ISDA has prepared this brief summary of frequently asked questions to assist in your consideration of the Novation Protocol II (“NPIl”). THIS FREQUENTLY ASKED QUESTIONS DOES NOT PURPORT TO BE AND SHOULD NOT BE CONSIDERED A GUIDE TO OR AN EXPLANATION OF ALL RELEVANT ISSUES OR CONSIDERATIONS IN CONNECTION WITH THE NPII. PARTIES SHOULD CONSULT WITH THEIR LEGAL ADVISERS AND ANY OTHER ADVISER THEY DEEM APPROPRIATE PRIOR TO USING OR ADHERING TO THE NPII. ISDA ASSUMES NO RESPONSIBILITY FOR ANY USE TO WHICH ANY OF ITS DOCUMENTATION OR OTHER DOCUMENTATION MAY BE PUT.

This Frequently Asked Questions webpage is divided into three sections: (i) questions relating to the submission of Adherence Letters; (ii) questions relating to the election of an entity not to participate in NPII; and (iii) questions relating to the substance of the NPII itself.

ADHERENCE LETTER SUBMISSION

Adherence Letter Submission Process
When do I need to send in my Adherence Letter?
The NPII is open on February 1, 2006. Unlike the 2005 Novation Protocol there is no cut off date for adherence.

How do I send in my Adherence Letter?
All Adherence Letters must be delivered by email to protocol@isda.org. In the email, you must submit both your conformed and executed copies of the Adherence Letter. You must use the form letter for the Novation Protocol II available on the ISDA website. Click here for form of adherence letter.

The Adherence Letter(s) should be on your institution’s letterhead. Nothing in the form Adherence Letter available on ISDA’s website may be changed with the exception of completing the details of your institutional name, date and signature block.

Please do not send your original Adherence Letter(s) by mail to ISDA.

What is a conformed copy?
A conformed copy of the Adherence Letter means that the name of the authorized signatory (for example, Patricia Smith) is typed rather than having Patricia Smith’s actual signature on the letter. ISDA only posts on its website the conformed copy of all Adherence Letters.

You must also submit an executed, or signed, copy of the Adherence Letter in addition to the conformed copy of the Adherence Letter. ISDA keeps the executed copy of the Adherence Letter for its files and does not share the executed copy with anyone else.

Who is an authorized signatory?
An authorized signatory to the Adherence Letter is an individual who has the legal authority to bind the adhering institution.

SPECIAL CONSIDERATIONS FOR INVESTMENT/ASSET MANAGERS

What if I am an investment or asset manager – how do I complete the signature block?
If you are an investment or asset manager and act on behalf of multiple funds, you have the option of indicating the following in the signature block: “Investment/Asset Manager, acting on behalf of the funds and accounts listed in the relevant Master Agreement between it and another Adhering Party”, or “Investment/Asset Manager, acting on behalf of the funds and accounts listed in Schedule I to this letter”. In the event that you choose the second option, Schedule I to your letter will be posted with your adherence letter.

If you have the ability to add new funds to a Master Agreement by an amendment, you may wish to complete the signature block as follows:

"Investment/Asset Manager, acting on behalf of the funds and accounts as listed in the Annex to the relevant Master Agreement (as amended from time to time) between it and another Adhering Party"

Depending on the method by which you have signed the Protocol, you may need to submit additional adherence letters when you add new funds. Please contact ISDA for further details.

Can I change the text of the Adherence Letter?
No. The Adherence Letter must be in the same format as the form letter published in the NPII.

Does it cost any money to adhere to the Novation Protocol II?
No.

ENTITIES ELECTING NOT TO ADHERE TO THE NOVATION PROTOCOL II.

What alternatives (if any) are there to participating in the 2005 Novation Protocol II?
The issues relating to Covered Transactions could be addressed by way of individually negotiated agreements or by incorporating relevant provisions of the NPII by reference. However, in either case, bilateral negotiations would be required and these could be time consuming and therefore costly.

DETAILS RELATING TO THE ISDA NOVATION PROTOCOL II

What changes have been made to the operative novation provisions (Annex I) to the Protocol since the 2005 Novation Protocol?
No changes have been made. NPII, includes unamended all of the novation terms of the original Novation Protocol. There have been certain changes made to the adherence process as outline below.

Limited Right of Revocation
Can I revoke my participation in NPII?
NPII contains a limited right of revocation. Once an Adherence Letter has been accepted by ISDA, an Adhering Party is bound by all amendments by with other parties that have already adhered to the Protocol or, subject to the discussion below, that adhere before a designation of the Annual Revocation Date.

An Adhering Party may, at any time during the period from January 1 to January 31 of a calendar year, deliver to ISDA a notice specifying the Annual Revocation Date as its cut-off date in respect of amendments with future Adhering Parties. The effect of such a letter will be to withdraw adherence for future Adhering Parties as of February 15 in that calendar year. Although amendments already made will not be revoked, any subsequent adherence by new Adhering Parties after the designated Annual Revocation Date, will not bind the party that has submitted a Revocation Notice.

Does the NPII in any way effect NPI
No. NPI and NPII are free standing protocols, identical in all respects regarding novation processes. NPII does not amend NPI, and NPI continues to operate without amendment.

If I adhered to NPI, do I have to also adhere to NPII?
It depends on what kind of novations business you do. If you want to do novations business with the new entities adhering to NPII, you should adhere to NPII. We anticipate that many new adhering parties will be funds, often in the position of Transferor, so parties that are often in the position of Remaining Party or Transferee most likely will need to adhere to NPII.