ISDA
International Swaps and Derivatives Association, Inc.
2002 MASTER AGREEMENT
dated as of August 27th, 2004
Cogent Capital Corp. and Amnor Books, Inc.
have entered and/or anticipate entering into one or more transactions (each
a "Transaction") that are or will be governed by this 2002 Master Agreement,
which includes the schedule (the "Schedule"), and the documents and other
confirming evidence (each a "Confirmation") exchanged between the parties
or otherwise effective for the purpose of confirming or evidencing those
Transactions. This 2002 Master Agreement and the Schedule are together
referred to as this "Master Agreement".
Accordingly, the parties agree as follows:-
1. Interpretation
(a) Definitions. The terms defined in Section 14 and elsewhere in this Master
Agreement will have the meanings therein specified for the purpose of this
Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the provisions
of the Schedule and the other provisions of this Master Agreement, the
Schedule will prevail. In the event of any inconsistency between the
provisions of any Confirmation and this Master Agreement, such Confirmation
will prevail for the purpose of the relevant Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on
the fact that this Master Agreement and all Confirmations form a single
agreement between the parties (collectively referred to as this "Agreement")
and the parties would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for value
on that date in the place of the account specified in the relevant
Confirmation or otherwise pursuant to this Agreement, in freely transferable
funds and in the manner customary for payments in the required currency.
Where settlement is by delivery (that is, other than by payment), such
delivery will be made for receipt on the due date in the manner customary
for the relevant obligation unless otherwise specified in the relevant
Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i)is subject to
(1) the condition precedent that no Event of Default or Potential Event
of Default with respect to the other party has occurred and is continuing,
(2) the condition precedent that no Early Termination Date in respect of
the relevant Transaction has occurred or been effectively designated and
(3) each other condition specified in this Agreement to be a condition
precedent for the purpose of this Section 2(a)(iii).
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(b) Change of Account. Either party may change its account for receiving
a payment or delivery by giving notice to the other party at least five
Local Business Days prior to the Scheduled Settlement Date for the payment
or delivery to which such change applies unless such other party gives
timely notice of a reasonable objection to such change.
(c) Netting of Payments. If on any date amounts would otherwise be payable:-
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation
to make payment of any such amount will be automatically satisfied and
discharged and, if the aggregate amount that would otherwise have been
payable by one party exceeds the aggregate amount that would otherwise
have been payable by the other party, replaced by an obligation upon the
party by which the larger aggregate amount would have been payable to pay
to the other party the excess of the larger aggregate amount over the
smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net
amount and payment obligation will be determined in respect of all amounts
payable on the same date in the same currency in respect of those
Transactions, regardless of whether such amounts are payable in respect of
the same Transaction. The election may be made in the Schedule or any
Confirmation by specifying that "Multiple Transaction Payment Netting"
applies to the Transactions identified as being subject to the election
(in which case clause (ii) above will not apply to such Transactions). If
Multiple Transaction Payment Netting is applicable to Transactions, it
will apply to those Transactions with effect from the starting date
specified in the Schedule or such Confirmation, or, if a starting date is
not specified in the Schedule or such Confirmation, the starting date
otherwise agreed by the parties in writing. This election may be made
separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties
make and receive payments or deliveries.
(d) Deduction or Withholding for Tax.
(i) Gross-Up. All payments under this Agreement will be made without any
deduction or withholding for or on account of any Tax unless such deduction
or withholding is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, then in effect.
If a party is so required to deduct or withhold, then that party ("X")
will:-
(1) promptly notify the other party ("Y") of such requirement;
(2) pay to the relevant authorities the full amount required to be deducted
or withheld (including the full amount required to be deducted or withheld
from any additional amount paid by X to Y under this Section 2(d)) promptly
upon the earlier of determining that such deduction or withholding is
required or receiving notice that such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified copy), or
other documentation reasonably acceptable to Y, evidencing such payment
to such authorities; and
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(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to the
payment to which Y is otherwise entitled under this Agreement, such
additional amount as is necessary to ensure that the net amount actually
received by Y (free and clear of Indemnifiable Taxes,whether assessed
against X or Y) will equal the full amount Y would have received had no
such deduction or withholding been required. However, X will not be
required to pay any additional amount to Y to the extent that it would not
be required to be paid but for:-
(A) the failure by Y to comply with or perform any agreement contained in
Section 4(a)(i),4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to Section 3(f) to
be accurate and true unless such failure would not have occurred but
for (I) any action taken by a taxing authority, or brought in a court of
competent jurisdiction,after a Transaction is entered into (regardless
of whether such action is taken or brought with respect to a party to this
Agreement) or (II) a Change in Tax Law.
(ii) Liability. If:-
(1) X is required by any applicable law, as modified by the practice of any
relevant governmental revenue authority, to make any deduction or withholding
in respect of which X would not be required to pay an additional amount to Y
under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly against X,
then, except to the extent Y has satisfied or then satisfies the liability
resulting from such Tax, Y will promptly pay to X the amount of such
liability (including any related liability for interest, but including any
related liability for penalties only if Y has failed to comply with or
perform any agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).
3. Representations
Each party makes the representations contained in Sections 3(a),3(b), 3(c)
3(d), 3(e) and 3(f) and, if specified in the Schedule as applying, 3(g) to
the other party (which representations will be deemed to be repeated by
each party on each date on which a Transaction is entered into and, in the
case of the representations in Section 3(f), at all times until the
termination of this Agreement). If any "Additional Representation" is
specified in the Schedule or any Confirmation as applying, the party or
parties specified for such Additional Representation will make and, if
applicable, be deemed to repeat such Additional Representation at the time
or times specified for such Additional Representation.
(a) Basic Representations.
(i) Status. It is duly organised and validly existing under the laws of the
jurisdiction of its organisation or incorporation and, if relevant under
such laws, in good standing;
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(ii) Powers. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to deliver
this Agreement and any other documentation relating to this Agreement that
it is required by this Agreement to deliver and to perform its obligations
under this Agreement and any obligations it has under any Credit Support
Document to which it is a party and has taken all necessary action to
authorise such execution, delivery and performance;
(iii) No Violation or Conflict. Such execution, delivery and performance
do not violate or conflict with any law applicable to it, any provision
of its constitutional documents, any order or judgment of any court or
other agency of government applicable to it or any of its assets or any
contractual restriction binding on or affecting it or any of its assets;
(iv) Consents. All governmental and other consents that are required to
have been obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party have been obtained and are in full
force and effect and all conditions of any such consents have been complied
with; and
(v) Obligations Binding. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal, valid
and binding obligations,enforceable in accordance with their respective
terms (subject to applicable bankruptcy, reorganisation, insolvency,
moratorium or similar laws affecting creditors'rights generally and subject
as to enforceability, to equitable principles of general application
(regardless of whether enforcement is sought in a proceeding in equity or
at law)).
(b) Absence of Certain Events. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has
occurred and is continuing and no such event or circumstance would occur
as a result of its entering into or performing its obligations under this
Agreement or any Credit Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its knowledge,
threatened against it, any of its Credit Support Providers or any of its
applicable Specified Entities any action, suit or proceeding at law or in
equity or before any court, tribunal, governmental body, agency or official
or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support Document
to which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.
(d) Accuracy of Specified Information. All applicable information that is
furnished in writing by or on behalf of it to the other party and is
identified for the purpose of this Section 3(d) in the Schedule is, as of
the date of the information, true, accurate and complete in every material
respect.
(e) Payer Tax Representation. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(e) is accurate and
true.
(f) Payee Tax Representations. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(f) is accurate and
true.
(g) No Agency. It is entering into this Agreement, including each
Transaction, as principal and not as agent of any person or entity.
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4. Agreements
Each party agrees with the other that, so long as either party has or may
have any obligation under this Agreement or under any Credit Support Document
to which it is a party:-
(a) Furnish Specified Information. It will deliver to the other party or, in
certain cases under clause (iii) below, to such government or taxing authority
as the other party reasonably directs:-
(i) any forms, documents or certificates relating to taxation specified in the
Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any Confirmation; and
(iii) upon reasonable demand by such other party, any form or document that
may be required or reasonably requested in writing in order to allow such
other party or its Credit Support Provider to make a payment under this
Agreement or any applicable Credit Support Document without any deduction
or withholding for or on account of any Tax or with such deduction or
withholding at a reduced rate (so long as the completion, execution or
submission of such form or document would not materially prejudice the
legal or commercial position of the party in receipt of such demand), with
any such form or document to be accurate and completed in a manner
reasonably satisfactory to such other party and to be executed and to be
delivered with any reasonably required certification, in each case by the
date specified in the Schedule or such Confirmation or, if none is
specified, as soon as reasonably practicable.
(b) Maintain Authorisations. It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other authority
that are required to be obtained by it with respect to this Agreement or any
Credit Support Document to which it is a party and will use all reasonable
efforts to obtain any that may become necessary in the future.
(c) Comply With Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to
comply would materially impair its ability to perform its obligations
under this Agreement or any Credit Support Document to which it is a party.
(d) Tax Agreement. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon
learning of such failure.
(e) Payment of Stamp Tax. Subject to Section 11, it will pay any
Stamp Tax levied or imposed upon it or in respect of its execution or
performance of this Agreement by a jurisdiction in which it is incorporated,
organised, managed and controlled or considered to have its seat, or where
an Office through which it is acting for the purpose of this Agreement is
located ("Stamp Tax Jurisdiction"), and will indemnify the other party
against any Stamp Tax levied or imposed upon the other party or in
respect of the other party's execution or performance of this Agreement by
any such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction
with respect to the other party.
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5. Events of Default and Termination Events
(a) Events of Default. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any
Specified Entity of such party of any of the following events constitutes
(subject to Sections 5(c) and 6(e)(iv)) an event of default (an "Event of
Default") with respect to such party:- (i) Failure to Pay or Deliver.
Failure by the party to make, when due, any payment under this Agreement
or delivery under Section 2(a)(i) or 9(h)i)(2) or (4) required to be made
by it if such failure is not remedied on or before the first Local Business
Day in the case of any such payment or the first Local Delivery Day in the
case of any such delivery after,in each case, notice of such failure is
given to the party;
(ii) Breach of Agreement; Repudiation of Agreement.
(1) Failure by the party to comply with or perform any agreement or
obligation (other than an obligation to make any payment under this
Agreement or delivery under Section 2(a)(i) or 9(h)(i)(2) or (4) or to
give notice of a Termination Event or any agreement or obligation under
Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by
the party in accordance with this Agreement if such failure is not
remedied within 30 days after notice of such failure is given to the
party; or
(2) the party disaffirms, disclaims, repudiates or rejects, in whole or
in part, or challenges the validity of, this Master Agreement, any
Confirmation executed and delivered by that party or any Transaction
evidenced by such a Confirmation (or such action is taken by any person
or entity appointed or empowered to operate it or act on its behalf);
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider of such party
to comply with or perform any agreement or obligation to be complied
with or performed by it in accordance with any Credit Support Document
if such failure is continuing after any applicable grace period has
elapsed;
(2) the expiration or termination of such Credit Support Document or
the failing or ceasing of such Credit Support Document, or any security
interest granted by such party or such Credit Support Provider to the
other party pursuant to any such Credit Support Document, to be in full
force and effect for the purpose of this Agreement (in each case other
than in accordance with its terms) prior to the satisfaction of all
obligations of such party under each Transaction to which such Credit
Support Document relates without the written consent of the other
party; or
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(3) the party or such Credit Support Provider disaffirms, disclaims,
repudiates or rejects, in whole or in part, or challenges the validity
of, such Credit Support Document (or such action is taken by any
person or entity appointed or empowered to operate it or act on its
behalf); (iv) Misrepresentation. A representation (other than a
representation under Section 3(e) or 3(f)) made or repeated or deemed
to have been made or repeated by the party or any Credit Support
Provider of such party in this Agreement or any Credit Support Document
proves to have been incorrect or misleading in any material respect
when made or repeated or deemed to have been made or repeated;
v) Default Under Specified Transaction. The party, any Credit Support
Provider of such party or any applicable Specified Entity of such party:-
(1) defaults (other than by failing to make a delivery) under a Specified
Transaction or any credit support arrangement relating to a Specified
Transaction and, after giving effect to any applicable notice requirement
or grace period, such default results in a liquidation of, an acceleration
of obligations under, or an early termination of, that Specified
Transaction;
(2) defaults, after giving effect to any applicable notice requirement or
grace period, in making any payment due on the last payment or exchange
date of, or any payment on early termination of, a Specified Transaction
(or, if there is no applicable notice requirement or grace period, such
default continues for at least one Local Business Day);
(3) defaults in making any delivery due under (including any delivery due
on the last delivery or exchange date of) a Specified Transaction or any
credit support arrangement relating to a Specified Transaction and, after
giving effect to any applicable notice requirement or grace period, such
default results in a liquidation of, an acceleration of obligations under,
or an early termination of, all transactions outstanding under the
documentation applicable to that Specified Transaction; or
(4) disaffirms, disclaims, repudiates or rejects, in whole or in part,
or challenges the validity of, a Specified Transaction or any credit
support arrangement relating to a Specified Transaction that is, in either
case, confirmed or evidenced by a document or other confirming evidence
executed and delivered by that party, Credit Support Provider or Specified
Entity (or such action is taken by any person or entity appointed or
empowered to operate it or act on its behalf);
(vi) Cross-Default. If "Cross-Default" is specified in the Schedule as
applying to the party, the occurrence or existence of:-
(1) a default, event of default or other similar condition or event
(however described) in respect of such party, any Credit Support Provider
of such party or any applicable Specified Entity of such party under
one or more agreements or instruments relating to Specified Indebtedness
of any of them (individually or collectively) where the aggregate principal
amount of such agreements or instruments, either alone or together with the
amount, if any, referred to in clause (2) below, is not less than the
applicable Threshold Amount (as specified in the Schedule) which has
esulted in such Specified Indebtedness becoming, or becoming capable at such
time of being declared,due and payable under such agreements or instruments
before it would otherwise have been due and payable; or
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(2) a default by such party, such Credit Support Provider or such Specified
Entity (individually or collectively) in making one or more payments under
such agreements or instruments on the due date for payment (after giving
effect to any applicable notice requirement or grace period) in an aggregate
amount,either alone or together with the amount, if any,referred to in clause
(1) above, of not less than the applicable Threshold Amount;(vii) Bankruptcy.
The party, any Credit Support Provider of such party or any applicable
Specified Entity of such party:-
(1) is dissolved (other than pursuant to a consolidation, amalgamation or
merger); (2) becomes insolvent or is unable to pay its debts or fails or
admits in writing its inability generally to pay its debts as they become
due; (3) makes a general assignment, arrangement or composition with or for
the benefit of its creditors; (4)(A) institutes or has instituted against it,
by a regulator, supervisor or any similar official with primary insolvency,
rehabilitative or regulatory jurisdiction over it in the jurisdiction of its
incorporation or organisation or the jurisdiction of its head or home office,
a proceeding seeking a judgment of insolvency or bankruptcy or any other
relief under any bankruptcy or insolvency law or other similar law affecting
creditors' rights, or a petition is presented for its winding-up or liquidation
by it or such regulator, supervisor or similar official, or (B) has instituted
against it a proceeding seeking a judgment of insolvency or bankruptcy or any
other relief under any bankruptcy or insolvency law or other similar law
affecting creditors' rights, or a petition is presented for its winding-up or
liquidation, and such proceeding or petition is instituted or presented by a
person or entity not described in clause (A) above and either (I) results in
a judgment of insolvency or bankruptcy or the entry of an order for relief or
the making of an order for its winding-up or liquidation or (II) is not
ismissed, discharged, stayed or restrained in each case within 15 days of the
institution or presentation thereof; (5) has a resolution passed for its
winding-up, official management or liquidation (other than pursuant to a
consolidation, amalgamation or merger); (6) seeks or becomes subject to the
appointment of an administrator, provisional liquidator, conservator,
receiver, trustee, custodian or other similar official for it or for all or
substantially all its assets; (7)has a secured party take possession of all or
substantially all its assets or has a distress, execution, attachment,
sequestration or other legal process levied, enforced or sued on or against
all or substantially all its assets and such secured party maintains possession,
or any such process is not dismissed, discharged, stayed or restrained, in each
case within 15 days thereafter; (8) causes or is subject to any event with
espect to it which, under the applicable laws of any jurisdiction, has an
analogous effect to any of the events specified in clauses (1) to (7) above
(inclusive); or (9) takes any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the foregoing acts; or
(viii) Merger Without Assumption. The party or any Credit Support Provider
of such party consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, or reorganises,
reincorporates or reconstitutes into or as, another entity and, at the time
of such consolidation, amalgamation,merger, transfer, reorganisation,
reincorporation or reconstitution:-
(1) the resulting, surviving or transferee entity fails to assume all the
obligations of such party or such Credit Support Provider under this
Agreement or any Credit Support Document to which it or its predecessor
was a party; or
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(2) the benefits of any Credit Support Document fail to extend (without
the consent of the other party) to the performance by such resulting,
surviving or transferee entity of its obligations under this Agreement.
(b) Termination Events. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any
Specified Entity of such party of any event specified below constitutes
(subject to Section 5(c)) an Illegality if the event is specified in clause
(i) below, a Force Majeure Event if the event is specified in clause (ii)
below, a Tax Event if the event is specified in clause (iii) below, a Tax
Event Upon Merger if the event is specified in clause (iv) below, and, if
specified to be applicable, a Credit Event Upon Merger if the event is
specified pursuant to clause (v) below or an Additional Termination Event
if the event is specified pursuant to clause (vi) below:-
(i) Illegality. After giving effect to any applicable provision, disruption
fallback or remedy specified in, or pursuant to, the relevant Confirmation
or elsewhere in this Agreement, due to an event or circumstance (other than
any action taken by a party or, if applicable, any Credit Support Provider
of such party) occurring after a Transaction is entered into, it becomes
unlawful under any applicable law (including without limitation the laws of
any country in which payment, delivery or compliance is required by either
party or any Credit Support Provider, as the case may be), on any day, or
it would be unlawful if the relevant payment, delivery or compliance were
required on that day (in each case, other than as a result of a breach by
the party of Section 4(b)):-
(1) for the Office through which such party (which will be the Affected
Party) makes and receives payments or deliveries with respect to such
Transaction to perform any absolute or contingent obligation to make a
payment or delivery in respect of such Transaction, to receive a payment
or delivery in respect of such Transaction or to comply with any other
material provision of this Agreement relating to such Transaction; or
(2) for such party or any Credit Support Provider of such party (which
will be the Affected Party) to perform any absolute or contingent
obligation to make a payment or delivery which such party or Credit
Support Provider has under any Credit Support Document relating to such
Transaction, to receive a payment or delivery under such Credit Support
Document or to comply with any other material provision of such
Credit Support Document;
(ii) Force Majeure Event. After giving effect to any applicable provision,
disruption fallback or remedy specified in, or pursuant to, the relevant
Confirmation or elsewhere in this Agreement, by reason of force majeure or
act of state occurring after a Transaction is entered into,on any day:-
(1) the Office through which such party (which will be the Affected Party)
makes and receives payments or deliveries with respect to such Transaction
is prevented from performing any absolute or contingent obligation to make
a payment or delivery in respect of such Transaction, from receiving a
payment or delivery in respect of such Transaction or from complying with
any other material provision of this Agreement relating to such Transaction
(or would be so prevented if such payment, delivery or compliance were
required on that day), or it becomes impossible or
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impracticable for such Office so to perform, receive or comply (or it would
be impossible or impracticable for such Office so to perform, receive or
comply if such payment, delivery or compliance were required on that day);
or
(2) such party or any Credit Support Provider of such party (which will be
the Affected Party) is prevented from performing any absolute or contingent
obligation to make a payment or delivery which such party or Credit Support
Provider has under any Credit Support Document relating to such Transaction,
from receiving a payment or delivery under such Credit Support Document or
from complying with any other material provision of such Credit Support
Document (or would be so prevented if such payment, delivery or compliance
were required on that day), or it becomes impossible or impracticable for
such party or Credit Support Provider so to perform, receive or comply
(or it would be impossible or impracticable for such party or Credit Support
Provider so to perform, receive or comply if such payment, delivery or
compliance were required on that day), so long as the force majeure or act
of state is beyond the control of such Office, such party or such Credit
Support Provider, as appropriate, and such Office, party or Credit Support
Provider could not, after using all reasonable efforts (which will not
require such party or Credit Support Provider to incur a loss, other than
immaterial, incidental expenses), overcome such prevention, impossibility
or impracticability;
(iii) Tax Event. Due to (1) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, after a Transaction is entered
into (regardless of whether such action is taken or brought with respect to
a party to this Agreement) or (2) a Change in Tax Law, the party (which will
be the Affected Party) will, or there is a substantial likelihood that it
will, on the next succeeding Scheduled Settlement Date (A) be required to
pay to the other party an additional amount in respect of an Indemnifiable
Tax under Section 2(d)(i)(4) (except in respect of interest under Section
9(h)) or (B) receive a payment from which an amount is required to be
deducted or withheld for or on account of a Tax (except in respect of
interest under Section 9(h)) and no additional amount is required to be paid
in respect of such Tax under Section 2(d)(i)(4) (other than by reason of
Section 2(d)(i)(4)(A)or (B));
(iv) Tax Event Upon Merger. The party (the "Burdened Party") on the next
succeeding Scheduled Settlement Date will either (1) be required to pay an
additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4)
(except in respect of interest under Section 9(h)) or (2) receive a payment
from which an amount has been deducted or withheld for or on account of any
Tax in respect of which the other party is not required to pay an additional
amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in either case
as a result of a party consolidating or amalgamating with, or merging with or
into, or transferring all or substantially all its assets (or any substantial
part of the assets comprising the business conducted by it as of the date of
this Master Agreement) to, or reorganising, reincorporating or reconstituting
into or as, another entity (which will be the Affected Party) where such action
does not constitute a Merger Without Assumption;
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(v) Credit Event Upon Merger. If "Credit Event Upon Merger" is specified in the
Schedule as applying to the party, a Designated Event (as defined below) occurs
with respect to such party, any Credit Support Provider of such party or any
pplicable Specified Entity of such party (in each case, "X") and such Designated
Event does not constitute a Merger Without Assumption, and the creditworthiness
of X or, if applicable, the successor, surviving or transferee entity of X,
after taking into account any applicable Credit Support Document, is materially
weaker immediately after the occurrence of such Designated Event than that of
X immediately prior to the occurrence of such Designated Event (and, in any such
event, such party or its successor, surviving or transferee entity, as
appropriate,will be the Affected Party). A "Designated Event" with respect to
X means that:-
(1) X consolidates or amalgamates with, or merges with or into, or transfers
all or substantially all its assets (or any substantial part of the assets
comprising the business conducted by X as of the
date of this Master Agreement) to, or reorganises,reincorporates or
reconstitutes nto or as, another entity;
(2) any person, related group of persons or entity acquires directly or
indirectly the beneficial ownership of (A) equity securities having the power
to elect a majority of the board of directors (or its equivalent) of X or
(B) any other ownership interest enabling it to exercise control of X; or
(3) X effects any substantial change in its capital structure by means of the
issuance, incurrence or guarantee of debt or the issuance of (A) preferred
stock or other securities convertible into or exchangeable for debt or
preferred stock or (B) in the case of entities other than corporations, any
other form of ownership interest; or
(vi) Additional Termination Event. If any "Additional Termination Event" is
specified in the Schedule or any Confirmation as applying, the occurrence of
such event (and, in such event, the Affected Party or Affected Parties will be
as specified for such Additional Termination Event in the Schedule or such
Confirmation).
(c) Hierarchy of Events.
(i) An event or circumstance that constitutes or gives rise to an Illegality or
a Force Majeure Event will not, for so long as that is the case, also constitute
or give rise to an Event of Default under Section 5(a)(i), 5(a)(ii)(1) or
5(a)(iii)(1) insofar as such event or circumstance relates to the failure to
make any payment or delivery or a failure to comply with any other material
provision of this Agreement or a Credit Support Document, as the case may be.
(ii) Except in circumstances contemplated by clause (i)above, if an event or
circumstance which would otherwise constitute or give rise to an Illegality
or a Force Majeure Event also constitutes an Event of Default or any other
Termination Event, it will be treated as an Event of Default or such other
Termination Event, as the case may be, and will not constitute or give rise to
an Illegality or a Force Majeure Event.
(iii) If an event or circumstance which would otherwise constitute or give rise
to a Force Majeure Event also constitutes an Illegality, it will be treated as
an Illegality, except as described in clause (ii) above, and not a Force Majeure
Event.
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(d) Deferral of Payments and Deliveries During Waiting Period. If an Illegality
or a Force Majeure Event has occurred and is continuing with respect to a
Transaction, each payment or delivery which would otherwise be required to be
made under that Transaction will be deferred to, and will not be due until:-
(i) the first Local Business Day or, in the case of a delivery, the first Local
Delivery Day (or the first day that would have been a Local Business Day or
Local Delivery Day, as appropriate, but for the occurrence of the event or
circumstance constituting or giving rise to that Illegality or Force Majeure
Event) following the end of any applicable Waiting Period in respect of that
Illegality or Force Majeure Event, as the case may be; or
(ii) if earlier, the date on which the event or circumstance constituting or
giving rise to that Illegality or Force Majeure Event ceases to exist or,
if such date is not a Local Business Day or, in the case of a delivery, a
Local Delivery Day, the first following day that is a Local Business Day or
Local Delivery Day, as appropriate.
(e) Inability of Head or Home Office to Perform Obligations of Branch. If
(i) an Illegality or a Force Majeure Event occurs under Section 5(b)(i)(1)
or 5(b)(ii)(1) and the relevant Office is not the Affected Party's head or
home office, (ii) Section 10(a) applies, (iii) the other party seeks
performance of the relevant obligation or
compliance with the relevant provision by the Affected Party's head or home
office and (iv) the Affected Party's head or home office fails so to perform
or comply due to the occurrence of an event or circumstance which would, if
that head or home office were the Office through which the Affected Party
makes and receives payments and deliveries with respect to the relevant
Transaction, constitute or give rise to an Illegality or a Force Majeure
Event, and such failure would otherwise constitute an Event of Default under
Section 5(a)(i) or 5(a)(iii)(1) with respect to such party, then, for so
long as the relevant event or circumstance continues to exist with respect
to both the Office referred to in Section 5(b)(i)(1) or 5(b)(ii)(1), as the
case may be, and the Affected Party's head or home office, such failure
will not constitute an Event of Default under Section 5(a)(i) or 5(a)(iii)(1).
6. Early Termination; Close-Out Netting
(a) Right to Terminate Following Event of Default. If at any time an Event
of Default with respect to a party (the "Defaulting Party") has occurred
and is then continuing, the other party (the "Non-defaulting Party") may,
by not more than 20 days notice to the Defaulting Party specifying the
relevant Event of Default, designate a day not earlier than the day such
notice is effective as an Early Termination Date in respect of all
outstanding Transactions. If, however, "Automatic Early Termination" is
specified in the Schedule as applying to a party, then an Early Termination
Date in respect of all outstanding Transactions will occur immediately upon
the occurrence with respect to such party of an Event of Default specified
in Section 5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto,
(8), and as of the time immediately preceding the institution of the relevant
proceeding or the presentation of the relevant petition upon the occurrence
with respect to such party of an Event of Default specified in Section 5(a)
vii)(4) or, to the extent analogous thereto, (8).
(b) Right to Terminate Following Termination Event.
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(i) Notice. If a Termination Event other than a Force Majeure Event occurs,
an Affected Party will, promptly upon becoming aware of it, notify the other
party, specifying the nature of that Termination Event and each Affected
Transaction, and will also give the other party such other information about
that Termination Event as the other party may reasonably require. If a Force
Majeure Event occurs,each party will, promptly upon becoming aware of it,
use all reasonable efforts to notify the other party, specifying the nature
of that Force Majeure Event, and will also give the other party such other
information about that Force Majeure Event as the other party may reasonably
require.
(ii) Transfer to Avoid Termination Event. If a Tax Event occurs and there is
only one Affected Party, or if a Tax Event Upon Merger occurs and the Burdened
Party is the Affected Party, the Affected Party will, as a condition to
its right to designate an Early Termination Date under Section 6(b)(iv), use
all reasonable efforts (which will not require such party to incur a loss,
other than immaterial, incidental expenses) to transfer within 20 days after
it gives notice under Section 6(b)(i) all its rights and obligations under
this Agreement in respect of the Affected Transactions to another of its
Offices or Affiliates so that such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give notice
to the other party to that effect within such 20 day period, whereupon the
other party may effect such a transfer within 30 days after the notice is
given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be subject to
and conditional upon the prior written consent of the other party, which
consent will not be withheld if such other party's policies in effect at such
time would permit it to enter into transactions with the transferee on the
terms proposed.
(iii) Two Affected Parties. If a Tax Event occurs and there are two Affected
Parties, each party will use all reasonable efforts to reach agreement within
30 days after notice of such occurrence is given under Section 6(b)(i) to
avoid that Termination Event.
(iv) Right to Terminate.
(1) If:-
(A) a transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii),
as the case may be, has not been effected with respect to all Affected
Transactions within 30 days after an Affected Party gives notice under Section
6(b)(i); or
(B) a Credit Event Upon Merger or an Additional Termination Event occurs, or
a Tax Event Upon Merger occurs and the Burdened Party is not the Affected
Party, the Burdened Party in the case of a Tax Event Upon Merger, any
Affected Party in the case of a Tax Event or an Additional Termination Event
if there are two Affected Parties, or the Non- affected Party in the case of
a Credit Event Upon Merger or an Additional Termination Event if there is only
one Affected Party may, if the relevant Termination Event is then continuing,
by not more than 20 days notice to the other party, designate a day not
earlier than the day such notice is effective as an Early Termination Date
in respect of all Affected Transactions.
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(2) If at any time an Illegality or a Force Majeure Event has occurred and
is then continuing and any applicable Waiting Period has expired:-
(A) Subject to clause (B) below, either party may, by not more than 20 days
notice to the other party, designate (I) a day not earlier than the day on
which such notice becomes effective as an Early Termination Date in respect
of all Affected Transactions or (II) by specifying in that notice the Affected
Transactions in respect of which it is designating the relevant day as an
Early Termination Date, a day not earlier than two Local Business Days
following the day on which such notice becomes effective as an Early
Termination Date in respect of less than all Affected Transactions. Upon
receipt of a notice designating an Early Termination Date in respect of
less than all Affected Transactions, the other party may, by notice to the
designating party, if such notice is effective on or before the day so
designated, designate that same day as an Early Termination Date in respect
of any or all other Affected Transactions.
(B) An Affected Party (if the Illegality or Force Majeure Event relates to
performance by such party or any Credit Support Provider of such party of an
obligation to make any payment or delivery under, or to compliance with any
other material provision of, the relevant Credit Support Document) will only
have the right to designate an Early Termination Date under Section 6(b)(iv)
(2)(A) as a result of an Illegality under Section 5(b)(i)(2) or a Force
Majeure Event under Section 5(b)(ii)(2) following the prior designation by
the other party of an Early Termination Date, pursuant to Section 6(b)(iv)
(2)(A), in respect of less than all Affected Transactions.
(c) Effect of Designation.
(i) If notice designating an Early Termination Date is given under Section
6(a) or 6(b), the Early Termination Date will occur on the date so designated,
whether or not the relevant Event of Default or Termination Event is then
continuing.
(ii) Upon the occurrence or effective designation of an Early Termination
Date,no further payments or deliveries under Section 2(a)(i) or 9(h)(i) in
respect of the Terminated Transactions will be required to be made, but
without prejudiceto the other provisions of this Agreement. The amount,
if any, payable in respect of an Early Termination Date will be determined
pursuant to Sections 6(e) and 9(h)(ii).
(d) Calculations; Payment Date.
(i) Statement. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the calculations
on its part,if any,contemplated by Section 6(e) and will provide to the other
party a statement (1) showing, in reasonable detail, such calculations
(including any quotations,market data or information from internal sources
used in making such calculations),(2) specifying (except where there are two
Affected Parties) any Early Termination Amount payable and (3) giving details
of the relevant account to which any amount payable to it is to be paid. In
the absence of written confirmation from the source of a quotation or market
data obtained in determining a Close-out Amount, the records of the party
obtaining such quotation or market data will be conclusive evidence of the
existence and accuracy of such quotation or market data.
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(ii) Payment Date. An Early Termination Amount due in respect of any Early
Termination Date will, together with any amount of interest payable pursuant
to Section 9(h)(ii)(2), be payable (1) on the day on which notice of the
amount payable is effective in the case of an Early Termination Date which
is designated or occurs as a result of an Event of Default and (2) on the
day which is two Local Business Days after the day on which notice of the
amount payable is effective (or, if there are two Affected Parties, after
the day on which the statement provided pursuant to clause (i) above by the
second party to provide such a statement is effective) in the case of an
Early Termination Date which is designated as a result of a Termination
Event. (e) Payments on Early Termination. If an Early Termination Date
occurs, the amount,if any, payable in respect of that Early Termination
Date (the "Early Termination Amount") will be determined pursuant to this
Section 6(e) and will be subject to Section 6(f).
(i) Events of Default. If the Early Termination Date results from an Event
of Default,the Early Termination Amount will be an amount equal to (1) the
sum of (A) the Termination Currency Equivalent of the Close-out Amount or
Close-out Amounts (whether positive or negative) determined by the Non-
defaulting Party for each Terminated Transaction or group of Terminated
Transactions, as the case may be, and (B) the Termination Currency Equivalent
of the Unpaid Amounts owing to the Non-defaulting Party less (2) the
Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting
Party. If the Early Termination Amount is a positive number, the Defaulting
Party will pay it to the Non-defaulting Party; if it is a negative number,
the Non-defaulting Party will pay the absolute value of the Early Termination
Amount to the Defaulting Party.
(ii) Termination Events. If the Early Termination Date results from a
Termination Event:-
(1) One Affected Party. Subject to clause (3) below,if there is one
Affected Party,the Early Termination Amount will be determined in accordance
with Section 6(e)(i),except that references to the Defaulting Party and
to the Non-defaulting Party will be deemed to be references to the Affected
Party and to the Non-affected Party, respectively.
(2) Two Affected Parties. Subject to clause (3) below,if there are two
Affected Parties,each party will determine an amount equal to the Termination
Currency Equivalent of the sum of the Close-out Amount or Close-out Amounts
(whether positive or negative) for each Terminated Transaction or group of
Terminated Transactions, as the case may be,and the Early Termination Amount
will be an amount equal to (A) the sum of (I) one-half of the difference
between the higher amount so determined (by party "X") and the lower amount
so determined (by party "Y") and (II) the Termination Currency Equivalent
of the Unpaid Amounts owing to X less (B) the Termination Currency Equivalent
of the Unpaid Amounts owing to Y. If the Early Termination Amount is a
positive number, Y will pay it to X; if it is a negative number, X will pay
the absolute value of the Early Termination Amount to Y.
(3) Mid-Market Events. If that Termination Event is an Illegality or a Force
Majeure Event, then the Early Termination Amount will be determined in
accordance with clause (1) or (2) above, as appropriate, except that, for
the purpose of determining a Close-out Amount or Close-out Amounts, the
Determining Party will:-
15
(A) if obtaining quotations from one or more third parties (or from any of
the Determining Party's Affiliates), ask each third party or Affiliate (I)
not to take account of the current creditworthiness of the Determining Party
or any existing Credit Support Document and (II) to provide mid-market
quotations; and
(B) in any other case, use mid-market values without regard to the credit
worthiness of the Determining Party.
(iii) Adjustment for Bankruptcy. In circumstances where an Early Termination
Date occurs because Automatic Early Termination applies in respect of a party,
the Early Termination Amount will be subject to such adjustments as are
appropriate and permitted by applicable law to reflect any payments or
deliveries made by one party to the other under this Agreement (and retained
by such other party) during the period from the relevant Early Termination
Date to the date for payment determined under Section 6(d)(ii).
(iv) Adjustment for Illegality or Force Majeure Event. The failure by a party
or any Credit Support Provider of such party to pay, when due, any Early
Termination Amount will not constitute an Event of Default under Section
5(a)(i) or 5(a)(iii)(1) if such failureb is due to the occurrence of an event
or circumstance which would, if it occurred with respect to payment, delivery
or compliance related to a Transaction, constitute or give rise to an Illegality
or a Force Majeure Event. Such amount will (1) accrue interest and otherwise
be treated as an Unpaid Amount owing to the other party if subsequently
an Early Termination Date results from an Event of Default, a Credit Event Upon
Merger or an Additional Termination Event in respect of which all outstanding
Transactions are Affected Transactions and (2) otherwise accrue interest in
accordance with Section 9(h)(ii)(2).
(v) Pre-Estimate. The parties agree that an amount recoverable under this
Section 6(e) is a reasonable pre-estimate of loss and not a penalty. Such
amount is payable for the loss of bargain and the loss of protection against
future risks, and, except as otherwise provided in this Agreement, neither
party will be entitled to recover any additional damages as a consequence of
the termination of the Terminated Transactions.
(f) Set-Off Any Early Termination Amount payable to one party (the "Payee")
by the other party (the "Payer"), in circumstances where there is a Defaulting
Party or where there s one Affected Party in the case where either a Credit
Event Upon Merger has occurred or any other Termination Event in respect of
which all outstanding Transactions are Affected Transactions has occurred,
will, at the option of the Non-defaulting Party or the Non-affected Party,
as the case may be ("X") (and without prior notice to the Defaulting Party
or the Affected Party, as the case may be), be reduced by its set-off against
any other amounts ("Other Amounts") payable by the Payee to the Payer (whether
or not arising under this Agreement, matured or contingent and irrespective of
the currency, place of payment or place of booking of the obligation). To the
extent that any Other Amounts are so set off, those Other Amounts will be
discharged promptly and in all respects. X will give notice to the other party
of any set-off effected under this Section 6(f).
For this purpose, either the Early Termination Amount or the Other Amounts
(or the relevant portion of such amounts) may be converted by X into the
currency in which the other is denominated at the rate of exchange at which
such party would be able, in good faith and using commercially reasonable
procedures, to purchase the relevant amount of such currency.
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If an obligation is unascertained, X may in good faith estimate that
obligation and set off in respect of the estimate, subject to the relevant
party accounting to the other when the obligation is ascertained. Nothing
in this Section 6(f) will be effective to create a charge or other security
interest. This Section 6(f) will be without prejudice and in addition to any
right of set-off, offset,combination of accounts, lien, right of retention or
withholding or similar right or requirement to which any party is at any time
otherwise entitled or subject (whether by operation of law, contract or
otherwise).
7. Transfer Subject to Section 6(b)(ii) and to the extent permitted by
applicable law,neither this Agreement nor any interest or obligation in or
under this Agreement may be transferred (whether by way of security or
otherwise)by either party without the prior written consent of the other party,
except that:-
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of
all or substantially all its assets to, another entity (but without prejudice
to any other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in any
Early Termination Amount payable to it by a Defaulting Party, together with any
amounts payable on or with respect to that interest and any other rights
associated with that interest pursuant to Sections 8, 9(h) and 11.
Any purported transfer that is not in compliance with this Section 7 will
be void.
8. Contractual Currency
(a) Payment in the Contractual Currency. Each payment under this Agreement
will be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable
law,any obligation to make payments under this Agreement in the Contractual
Currency will not be discharged or satisfied by any tender in any currency
other than the Contractual Currency, except to the extent such tender results
in the actual receipt by the party to which payment is owed, acting in good
faith and using commercially reasonable procedures in converting the currency
so tendered into the Contractual Currency, of the full amount in the
Contractual Currency of all amounts payable in respect of this Agreement. If
for any reason the amount in the Contractual Currency so received falls short
of the amount in the Contractual Currency payable in respect of this Agreement,
the party required to make the payment will, to the extent permitted by
applicable law, immediately pay such additional amount in the Contractual
Currency as may be necessary to compensate for the shortfall. If for any reason
the amount in the Contractual Currency so received exceeds the amount in the
Contractual Currency payable in respect of this Agreement, the party receiving
the payment will refund promptly
the amount of such excess.
17
(b) Judgments. To the extent permitted by applicable law, if any judgment or
order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any mount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in clause (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arisesor results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purpose of such
judgment or order and the rate of exchange at which such party is able, acting
in good faith and using
commercially reasonable procedures in converting the currency received into
the Contractual Currency, to purchase the Contractual Currency with the amount
of the currency of the judgment or order actually received by such party.
(c) Separate Indemnities. To the extent permitted by applicable law, the
indemnities in this Section 8 constitute separate and independent obligations
from the other obligations in this Agreement, will be enforceable as separate
and independent causes of action, will apply notwithstanding any indulgence
granted by the party to which any payment is owed and will not be affected by
judgment being obtained or claim or proof being made for any other sums payable
in respect of this Agreement.
(d) Evidence of Loss. For the purpose of this Section 8, it will be sufficient
for a party to demonstrate that it would have suffered a loss had an actual
exchange or purchase been made.
9. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter. Each of the
parties acknowledges that in entering into this Agreement it has not relied
on any oral or written representation, warranty or other assurance (except as
provided for or referred to in this Agreement) and waives all rights and
remedies which might otherwise be available to it in respect thereof, except
that nothing in this Agreement will limit or exclude any liability of a party
for fraud.
(b) Amendments. An amendment, modification or waiver in respect of this
Agreement will only be effective if in writing (including a writing evidenced
by a facsimile transmission) and executed by each of the parties or confirmed
by an exchange of telexes or by an exchange of electronic messages on an
electronic messaging system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and 6(c)
(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
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(d) Remedies Cumulative. Except as provided in this Agreement,the rights,
powers,remedies and privileges provided in this Agreement are cumulative
and not exclusive of any rights, powers, remedies and privileges provided
by law.
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver in respect
of it)may be executed and delivered in counterparts (including by facsimile
transmission and by electronic messaging system), each of which will be deemed
an original.
(ii) The parties intend that they are legally bound by the terms of each
Transaction from the moment they agree to those terms (whether orally or
otherwise). A Confirmation will be entered into as soon as practicable and
may be executed and delivered in counterparts (including by facsimile
transmission) or be created by an exchange of telexes, by an exchange of
electronic messages on an electronic messaging system or by an exchange of
e-mails, which in each case will be sufficient for all purposes to evidence
a binding supplement to this Agreement. The parties will specify therein or
through another effective means that any such counterpart, telex, electronic
message or e-mail constitutes a Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right, power
or privilege in respect of this Agreement will not be presumed to operate as
a waiver, and a single or partial exercise of any right, power or privilege
will not be presumed to preclude any subsequent or further exercise, of that
right,power or privilege or the exercise of any other right, power or
privilege.
(g) Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken
into consideration in interpreting this Agreement.
(h) Interest and Compensation.
(i) Prior to Early Termination. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant
Transaction:-
(1) Interest on Defaulted Payments. If a party defaults in the performance
of any payment obligation, it will, to the extent permitted by applicable
law and subject to Section 6(c),pay interest (before as well as after judgment)
on the overdue amount to the other party on demand in the same currency as
the overdue amount, for the period from (and including)the original due date
for payment to (but excluding) the date of actual payment (and excluding
any period in respect of which interest or compensation in respect of the
overdue amount is due pursuant to clause (3)(B) or (C) below), at the Default
Rate.
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(2) Compensation for Defaulted Deliveries. If a party defaults in the
performance of any obligation required to be settled by delivery, it will on
demand (A)compensate the other party to the extent provided for in the relevant
Confirmation or elsewhere in this Agreement and (B) unless otherwise provided
in the relevant Confirmation or elsewhere in this Agreement, to the extent
permitted by applicable law and subject to Section 6(c), pay to the other party
interest (before as well as after judgment) on an amount equal to the fair
market value of that which was required to be delivered in the same currency
as that amount, for the period from (and including) the originally scheduled
date for delivery to (but excluding) the date of actual delivery (and excluding
any period in respect of which interest or compensation in respect of that
amount is due pursuant to clause (4) below), at the Default Rate. The fair
market value of any obligation referred to above will be determined as of the
originally scheduled date for delivery, in good faith and using commercially
reasonable procedures, by the party that was entitled to take delivery.
(3) Interest on Deferred Payments. If:-
(A) a party does not pay any amount that, but for Section 2(a)(iii), would have
been payable,it will, to the extent permitted by applicable law and subject to
Section 6(c) and clauses (B) and (C) below, pay interest (before as well as
after judgment) on that amount to the other party on demand (after such amount
becomes payable) in the same currency as that amount, for the period from
(and including)the date the amount would, but for Section 2(a)(iii), have been
payable to (but excluding) the date the amount actually becomes payable, at
the Applicable Deferral Rate;
(B) a payment is deferred pursuant to Section 5(d), the party which would
otherwise have been required to make that payment will, to the extent permitted
by applicable law, subject to Section 6(c) and for so long as no Event of
Default or Potential Event of Default with respect to that party has occurred
and is continuing, pay interest (before as well as after judgment) on the
amount of the deferred payment to the other party on demand (after such amount
becomes payable)in the same currency as the deferred payment, for the period
from (and including)the date the amount would, but for Section 5(d), have been
payable to (but excluding) the earlier of the date the payment is no longer
deferred pursuant to Section 5(d) and the date during the deferral period upon
which an Event of Default or Potential Event of Default with respect to that
party occurs, at the Applicable Deferral Rate; or
(C) a party fails to make any payment due to the occurrence of an Illegality
or a Force Majeure Event (after giving effect to any deferral period
contemplated by clause (B) above), it will, to the extent permitted by
applicable law, subject to Section 6(c) and for so long as the event or
circumstance giving rise to that Illegality or Force Majeure Event
continues and no Event of Default or Potential Event of Default with respect
to that party has occurred and is continuing, pay interest (before as well
as after judgment) on the overdue amount to the other party on demand in the
same currency as the overdue amount, for the period from (and including) the
date the party fails to make the payment due to the occurrence of the relevant
Illegality or Force Majeure Event (or, if later, the date the payment is no
longer deferred pursuant to Section 5(d)) to (but excluding) the earlier of
the date the event or circumstance giving rise to that Illegality or Force
Majeure Event ceases to exist and the date during the period upon which an
Event of Default or Potential Event of Default with respect to that party
occurs (and excluding any period in respect of which interest or compensation
in respect of the overdue amount is due pursuant to clause (B) above), at the
Applicable Deferral Rate.
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(4) Compensation for Deferred Deliveries. If:-
(A) a party does not perform any obligation that, but for Section 2(a)(iii),
would have been required to be settled by delivery;
(B) a delivery is deferred pursuant to Section 5(d); or
(C) a party fails to make a delivery due to the occurrence of an Illegality
or a Force Majeure Event at a time when any applicable Waiting Period has
expired,
the party required (or that would otherwise have been required) to make the
delivery will, to the extent permitted by applicable law and subject to
Section 6(c), compensate and pay interest to the other party on demand
(after, in the case of clauses (A) and (B) above, such delivery is required)
if and to the extent provided for in the relevant Confirmation or elsewhere
in this Agreement.
(ii) Early Termination. Upon the occurrence or effective designation of an
Early Termination Date in respect of a Transaction:-
(1) Unpaid Amounts. For the purpose of determining an Unpaid Amount in respect
of the relevant Transaction, and to the extent permitted by applicable law,
interest will accrue on the amount of any payment obligation or the amount
equal to the fair market value of any obligation required to be settled by
delivery included in such determination in the same currency as that amount,
for the period from (and including) the date the relevant obligation was (or
would have been but for Section 2(a)(iii) or 5(d))required to have been
performed to (but excluding) the relevant Early Termination Date, at the
Applicable Close-out Rate.
(2) Interest on Early 7%rmination Amounts. If an Early Termination Amount is
due in respect of such Early Termination Date, that amount will, to the extent
permitted by applicable law, be paid together with interest (before as well
as after judgment) on that amount in the Termination Currency, for the period
from (and including) such Early Termination Date to (but excluding) the date
the amount is paid, at the Applicable Close-out Rate.
(iii) Interest Calculation. Any interest pursuant to this Section 9(h) will
be calculated on the basis of daily compounding and the actual number of days
elapsed.
10. Offices; Multibranch Parties
(a) If Section 10(a) is specified in the Schedule as applying,each party
that enters into a Transaction through an Office other than its head or
home office represents to and agrees with the other party that,
notwithstanding the place of booking or its jurisdiction of incorporation
or organisation, its obligations are the same in terms of recourse against
it as if it had entered into the Transaction through its head or home
office, except that a party will not have recourse to the head or home office
of the other party in respect of any payment or delivery deferred pursuant to
Section 5(d) for so long as the payment or delivery is so deferred. This
representation and agreement will be deemed to be repeated by each party on
each date on which the parties enter into a Transaction.
21
(b) If a party is specified as a Multibranch Party in the Schedule, such party
may, subject to clause (c) below, enter into a Transaction through, book a
Transaction in and make and receive payments and deliveries with respect to a
Transaction through any Office listed in respect of that party in the Schedule
(but not any other Office unless otherwise agreed by the parties in writing).
(c) The Office through which a party enters into a Transaction will be the
Office specified for that party in the relevant Confirmation or as otherwise
agreed by the parties in writing, and, if an Office for that party is not
specified in the Confirmation or otherwise agreed by the parties in writing,
its head or home office. Unless the parties otherwise agree in writing, the
Office through which a party enters into a Transaction will also be the Office
in which it books the Transaction and the Office through which it makes and
receives payments and deliveries with respect to the Transaction. Subject
to Section 6(b)(ii), neither party may change the Office in which it books
the Transaction or the Office through which it makes and receives payments
or deliveries with respect to a Transaction without the prior written consent
of the other party.
11. Expenses
A Defaulting Party will on demand indemnify and hold harmless the other party
for and against all reasonable out-of- pocket expenses, including legal fees,
execution fees and Stamp Tax, incurred by such other party by reason of the
enforcement and protection of its rights under this Agreement or any Credit
Support Document to which the Defaulting Party is a party or by reason of the
early termination of any Transaction, including, but not limited to, costs of
collection.
12. Notices
(a) Effectiveness. Any notice or other communication in respectof this
Agreement may be given in any manner described below (except that a notice or
other communication under Section 5 or 6 may not be given by electronic
messaging system or e-mail) to the address or number or in accordance with
the electronic messaging system or e-mail details provided (see the Schedule)
and will be deemed effective as indicated:-
(i) if in writing and delivered in person or by courier, on the date it is
delivered;
(ii) if sent by telex, on the date the recipient's answerback is received;
(iii) if sent by facsimile transmission, on the date it is received by a
responsible employee of the recipient in legible form (it being agreed that
the burden of proving receipt will be on the sender and will not be met by
a transmission report generated by the sender's facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or the
equivalent (return receipt requested), on the date it is delivered or its
delivery is attempted;
(v) if sent by electronic messaging system, on the date it is received; or
22
(vi) if sent by e-mail, on the date it is delivered,unless the date of that
delivery (or attempted delivery) or that receipt, as applicable, is not a
Local Business Day or that communication is delivered (or attempted) or
received, as applicable, after the close of business on a Local Business
Day, in which case that communication will be deemed given and effective
on the first following day that is a Local Business Day.
(b) Change of Details. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system or e-mail
details at which notices or other communications are to be given to it.
13. Governing Law and Jurisdiction
(a) Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating
to any dispute arising out of or in connection with this Agreement
("Proceedings"), each party irrevocably:-
(i) submits:-
(1) if this Agreement is expressed to be governed by English law, to (A)
the non-exclusive jurisdiction of the English courts if the Proceedings
do not involve a Convention Court and (B) the exclusive jurisdiction of
the English courts if the Proceedings do involve a Convention Court; or
(2) if this Agreement is expressed to be governed by the laws of the State
of New York, to the non-exclusive jurisdiction of the courts of the State
of New York and the United States District Court located in the Borough of
Manhattan in New York City;
(ii) waives any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any claim that
such Proceedings have been brought in an inconvenient forum and further
waives the right to object, with respect to such Proceedings, that such
court does not have any jurisdiction over such party; and
(iii) agrees, to the extent permitted by applicable law,that the bringing
of Proceedings in any one or more jurisdictions will not preclude the
bringing of Proceedings in any other jurisdiction.
(c) Service of Process. Each party irrevocably appoints the Process Agent,
if any, specified opposite its name in the Schedule to receive, for it and
on its behalf, service of process in any Proceedings. If for any reason any
party's Process Agent is unable to act as such, such party will promptly
notify the other party and within 30 days appoint a substitute process agent
acceptable to the other party. The parties irrevocably consent to service
of process given in the manner provided for notices in Section 12(a)(i),
12(a)(iii) or 12(a)(iv). Nothing in this Agreement will affect the right
of either party to serve process in any other manner permitted by
applicable law.
23
(d) Waiver of Immunities. Each party irrevocably waives, to the extent
permitted by applicable law, with respect to itself and its revenues and
assets (irrespective of their use or intended use), all immunity on the
grounds of sovereignty or other similar grounds from (i) suit, (ii)
jurisdiction of any court,
(iii) relief by way of injunction or order for specific performance or
recovery of property, (iv) attachment of its assets (whether before or
after judgment) and (v) execution or enforcement of any judgment to which
it or its revenues or assets might otherwise be entitled in any Proceedings
in the courts of any jurisdiction and irrevocably agrees, to the extent
permitted by applicable law, that it will not claim any such immunity in
any Proceedings.
14. Definitions
As used in this Agreement:-
"Additional Representation " has the meaning specified in Section 3.
"Additional Termination Event" has the meaning specified in Section 5(b).
"AffectedParty"has the meaning specified in Section 5(b).
"Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality, Force Majeure Event, Tax Event or Tax Event
Upon Merger, all Transactions affected by the occurrence of such Termination
Event (which, in the case of an Illegality under Section 5(b)(i)(2) or a
Force Majeure Event under Section 5(b)(ii)(2), means all Transactions
unless the relevant Credit Support Document references only certain
Transactions, in which case those Transactions and, if the relevant Credit
Support Document constitutes a Confirmation for a Transaction, that
Transaction) and (b) with respect to any other Termination Event, all
Transactions.
"Affiliate" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control"
of any entity or person means ownership of a majority of the voting power
of the entity or person.
"Agreement" has the meaning specified in Section 1(c).
"Applicable Close-out Rate" means: -
(a) in respect of the determination of an Unpaid Amount:-
(i) in respect of obligations payable or deliverable (or which would have
been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(ii) in respect of obligations payable or deliverable (or which would have
been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
Rate;
(iii) in respect of obligations deferred pursuant to Section 5(d), if there
is no Defaulting Party and for so long as the deferral period continues,
the Applicable Deferral Rate; and
24
(iv) in all other cases following the occurrence of a Termination Event
(except where interest accrues pursuant to clause (iii) above), the
Applicable Deferral Rate; and
(b) in respect of an Early Termination Amount:-
(i) for the period from (and including) the relevant Early Termination Date
to (but excluding) the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable:-
(1) if the Early Termination Amount is payable by a Defaulting Party, the
Default Rate;
(2) if the Early Termination Amount is payable by a Non-defaulting Party,
the Non-default Rate; and
(3) in all other cases, the Applicable Deferral Rate; and
(ii) for the period from (and including) the date (determined in accordance
with Section 6(d)(ii)) on which that amount is payable to (but excluding)
the date of actual payment:-
(1) if a party fails to pay the Early Termination Amount due to the
occurrence of an event or circumstance which would, if it occurred with
respect to a payment or delivery under a Transaction,constitute or give rise
to an Illegality or a Force Majeure Event, and for so long as the Early
Termination Amount remains unpaid due to the continuing existence of such
event or circumstance, the Applicable Deferral Rate;
(2) if the Early Termination Amount is payable by a Defaulting Party (but
excluding any period in respect of which clause (1) above applies), the
Default Rate;
(3) if the Early Termination Amount is payable by a Non-defaulting Party
(but excluding any period in respect of which clause (1) above applies),
the Non-default Rate; and
(4) in all other cases, the Termination Rate.
"Applicable Deferral Rate" means:-
(a) for the purpose of Section 9(h)(i)(3)(A), the rate certified by the
relevant payer to be a rate offered to the payer by a major bank in a
relevant interbank market for ovemight deposits in the applicable currency,
such bank to be selected in good faith by the payer for the purpose of
obtaining a representative rate that will reasonably reflect conditions
prevailing at the time in that relevant market;
(b) for purposes of Section 9(h)(i)(3)(B) and clause (a)(iii) of the
definition of Applicable Close-out Rate, the rate certified by the relevant
payer to be a rate offered to prime banks by a major bank in a relevant
interbank market for ovemight deposits in the applicable currency, such bank
to be selected in good faith by the payer after consultation with the other
party, if practicable, for the purpose of obtaining a representative rate
that will reasonably reflect conditions prevailing at the time in that
relevant market; and
25
(c) for purposes of Section 9(h)(i)(3)(C) and clauses (a)(iv),(b)(i)(3) and
(b)(ii)(1) of the definition of Applicable Close-out Rate, a rate equal to
the arithmetic mean of the rate determined pursuant to clause (a) above and
a rate per annum equal to the cost (without proof or evidence of any actual
cost) to the relevant payee (as certified by it) if it were to fund or
of funding the relevant amount.
"Automatic Early Termination " has the meaning specified in Section 6(a).
"Burdened Party " has the meaning specified in Section 5(b)(iv).
"Change in Tax Law" means the enactment, promulgation, execution or
ratification of, or any change in or amendment to, any law (or in the
application or official interpretation of any law) that occurs after the
parties enter into the relevant Transaction.
"Close-out Amount" means, with respect to each Terminated Transaction or
each group of Terminated Transactions and a Determining Party, the amount
of the losses or costs of the Determining Party that are or would be
incurred under then prevailing circumstances (expressed as a positive number)
or gains of the Determining Party that are or would be realised under then
prevailing circumstances (expressed as a negative number) in replacing, or
in providing for the Determining Party the economic equivalent of, (a) the
material terms of that Terminated Transaction or group of Terminated
Transactions, including the payments and deliveries by the parties under
Section 2(a)(i) in respect of that Terminated Transaction or group of
Terminated Transactions that would, but for the occurrence of the relevant
Early Termination Date, have been required after that date (assuming
satisfaction of the conditions precedent in
Section 2(a)(iii)) and (b) the option rights of the parties in respect of
that Terminated Transaction or group of Terminated Transactions.
Any Close-out Amount will be determined by the Determining Party (or its
agent), which will act in good faith and use commercially reasonable
procedures in order to produce a commercially reasonable result. The
Determining Party may determine a Close-out Amount for any group of
Terminated Transactions or any individual Terminated Transaction but, in
the aggregate, for not less than all Terminated Transactions. Each
Close-out Amount will be determined as of the Early Termination Date or,
if that would not be commercially reasonable, as of the date or dates
following the Early Termination Date as would be commercially reasonable.
Unpaid Amounts in respect of a Terminated Transaction or group of Terminated
Transactions and legal fees and out- of-pocket expenses referred to in
Section 11 are to be excluded in all determinations of Close-out Amounts.
In determining a Close-out Amount, the Determining Party may consider any
relevant information, including, without limitation, one or more of the
following types of information:-
(i) quotations (either firm or indicative) for replacement transactions
supplied by one or more third parties that may take into account the
creditworthiness of the Determining Party at the time the quotation is
provided and the terms of any relevant documentation, including credit
support documentation, between the Determining Party and the third party
providing the quotation;
26
(ii) information consisting of relevant market data in the relevant market
supplied by one or more third parties including, without limitation,
relevant rates, prices, yields, yield curves, volatilities, spreads,
correlations or other relevant market data in the relevant market; or
(iii) information of the types described in clause (i) or (ii) above from
intemal sources (including any of the Determining Party's Affiliates) if
that information is of the same type used by the Determining Party in the
regular course of its business for the valuation of similar transactions.
The Determining Party will consider, taking into account the standards and
procedures described in this definition, quotations pursuant to clause (i)
above or relevant market data pursuant to clause (ii) above unless the
Determining Party reasonably believes in good faith that such quotations
or relevant market data are not readily available or would produce
a result that would not satisfy those standards. When considering
information described in clause (i), (ii) or (iii) above, the Determining
Party may include costs of funding, to the extent costs of funding are not
and would not be a component of the other information being utilised. Third
parties supplying quotations pursuant to clause (i) above or market data
pursuant to clause (ii) above may include, without limitation, dealers in
the relevant markets, end-users of the relevant product,information vendors,
brokers and other sources of market information.
Without duplication of amounts calculated based on information described in
clause (i), (ii) or (iii) above, or other relevant information, and when it
is commercially reasonable to do so, the Determining Party may in addition
consider in calculating a Close-out Amount any loss or cost incurred in
connection with its terminating, liquidating or re-establishing any hedge
related to a Terminated Transaction or group of Terminated Transactions
(or any gain resulting from any of them).
Commercially reasonable procedures used in determining a Close-out Amount
may include the following:-
(1) application to relevant market data from third parties pursuant to
clause (ii) above or information from intemal sources pursuant to clause
(iii) above of pricing or other valuation models that are, at the time of
the determination of the Close-out Amount, used by the Determining Party in
the regular course of its business in pricing or valuing transactions between
the Determining Party and unrelated third parties that are similar to the
Terminated Transaction or group of Terminated Transactions; and
(2) application of different valuation methods to Terminated Transactions
or groups of Terminated Transactions depending on the type, complexity,
size or number of the Terminated Transactions or group of Terminated
Transactions.
"Confirmation " has the meaning specified in the preamble.
"consent" includes a consent, approval, action, authorisation,exemption,
notice, filing, registration or exchange control consent.
"Contractual Currency" has the meaning specified in Section 8(a).
27
"Convention Court" means any court which is bound to apply to the Proceedings
either Article 17 of the 0000 Xxxxxxxx Convention on Jurisdiction and the
Enforcement of Judgments in Civil and Commercial Matters or Article 17 of
the 1988 Lugano Convention on Jurisdiction and the Enforcement of Judgments
in Civil and Commercial Matters.
"Credit Event Upon Merger" has the meaning specified in Section 5(b).
"Credit Support Document" means any agreement or instrument that is specified
as such in this Agreement.
"Credit Support Provider" has the meaning specified in the Schedule.
"Cross-Default" means the event specified in Section 5(a)(vi).
"Default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if
t were to fund or of funding the relevant amount plus 1% per annum.
"Defaulting Party" has the meaning specified in Section 6(a).
"Designated Event" has the meaning specified in Section 5(b)(v).
"Determining Party " means the party determining a Close-out Amount.
"Early Termination Amount" has the meaning specified in Section 6(e).
"Early Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"electronic messages" does not include e-mails but does include documents
expressed in markup languages, and "electronic messaging system" will be
construed accordingly.
"English law" means the law of England and Wales, and "English" will be
construed accordingly.
"Event of Default" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.
"Force Majeure Event" has the meaning specified in Section 5(b).
"General Business Day" means a day on which commercial banks are open for
general business (including dealings in foreign exchange and foreign
currency deposits).
"Illegality " has the meaning specified in Section 5(b).
28
"Indemnifiable Tax" means any Tax other than a Tax that would not be imposed
in respect of a payment under this Agreement but for a present or former
connection between the jurisdiction of the government or taxation authority
imposing such Tax and the recipient of such payment or a person related to
such recipient (including, without limitation, a connection arising from
such recipient or related person being or having been a citizen or resident
of such jurisdiction, or being or having been organised, present or engaged
in a trade or business in such jurisdiction, or having or having had a
permanent establishment or fixed place of business in such jurisdiction,
but excluding a connection arising solely from such recipient or related
person having executed, delivered, performed its obligations or received a
payment under, or enforced, this Agreement or a Credit Support Document).
"law" includes any treaty, law, rule or regulation (as modified, in the case
of tax matters, by the practice of any relevant governmental revenue authority)
and "unlawful" will be construed accordingly.
"Local Business Day" means (a) in relation to any obligation under Section
2(a)(i), a General Business Day in the place or places specified in the
relevant Confirmation and a day on which a relevant settlement system is
open or operating as specified in the relevant Confirmation or, if a place
or a settlement system is not so specified, as otherwise agreed by the
parties in writing or determined pursuant to provisions contained, or
incorporated by reference, in this Agreement, (b) for the purpose of
determining when a Waiting Period expires, a General Business Day in the
place where the event or circumstance that constitutes or gives rise to the
Illegality or Force Majeure Event, as the case may be, occurs, (c) in
relation to any other payment, a General Business Day in the place where the
relevant account is located and, if different, in the principal financial
centre, if any, of the currency of such payment and, if that currency does
not have a single recognised principal financial centre, a day on which the
settlement system necessary to accomplish such payment is open, (d) in
relation to any notice or other communication, including notice contemplated
under Section 5(a)(i), a General Business Day (or a day that would have been
a General Business Day but for the occurrence of an event or circumstance
which would, if it occurred with respect to payment, delivery or compliance
related to a Transaction, constitute or give rise to an Illegality or a Force
Majeure Event) in the place specified in the address for notice provided
by the recipient and, in the case of a notice contemplated by Section 2(b),
in the place where the relevant new account is to be located and (e) in
relation to Section 5(a)(v)(2), a General Business Day in the relevant
locations for performance with respect to such Specified Transaction.
"Local Delivery Day" means, for purposes of Sections 5(a)(i) and 5(d), a day
on which settlement systems necessary to accomplish the relevant delivery
are generally open for business so that the delivery is capable of being
accomplished in accordance with customary market practice, in the place
specified in the relevant Confirmation or, if not so specified, in a location
as determined in accordance with customary market practice for the relevant
delivery.
"Master Agreement" has the meaning specified in the preamble.
"Merger Without Assumption " means the event specified in Section 5(a)(viii).
"Multiple Transaction Payment Netting" has the meaning specified in Section
2(c).
29
"Non-affected Party " means, so long as there is only one Affected Party,
the other party.
"Non-default Rate" means the rate certified by the Non-defaulting Party to
be a rate offered to the Non-defaulting Party by a major bank in a relevant
interbank market for overnight deposits in the applicable currency, such
bank to be selected in good faith by the Non-defaulting Party for the
purpose of obtaining a representative rate that will reasonably reflect
conditions prevailing at the time in that relevant market.
"Non-defaulting Party" has the meaning specified in Section 6(a).
"Office" means a branch or office of a party, which may be such party's head
or home office.
"Other Amounts" has the meaning specified in Section 6(f).
"Payee" has the meaning specified in Section 6(f).
"Payer" has the meaning specified in Section 6(f).
"Potential Event of Default" means any event which, with the giving of notice
or the lapse of time or both, would constitute an Event of Default.
"Proceedings" has the meaning specified in Section 13(b).
"Process Agent" has the meaning specified in the Schedule.
"rate of exchange" includes, without limitation, any premiums and costs of
exchange payable in connection with the purchase of or conversion into the
Contractual Currency.
"Relevant Jurisdiction " means, with respect to a party, the jurisdictions
(a) in which the party is incorporated, organised, managed and controlled
or considered to have its seat, (b) where an Office through which the party
is acting for purposes of this Agreement is located, (c) in which the party
executes this Agreement and (d) in relation to any payment, from or through
which such payment is made.
"Schedule" has the meaning specified in the preamble.
"Scheduled Settlement Date" means a date on which a payment or delivery is
to be made under Section 2(a)(i) with respect to a Transaction.
"Specified Entity" has the meaning specified in the Schedule.
"Specified Indebtedness" means, subject to the Schedule, any obligation
(whether present or future, contingent or otherwise, as principal or surety
or otherwise) in respect of borrowed money.
30
"Specified Transaction" means, subject to the Schedule, (a) any transaction
(including an agreement with respect to any such transaction) now existing
or hereafter entered into between one party to this Agreement (or any Credit
Support Provider of such party or any applicable Specified Entity of such
party) and the other party to this Agreement (or any Credit Support Provider
of such other party or any applicable Specified Entity of such other party)
which is not a Transaction under this Agreement but (i) which is a rate swap
transaction, swap option, basis swap, forward rate transaction, commodity
swap, commodity option, equity or equity index swap, equity or equity index
option, bond option, interest rate option, foreign exchange transaction,
cap transaction, floor transaction, collar transaction, currency swap
transaction, cross-currency rate swap transaction, currency option, credit
protection transaction, credit swap, credit default swap, credit default
option, total return swap, credit spread transaction, repurchase transaction,
reverse repurchase transaction, buy/sell-back transaction, securities lending
transaction, weather index transaction or forward purchase or sale of a
security, commodity or other financial instrument or interest (including any
option with respect to any of these transactions) or (ii) which is a type of
transaction that is similar to any transaction referred to in clause (i)
above that is currently, or in the future becomes, recurrently entered into
in the financial markets (including terms and conditions incorporated by
reference in such agreement) and which is a forward, swap, future, option
or other derivative on one or more rates, currencies, commodities, equity
securities or other equity instruments, debt securities or other debt
instruments, economic indices or measures of economic risk or value, or
other benchmarks against which payments or deliveries are to be made, (b)
any combination of these transactions and (c) any other transaction
identified as a Specified Transaction in this Agreement or the relevant
confirmation.
"Stamp Tax" means any stamp, registration, documentation or similar tax.
"Stamp Tax Jurisdiction " has the meaning specified in Section 4(e).
"Tax" means any present or future tax, levy, impost, duty,charge, assessment
or fee of any nature (including interest, penalties and additions thereto)
that is imposed by any government or other taxing authority in respect of
any payment under this Agreement other than a stamp, registration,
documentation or similar tax.
"Tax Event" has the meaning specified in Section 5(b).
"Tax Event Upon Merger" has the meaning specified in Section 5(b).
"Terminated Transactions" means, with respect to any Early Termination Date,
(a) if resulting from an Illegality or a Force Majeure Event, all Affected
Transactions specified in the notice given pursuant to Section 6(b)(iv),
(b) if resulting from any other Termination Event, all Affected
Transactions and (c) if resulting from an Event of Default, all
Transactions in effect either immediately before the effectiveness of the
notice designating that Early Termination Date or, if Automatic Early
Termination applies, immediately before that Early Termination
Date.
31
"Termination Currency" means (a) if a Termination Currency is specified in
the Schedule and that currency is freely available, that currency, and (b)
otherwise, euro if this Agreement is expressed to be governed by English
law or United States Dollars if this Agreement is expressed to be governed
by the laws of the State of New York.
"Termination Currency Equivalent" means, in respect of any amount denominated
in the Termination Currency, such Termination Currency amount and, in respect
of any amount denominated in a currency other than the Termination Currency
(the "Other Currency"), the amount in the Termination Currency determined by
the party making the relevant determination as being required to purchase
such amount of such Other Currency as at the relevant Early Termination Date,
or, if the relevant Close-out Amount is determined as of a later date, that
later date, with the Termination Currency at the rate equal to the spot
exchange rate of the foreign exchange agent (selected as provided below) for
the purchase of such Other Currency with the Termination Currency at or about
11:00 a.m. (in the city in which such foreign exchange agent is located) on
such date as would be customary for the determination of such a rate for the
purchase of such Other Currency for value on the relevant Early Termination
Date or that later date. The foreign exchange agent will, if only one party
is obliged to make a determination under Section 6(e), be selected in good
faith by that party and otherwise will be agreed by the parties.
"Termination Event" means an Illegality, a Force Majeure Event, a Tax Event,
a Tax Event Upon Merger or, if specified to be applicable, a Credit Event
Upon Merger or an Additional Termination Event.
"Termination Rate" means a rate per annum equal to the arithmetic mean of
the cost (without proof or evidence of any actual cost) to each party (as
certified by such party) if it were to fund or of funding such amounts.
"Threshold Amount" means the amount, if any, specified as such in the
Schedule.
"Transaction " has the meaning specified in the preamble.
"Unpaid Amounts" owing to any party means, with respect to an Early
Termination Date, the aggregate of (a) in respect of all Terminated
Transactions, the amounts that became payable (or that would have become
payable but for Section 2(a)(iii) or due but for Section 5(d)) to such
party under Section 2(a)(i) or 2(d)(i)(4) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination
Date, (b) in respect of each Terminated Transaction, for each obligation
under Section 2(a)(i) which was (or would have been but for Section
2(a)(iii) or 5(d)) required to be settled by delivery to such party on or
prior to such Early Termination Date and which has not been so settled as
at such Early Termination Date, an amount equal to the fair market value
of that which was (or would have been) required to be delivered and (c)
if the Early Termination Date results from an Event of Default, a Credit
Event Upon Merger or an Additional Termination Event in respect of which
all outstanding Transactions are Affected Transactions, any Early
Termination Amount due prior to such Early Termination Date and which
remains unpaid as of such Early Termination Date, in each case together
with any amount of interest accrued or other
32
compensation in respect of that obligation or deferred obligation, as
the case may be, pursuant to Section 9(h)(ii)(1)or (2), as appropriate.
The fair market value of any obligation referred to in clause (b) above
will be determined as of the originally scheduled date for delivery, in
good faith and using commercially reasonable procedures, by the party
obliged to make the determination under Section 6(e) or, if each party is
so obliged, it will be the average of the Termination Currency Equivalents
of the fair market values so determined by both parties.
"Waiting Period" means:-
(a) in respect of an event or circumstance under Section 5(b)(i), other
than in the case of Section 5(b)(i)(2) where the relevant payment, delivery
or compliance is actually required on the relevant day (in which case no
Waiting Period will apply), a period of three Local Business Days (or days
that would have been Local Business Days but for the occurrence of that
event or circumstance) following the occurrence of that event or
circumstance; and
(b) in respect of an event or circumstance under Section 5(b)(ii), other
than in the case of Section 5(b)(ii)(2) where the relevant payment, delivery
or compliance is actually required on the relevant day (in which case no
Waiting Period will apply), a period of eight Local Business Days (or days
that would have been Local Business Days but for the occurrence of that
event or circumstance) following the occurrence of that event or circumstance.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page
of this document.
Cogent Capital Corp. Amnor Books, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxxx Xxxxxx
Title: President Title: President
Date: August 27, 2004 Date: 8-27-04
33
ISDA
International Swaps and Derivatives Association, Inc.
SCHEDULE
to the
2002 Master Agreement
dated as of August 27, 2004
between Cogent Capital Corp. and Amnor Books, Inc.
("Party A") ("Party B")
established as a corporation established as a corporation
under the laws of Utah under the laws of Utah
Part 1. Termination Provisions.
(a) "Specified Entity" means in relation to Party A for the purpose of:-
Section 5(a)(v), Affiliate
Section 5(a)(vi), Affiliate
Section 5(a)(vii), Affiliate
Section 5(b)(v), Affiliate
and in relation to Party B for the purpose of:-
Section 5(a)(v), Affiliate
Section 5(a)(vi), Affiliate
Section 5(a)(vii), Affiliate
Section 5(b)(v), Affiliate
(b) "Specified Transaction" will have the meaning specified in Section 14
of this
Agreement.
(c) The "Cross-Default" provisions of Section 5(a)(vi) will apply to
Party A will apply to Party B
"Specified Indebtedness" will have the meaning specified in Section 14 of
this Agreement.
"Threshold Amount" means $0.00 (zero dollars).
(d) The "Credit Event Upon Merger" provisions of Section 5(b)(v) will
not apply to Party A will not apply to Party B
(e) The "Automatic Early Termination"provision of Section 6(a) will not
apply to Party A will not apply to Party B
(f) "Termination Currency" will have the meaning specified in Section 14
of this Agreement.
(g) Additional Termination Event will not apply.
Part 2. Tax Representations.
(a) Payer Representations. For the purpose of Section 3(e) of this
Agreement, Party A and Party B do not make any representations.
(b) Payee Representations. For the purpose of Section 3(f) of this
Agreement, Party A and Party B do not make any representations.
1
Part 3. Agreement to Deliver Documents.
For the purpose of Sections 4(a)(i) and 4(a)(ii) of this Agreement, each
party agrees to deliver the following documents, as applicable:-
(a)Tax forms, documents or certificates to be delivered are: none
(b)Other documents to be delivered are: none
Part 4. Miscellaneous.
(a) Addresses for Notices. For the purpose of Section 12(a) of this
Agreement:-
Address for notices or communications to Party A:-
Address: XX Xxx 0000, Xxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Facsimile No.: 000-000-0000 Telephone No.: 000-000-0000
E-mail: xxxxxxxx@xxxxxx-xxxxxxx.xxx
Electronic Messaging System Details:
Specific Instructions:
Address for notices or communications to Party B:-
Address: 0000 Xxxxx Xxxxxxxx Xxxxx, #0000, Xxxx Xxxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Facsimile No.: 000-000-0000 Telephone No.: 000-000-0000
E-mail:
Electronic Messaging System Details:
Specific Instructions:
(b) Process Agent. For the purpose of Section 13(c) of this Agreement:-
Party A appoints as its Process Agent: not applicable.
Party B appoints as its Process Agent: To be provided.
(c) Offices. The provisions of Section 10(a) will apply to this Agreement.
(d) Multibranch Party. For the purpose of Section 10(b) of this Agreement:-
Party A is not a Multibranch Party.
Party B is not a Multibranch Party
(e) Calculation Agent. The Calculation Agent is Party A.
(f) Credit Support Document. Details of any Credit Support Document:
1994 ISDA Credit Support Annex by and between Party A and Party B,
dated August 27, 2004 and ISDA Credit Support Annex Amendment Agreement
by and between Party A and Party B, dated August 27, 2004.
(h) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York (without reference
to choice of law doctrine).
(i) Netting of Payments. "Multiple Transaction Payment Netting" will apply
for the purpose of Section 2(c) of this Agreement to all Transactions.
2
(j) "Affiliate" will have the meaning specified in Section 14 of this
Agreement.
(k) Absence of Litigation. For the purpose of Section 3(c):-
"Specified Entity" means in relation to Party A, any Affiliate.
"Specified Entity" means in relation to Party B, any Affiliate.
(l) No Agency. The provisions of Section 3(g) will apply to this
Agreement.
(m) Additional Representation will apply. For the purpose of Section 3
of this Agreement,the following will constitute an Additional
Representation:-
(i) Relationship Between Parties. Each party will be deemed to represent
to the other party on the date on which it enters into a Transaction
that (absent a written agreement between the parties that expressly
imposes affirmative obligations to the contrary for that Transaction):-
(1) Non-Reliance. It is acting for its own account, and it has made its own
independent decisions to enter into that Transaction and as to whether
that Transaction is appropriate or proper for it based upon its own
judgment and upon advice from such advisers as it has deemed necessary.
It is not relying on any communication (written or oral) of the other
party as investment advice or as a recommendation to enter into that
Transaction, it being understood that information and explanations
related to the terms and conditions of a Transaction will not be
considered investment advice or a recommendation to enter into that
Transaction. No communication (written or oral) received from the other
party will be deemed to be an assurance or guarantee as to the expected
results of that Transaction.
(2) Assessment and Understanding. It is capable of assessing the merits of
and understanding (on its own behalf or through independent professional
advice), and understands and accepts, the terms, conditions and risks
of that Transaction. It is also capable of assuming, and assumes, the
risks of that Transaction.
(3) Status of Parties. The other party is not acting as a fiduciary for or
an adviser to it in respect of that Transaction.
(n) Recording of Conversations. Each party (i) consents to the recording
of telephone conversations between the trading, marketing and other
relevant personnel of the parties in connection with this Agreement or
any potential Transaction, (ii) agrees to obtain any necessary consent
of, and give any necessary notice of such recording to, its relevant
personnel and (iii) agrees, to the extent permitted by applicable law,
that recordings may be submitted in evidence in any Proceedings.
Cogent Capital Corp. Amnor Books, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxxx Xxxxxx
Title: President Title: President
Date: August 27, 2004 Date: August 27, 2004
3
(Bilateral Form) (ISDA Agreements Subject to New York Law Only)
ISDA.
International Swaps and Derivatives Association, Inc.
CREDIT SUPPORT ANNEX
to the Schedule to the
2002 ISDA Master Agreement
dated as of August 27, 2004
between
Cogent Capital Corp. and Amnor Books, Inc.
("Party A") ("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 1. 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 Pledgor 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 "Pledgor" 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 Transfer 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.
1
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 Pledgor will Transfer to the Secured Party Eligible
Credit Support having a Value as of the date of Transfer at least equal
to the applicable Delivery Amount (rounded pursuant to Paragraph 13). Unless
otherwise specified in Paragraph 13, the "Delivery Amount" applicable to the
Pledgor for any Valuation Date will equal the amount by which:
(i) 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
Pledgor on or promptly following a Valuation Date,if the Return Amount for
that Valuation Date equals or exceeds the Secured Party's Minimum Transfer
Amount, then the Secured Party will Transfer to the Pledgor Posted Credit
Support specified by the Pledgor 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:
(i) the Value as of that Valuation Date of all Posted Credit Support held
by the Secured Party exceeds
(ii) the Credit Support Amount.
"Credit Support Amount" 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
Pledgor, if any, minus (iii) all Independent Amounts applicable to the
Secured Party, if any, minus (iv) the Pledgor'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 Timing, Calculations and
Substitutions
(a) Conditions Precedent. Each Transfer obligation of the Pledgor under
Paragraphs 3 and 5 and of the Secured Party under Paragraphs 3, 4(d)(ii)
5 and 6(d) is subject to the conditions precedent that:
(i) no Event of Default, Potential Event of Default 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 result of an Event of Default
or Specified Condition with respect to the other party.
2
(b) Transfer Timing. Subject to Paragraphs 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 after the Notification Time, then the relevant
Transfer will be made not later than the close of business on the second
Local Business Day thereafter.
(c) Calculations. All calculations of Value and Exposure 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 of Paragraph 6(d), following the date of
calculation).
(d) Substitutions.
(i) 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 Local 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
Pledgor 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 will 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
(1) 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 following (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 (II) 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 (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 (II) above, (3) the parties will consult with each other in an
attempt to resolve the dispute and (4) if they fail to resolve the
dispute by the Resolution Time,then:
(i) 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 of Exposure for the Transactions (or Swap
Transactions) that the parties have agreed are not in dispute,
3
(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 may be used for that
Transaction (or Swap Transaction), and if no quotations are 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 ach 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.
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 care to
assure the safe custody of all Posted Collateral to the extent required
by applicable law, and in any event the Secured Party will be deemed to
have exercised reasonable care if it exercises at least the same degree of
care as it would exercise with respect to its own property. Except as
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; Custodians.
(i) 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 Pledgor of the appointment of a Custodian, the Pledgor
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) Failure to Satisfy Conditions. If the Secured Party or its Custodian
fails to satisfy, any conditions for holding Posted 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 Posted Collateral held by it to a Custodian that satisfies
those conditions or to the Secured Party if it satisfies those conditions.
4
(iii) Liability. The Secured Party will 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 parties 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:
(i) 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 Paragraphs 3 and 5 and any rights or remedies
authorized under this Agreement, the Secured Party will be deemed to continue
to hold all Posted Collateral and to receive Distributions made thereon,
regardless of whether the Secured Party has exercised any rights with
respect to any Posted Collateral pursuant to (i) or (ii) above.
(d) 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 Distributions 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 for this purpose).
(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 respect to Posted Collateral in the form
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 portion 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
For purposes of Section 5(a)(iii)(1) of this Agreement, an Event of Default
will exist with respect to a party if:
5
(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(i) and 7(ii) and that failure
continues for 30 days after notice of that failure is given to that party.
Paragraph 8. Certain Rights and Remedies
(a) Secured Party's Rights and Remedies. If at any time (1) an Event of
Default or Specified Condition with respect to the Pledgor 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 Pledgor, then, unless the Pledgor 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:
(i) all rights and remedies available to a secured party under applicable
law with respect to Posted Collateral held by the Secured Party,
(ii) any other rights and remedies available to the Secured Party under
the terms of Other Posted Support, if any,
(iii) the right to Set-off any amounts payable by the Pledgor 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 right to liquidate any Posted Collateral held by the Secured Party
through one or more public or private sales or other dispositions with such
notice, if any, as may be required under applicable law, free from any
claim or right of any nature whatsoever of the Pledgor, 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) from the liquidation
of the Posted Collateral to any amounts payable by the Pledgor 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.
(b) Pledgor's Rights and Remedies. If at any time 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):
6
(i) the Pledgor may exercise all rights and remedies available to a pledgor
under applicable law with respect to Posted Collateral held by the Secured
Party,
(ii) the Pledgor may exercise any other rights and remedies available to the
Pledgor 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 Pledgor, and
(iv) to the extent that Posted Collateral or the Interest Amount is not so
Transferred pursuant to (iii) above, the Pledgor may:
(A) Set-off any amounts payable by the Pledgor 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
B) to the extent that the Pledgor does not Set-off under (iv)(A) above,
withhold payment of any remaining amounts payable by the Pledgor 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
Pledgor.
(c) Deficiencies and Excess Proceeds. The Secured Party will Transfer to the
Pledgor any proceeds and Posted Credit Support remaining after liquidation,
Set-off and/or application under Paragraphs 8(a) and 8(b) after satisfaction
in full of all amounts payable by the Pledgor with respect to any Obligations,
the Pledgor 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) Final Returns. When no amounts are or thereafter may become payable by
the Pledgor with respect to any Obligations (except for any potential liability
under Section 2(d) of this Agreement), the Secured Party will Transfer to the
Pledgor 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 repeated as of each date on which it, as the Pledgor, 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 Pledgor 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, encumbrance 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 or other
entity not within the control of the Pledgor involved in the Transfer of
that Eligible Collateral gives the notices and takes the action required
of it under applicable law for perfection of that interest), and
7
(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.
Paragraph 10. Expenses
(a) General Except as otherwise provided in Paragraphs 10(b) and 10(c),
each party will pay its own costs and expenses 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) Liquidation/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 parties.
Paragraph 11. Miscellaneous
(a) Default 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 party 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 Pledgor 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).
8
(d) Good Faith and Commercially Reasonable Manner. 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 Notices Section of this
Agreement, except as otherwise provided in Paragraph 13.
(f) Specifications of Certain Matters. 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
construed accordingly.
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)(i) and 13,
"Delivery Amount" has the meaning specified in Paragraph 3(a).
"Disputing Party" 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 Collateral" 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(e)(ii)(2)(A) 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.
9
"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 form 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 fbr that day; divided by (z) 360.
"Interest 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.
"Interest Rate" means the rate specified in Paragraph 13.
"Local Business Day", unless otherwise specified in Paragraph 13, has the
meaning specified in the Definitions Section of this Agreement, except that
references to a payment in clause (b)thereof will be deemed to include a
Transfer under this Annex.
"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 Time" has the meaning specified in Paragraph 13.
"Obligations" means, with respect to a party, all present and future
obligations of that party 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 Support 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 for or
is required to Transfer Eligible Credit Support under Paragraph 3(a) or
(ii) has Transferred Eligible Credit Support under Paragraph 3(a).
"Posted Collateral" 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)(ii) will constitute Posted Collateral
in the form of Cash.
"Posted Credit Support" means Posted Collateral and Other Posted Support.
"Recalculation 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.
10
"Resolution Time" 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 (i) 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, P1edgor 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 stamps 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
case of Other Eligible Support or Other Posted Support, as specified in
Paragraph 13.
"Valuation Agent" has the meaning specified in Paragraph 13.
"Valuation Date" means each date specified in or otherwise determined pursuant
to Paragraph 13.
"Valuation Percentage" means, for any item of Eligible Collateral, the
percentage specified in Paragraph 13.
"Valuation Time" has the meaning specified in Paragraph 13.
"Value" means for any Valuation Date or other date for which Value is
calculated and subject to Paragraph 5 in the case of a dispute, with respect
to:
(i) Eligible Collateral or Posted Collateral that is:
(A) Cash, the amount thereof, and
(B) a security, the bid price obtained by the Valuation Agent multiplied
by the applicable Valuation Percentage, if any;
11
(ii) Posted Collateral that consists of items that are not specified as
Eligible Collateral, zero, and
(iii) Other Eligible Support and Other Posted Support, as specified in
Paragraph 13.
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 A: none.
With respect to Party B: none.
(b) Credit Support Obligations.
(i) Delivery Amount, Return Amount and Credit Support Amount.
(A) "Delivery Amount" has the meaning specified in Paragraph 3(a).
(B) "Return Amount" has the meaning specified in Paragraph 3(b).
(C) "Credit Support Amount" has the meaning specified in Paragraph 3.
(ii) Eligible Collateral. The following items will qualify as"Eligible
Collateral"for the party specified:
Party A Party B Valuation
Percentage
(A) Cash [X] [X] 100%
(B) negotiable debt obligations issued by the
U.S. Treasury Department having an original
maturity t issuance of not more than one year
("Treasury Bills")
[X] [X] 100%
(C) negotiable debt obligations issued by the
U.S.Treasury Department having an original
maturity at issuance of more than one year but
not more than 10 years ("Treasury Notes")
[X] [X] 100%
(D) negotiable debt obligations issued by the
U.S.Treasury Department having an original
maturity at issuance of more than 10 years
("Treasury Bonds")
[ ] [ ] [ ]%
(E) other: .............................. [ ] [ ] [ ]%
12
(iii) Other Eligible Support. The following items will
qualify as "Other Eligible Support" for the party specified:
Party A - None.
Party B- None
(iv) Thresholds.
(A) "Independent Amount" means with respect to Party
A: $ 0.00 (Zero)
(B) "Independent Amount" means with respect to Party
B: $ Market value of Number of Equity Shares as
defined by Equity Swap Confirm dated August 27, 2004
(B) "Threshold" means with respect to Party A:
$250,000
"Threshold" means with respect to Party B:
$250,000
(C) "Minimum Transfer Amount" means with respect to
Party A: $ 0
"Minimum Transfer Amount" means with respect to
Party B: $ 0
(D) Rounding. The Delivery Amount and the Return Amount will be rounded
up and down to the nearest integral multiple of $1000, respectively.
(c) Valuation and Timing.
i) "Valuation Agent" means, for purposes of Paragraphs 3 and 5, the party
making the demand under Paragraph 3, and, for purposes of Paragraph
6(d), the Secured Party receiving or deemed to receive the Distributions
or the Interest Amount, as applicable.
(ii) "Valuation Date" means: Valuation Dates as defined by Equity Swap Confirm
dated August 27, 2004
(iii) "Valuation Time" means:
[ X] the close of business in the city of the Valuation Agent on the
Valuation Date or date of calculation, as applicable;
[ ] the close of business on the Local Business Day before the Valuation
Date or date of calculation, as applicable; provided that the
calculations of Value and Exposure will be made as of approximately
the same time on the same date.
(iv) "Notification Time" means 1:00 p.m., New York time, on a Local Business
Day.
13
(d) Conditions Precedent and Secured Party's Rights and Remedies. The
following Termination Event(s) will be a "Specified Condition"
for the party specified (that party being the Affected Party if
the Termination Event occurs with respect to that party):
Party A Party B
Illegality [ X] [X]
Tax Event [ ] [ ]
Tax Event Upon Merger [ ] [ ]
Credit Event Upon Merger [ ] [ ]
Additional Termination Event(s):
...................... [ ] [ ]
...................... [ ] [ ]
(e) Substitution.
(i) "Substitution Date" has the meaning specified in Paragraph 4(d)(ii).
(ii) Consent. If specified here as applicable, then the Pledgor must
obtain the Secured Party?s consent for any substitution pursuant
to Paragraph 4(d): applicable.
(f) Dispute Resolution.
(i) "Resolution Time" means 1:00 p.m., New York time, on the Local Business
Day following the date on which the notice is given that gives rise to
a dispute under Paragraph 5.
(ii) Value. For the purpose of Paragraphs 5(i)(C) and 5(ii), the Value of
Posted Credit Support will be calculated as follows: Retain "AAA"
rated bank or investment bank to calculations using paragraphs 5(i)(A)
and 5(i)(B).
(iii) Alternative. The provisions of Paragraph 5 will apply.
(g) Holding and Using Posted Collateral.
(i) Eligibility to Hold Posted Collateral; Custodians. Party A and its
Custodian will be entitled to hold Posted Collateral pursuant to
Paragraph 6(b); provided that the following conditions applicable
to it are satisfied:
(1) Party A is not a Defaulting Party.
(2) Posted Collateral may be held only in the following jurisdictions:
Massachusetts or New York.
14
Initially, the Custodian for Party A is Investor's Bank & Trust.
(ii) Use of Posted Collateral. The provisions of Paragraph 6(c) will
not apply to the Party A.
(h) Distributions and Interest Amount.
(i) Interest Rate. The "Interest Rate" will be: USD-LIBOR-BBA
(ii) Transfer of Interest Amount. The Transfer of the Interest Amount
will be made on the last Local Business Day of each calendar month
and on any Local Business Day that Posted Collateral in the form of
Cash is Transferred to the Pledgor pursuant to Paragraph 3 (b).
(iii) Alternative to Interest Amount. The provisions of Paragraph 6(d)(ii)
will apply.
(i) Additional Representation(s).
None.
(j) Other Eligible Support and Other Posted Support.
Not Applicable.
(k) Demands and Notices.
All demands, specifications and notices under this Annex will be
made pursuant to the Notices Section of this Agreement, unless
otherwise specified here:
Party A: Cogent Capital Corp.
Attn: Xxxx Xxxxxxx
00000 X. Xxxxxx Xxxxx Xxx.
Xxxxx, XX 00000
Fax 000-000-0000
Party B: Amnor Books, Inc.
Attn: Xxxxxx Xxxxxx
0000 Xxxxx Xxxxxxxx Xxxxx, #0000
Xxxx Xxxx Xxxx, XX 00000
Fax 000-000-000-0000
(1) Addresses for Transfers.
Party A: To be provided
Party B: To be provided
(m) Other Provisions.
None.
Cogent Capital Corp. Amnor Books, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxxx Xxxxxx
Title: President Title: President
Date: August 27, 2004 Date: August 27, 2004
15
August 27, 2004
To: Amnor Books, Inc.
From: Cogent Capital Corp.
SUBJECT: EQUITY OPTION TRANSACTION
The purpose of this communication is to set forth the terms and conditions
of the Call Option transaction entered into on the Trade Date referred to
below (the "Option Transaction"), between Cogent Capital Corp., a Utah
corporation ("Cogent" or "we") and Amnor Books, Inc., a Utah corporation
("Amnor" or "you"). This communication constitutes a "Confirmation" as
referred to in the ISDA Master Agreement specified below.
This Confirmation incorporates the definitions and provisions contained in
the 2002 ISDA Equity Derivatives Definitions as published by the International
Swap and Derivatives Association, Inc. (the "Equity Definitions"). In the
event of any inconsistency between the Definitions and this Confirmation,
this Confirmation will govern.
1. This Confirmation will supplement, form a part of, and be subject to
the ISDA Master Agreement dated as of August 27, 2004. All provisions
contained in, or incorporated by reference to, the ISDA Master Agreement
shall govern this Confirmation except as expressly modified below. In the
event of any inconsistency between the provisions of that ISDA Master
Agreement and this Confirmation, this Confirmation shall prevail for the
purpose of this Equity Option Transaction. In addition, this Confirmation
shall itself evidence a complete and binding agreement between you and us
as to the terms and conditions of the Equity Option Transaction to which
this Confirmation relates.
Cogent and Amnor each represents that entering into the Equity Transaction
is authorized and does not violate any laws of its jurisdiction of
organization or residence or the terms of any agreement to which it is a
party. Cogent and Amnor each represents that (i) it is not relying on
the other party in connection with its decision to enter into this Option
Transaction, and neither party is acting as an advisor or fiduciary of the
other party in connection with this Option Transaction regardless of whether
the other party provides it with market information or its views; (ii) it
understands the risks of the Option Transaction and any legal, regulatory, tax,
accounting and economic consequences resulting therefrom; and (iii) it has
determined based upon its own judgement and upon any advice received from its
own professional advisors as it has deemed necessary to consult that entering
into the Option Transaction is appropriate for such party in light of its
financial capabilities and objectives.
1
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
General Terms:
Trade Date: August 27, 2004
Option Style: European
Option Type: Call
Seller: Cogent
Buyer: Amnor
Shares: Amnor Books, Inc. common shares ("AMNOR")
CUSIP number 03167M 10 4
Number of Options: 1,000,000
Option Entitlement: 1 Share per Option
Strike Price: Current market price of share at
time of exercise
Premium: $1
Premium Payment Date: Trade Date
Exchange: All Exchanges
Related Exchange(s): All Exchanges
Clearance System(s): DTC or Physical Certificate(s)
Procedures for Exercise:
Latest Exercise Time: Notice given 12:00 noon, New York time
July 27,2006
Expiration Time: The official closing
time on the Exchange
Expiration Date: August 27, 2006
Multiple Exercise: Not Applicable
Automatic Exercise: Not Applicable
Seller's Telephone
Number and Telex and/or
Facsimile Number and Contact
Details for purpose of giving
Notice: Telephone: 000-000-0000
Facsimile: 000-000-0000
2
Settlement Terms:
Physical Settlement: Applicable. Certificates with
standard Rule 144 transfer restrictions
may be used for good delivery.
Settlement Currency: USD
Settlement Method Election: Not Applicable
Default Settlement Method: Physical Settlement
Adjustments:
Method of Adjustment: Option Exchange Adjustment
Options Exchange: Related Exchange
Extraordinary Events:
Consequences of Merger Events:
Share-for-Share: Alternative Obligation
Share-for-Other: Alternative Obligation
Share-for-Combined: Alternative Obligation
Tender Offer: Applicable
Consequences of Tender Offers:
Share-for-Share: Calculation Agent Adjustment
Share-for-Other: Calculation Agent Adjustment
Share-for-Combined: Calculation Agent Adjustment
Composition of Combined Consideration: Applicable
Nationalization, Insolvency or Delisting: Negotiated Close-Out
Additional Disruption Events:
Change in Law: Applicable
Failure to Deliver: Applicable
Insolvency Filing: Applicable
Determining Party: Cogent
Non-Reliance: Applicable
3
4. Calculation Agent: Cogent
5. Account Details:
Account for payments to Cogent: To be provided.
Account for payments to Amnor To be provided.
Account for delivery of Shares to
Amnor: To be provided.
6. Relationship between the parties:
(a) Except as expressly provided herein, each party acknowledges that
in connection with entering into this Transaction, it has not
entered into any agreements, arrangements or understandings with
the other party or any related entity of such party in relation to
timing or manner of any acquisition or disposal of any Shares, the
voting rights attaching to any Shares or the management of the Issuer.
7. Governing Law: the laws of the State of New York (without reference to
choice of law doctrine).
Please confirm that the foregoing correctly sets forth the terms of
our agreement by executing the copy of this Confirmation enclosed
for that purpose and returning it to us or by sending to us a letter
or telex substantially similar to this letter, which letter or telex
sets forth the material terms of the Transaction to which this
Confirmation relates and indicates your agreement to those terms.
Yours sincerely,
Cogent Capital Corp.
By: /s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
President
Confirmed as of the date first above written:
Amnor Books, Inc.
By: /s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx
President
4
Date: August 27, 2004
To: Amnor Books, Inc.
From: Cogent Capital Corp.
SUBJECT: EQUITY SWAP TRANSACTION
The purpose of this communication is to set forth the terms and conditions
of the Swap transaction entered into on the Trade Date referred to below
(the "Swap Transaction"), between Cogent Capital Corp., a Utah corporation
("Cogent" or "we") and Amnor Books, Inc., a Delaware corporation ("Amnor"
or "you"). This communication constitutes a "Confirmation" as referred to
in the ISDA Master Agreement specified below.
This Confirmation incorporates the definitions and provisions contained in
the 2002 ISDA Equity Derivatives Definitions as published by the International
Swaps and Derivatives Association, Inc. (the "Equity Definitions"). In the
event of any inconsistency between the Definitions and this Confirmation, this
Confirmation will govern.
1. This Confirmation will supplement, form a part of, and be subject to the
ISDA Master Agreement dated as of August 27, 2004. All provisions contained
in, or incorporated by reference to, the ISDA Master Agreement shall govern
this Confirmation except as expressly modified below. In the event of any
inconsistency between the provisions of that ISDA Master Agreement and this
Confirmation, this Confirmation shall prevail for the purpose of this Swap
Transaction. In addition, this Confirmation shall itself evidence a complete
and binding agreement between you and us as to the terms and conditions of the
Swap Transaction to which this Confirmation relates.
Cogent and Amnor each represents that entering into the Swap Transaction is
authorized and does not violate any laws of its jurisdiction of organization
or residence or the terms of any agreement to which it is a party. Cogent and
Amnor each represents that (i) it is not relying on the other party in
connection with its decision to enter into this Swap Transaction, and neither
party is acting as an advisor or fiduciary of the other party in connection
with this Swap Transaction regardless of whether the other party provides it
with market information or its views; (ii) it understands the risks of the
Swap Transaction and any legal, regulatory, tax, accounting and economic
consequences resulting therefrom; and (iii) it has determined based upon its
own judgement and upon any advice received from its own professional advisors
as it has deemed necessary to consult that entering into the Swap Transaction
is appropriate for such party in light of its financial capabilities and
objectives.
2. Transaction Description. This Transaction shall be deemed to be both a
"Call Option Transaction" and a "Put Option Transaction" as defined in the
Equity Definitions, and each of Cogent and Amnor shall be deemed to be an
"Equity Amount Payer" as defined in the Equity Definitions. For the
avoidance of doubt, the Equity Amount payable by a party shall be the relevant
Call Option Amount or Put Option Amount applicable to such party.
1
3. The terms of the particular Transaction to which this Confirmation relates
are as follows:
General Terms:
Trade Date: August 27, 2004
Effective Date: August 27, 2004
Termination Date: The later of either: November 27, 2007; or the date
on which all of the 1,250,000 shares purchased under the Subscription
Agreements dated August 27, 2004 have been registered for sale under the
Securities Act of 1933; or, the date on which all restrictions on sale imposed
on the above 1,250,000shares by reference to the Securities Act of 1933 have
been removed under paragraph (k) of Rule 144 adopted under the Securities
Act of 1933.
Shares: Amnor Books, Inc. common shares ("AMNOR")
CUSIP number 03167M 10 4
Exchange: The primary exchange on which the shares are traded
Related Exchange(s): The primary exchange on which listed options or
futures on the Shares are traded.
Knock-out Event: Applicable. If the equity option dated August 27,
2004 between the parties is exercised by the
counterparty.
Knock-out Price: The average of the bid and ask price per Share
determined by the Calculation Agent at the Knock-
out Valuation Time on the Knock-out Valuation Date.
Knock-out Reference Security: Amnor Books, Inc. common shares ("AMNOR")
Knock-out Determination Day(s): July 27, 2006
Knock-out Valuation Time: The closing time on the Exchange
Equity Amounts payable by Cogent
Equity Amount Payer: Cogent
Equity Amount Receiver: Counterparty
Number of Shares: 1,000,000
Equity Notional Amount: $5,000,000
Equity Notional Reset: Applicable
Type of Return: Price Return
Initial Price: $5.00 per Share
2
Final Price: The average of the bid and ask price per Share
determined by the Calculation Agent at the
Valuation Time on the Valuation Date.
Valuation Time: The closing time on the Exchange
Valuation Date(s): Each monthly anniversary of the Trade Date prior to
the Termination Date
Averaging Dates: Ten trading days up to and including the Valuation
Date(s)
Averaging Date Disruption: Modified Postponement
Relevant Price: The average of the bid and ask price per Share
determined by the Calculation Agent at the
Valuation Time on the Valuation Date.
Floating Amounts payable by Counterparty:
Floating Amount Payer: Counterparty
Notional Amount: The Equity Notional Amount
Payment Dates: Valuation Dates
Floating Rate Option: USD-LIBOR-BBA
Spread: plus 3%
Floating Rate Day Count Fraction: Actual/360
Reset Dates: Valuation Dates
Floating Amounts payable by Cogent:
Floating Amount Payer: Cogent
Notional Amount: The Equity Notional Amount
Payment Dates: Valuation Dates
Floating Rate Option: USD-LIBOR-BBA
Spread: minus 3%
Floating Rate Day Count Fraction: Actual/360
Reset Dates: Valuation Dates
Initial Exchange Amount payable by Counterparty:
Counterparty Initial $400,000
Exchange Amount:
Counterparty Initial August 30, 2004
Exchange Date:
3
Other Terms:
Adjustment of Equity Amount
Number of Shares: Subject to the conditions that no Knock-out Event has
occurred or the Transaction has not been otherwise
terminated, the Equity Amount Number of Shares payable
by Cogent shall be reduced during the term of this
Transaction on the following basis:
The "Trigger Event" means the date on which shares
purchased under the Subscription Agreements dated
August 27, 2004 (the "Equity Shares") have been
registered for sale under the Securities Act of 1933,
or the date on which all restrictions on sale imposed
on Equity Shares by reference to the Securities Act of
1933 have been removed under paragraph (k) of Rule 144
adopted under the Securities Act of 1933.
If the Trigger Event occurs with respect to not less
than 416,667 Equity Shares by the 27th monthly
anniversary of the Trade Date, the Equity Amount
Number of Shares shall be reduced to 833,333 shares on
the day following said anniversary, or, in the
alternative,
If the Trigger Event occurs with respect to not less
than 583,333 Equity Shares by the 30th monthly
anniversary of the Trade Date, the Equity Amount
Number of Shares shall be reduced to 666,667 shares on
the day following said anniversary, or, in the
alternative,
If the Trigger Event occurs with respect to not less
than 750,000 Equity Shares by the 33rd monthly
anniversary of the Trade Date, the Equity Amount
Number of Shares shall be reduced to 500,000 shares on
the day following said anniversary, or, in the
alternative,
If the Trigger Event occurs with respect to not less
than 916,667 Equity Shares by the 36th monthly
anniversary of the Trade Date, the Equity Amount
Number of Shares shall be reduced to 333,333 shares
on the day following said anniversary.
If the Trigger Event occurs with respect to not less
than 1,083,333 Equity Shares by the 39th monthly
anniversary of the Trade Date, the Equity Amount
Number of Shares shall be reduced to 166,667 shares
on the day following said anniversary.
4
Settlement Terms:
Cash Settlement: Applicable
Settlement Currency: USD
Cash Settlement Payment Date: USD Currency Business Days after the relevant
Valuation Date
Settlement Method Election: Not Applicable
Default Settlement Method: Cash Settlement
Dividends:
Dividend Period: Second Period
Dividend Amount: The Paid Amount multiplied by the Number of Shares
Dividend Payment Date: Cash Settlement Payment Date
Extraordinary Dividend: Calculation Agent Adjustment
Re-investment of Dividends: Not Applicable
Adjustments:
Method of Adjustment: Calculation Agent Adjustment
Extraordinary Events:
Consequences of Merger Events:
Share-for-Share: Alternative Obligation
Share-for-Other: Alternative Obligation
Share-for-Combined: Alternative Obligation
Determining Party: Cogent
Tender Offer: Applicable
Consequences of Tender Offers:
Share-for-Share: Calculation Agent Adjustment
Share-for-Other: Calculation Agent Adjustment
Share-for-Combined: Component Adjustment
5
Determining Party: Cogent
Composition of Combined Consideration: Applicable
Nationalization, Insolvency or Delisting: Negotiated Close-out
Determining Party: Cogent
Additional Disruption Events:
Insolvency Filing: Applicable
Determining Party: Cogent
Non-Reliance: Applicable
Agreements and Acknowledgments
Regarding Hedging Activities: Not Applicable
Additional Acknowledgments: Applicable
4. Calculation Agent: Cogent
5. Account Details:
Account for payments to Cogent: To be provided.
Account for payments to Amnor : To be provided.
6. Relationship between the parties:
(b) Except as expressly provided herein, each party acknowledges that in
connection with entering into this Transaction, it has not entered into
any agreements, arrangements or understandings with the other party or
any related entity of such party in relation to timing or manner of any
acquisition or disposal of any Shares, the voting rights attaching to
any Shares or the management of the Issuer.
7. Governing Law: the laws of the State of New York (without reference to
choice of law doctrine).
Please confirm that the foregoing correctly sets forth the terms of
our agreement by executing the copy of this Confirmation enclosed for
that purpose and returning it to us by facsimile at (000) 000-0000.
Yours sincerely,
Cogent Capital Corp.
By: /s/Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
President
Confirmed as of the date first above written:
Amnor Books, Inc.
By: /s/ Xxxxxx Gallup_____________________
Xxxxxx Xxxxxx
President
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