EFTA00169583.pdf

(Bilateral Form) (ISDA Agreements Subject to New York Law Only) ISDAL International Swaps and Derivative: Association, Inc CREDIT SUPPORT ANNEX to the Schedule to the ISDAS MASTER AGREEMENT dated as of October 28, 2013 between DEUTSCHE BANK AG ("Party A") and SOUTHERN FINANCIAL, LLC ("Party B") This Annex supplements, forms part of, and is subject to, the above-referenced Agreement, is part of its Schedule and is a Credit Support Document under this Agreement with respect to each party. Accordingly, the parties agree as follows:- Paragraph I. Interpretation (a) Definitions and Inconsistency. Capitalized terms not otherwise defined herein or elsewhere in this Agreement have the meanings specified pursuant to Paragraph 12, and all references in this Annex to Paragraphs are to Paragraphs of this Annex. In the event of any inconsistency between this Annex and the other provisions of this Schedule, this Annex will prevail, and in the event of any inconsistency between Paragraph 13 and the other provisions of this Annex, Paragraph 13 will prevail. (b) Secured Party and Pledger. All references in this Annex to the "Secured Party" will be to either party when acting in that capacity and all corresponding references to the "Pledger" will be to the other party when acting in that capacity; provided, however-, that if Other Posted Support is held by a party to this Annex, all references herein to that party as the Secured Party with respect to that Other Posted Support will be to that party as the beneficiary thereof and will not subject that support or that party as the beneficiary thereof to provisions of law generally relating to security interests and secured parties. Paragraph 2. Security Interest Each party, as the Pledgor, hereby pledges to the other party, as the Secured Party, as security for its Obligations, and grants to the Secured Party a first priority continuing security interest in, lien on and right of Set-off against all Posted Collateral Transferred to or received by the Secured Party hereunder. Upon the Transfix by the Secured Party to the Pledgor of Posted Collateral, the security interest and lien granted hereunder on that Posted Collateral will be released immediately and, to the extent possible, without any further action by either party. Copyright f:3 1994 by International Swaps and Derivatives Association, Inc. CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) MO -648986 EFTA_00019856 EFTA00169583  Paragraph 3. Credit Support Obligations (a) Delivery Amount Subject to Paragraphs 4 and 5, upon a demand made by the Secured Party on or promptly following a Valuation Date, if the Delivery Amount for that Valuation Date equals or exceeds the Pledgor's Minimum Transfer Amount, then the Pledger will Transfer to the Secured Party Eligible Credit Support having a Value as of the date of Transfer at kart equal to the applicable Delivery Amount (rounded pursuant to Paragraph 13). Unless otherwise specified in Paragraph 13, the "Defivery Amount" applicable to the Pledger for any Valuation Date will equal the amount by which: () the Credit Support Amount exceeds (ii) the Value as of that Valuation Date of all Posted Credit Support held by the Secured Party. (b) Return Amount Subject to Paragraphs 4 and 5, upon a demand made by the Pledger on or promptly following a Valuation Date, if the Return Amount for that Valuation Date equals or exceeds the Secured Party's Minimum Translbr Amount, then the Secured Party will Transfer to the Pledger Posted Credit Support specified by the Pledger in that demand having a Value as of the date of Transfer as close as practicable to the applicable Return Amount (rounded pursuant to Paragraph 13). Unless otherwise specified in Paragraph 13, the `Return Amount" applicable to the Secured Party for any Valuation Date will equal the amount by which: (0 the Value as of that Valuation Date of all Posted Credit Support held by the Secured Party exceeds the Credit Support Amount. "Credit Support Amorous means, unless otherwise specified in Paragraph 13, for any Valuation Date (i) the Secured Party's Exposure for that Valuation Date plus (ii) the aggregate of all Independent Amounts applicable to the Pledger, if any, minus (iii) all Independent Amounts applicable to the Secured Party, if any, minus (iv) the Pledger's Threshold; provided, however, that the Credit Support Amount will be deemed to be zero whenever the calculation of Credit Support Amount yields a number less than zero. Paragraph 4. Conditions Precedent, Transfer Tuning, Calculations and SubstlIntIons (a) Conditions Precedent Each Transfer obligation of the Pledger under Paragraphs 3 and 5 and of the Secured Party under Paragraphs 3, 4(dXi), 5 and 6(d) is subject to the conditions precedent that: (i) no Event ofDefault.Potential Event ofDefault or Specified Condition has occurred and is continuing with respect to the other party. and (ii) no Early Termination Date for which any unsatisfied payment obligations exist has occurred or been designated as the milt of an Event of Default or Specified Condition with respect to the other party. (b) Transfer Timis,. Subject to Piragrapha 4(a) and 5 and unless otherwise specified, if a demand for the Transfer of Eligible Credit Support or Posted Credit Support is made by the Notification Time, then the relevant Transfer will be made not later than the close of business on the next Local Business Day; if a demand is made alter the Notification Time, then the relevant Transfer will be made not later than the close of business on the second Local Business Day thereafter. (e) Calculadons. All calculations of Value and ExPerum for purposes of Paragraphs 3 and 6(d) will be made by the Valuation Agent as of the Valuation Time. The Valuation Agent will notify each party (or the other party. if the Valuation Agent is a party) of its calculations not later than the Notification Time on the Local Business Day following the applicable Valuation Date (or in the case ofParagraph 6(d). following the date of calculation). ISOM/ 1994 CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) VASOZ987 EFTA_00019857 EFTA00169584  (d) Siduritudons. () Unless otherwise specified in Paragraph 13, upon notice to the Secured Party specifying the items of Posted Credit Support to be exchanged, the Pledgor may, on any Leta! Business Day, Transfer to the Secured Party substitute Eligible Credit Support (the "Substitute Credit Support"); and (ii) subject to Paragraph 4(a), the Secured Party will Transfer to the Pledger the items of Posted Credit Support specified by the Pledgor in its notice not later than the Local Business Day following the date on which the Secured Party receives the Substitute Credit Support, unless otherwise specified in Paragraph 13 (the "Substitution Date");provided that the Secured Party well only be obligated to Transfer Posted Credit Support with a Value as of the date of Transfer of that Posted Credit Support equal to the Value as of that date of the Substitute Credit Support. Paragraph 5. Dispute Resolution If a party (a "Disputing Party") disputes (I) the Valuation Agent's calculation of a Delivery Amount or a Return Amount or (II) the Value of any Transfer of Eligible Credit Support or Posted Credit Support, then (I) the Disputing Party will notify the other party and the Valuation Agent (if the Valuation Agent is not the other party) not later than the close of business on the Local Business Day Palley/Mg (X) the date that the demand is made under Paragraph 3 in the case of (I) above or (Y) the date of Transfer in the case of (IR above, (2) subject to Paragraph 4(a), the appropriate party will Transfer the undisputed amount to the other party not later than the close of business on the Local Business Day following 01) the date that the demand is made under Paragraph 3 will consult with each in the case of (I) above or (Y) the date of Transfer in the case of (IQ above, (3) the panics other in an attempt to resolve the dispute and (4) if they fail to resolve the dispute by the Resolution Time, then: () In the case of a dispute involving a Delivery Amount or Return Amount, unless otherwise specified in Paragraph 13. the Valuation Agent will recalculate the Exposure and the Value as of the Recalculation Date by: (A) utilizing any calculations ofExpos& for the Transactions (or Swap Transactions) that the parties have agreed arc not in dispute; (B) calculating the Exposure for the Transactions (or Swap Transactions) in dispute by seeking four actual quotations at mid-market from Reference Market-makers for purposes of calculating Market Quotation, and taking the arithmetic average of those obtained; provided that if four quotations are not available for a particular Transaction (or Swap Transaction), then fewer than four quotations nay be used for that Transaction (or Swap Transaction); and if no quotations arc available for a particular Transaction (or Swap Transaction), then the Valuation Agent's original calculations will be used for that Transaction (or Swap Transaction); and (C) utilizing the procedures specified in Paragraph 13 for calculating the Value, if disputed, of Posted Credit Support. (ii) In the case of a dispute involving the Value of any Transfer of Eligible Credit Support or Posted Credit Support, the Valuation Agent will recalculate the Value as of the date of Transfer pursuant to Paragraph 13. Following a recalculation pursuant to this Paragraph, the Valuation Agent will notify each party (or the other party, if the Valuation Agent is a party) not later than the Notification Time on the Local Business Day following the Resolution Time. The appropriate party will, upon demand following that notice by the Valuation Agent or a resolution pursuant to (3) above and subject to Paragraphs 4(a) and 4(b), make the appropriate Transfer. 3 WAS 1904 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) isltapat988 EFTA_00019858 EFTA00169585  Paragraph 6. Holding and Using Posted Collateral (a) Care of Posted Collateral Without limiting the Secured Party's rights under Paragraph 6(c), the Secured Party will exercise reasonable cart to assure the safe custody of all Posted Collateral to the extent required by if it applicable law, and in any event the Secured Party will be deemed to have exercised reasonable care to its own property. Except as exercises at least the same degree of are as it would exercise with respect specified in the preceding sentence, the Secured Party will have no duty with respect to Posted Collateral, including, without limitation, any duty to collect any Distributions, or enforce or preserve any rights pertaining thereto. (b) Eligibility to Hold Posted Collateral; Canaan& () GeneraL Subject to the satisfaction of any conditions specified in Paragraph 13 for holding Posted Collateral, the Secured Party will be entitled to hold Posted Collateral or to appoint an agent (a 'Custodian') to hold Posted Collateral for the Secured Party. Upon notice by the Secured Party to the Pledger of the appointment of a Custodian, the Pledgor's obligations to make any Transfer will be discharged by making the Transfer to that Custodian. The holding of Posted Collateral by a Custodian will be deemed to be the holding of that Posted Collateral by the Secured Party for which the Custodian is acting. (ii) Falters so Satisfy Conditions. If the Secured Pany or its Custodian fails to satisfy any conditions for holding Paned Collateral, then upon a demand made by the Pledgor, the Secured Party will, not later than five Local Business Days after the demand, Transfer or cause its Custodian to Transfer all Patted Collateral held by it to a Custodian that satisfies those conditions or to the Secured Party if it satisfies those conditions. (iii) Liability. The Secured ➢any wiU be liable for the acts or omissions of its Custodian to the same extent that the Secured Party would be liable hereunder for its own acts or omissions. (c) Use of Posted CollateraL Unless otherwise specified in Paragraph 13 and without limiting the rights and obligations of the patties under Paragraphs 3,4(d)(ii). 5,6(d) and 8, if the Secured Party is not a Defaulting Party or an Affected Party with respect to a Specified Condition and no Early Termination Date has occurred or been designated as the result of an Event of Default or Specified Condition with respect to the Secured Party, then the Secured Party will, notwithstanding Section 9-207 of the New York Uniform Commercial Code, have the right to: () sell, pledge, rehypothecate, assign, invest, use, commingle or otherwise dispose of, or otherwise use in its business any Posted Collateral it holds, free from any claim or right of any nature whatsoever of the Pledgor, including any equity or right of redemption by the Pledgor; and (ii) register any Posted Collateral in the name of the Secured Party, its Custodian or a nominee for either. For purposes of the obligation to Transfer Eligible Credit Support or Posted Credit Support pursuant to Paragrapha 3 and 5 and any rights or remedies authorized under this Agreement, the Secured Party will be deemed to continue to bold alt Posted Collateral and to receive Distributions made thereon, regardless of whether the Secured Party has exercised any rights with respect to any Posted Collateral punuant to (i) or (ii) above. (dl Distributions and Interest Amount, (i) Distributions. Subject to Paragraph 4(a), if the Secured Party receives or is deemed to receive Distributions on a Local Business Day, it will Transfer to the Pledgor not later than the following Local Business Day any Distribution it receives or is deemed to receive to the extent that a Delivery Amount would not be created or increased by that Transfer, as calculated by the Valuation Agent (and the date of calculation will be deemed to be a Valuation Date fur this purpose). 4 ISDAS 1994 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) VASOZ989 EFTA_00019859 EFTA00169586  (ii) Interest Amount Unless otherwise specified in Paragraph 13 and subject to Paragraph 4(a), in lieu of any interest, dividends or other amounts paid or deemed to have been paid with reap= to Posted Collateral in the forrn of Cash (all of which may be retained by the Secured Party), the Secured Party will Transfer to the Pledgor at the times specified in Paragraph 13 the Interest Amount to the extent that a Delivery Amount would not be created or increased by that Transfer, as calculated by the Valuation Agent (and the date of calculation will be deemed to be a Valuation Date for this purpose). The Interest Amount or ponion thereof not Transferred pursuant to this Paragraph will constitute Posted Collateral in the form of Cash and will be subject to the security interest granted under Paragraph 2. Paragraph 7. Events of Default if For purposes of Section 5(aXiii)(I) of this Agreement, an Event of Default will exist with respect to a party (i) that party fails (or fails to cause its Custodian) to make, when due, any Transfer of Eligible Collateral, Posted Collateral or the Interest Amount, as applicable, required to be made by it and that failure continues for two Local Business Days after notice of that failure is given to that party; (ii) that party fails to comply with any restriction or prohibition specified in this Annex with respect to any of the rights specified in Paragraph 6(c) and that failure continues for five Local Business Days after notice of that failure is given to that party, or (iii) that party fails to comply with or perform any agreement or obligation other than those specified in Paragraphs 7() and 7(ii) and that failure continues for 30 days after nice of that failure is given to that party. Paragraph 8. Certain Rights and Remedies (a) SecuredParty's Mem andSandia. If at any time (1) an Event of Default or Specified Condition with respect to the Pledger has occurred and is continuing or (2) an Early Termination Date has occurred or been designated as the result of an Event of Default or Specified Condition with respect to the Pledger, then, unless the Pledger has paid in full all of its Obligations that are then due, the Secured Party may exercise one or more of the following rights and remedies: (Q all tights and remedies available to a secured party under applicable law with respect to Posted Collateral held by the Secured Party; 60 any other rights and remedies available to the Secured Party under the terms of Other Posted Support, if any; (iii) the right to Setoff any amounts payable by the Pledger with respect to any Obligations against any Posted Collateral or the Cash equivalent of any Posted Collateral held by the Secured Party (or any obligation of the Secured Party to Transfer that Posted Collateral); and (iv) the tight to liquidate any Posted Collateral held by the Secured Party through one or more public or private tales or other dispositions with such notice, if any, as may be required under applicable law, pee from any claim or right of any nature whatsoever of the Pledger, including any equity or right of redemption by the Pledgor (with the Secured Party having the right to purchase any or all of the Posted Collateral to be sold) and to apply the proceeds (or the Cash equivalent thereof) fmm the liquidation of the Posted Collateral to any amounts payable by the Pledger with respect to any Obligations in that order as the Secured Party may elect. Each party acknowledges and agrees that Posted Collateral in the form of securities may decline speedily in value and is of a type customarily sold on a recognized market, and, accordingly, the Pledgor is not entitled to prior notice of any sale of that Posted Collateral by the Secured Party, except any notice that is required under applicable law and cannot be waived. 5 ISDA® 1994 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) VASNA9990 EFTA_00019860 EFTA00169587  (b) fiedgor's Rights and Remedies If at any lime an Early Termination Date has occurred or been designated as the result of an Event of Default or Specified Condition with respect to the Secured Party, then (except in the case of an Early Termination Date relating to less than all Transactions (or Swap Transactions) where the Secured Party has paid in full all of its obligations that are then due under Section 6(e) of this Agreement): (i) the Pledger may exercise all rights and remedies available to a pledger under applicable law with respect to Posted Collateral held by the Secured Party; (ii) the Pledger may exercise any other rights and remedies available to the Pledger under the terms of Other Posted Support, if any; (iii) the Secured Party will be obligated immediately to Transfer all Posted Collateral and the Interest Amount to the Pledger; and (iv) to the extent that Posted Collateral or the Interest Amount is not so Transferred pursuant to (iii) above, the Pledger may: (A) Set-off any amounts payable by the Pledger with respect to any Obligations against any Posted Collateral or the Cub equivalent of any Posted Collateral held by the Secured Party (or any obligation of the Secured Patty to Transfer that Posted (ollateral); and (B) to the extent that the Pledger does not Set-off under (lv)(A) above, withhold payment of any remaining amounts payable by the Pledger with respect to any Obligations, up to the Value of any remaining Posted Collateral held by the Secured Party, until that Posted Collateral is Transferred to the Pledger. (c) Detclencles and Excess Proceeds. The Secured Party will Transfer to the Pledger any proceeds and Posted Credit Support remaining atter liquidation, Set-off and/or application under Paragraphs 8(a) and 8(b) after satisfaction in full of all amounts payable by the Pledger with respect to any Obligations; the Pledger in all events will remain liable for any amounts remaining unpaid after any liquidation, Set-off and/or application under Paragraphs 8(a) and 8(b). (d) FinalRatans& When no amounts are or thereafter may become payable by the Pledger with respect to any Obligations (except for any potential liability under Section 2(d) of this Agreement), the Secured Party will Transfer to the Pledger all Posted Credit Support and the Interest Amount. if any. Paragraph 9. Representations Each party represents to the other party (which representations will be deemed to be repealed as of each date on which it, as the Pledger. Transfers Eligible Collateral) that: (i) it has the power to grant a security interest in and lien on any Eligible Collateral it Transfers as the Pledger and has taken all necessary actions to authorize the granting of that security interest and lien; (ii) it is the sole owner of or otherwise has the right to Transfer all Eligible Collateral it Transfers to the Secured Party hereunder. free and clear of any security interest, lien, enaunbrance or other restrictions other than the security interest and lien granted under Paragraph 2; (iii) upon the Transfer of any Eligible Collateral to the Secured Party under the terms of this Annex, the Secured Party will have a valid and perfected first priority security interest therein (assuming that any central clearing corporation or any third-party financial intermediary orother entity not within the control of the Pledger involved in the Transfer of that Eligible Collateral gives the notices and lakes the action required of it under applicable law for perfection of that interest); and (iv) the performance by it of its obligations under this Annex will not result in the creation of any security interest, lien or other encumbrance on any Posted Collateral other than the security interest and lien granted under Paragraph 2. 6 ISDA® 1994 CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) VASAM981 EFTA_00019861 EFTA00169588  Paragraph 10. Expenses (a) General. Except as otherwise provided in Paragraphs 10(b) and 10(c), each party will pay its own costs and emery= in connection with performing its obligations under this Annex and neither party will be liable for any costs and expenses incurred by the other party in connection herewith. (b) Posted Credit Support The Pledgor will promptly pay when due all taxes, assessments or charges of any nature that are imposed with respect to Posted Credit Support held by the Secured Party upon becoming aware of the same, regardless of whether any portion of that Posted Credit Support is subsequently disposed of under Paragraph 6(c), except for those taxes, assessments and charges that result from the exercise of the Secured Party's rights under Paragraph 6(c). (c) Liqrsidadon/Application of Posted Credit Support All reasonable costs and expenses incurred by or on behalf of the Secured Party or the Pledgor in connection with the liquidation and/or application of any Posted Credit Support under Paragraph 8 will be payable, on demand and pursuant to the Expenses Section of this Agreement, by the Defaulting Party or, if there is no Defaulting Party, equally by the patties. Paragraph 11. MIseellaneoes (a) Defardt Interest A Secured Party that fails to make, when due, any Transfer of Posted Collateral or the Interest Amount will be obligated to pay the Pledgor (to the extent permitted under applicable law) an amount equal to interest at the Default Rate multiplied by the Value of the items of property that were required to be Transferred, from (and including) the date that Posted Collateral or Interest Amount was required to be Transferred to (but excluding) the date of Transfer of that Posted Collateral or Interest Amount. This interest will be calculated on the basis of daily compounding and the actual number of days elapsed. (b) Further Assurances. Promptly following a demand made by a party, the other party will execute, deliver, file and record any financing statement, specific assignment or other document and take any other action that may be necessary or desirable and reasonably requested by that party to create, preserve, perfect or validate any security interest or lien granted under Paragraph 2, to enable that parry to exercise or enforce its rights under this Annex with respect to Posted Credit Support or an Interest Amount or to effect or document a release of a security interest on Posted Collateral or an Interest Amount. (c) Further Protection. The Pledger will promptly give notice to the Secured Party of, and defend against, any suit, action, proceeding or lien that involves Posted Credit Support Transferred by the Pledgor or that could adversely affect the security interest and lien granted by it under Paragraph 2, unless that suit, action, proceeding or lien results from the exercise of the Secured Party's rights under Paragraph 6(c). (d) Good Faith ad Cornmerrialor Reasonable Mawr. Performance of all obligations under this Annex, including, but not limited to, all calculations, valuations and determinations made by either party, will be made in good faith and in a commercially reasonable manner. (e) Demands and Notices. All demands and notices made by a party under this Annex will be made as specified in the Notion Section of this Agreement, except as otherwise provided in Paragraph 13. (f) Specifications of Certain Marten. Anything referred to in this Annex as being specified in Paragraph 13 also may be specified in one or more Confirmations or other documents and this Annex will be conurued accordingly. 7 ISDA® 1991 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) VASO-M992 EFTA_00019862 EFTA00169589  Paragraph 12. Definitions As used in this Annex:— "Cash" means the lawful currency of the United States of America. "Credit Support Amount" has the meaning specified in Paragraph 3. "Custodian" has the meaning specified in Paragraphs 6(b)0) and 13. "Delivery Amount" has the meaning specified in Paragraph 3(a). "Disputing Parry" has the meaning specified in Paragraph 5. "Distributions" means with respect to Posted Collateral other than Cash, all principal, interest and other payments and distributions of cash or other property with respect thereto, regardless of whether the Secured Party has disposed of that Posted Collateral under Paragraph 6(c). Distributions will not include any item of property acquired by the Secured Party upon any disposition or liquidation of Posted Collateral or, with respect to any Posted Collateral in the form of Cash, any distributions on that collateral, unless otherwise specified herein. "Eligible CoMaurer means, with respect to a party, the items, if any. specified as such for that party in Paragraph 13. "Eligible Credit Support- means Eligible Collateral and Other Eligible Support "Exposure" means for any Valuation Date or other date for which Exposure is calculated and subject to Paragraph 5 in the case of a dispute, the amount. if any, that would be payable to a party that is the Secured Party by the other party (expressed as a positive number) or by a party that is the Secured Party to the other party (expressed as a negative number) pursuant to Section 6(eXii)(2XA) of this Agreement as if all Transactions (or Swap Transactions) were being terminated as of the relevant Valuation Time; provided that Market Quotation will be determined by the Valuation Agent using its estimates at mid-market of the amounts that would be paid for Replacement Transactions (as that term is defined in the definition of "Market Quotation"). "Independent Amount" means, with respect to a party, the amount specified as such for that party in Paragraph 13; if no amount is specified, zero. "Interest Amount' means, with respect to an Interest Period, the aggregate sum of the amounts of interest calculated for each day in that Interest Period on the principal amount of Posted Collateral in the farm of Cash held by the Secured Party on that day, determined by the Secured Party for each such day as follows: (x) the amount of that Cash on that day; multiplied by (y) the Interest Rate in effect for that day; divided by (z) 360. "littered Period" means the period from (and including) the last Local Business Day on which an Interest Amount was Transferred (or, if no Interest Amount has yet been Transferred, the Local Business Day on which Posted Collateral in the form of Cash was Transferred to or received by the Secured Party) to (but excluding) the Local Business Day on which the Current Interest Amount is to be Transferred. "Mitten Rate" means the rate specified in Paragraph I3. "Local Business Day", unless otherwise specified in Paragraph 13. has the meaning specified in the Definitions Section of this Agreement, except that rettrences to a payment in clause (b) thereof win be deemed to include a Transfer under this Annex. g ISDA. 1994 CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) *S9D1WM993 EFTA_00019863 EFTA00169590  "Minimum Transfer Amount" means, with respect to a party, the amount specified as such for that party in Paragraph 13; if no amount is specified, zero. "Notification rime" has the meaning specified in Paragraph 13. "Obligations" means, with respect to a patty, all present and future obligations of that patty under this Agreement and any additional obligations specified for that party in Paragraph 13. "Other Eligible Support" means, with respect to a party, the items, if any. specified as such for that party in Paragraph 13. "Other Posted Support" means all Other Eligible Supped Transferred to the Secured Party that remains in effect for the benefit of that Secured Party. "Pledgor" means either party, when that party (i) receives a demand far or is required to Transfer Eligible Credit Support under Paragraph 3(a) or (i) has Transkrred Eligible Credit Support under Paragraph 3(a). "Posted Watered" means all Eligible Collateral, other property, Distributions, and all proceeds thereof that have been Transferred to or received by the Secured Party under this Annex and not Transferred to the Pledgor pursuant to Paragraph 3(b), 4(d)(ii) or 6(d)(i) or 'released by the Secured Party under Paragraph 8. Any Interest Amount or portion thereof not Transferred pursuant to Paragraph 6(d)(i) will constitute Posted Collateral in the form of Cash. "Posted Credit Support" means Posted Collateral and Other Posted Support. "Recakulation Date" means the Valuation Date that gives rise to the dispute under Paragraph 5; provided, however, that if a subsequent Valuation Date occurs under Paragraph 3 prior to the resolution of the dispute, then the "Recalculation Date" means the most recent Valuation Date under Paragraph 3. "Resolution lime" has the meaning specified in Paragraph 13. "Return Amount" has the meaning specified in Paragraph 3(b). "Secured Party" means either party, when that party () makes a demand for or is entitled to receive Eligible Credit Support under Paragraph 3(a) or (ii) holds or is deemed to hold Posted Credit Support. "Specified Condition" means, with respect to a party, any event specified as such for that party in Paragraph 13. "Substitute Credit Support" has the meaning specified in Paragraph 4(d)(i). "Substitution Date" has the meaning specified in Paragraph 4(d)(ii). 'Threshold" means, with respect to a party, the amount specified as such for that party in Paragraph 13; if no amount is specified, zero. "Transfer" means, with respect to any Eligible Credit Support, Posted Credit Support or Interest Amount, and in accordance with the instructions of the Secured Party, Pledger or Custodian, as applicable: (i) in the case of Cash, payment or delivery by wire transfer into one or more bank accounts specified by the recipient; (ii) in the case of certificated securities that cannot be paid or delivered by book-entry, payment or delivery in appropriate physical form to the recipient or its account accompanied by any duly executed instruments of transfer, assignments in blank, transfer tax vamps and any other documents necessary to constitute a legally valid transfer to the recipient; (iii) in the case of securities that can be paid or delivered by book-entry, the giving of written instructions to the relevant depository institution or other entity specified by the recipient, together with a written copy thereof to the recipient, sufficient if complied with to result in a legally effective transfer of the relevant interest to the recipient; and (iv) in the cast of Other Eligible Support or Other Posted Support, as specified in Paragraph 13. 9 1SDA® 1994 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) VAStsnal994 EFTA_00019864 EFTA00169591  Party A: Deutsche Bank AG Party B: Southern Financial, Paragraph 13. Elections and Variables (a) Security Interest for "Obligations". The term "Obligations" as used in this Annex includes the following additional obligations. With respect to Party I3, "Obligations" means any and all present and future obligations of Party B under or in connection with this Agreement, or any other contract, or any other transaction between Party B and Party A. (h) Credit Support Obligations. Delivery Amount, Return Amount and Credit Support Amount (A) "Delivery Amount" has the meaning specified in Paragraph 3(a), except that each reference therein to "Valuation Date" is hereby amended to be "Valuation Time". (B) "Return Amount" has the meaning specified in Paragraph 3(b), except that each reference therein to "Valuation Date" is hereby amended to be "Valuation Time". (C) "Credit Support Amount" has the meaning specified in Paragraph 3, except that, if an Independent Amount or Independent Amounts are specified for a party, the Credit Support Amount for such party will never be less than the aggregate of all Independent Amounts applicable to that party. (ii) Eligible CollateraL The following items will qualify as "Eligible Collateral" for the party specified: Party A Party B Valuation Percentage (A) Cash Inapplicable [Xi 100% (B) negotiable debt obligations issued by the U.S. Inapplicable [XJ 98% Treasury Department having a remaining maturity of less than one year ("Treasury Bills") (C) negotiable debt obligations issued by the U.S. Inapplicable [XJ 95% Treasury Department having a remaining maturity of 1-10 years ("Treasury Notes") (D) negotiable debt obligations issued by the U.S. Inapplicable [X] 90% Treasury Department having a remaining maturity of more than 10 years ('Treasury Bonds") (E) Any account or deposit of Party B with Party A or Inapplicable IXJ As determined an affiliate of Party A which is identified on Exhibit by Party A in A annexed hereto or otherwise designated as its sole Eligible Collateral for purposes of this Annex in a discretion and writing executed and delivered, in counterpart or further reduced otherwise, by Party A and Party B (each such by the Ml account or deposit, together with all of the amount of any CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) WRO-6 90?•,8996 EFTA_00019865 EFTA00169592  securities, funds and other property therein and all other of the security entitlements related thereto, an obligations "Eligible Account"). In the case of an account or secured by deposit with an affiliate of Party A, such account or such Eligible deposit shall qualify as an Eligible Account only if Account as such affiliate signs this Annex at the end hereof. detennined by Party A in its sole discretion. (F) Such other collateral as Party A and Party B may Inapplicable [X] As may be agree. agreed. (iii) Other Eligible Support. The following items will qualify as "Other Eligible Support" for the party specified: (A) Inapplicable Inapplicable (I (B) Inapplicable Inapplicable [ (iv) Thresholds (A) "Independent Amount" means with respect to Party A: Inapplicable "Independent Amount" means with respect to Party B: an amount in USD equal to the sum of (I) for Derivatives Trans