The framework agreement and timetable define the reasons why one party may impose the closure of covered transactions due to the appearance of a termination event by the other party. Standard termination events include defaults or bankruptcy. Other closing events that can be added to the calendar include a downgrade of credit data below a specified level. NEW JERSEY TURNPIKE AUTHORITY INTEREST RATE SWAP MANAGEMENT PLAN 1. PURPOSE This interest rate management plan defines how interest rate swaps and related agreements are executed, which, as part of the closing process, replaces all remaining payment and delivery commitments of the parties with respect to terminated transactions with a one-time early termination amount due from one party to another. “Close-out netting” has advantages both from a credit and capital perspective. For example, when analyzing the total amount of financial exposure that a party has to each of its counterparties, credit services will generally do so on the basis of net risk where there is a legally enforceable compensation agreement. From a capital perspective, regulated entities may hold less capital if they are able to account for their exposures on their counterparties. The framework contract also helps to reduce litigation by providing significant resources that define its contractual terms and explain the intent of the contract, thus preventing litigation from beginning and providing a neutral resource for interpreting standard contractual terms. Finally, the framework agreement provides significant assistance in managing risks and credit for the parties. An ISDA master contract is the standard document that is regularly used to regulate over-the-counter derivatives transactions. The agreement, published by the International Swaps and Derivatives Association (ISDA), outlines the conditions to be applied to a derivatives transaction between two parties, usually to a derivatives trader and counterparty.

The master contract of the ISDA itself is the norm, but it is accompanied by a bespoke timetable and sometimes an annex to support the credit, both signed by both parties in a given transaction. At the same time as the timetable, the framework agreement defines all the general conditions necessary for the proper distribution of the risks of transactions between the parties, but does not contain specific terms and conditions for a particular transaction. Once the framework agreement has been concluded, the parties can enter into numerous transactions by agreeing to the essential terms and conditions over the telephone, as confirmed in writing, without the need to re-consider the terms of the framework agreement. This uniform approach to the agreement is an integral part of the structure and part of the network-based protection offered by the framework agreement. The fact that all transactions are the sole contract enhances the ability to close these transactions and obtain a one-time net amount payable in the event of default. 4 Annexes Over the past decade, ISDA, in collaboration with commodity industry associations, has published annexes to be added to the ISDA master of parties wishing to enter into agreements to purchase and sell physical raw materials, including electricity, gas, oil and coal. These annexes were developed in collaboration with the commodity industry association and reflect the prevailing market conditions for these industries. The addition of physical schedules allows the parties to make payments for physical and financial transactions, as explained below. The single agreement, by its terms, any ISDA governing agreement (including its timetable, CSA and annexes, if it exists), as well as any further confirmation or confirmation submitted to an AMM (including the corresponding trade definition brochure) between two parties constitute a single agreement.