specified Affiliates under any otheragreement, and

(ii) any amounts owed by Non-defaulting Party or its Specified Affiliates toDefaulting Party or its Specified Affiliates under any other agreement.

Broadens Non-defaulting Party’s §5 settlement-related setoff rights (which apply in respect of all amounts owed between Non-defaulting Party and Defaulting Party under the UMAs and MNA).

12

UNLESS DELETED, Party grants to its counterparty a security interest in all amounts payable to it by the counterparty (i.e., its receivables) under the UMAs.

CAUTION: Users should:

(x) insure that this grant of a security interest does not result in a default under a Party’s credit agreements, indentures and other material contracts -- without confirmation that no default will occur as a result, a user should select DELETE, and

(y) verify that neither Party has previously granted any lien on or security interest in its receivables under any UMA -- failure to take such precaution may result in a user's unawareness of a pre-existing lien or security interest

that could prevent the exercise of anticipated settlement, netting or setoff rights.

UNLESS DELETED, Party grants to its counterparty a security interest in all amounts payable to it by the counterparty (i.e., its receivables) under the UMAs.

CAUTION: Users should:

(x) insure that this grant of a security interest does not result in a default under a Party’s credit agreements, indentures and other material contracts -- without confirmation that no default will occur as a result, a user should select DELETE, and

(y) verify that neither Party has previously granted any lien on or security interest in its receivables under any UMA -- failure to take such precaution may result in a user's unawareness of a pre-existing lien or security interest

that could prevent the exercise of anticipated settlement, netting or setoff rights.

Master Netting Agreement Security Interest Deletion Option -- §§ 5(i) and 5(j)

Master Netting Agreement Security Interest Deletion Option -- §§ 5(i) and 5(j)

13

Master Netting Agreement Collateral -- § 9

Master Netting Agreement Collateral -- § 9

All matters relating to the determination, delivery, return, administration and application of Performance Assurance or any other form of collateral or credit support is governed by MNA, including the Collateral Annex, and in addition upon

(i) a UMA Default,

(ii) an NFTE, or

(iii) an MNA Default,

rights to realize on or apply collateral pursuant to the applicable UMA shall remain in full force and effect.

CAUTION: Guaranties are not treated as Performance Assurance, and therefore are unaffected by the MNA, including §9. Users must review and consider existing guaranties with particular attention to any limits on guaranteed amounts and scope of guaranteed obligations.

All matters relating to the determination, delivery, return, administration and application of Performance Assurance or any other form of collateral or credit support is governed by MNA, including the Collateral Annex, and in addition upon

(i) a UMA Default,

(ii) an NFTE, or

(iii) an MNA Default,

rights to realize on or apply collateral pursuant to the applicable UMA shall remain in full force and effect.

CAUTION: Guaranties are not treated as Performance Assurance, and therefore are unaffected by the MNA, including §9. Users must review and consider existing guaranties with particular attention to any limits on guaranteed amounts and scope of guaranteed obligations.

14

This option is related to Security Interest Deletion Option and should be selected unless the Security Interest Deletion Option is selected. Doing so backstops the lien granted in §5(i).

Even if Security Interest Deletion Option is selected but some protection of a user’s cross-product netting rights is desired, this option may provide it.

As this provision is a covenant against liens with respect to UMA receivables, this option should be selected only after careful consideration and consultation.

This option is related to Security Interest Deletion Option and should be selected unless the Security Interest Deletion Option is selected. Doing so backstops the lien granted in §5(i).

Even if Security Interest Deletion Option is selected but some protection of a user’s cross-product netting rights is desired, this option may provide it.

As this provision is a covenant against liens with respect to UMA receivables, this option should be selected only after careful consideration and consultation.

Master Netting Agreement Negative Encumbrance Option -- § 11(b)

Master Netting Agreement Negative Encumbrance Option -- § 11(b)

15

If selected, this option provides user who has selected MNA Default Option A or MNA Default Option B with a general adequate assurances right in addition to any collateral security obtained under Collateral Annex.

If adequate assurances are provided in form of Eligible Collateral (as specified in Collateral Annex Cover Sheet),

If selected, this option provides user who has selected MNA Default Option A or MNA Default Option B with a general adequate assurances right in addition to any collateral security obtained under Collateral Annex.

If adequate assurances are provided in form of Eligible Collateral (as specified in Collateral Annex Cover Sheet),

Master Netting Agreement Adequate Assurances Option -- § 11(c)

Master Netting Agreement Adequate Assurances Option -- § 11(c)

(x) it is treated as Eligible Collateral for purposes of its use and administration and its application upon an MNA Default,

(y) but it is not treated as Eligible Collateral for purposes of a Party’s calculation of its Exposure or the collateral return and calculation dispute provisions of Collateral

Annex.

(x) it is treated as Eligible Collateral for purposes of its use and administration and its application upon an MNA Default,

(y) but it is not treated as Eligible Collateral for purposes of a Party’s calculation of its Exposure or the collateral return and calculation dispute provisions of Collateral

Annex.

16

If selected, this option deletes all provisions in UMAs (“Credit Event Clauses”) that permit or require termination of (or create any obligation under) any Transaction or UMA upon:

(i) credit rating downgrade,

(ii) loss of shareholder equity,

(iii) financial covenant test failure, or

(iv) other similar provisions related tofinancial condition (each a “Credit Event”).

Selection of option does not affect any right under UMAs or applicable law to request adequate assurance so long as such request is not conditioned upon the occurrence of a Credit Event.

CAUTION: Users should review Credit Event Clauses in all UMAs prior to selecting option. Selecting this option will, among other things, delete all Credit Event Clauses, including those that relate to the level of performance assurance required to be posted and those that are immediate events of default or termination events.

If selected, this option deletes all provisions in UMAs (“Credit Event Clauses”) that permit or require termination of (or create any obligation under) any Transaction or UMA upon:

(i) credit rating downgrade,

(ii) loss of shareholder equity,

(iii) financial covenant test failure, or

(iv) other similar provisions related tofinancial condition (each a “Credit Event”).

Selection of option does not affect any right under UMAs or applicable law to request adequate assurance so long as such request is not conditioned upon the occurrence of a Credit Event.

CAUTION: Users should review Credit Event Clauses in all UMAs prior to selecting option. Selecting this option will, among other things, delete all Credit Event Clauses, including those that relate to the level of performance assurance required to be posted and those that are immediate events of default or termination events.

Master Netting Agreement Credit Event Deletion Option -- § 13

Master Netting Agreement Credit Event Deletion Option -- § 13

17

This provision is NOT an Option. It supersedes and replaces assignment provisions under ALL UMAs.

ALL assignments are void other than those made with consent, as collateral security or in connection with monetization or financing of receivables or by operation of law (e.g., merger or similar transactions).

Any permitted assignment is, however, subject to the netting and setoff rights under MNA and to the §5(i) security interest if the Security Interest Deletion Option is not selected.

CAUTION: Users should insure that

(x) any permitted assignment in the nature of a security interest or lien does not violate credit agreements, indentures or othermaterial contracts, and

(y) existing permitted collateral assignments under UMAs are notinadvertently converted into MNA Defaults.

This provision is NOT an Option. It supersedes and replaces assignment provisions under ALL UMAs.

ALL assignments are void other than those made with consent, as collateral security or in connection with monetization or financing of receivables or by operation of law (e.g., merger or similar transactions).

Any permitted assignment is, however, subject to the netting and setoff rights under MNA and to the §5(i) security interest if the Security Interest Deletion Option is not selected.

CAUTION: Users should insure that

(x) any permitted assignment in the nature of a security interest or lien does not violate credit agreements, indentures or othermaterial contracts, and

(y) existing permitted collateral assignments under UMAs are notinadvertently converted into MNA Defaults.

Master Netting AgreementAssignment -- § 18

Master Netting AgreementAssignment -- § 18

18

Analysis of MNA Default Option and Remedies Option Pairings

Analysis of MNA Default Option and Remedies Option Pairings

19

Analysis of MNA Default OPTION A PairingsAnalysis of MNA Default OPTION A Pairings

Remedies Option A

On MNA Default and Potential MNA Default (subject to the Suspension Opt Out Option), MNA Remedies supercede those in UMAs, other than the 4 Exceptions: Suspension Rights: opt out? Yes - UMA suspension rights survive. No - (a) on Potential MNA Default - Non-

defaulting Party may suspend payment/performance

under any/all UMAs for 5 days. (b) on MNA Default - Non-

defaulting Party may suspend payment/performance under

any/all UMAs for 14 days.

Remedies Option A

On MNA Default and Potential MNA Default (subject to the Suspension Opt Out Option), MNA Remedies supercede those in UMAs, other than the 4 Exceptions: Suspension Rights: opt out? Yes - UMA suspension rights survive. No - (a) on Potential MNA Default - Non-

defaulting Party may suspend payment/performance




Remedies Option B

On MNA Default, Non-defaulting Party may: (A) exercise rights/remedies

under applicable UMAs --other than Close-Out right,

(B) liquidate/apply Performance Assurance, (C) take any other action permitted at law

or in equity, or

(D) designate Early Termination Date for Close-Out of all Transactions.

Remedies Option B



(B) liquidate/apply Performance Assurance, (C) take any other action permitted at law

or in equity, or

(D) designate Early Termination Date for Close-Out of all Transactions.

MNA Defaults: Comparable Provisions in UMAs are conformed to §§ 3(d)(ii)- 3(d)(x) [(adjusted for elections)] MNA payment default provision (3(d)(i)) subject to Aggregate Delinquency Amount

UMA Defaults: UMA Sub-Aggregate Delinquency Amount payment default provisions surviveUMA defaults that are not Comparable Provisions survive

MNA Defaults: Comparable Provisions in UMAs are conformed to §§ 3(d)(ii)- 3(d)(x) [(adjusted for elections)] MNA payment default provision (3(d)(i)) subject to Aggregate Delinquency Amount

UMA Defaults: UMA Sub-Aggregate Delinquency Amount payment default provisions surviveUMA defaults that are not Comparable Provisions survive

20

Analysis of MNA Default OPTION A PairingsAnalysis of MNA Default OPTION A Pairings

Remedies Option A (continued)

On MNA Default, Non-defaulting Party may: (1) setoff, net and recoup per MNA or

UMAs,(2) liquidate/apply Performance

Assurance,(3) designate Early Termination Date for

all Close-Out of Transactions, or(4) take any other action permitted at law or in equity.


On MNA Default, Non-defaulting Party may: (1) setoff, net and recoup per MNA or

UMAs,(2) liquidate/apply Performance

Assurance,(3) designate Early Termination Date for

all Close-Out of Transactions, or(4) take any other action permitted at law or in equity.

Remedies Option B (continued)

Upon designation of Early Termination Date, rights/ remedies in UMAs superceded, other than the 4 Exceptions


Upon designation of Early Termination Date, rights/ remedies in UMAs superceded, other than the 4 Exceptions

Common Remedies Provisions

After designation of Early Termination Date, Non-defaulting Party may: (i) suspend payment/performance under MNA or any/all UMAs, (ii) liquidate/apply Performance Assurance, (iii) setoff, net and recoup under MNA or UMAs, or (iv) take any other action permitted at law or in equity.


Close-Out per §5. Setoff per §6.





21

Analysis of MNA Default Option A PairingsAnalysis of MNA Default Option A Pairings

Summary: MNA Default Option A (Comparable Provisions Conformed) produces bifurcated results. This election provides for MNA Defaults and leaves intact as “UMA Defaults” defaults in UMAs that are not Comparable Provisions to MNA Defaults and not NFTEs. An example would be a Sub-Aggregate Delinquency Amount threshold payment default. NFTEs are unaffected.

When MNA Default Option A is paired with Remedies Option A, an MNA Default results in exclusive application of MNA Remedies (including Close-Out of all (and not less than all) UMAs), subject to the 4 Exceptions and to the user's ability to opt out of the 5/14 day suspension right regime. Remedies Option A is not triggered upon a UMA Default and all UMA Remedies remain intact, including right to Close-Out individual UMAs.

When MNA Default Option A is paired with Remedies Option B, an MNA Default entitles the Non-defaulting Party to exercise its remedies under UMAs, apply Performance Assurance and exercise all other legal and equitable remedies short of total Close-Out of a UMA. Upon designation of an Early Termination Date, the MNA Remedies become exclusive (subject to the 4 exceptions). As with Remedies Option A, all UMA remedies upon a UMA Default (by definition not an MNA Default) are preserved under Remedies Option B.

Shorthand: MNA Defaults: MNA Remedies. UMA Defaults: UMA remedies. NFTEs: NFTE remedies. Remedies Option A offers a rationalized suspension right alternative. Remedies Option B preserves UMA remedies prior to designation of Early Termination Date. From designation of Early Termination Date onwards, no difference.

A compromise between MNA Default Option B and MNA Default Option C.

Summary: MNA Default Option A (Comparable Provisions Conformed) produces bifurcated results. This election provides for MNA Defaults and leaves intact as “UMA Defaults” defaults in UMAs that are not Comparable Provisions to MNA Defaults and not NFTEs. An example would be a Sub-Aggregate Delinquency Amount threshold payment default. NFTEs are unaffected.

When MNA Default Option A is paired with Remedies Option A, an MNA Default results in exclusive application of MNA Remedies (including Close-Out of all (and not less than all) UMAs), subject to the 4 Exceptions and to the user's ability to opt out of the 5/14 day suspension right regime. Remedies Option A is not triggered upon a UMA Default and all UMA Remedies remain intact, including right to Close-Out individual UMAs.

When MNA Default Option A is paired with Remedies Option B, an MNA Default entitles the Non-defaulting Party to exercise its remedies under UMAs, apply Performance Assurance and exercise all other legal and equitable remedies short of total Close-Out of a UMA. Upon designation of an Early Termination Date, the MNA Remedies become exclusive (subject to the 4 exceptions). As with Remedies Option A, all UMA remedies upon a UMA Default (by definition not an MNA Default) are preserved under Remedies Option B.

Shorthand: MNA Defaults: MNA Remedies. UMA Defaults: UMA remedies. NFTEs: NFTE remedies. Remedies Option A offers a rationalized suspension right alternative. Remedies Option B preserves UMA remedies prior to designation of Early Termination Date. From designation of Early Termination Date onwards, no difference.

A compromise between MNA Default Option B and MNA Default Option C.

22

Analysis of MNA Default OPTION B PairingsAnalysis of MNA Default OPTION B Pairings

Remedies Option A

On MNA Default and (subject to the Suspension Opt Out Option) Potential MNA Default, MNA Remedies supercede those in UMAs, other than the 4 Exceptions:

Suspension Rights: opt out? Yes - UMA Suspension rights survive. No - (a) on Potential MNA Default -

Non-defaulting Party maysuspend payment/performance




Remedies Option A

On MNA Default and (subject to the Suspension Opt Out Option) Potential MNA Default, MNA Remedies supercede those in UMAs, other than the 4 Exceptions:

Suspension Rights: opt out? Yes - UMA Suspension rights survive. No - (a) on Potential MNA Default -

Non-defaulting Party maysuspend payment/performance




Remedies Option B

On MNA Default, Non-defaulting Party may: (A) exercise rights/remedies under applicable UMAs -- other than Close-Out right, (B) liquidate/apply Performance

Assurance, (C) take any other action permitted at law or in equity, or (D) designate Early Termination Date for Close-Out of all Transactions.

Remedies Option B

On MNA Default, Non-defaulting Party may: (A) exercise rights/remedies under applicable UMAs -- other than Close-Out right, (B) liquidate/apply Performance

Assurance, (C) take any other action permitted at law or in equity, or (D) designate Early Termination Date for Close-Out of all Transactions.

MNA Default: §§ 3(d)(i)-3(d)(x) only (adjusted for elections)All UMA Defaults are superceded (including nonpayment)

MNA Default: §§ 3(d)(i)-3(d)(x) only (adjusted for elections)All UMA Defaults are superceded (including nonpayment)

23



On MNA Default, Non-defaulting Party may: (1) setoff, net and recoup per MNA or UMAs, (2) liquidate/apply Performance

Assurance, (3) designate Early Termination

Date for Close-Out of allTransactions, or

(4) take any other action permittedat law or in equity.


On MNA Default, Non-defaulting Party may: (1) setoff, net and recoup per MNA or UMAs, (2) liquidate/apply Performance

Assurance, (3) designate Early Termination

Date for Close-Out of allTransactions, or

(4) take any other action permittedat law or in equity.


Upon designation of Early Termination Date, rights/ remedies in UMAs superceded, other than the 4 Exceptions:











24


Summary: MNA Default Option B (Complete Replacement) produces congruent results on a “top-down” basis. MNA Defaults (as affected by user’s choices) replace and supersede all defaults under the UMAs. Thus, there are no UMA Defaults. NFTEs are unaffected.

When MNA Default Option B is paired with Remedies Option A, any default (because all defaults are MNA Defaults) results in exclusive application of MNA Remedies (including Close-Out of all (and not less than all) UMAs), subject to the 4 Exceptions and to the user's ability to opt out of the 5/14 day suspension right regime.

When MNA Default Option B is paired with Remedies Option B, any default entitles the Non-defaulting Party to exercise its remedies under UMAs, apply Performance Assurance and exercise all other legal and equitable remedies until designation of Early Termination Date. At that point, MNA Remedies become exclusive (subject to the 4 exceptions).

Shorthand: MNA Defaults produce “top-down” congruent results. Other UMA defaults eliminated. Remedies Option A offers a rationalized suspension right alternative. Remedies Option B preserves UMA remedies prior to designation of Early Termination Date. From designation of Early Termination Date onwards, no difference.

For “revisionist” users: those who seek to revise and make totally congruent their UMA default provisions.

Summary: MNA Default Option B (Complete Replacement) produces congruent results on a “top-down” basis. MNA Defaults (as affected by user’s choices) replace and supersede all defaults under the UMAs. Thus, there are no UMA Defaults. NFTEs are unaffected.

When MNA Default Option B is paired with Remedies Option A, any default (because all defaults are MNA Defaults) results in exclusive application of MNA Remedies (including Close-Out of all (and not less than all) UMAs), subject to the 4 Exceptions and to the user's ability to opt out of the 5/14 day suspension right regime.

When MNA Default Option B is paired with Remedies Option B, any default entitles the Non-defaulting Party to exercise its remedies under UMAs, apply Performance Assurance and exercise all other legal and equitable remedies until designation of Early Termination Date. At that point, MNA Remedies become exclusive (subject to the 4 exceptions).

Shorthand: MNA Defaults produce “top-down” congruent results. Other UMA defaults eliminated. Remedies Option A offers a rationalized suspension right alternative. Remedies Option B preserves UMA remedies prior to designation of Early Termination Date. From designation of Early Termination Date onwards, no difference.

For “revisionist” users: those who seek to revise and make totally congruent their UMA default provisions.

25

Analysis of MNA Default OPTION C PairingsAnalysis of MNA Default OPTION C Pairings

Remedies Option A

On MNA Default and (subject to the Suspension Opt Out Option) Potential MNA Default, MNA Remedies supercede those in UMAs, other than the 4 Exceptions: Suspension Rights: opt out? Yes - UMA Suspension rights survive. No - (a) on Potential MNA Default - Non-

defaulting Party may suspendpayment/performance underany/all UMAs for 5 days.

(b) on MNA Default - Non-defaulting Party may suspendpayment/performance under


Remedies Option A

On MNA Default and (subject to the Suspension Opt Out Option) Potential MNA Default, MNA Remedies supercede those in UMAs, other than the 4 Exceptions: Suspension Rights: opt out? Yes - UMA Suspension rights survive. No - (a) on Potential MNA Default - Non-

defaulting Party may suspendpayment/performance underany/all UMAs for 5 days.

(b) on MNA Default - Non-defaulting Party may suspendpayment/performance under


Remedies Option B



(B) liquidate/ apply PerformanceAssurance,

(C) take any other action permitted at law or in equity, or (D) designate Early Termination Date for Close-Out of all Transactions.

Remedies Option B



(B) liquidate/ apply PerformanceAssurance,

(C) take any other action permitted at law or in equity, or (D) designate Early Termination Date for Close-Out of all Transactions.

MNA Default: § 3(d)(ii) breach of R/W in MNA§ 3(d)(iii) nonperformance of Obligations in MNA§ 3(d)(viii) failure to Transfer (or comply with restrictions on use of)

Performance Assurance or other credit support.Any event giving rise to any UMA total Close-Out right.

MNA Default: § 3(d)(ii) breach of R/W in MNA§ 3(d)(iii) nonperformance of Obligations in MNA§ 3(d)(viii) failure to Transfer (or comply with restrictions on use of)

Performance Assurance or other credit support.Any event giving rise to any UMA total Close-Out right.

26



On MNA Default, Non-defaulting Party may: (1) setoff, net and recoup per MNA or UMAs, (2) liquidate/apply Performance Assurance, (3) designate Early Termination Date for Close-Out of all Transactions, or (4) take any other action permitted at law or in equity.


On MNA Default, Non-defaulting Party may: (1) setoff, net and recoup per MNA or UMAs, (2) liquidate/apply Performance Assurance, (3) designate Early Termination Date for Close-Out of all Transactions, or (4) take any other action permitted at law or in equity.













27


Summary: MNA Default Option C (rely on UMA defaults; cross-default and cross-netting only) produces congruent results on a “bottoms-up” basis. MNA Defaults include all UMA Defaults (that result in total Close-Out). As with other options, NFTEs are unaffected.

Pairing MNA Default Option C with Remedies Option A or Remedies Option B produces the same exact results as under Default Option B. The only difference is that the set of triggering events is all defaults in UMAs plus the three § 3(d) clauses, rather than the § 3(d) MNA Defaults that apply exclusively in MNA Default Option B.

Shorthand: Same as MNA Default Option B, except that the trigger set, rather than being top-down use of the § 3(d) MNA Defaults, is the bottoms-up use of all defaults in UMAs plus §§ 3(d)(ii), (iii) and (viii). Remedies Option A offers a rationalized suspension right alternative. Remedies Option B preserves UMA remedies prior to designation of Early Termination Date. From designation of Early Termination Date onwards, no difference.

For users that are comfortable with the default provisions in their UMAs.

Summary: MNA Default Option C (rely on UMA defaults; cross-default and cross-netting only) produces congruent results on a “bottoms-up” basis. MNA Defaults include all UMA Defaults (that result in total Close-Out). As with other options, NFTEs are unaffected.

Pairing MNA Default Option C with Remedies Option A or Remedies Option B produces the same exact results as under Default Option B. The only difference is that the set of triggering events is all defaults in UMAs plus the three § 3(d) clauses, rather than the § 3(d) MNA Defaults that apply exclusively in MNA Default Option B.

Shorthand: Same as MNA Default Option B, except that the trigger set, rather than being top-down use of the § 3(d) MNA Defaults, is the bottoms-up use of all defaults in UMAs plus §§ 3(d)(ii), (iii) and (viii). Remedies Option A offers a rationalized suspension right alternative. Remedies Option B preserves UMA remedies prior to designation of Early Termination Date. From designation of Early Termination Date onwards, no difference.

For users that are comfortable with the default provisions in their UMAs.

Documents

EEI MASTER NETTING AGREEMENT Default and Remedies Options MASTER NETTING AGREEMENT Default and Remedies Options ©COPYRIGHT 2002 BY JONES DAY. ALL RIGHTS