"Termination Payments" - Part 5 (b)(k) to the ISDA Master Agreement

This provision is an election which we have added to the Schedule for
governmental entities. I believe that it is intended to eliminate any
confusion that historically arose during the debate between "First Method"
(one-way payments) and "Second Method" (two-way payments) for Early
Termination purposes. Although I can't find a good reason to continue to use
this provision with an ISDA (except that it emphasizes the point), I can
understand why we may have added it to a pre-ISDA agreement with a
governmental. The only example that I could locate was our September 21,
1995 Master Agreement with Reedy Creek Improvement District. For those of
you who have never seen this form, it was one of the two types of master
agreements developed by ECT before we became conversant with ISDA. Because
these forms didn't contemplate municipal counterparties, we had to add many
of the ISDA U.S. Municipal Counterparty Schedule provisions. The Part
5(b)(k) provision originally appeared in this early agreement. It was
included in the "Event of Change" section [5F(4)] (which is tantamount to the
ISDA concept of "Illegality", a "Termination Event"). I think it was
probably included because in the ISDA, Second Method is the automatic payment
method if the parties fail to make a specific designation for Early
Termination purposes, but there isn't a comparable provision in the old ECT
form.