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EXHIBIT 10.20
ISDA
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of June 10, 1999
CHICAGO BRIDGE & IRON COMPANY NV and BANK OF MONTREAL
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows:--
1. INTERPRETATION
(a) DEFINITIONS. The terms defined in Section 14 and in the Schedule 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 (including the
Schedule), 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 applicable condition
precedent specified in this Agreement.
Copyright (C) 1992 by International Swap Dealers Association, Inc.
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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 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. 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 whom 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
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). 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
(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, on or after the date on which 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.
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(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)).
(e) DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.
3. REPRESENTATIONS
Each party represents 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) that:--
(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;
(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)).
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(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 or any of its Affiliates 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.
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 subparagraph (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 nor 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.
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(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 in which a branch or 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.
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 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
2(e) required to be made by it if such failure is not remedied on or
before the third Local Business Day after notice of such failure is
given to the party;
(ii) BREACH OF AGREEMENT. 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
2(e) 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 on or before the thirtieth day after
notice of such failure is given to the party;
(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 to be
in full force and effect for the purpose of this Agreement (in
either 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
(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;
(iv) MISREPRESENTATION. A representation (other than a representation
under Section 3(e) or (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
(I) defaults under a Specified Transaction and, after giving effect to
any applicable notice requirement or grace period, there occurs 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 or delivery due on the last payment. delivery or exchange
date of. or any payment on early termination of, a Specified
Transaction (or such default continues for at least three Local
Business Days if there is no applicable notice requirement or grace
period) or (3) disaffirms, disclaims, repudiates or rejects, in whole
or in part, a Specified Transaction (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
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Entity of such party under one or more agreements or instruments
relating to Specified Indebtedness of any of them (individually or
collectively) in an aggregate amount of not less than the applicable
Threshold Amount (as specified in the Schedule) which has resulted 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 (2)
a default by such party, such Credit Support Provider or such Specified
Entity (individually or collectively) in making one or more payments on
the due date thereof in an aggregate amount of not less than the
applicable Threshold Amount under such agreements or instruments (after
giving effect to any applicable notice requirement or grace period);
(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) institutes or 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, in
the case of any such proceeding or petition instituted or
presented against it, such proceeding or petition (A) 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 (B) is not dismissed, discharged, stayed or
restrained in each case within 30 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 30 days thereafter; (8) causes or is subject to any event
with respect 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) (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, another
entity and, at the time of such consolidation, amalgamation, merger or
transfer:--
(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 by operation of law or pursuant to
an agreement reasonably satisfactory to the other party to this
Agreement; or
(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.
(h) 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 an Illegality if
the event is specified in (i) below, a Tax Event if the event is specified in
(ii) below or a Tax Event Upon Merger if the event is specified in (iii) below,
and, if specified to be applicable, a Credit Event Upon Merger if the event is
specified pursuant to (iv) below or an Additional Termination Event if the event
is specified pursuant to (v) below:--
(i) ILLEGALITY. Due to the adoption of, or any change in, any
applicable law after the date on which a Transaction is entered into,
or due to the promulgation of, or any change in, the interpretation by
any court, tribunal or regulatory authority with competent jurisdiction
of any applicable law after such date, it
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becomes unlawful (other than as a result of a breach by the party of
Section 4(b)) for such party (which will be the Affected Party):--
(1) to perform any absolute or contingent obligation to make a
payment or delivery or 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) to perform, or for any Credit Support Provider of such party
to perform, any contingent or other obligation which the party
(or such Credit Support Provider) has under any Credit Support
Document relating to such Transaction;
(ii) TAX EVENT. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on
which a Transaction is entered into (regardless of whether such action
is taken or brought with respect to a party to this Agreement) or (y) 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 Payment Date (1) 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 2(e),
6(d)(ii) or 6(e)) or (2) 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 2(e), 6(d)(ii) or 6(e)) 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));
(iii) TAX EVENT UPON MERGER. The party (the "Burdened Party") on the
next succeeding Scheduled Payment 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 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has
been deducted or withheld for or on account of any Indemnifiable 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 to, another entity (which will be the Affected Party) where such
action does not constitute an event described in Section 5(a)(viii);
(iv) CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity of
X consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and
such action does not constitute an event described in Section 5(a)(vii)
but the creditworthiness of the resulting, surviving or transferee
entity is materially weaker than that of X, such Credit Support
Provider or such Specified Entity, as the case may be, immediately
prior to such action (and, in such event, X or its successor or
transferee, as appropriate, will be the Affected Party); or
(v) 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 shall be as specified for such Additional Termination
Event in the Schedule or such Confirmation).
(c) EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which
would otherwise constitute or give rise to an Event of Default also constitutes
an Illegality, it will be treated as an Illegality and will not constitute an
Event of Default.
6. EARLY TERMINATION
(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
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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.
(i) NOTICE. If a Termination 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 such other information about that Termination Event as
the other party may reasonably require.
(ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality under
Section 5(b)(i)(1) or 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, excluding 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 an Illegality under Section 5(b)(i)( 1)
or 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 thereof is given under Section 6(b)(i) on action to avoid that
Termination Event.
(iv) RIGHT TO TERMINATE. If:--
(l) 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
(2) an Illegality under Section 5(b)(i)(2), 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,
either party in the case of an Illegality, 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 is more than one
Affected Party, or the party which is not the Affected Party in the
case of a Credit Event Upon Merger or an Additional Termination Event
if there is only one Affected Party may, by not more than 20 days
notice to the other party and provided that the relevant Termination
Event is then continuing, designate a day not earlier than the day such
notice is effective as an Early Termination Date in respect of all
Affected Transactions.
(c) EFFECT OF DESIGNATION.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (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 2(e) in respect of the Terminated Transactions will be
required to be made, but without prejudice to the other provisions of
this Agreement. The amount, if any, payable in
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respect of an Early Termination Date shall be determined pursuant to
Section 6(e).
(d) CALCULATIONS.
(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 all relevant quotations and
specifying any amount payable under Section 6(e)) and (2) 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 obtained in determining a Market Quotation, the records of
the party obtaining such quotation will be conclusive evidence of the
existence and accuracy of such quotation.
(ii) PAYMENT DATE. An amount calculated as being due in respect of any
Early Termination Date under Section 6(e) will be payable on the day
that 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 on the day which is two Local Business Days after the
day on which notice of the amount payable is effective (in the case of
an Early Termination Date which is designated as a result of a
Termination Event). Such amount will be paid together with (to the
extent permitted under applicable law) interest thereon (before as well
as after judgment) in the Termination Currency, from (and including)
the relevant Early Termination Date to (but excluding) the date such
amount is paid, at the Applicable Rate. Such interest will be
calculated on the basis of daily compounding and the actual number of
days elapsed.
(e) PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.
(i) EVENTS OF DEFAULT. If the Early Termination Date results from an
Event of Default: --
(1) FIRST METHOD AND MARKER QUOTATION. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the
Non-defaulting Party the excess, if a positive number, of (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the
Termination Currency Equivalent of the Unpaid Amounts owing to
the Non-defaulting Party over (B) the Termination Currency
Equivalent of the Unpaid Amounts owing to the Defaulting Party.
(2) FIRST METHOD AND LOSS. If the First Method and Loss apply,
the Defaulting Party will pay to the Non-defaulting Party, if a
positive number, the Non-defaulting Party's Loss in respect of
this Agreement.
(3) SECOND METHOD AND MARKET QUOTATION. If the Second Method and
Market Quotation apply, an amount will be payable equal to (A)
the sum of the Settlement Amount (determined by the
Non-defaulting Party) in respect of the Terminated Transactions
and the Termination Currency Equivalent of the Unpaid Amounts
owing to the Non-defaulting Party less (B) the Termination
Currency Equivalent of the Unpaid Amounts owing to the Defaulting
Party. If that 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
that amount to the Defaulting Party.
(4) SECOND METHOD AND LOSS. If the Second Method and Loss apply,
an amount will be payable equal to the Non-defaulting Party's
Loss in respect of this Agreement. If that 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 that amount to the Defaulting Party.
(ii) TERMINATION EVENTS. If the Early Termination Date results from a
Termination Event: --
9 ISDA(R)1992
10
(1) ONE AFFECTED PARTY. If there is one Affected Party, the
amount payable will be determined in accordance with Section
6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4),
if Loss applies, except that, in either case, references to the
Defaulting Party and to the Non-defaulting Party will be deemed
to be references to the Affected Party and the party which is not
the Affected Party, respectively, and, if Loss applies and fewer
than all the Transactions are being terminated, Loss shall be
calculated in respect of all Terminated Transactions.
(2) TWO AFFECTED PARTIES. If there are two Affected Parties:--
(A) if Market Quotation applies, each party will determine a
Settlement Amount in respect of the Terminated Transactions,
and an amount will be payable equal to (I) the sum of (a)
one-half of the difference between the Settlement Amount of
the party with the higher Settlement Amount ("X") and the
Settlement Amount of the party with the lower Settlement
Amount ("Y") and (b) the Termination Currency Equivalent of
the Unpaid Amounts owing to X less (II) the Termination
Currency Equivalent of the Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its Loss in
respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in respect of all
Terminated Transactions) and an amount will be payable equal
to one-half of the difference between the Loss of the party
with the higher Loss ("X") and the Loss of the party with
the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X;
if it is a negative number, X will pay the absolute value of that
amount to Y.
(iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies
in respect of a party, the amount determined under this Section 6(e)
will be subject to such adjustments as are appropriate and permitted by
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) PRE-ESTIMATE. The parties agree that if Market Quotation applies
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 such
losses.
7. TRANSFER
Subject to Section 6(b)(ii), 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 amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section 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
10 ISDA(R)1992
11
such tender results in the actual receipt by the party to which payment is owed,
acting in a reasonable manner and in good faith 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.
(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 amount 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 (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 arises or 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 purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith 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.
The term "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.
(c) SEPARATE INDEMNITIES. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the ocher
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 and supersedes
all oral communication and prior writings with respect thereto.
(b) AMENDMENTS. No amendment, modification or waiver in respect of this
Agreement will be effective unless 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 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.
(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), 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
11 ISDA(R)1992
12
they agree to those terms (whether orally or otherwise). A Confirmation
shall 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 or by an exchange of electronic
messages on an electronic messaging system, 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 or electronic message
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.
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 the other party that, notwithstanding the place of booking
office or jurisdiction of incorporation or organisation of such party, the
obligations of such party are the same as if it had entered into the Transaction
through its head or home office. This representation will be deemed to be
repeated by such party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.
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 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 respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system 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 that transmission
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 that mail is
delivered or its delivery is attempted; or
12 ISDA(R)1992
13
(v) if sent by electronic messaging system, on the date that electronic
message is received,
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 shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) CHANGE OF ADDRESSES. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system 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 this Agreement ("Proceedings"), each party irrevocably: --
(i) submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or 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, if this Agreement is expressed to be governed by the
laws of the State of New York; and
(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.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions 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. Nothing in this Agreement will
affect the right of either party to serve process in any other manner permitted
by law.
(d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest
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, order for specific performance or for
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 TERMINATION EVENT" has the meaning specified in Section 5(b).
"AFFECTED PARTY" has the meaning specified in Section 5(b).
"AFFECTED TRANSACTIONS" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or
13 ISDA(R)1992
14
Tax Event Upon Merger, all Transactions affected by the occurrence of such
Termination Event 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.
"APPLICABLE RATE" means:--
(a) 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;
(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
Rate; and
(d) in all other cases, the Termination Rate.
"BURDENED PARTY" has the meaning specified in Section 5(b).
"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 on or after the date on which the
relevant Transaction is entered into.
"CONSENT" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.
"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.
"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 it
were to fund or of funding the relevant amount plus 1% per annum.
"EARLY TERMINATION DATE" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.
"LLLEGALITY" has the meaning specified in Section 5(b).
"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
"LAWFUL" and "UNLAWFUL" will be construed accordingly.
"LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which commercial
banks are open for business
14 ISDA(R)1992
15
(including dealings in foreign exchange and foreign currency deposits) (a) in
relation to any obligation under Section 2(a)(i), in the place(s) specified in
the relevant Confirmation or, if 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) in relation to any other
payment, 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, (c)
in relation to any notice or other communication, including notice contemplated
under Section 5(a)(i), in the city 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 (d) in relation to
Section 5(a)(v)(2), in the relevant locations for performance with respect to
such Specified Transaction.
"LOSS" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case expressed as a negative number)
in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain resulting from
any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each
applicable condition precedent) on or before the relevant Early Termination Date
and not made, except, so as to avoid duplication, if Section 6(e)(i)(l) or (3)
or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and
out-of-pocket expenses referred to under Section 11. A party will determine its
Loss as of the relevant Early Termination Date, or, if that is not reasonably
practicable, as of the earliest date thereafter as is reasonably practicable. A
party may (but need not) determine its Loss by reference to quotations of
relevant rates or prices from one or more leading dealers in the relevant
markets.
"MARKET QUOTATION" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such 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. For this
purpose, Unpaid Amounts in respect of the Terminated Transaction or group of
Terminated Transactions are to be excluded but, without limitation, any payment
or delivery that would, but for the relevant Early Termination Date, have been
required (assuming satisfaction of each applicable condition precedent) after
that Early Termination Date is to be included. The Replacement Transaction would
be subject to such documentation as such party and the Reference Market-maker
may, in good faith, agree. The party making the determination (or its agent)
will request each Reference Market-maker to provide its quotation to the extent
reasonably practicable as of the same day and time (without regard to different
time zones) on or as soon as reasonably practicable after the relevant Early
Termination Date. The day and time as of which those quotations are to be
obtained will be selected in good faith by the party obliged to make a
determination under Section 6(e), and, if each party is so obliged, after
consultation with the other. If more than three quotations are provided, the
Market Quotation will be the arithmetic mean of the quotations, without regard
to the quotations having the highest and lowest values. If exactly three such
quotations are provided, the Market Quotation will be the quotation remaining
after disregarding the highest and lowest quotations. For this purpose, if more
than one quotation has the same highest value or lowest value, then one of such
quotations shall be disregarded. If fewer than three quotations are provided, it
will be deemed that the Market Quotation in respect of such Terminated
Transaction or group of Terminated Transactions cannot be determined.
"NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.
"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.
"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice or
the lapse of time or both, would
15 ISDA(R)1992
16
constitute an Event of Default.
"REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.
"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.
"SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"SET-OFF" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
"SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination
Date, the sum of: --
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference to any
Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not Cm
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"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.
"SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) 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 a rate swap
transaction, 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 or any other similar transaction (including
any option with respect to any of these transactions), (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.
"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 a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in
16 ISDA(R)1992
17
effect immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"TERMINATION CURRENCY" has the meaning specified in the Schedule.
"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 Market Quotation or Loss (as the case may be), 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 Tax Event or 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.
"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)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(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)) 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 as of the originally scheduled date for delivery, in each case
together with (to the extent permitted under applicable law) interest, in the
currency of such amounts, from (and including) the date such amounts or
obligations were or would have been required to have been paid or performed to
(but excluding) such Early Termination Date, at the Applicable Rate. Such
amounts of interest will be calculated on the basis of daily compounding and the
actual number of days elapsed. The fair market value of any obligation referred
to in clause (b) above shall be reasonably determined by the party obliged to
make the determination under Section 6(e) or, if each party is so obliged, it
shall be the average of the Termination Currency Equivalents of the fair market
values reasonably determined by both parties.
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.
CHICAGO BRIDGE & IRON COMPANY NV BANK OF MONTREAL
- -------------------------------- -----------------------
(Name of Party) (Name of Party)
By: CHICAGO BRIDGE & IRON COMPANY B.V.
Its: Managing Director
By: /s/ Timothy J. Wiggins By: /s/ Kevin R. Holme
---------------------- ------------------
Name: Timothy J. Wiggins Name: Kevin R. Holme
Title: Managing Director Title: Managing Director
Date: June 11, 1999 Date: June 11, 1999
17 ISDA(R)1992
18
(Multicurrency - Cross Border)
ISDA
SCHEDULE
TO THE
MASTER AGREEMENT
dated as of June 10, 1999
between CHICAGO BRIDGE & IRON COMPANY N.V. (`Party A")
and
BANK OF MONTREAL ("Party B")
PART 1
TERMINATION PROVISIONS
(a) "SPECIFIED ENTITY" means in relation to Party A for the purpose of:-
Section 5(a)(v), Material Subsidiaries (as defined in the Credit
Agreement)
Section 5(a)(vi), Material Subsidiaries (as defined in the Credit
Agreement)
Section 5(a)(vii), Material Subsidiaries (as defined in the Credit
Agreement)
Section 5(b)(iv), Material Subsidiaries (as defined in the Credit
Agreement)
and in relation to Party B for the purpose of:-
Section 5(a)(v), Not Applicable
Section 5(a)(vi), Not Applicable
Section 5(a)(vii), Not Applicable
Section 5(b)(iv), Not Applicable.
(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 and Party B.
"SPECIFIED INDEBTEDNESS" will have the meaning specified in Section 14,
provided that it will also include any obligation (whether present or
future, contingent or otherwise, as principal or surety or otherwise)
in respect of any Swap Transaction (as defined in the ISDA Definitions)
and will not include indebtedness in respect of deposits received or
any payment obligation not made because of any event similar to
Illegality.
"THRESHOLD AMOUNT" means in relation to Party A (i) zero with respect
to Specified Indebtedness to Party B and (ii) US$5,000,000 with respect
to any other Specified Indebtedness.
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19
"THRESHOLD AMOUNT" means in relation to Party B 2% of stockholders' equity
(including retained earnings) of Party B.
(d) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv) will apply
to Party A and Party B.
(e) The "AUTOMATIC EARLY TERMINATION" provisions of Section 6(a) will apply to
Party A and Party B.
(f) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e) of this
Agreement:
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(g) "TERMINATION CURRENCY" means the currency selected by the Non-defaulting
Party or the non-Affected Party, as the case may be, provided that the
Termination Currency shall be one of the currencies in which payments in
respect of at least one Terminated Transaction are required to be made
pursuant to the related Confirmation if such specified currency is freely
transferable, failing which the Termination Currency shall be U.S.
Dollars. If there are two Affected Parties the Termination Currency shall
be U.S. Dollars.
(h) ADDITIONAL TERMINATION EVENT will not apply.
(i) "CREDIT AGREEMENT" means the Credit Agreement dated as of March 6, 1997,
as amended October 31, 1997 and March 5, 1998, among Party A, the
Borrowing Subsidiaries party thereto, the Lenders party thereto (including
Party B) and The Chase Manhattan Bank as Administrative Agent, (without
giving effect to any amendments thereto, or waivers or consents granted
thereunder, not consented to by Party B).
(j) ADDITIONAL EVENT OF DEFAULT. In addition to the Events of Default
contained in Section 5, it shall be an Event of Default hereunder, with
Party A as the Defaulting Party, if, under the Credit Agreement, an "Event
of Default" (as defined in the Credit Agreement) shall occur, whether or
not the Credit Agreement remains in effect, without giving effect to any
requirement contained in the Credit Agreement that notice of the relevant
circumstance be provided by any party, but only requiring that any such
notice be provided by Party B.
(k) ADDITIONAL COVENANTS AND AGREEMENTS. In addition to the agreements set
forth in Section 4, Party A agrees to observe, perform and comply with all
the covenants and agreements set forth in the Credit Agreement whether or
not the Credit Agreement remains in effect, and such covenants and
agreements will be deemed to continue in effect for the benefit of Party B
whether or not any commitment remains in effect, or any sum remains
payable, under the Credit Agreement provided that any documentation to be
delivered to any Lender under the Credit Agreement shall be delivered to
Party B.
PART 2
TAX REPRESENTATIONS
(a) PAYER REPRESENTATION. For the purpose of Section 3(e) of this Agreement,
Party A and Party B will each make the following representation:- It is
not required by any applicable law, as modified by the practice of any
relevant governmental revenue authority, of any Relevant Jurisdiction to
make any deduction or withholding for or on account of any Tax from any
payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of this
Agreement) to be made by it to the other party under this Agreement. In
making this representation, it may rely on:-
(i) the accuracy of any representations made by the other party pursuant
to Section 3(f) of this Agreement;
20
20
(ii) the satisfaction of the agreement contained in Section 4(a)(i)
or 4(a)(iii) of this Agreement and the accuracy and
effectiveness of any document provided by the other party
pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement;
and
(iii) the satisfaction of the agreement of the other party contained
in Section 4(d) of this Agreement;
provided that it shall not be a breach of this representation where
reliance is placed on clause (ii) and the other party does not deliver
a form or document under Section 4(a)(iii) by reason of material
prejudice to its legal or commercial position.
(b) PAYEE TAX REPRESENTATIONS. For the purpose of Section 3(f) of this
Agreement, Party A and Party B make the representations specified
below, if any:-
(i) The following representation will apply to Party A and Party
B:-
Each payment received or to be received by it in connection
with this Agreement will be effectively connected with its
conduct of a trade or business in the Specified Jurisdiction.
If such representation applies, then:-
"SPECIFIED JURISDICTION" means with respect to Party A: the Netherlands
"SPECIFIED JURISDICTION" means with respect to Party B: Canada
(ii) The following representations will apply to Party A and Party
B, respectively:-
Party A has been duly incorporated, created or organized under
the laws of the Netherlands and it is validly existing under
those laws.
Party B has been duly created and organized under the laws of
Canada.
(iii) Other Payee Representations:- None made.
PART 3
AGREEMENT TO DELIVER DOCUMENTS
For the purpose of Section 4(a)(i) and (ii) of this Agreement, each party agrees
to deliver the following documents, as applicable:-
(a) Each party shall, as soon as practicable after demand, deliver to the
other party any form or document reasonably requested by the other
party, including without limitation, any form or document required to
enable such other party to make payments hereunder without withholding
for or on account of Taxes or with such withholding at a reduced rate.
(b) Other documents to be delivered by each party concurrently with the
execution and delivery of this Agreement are:
21
21
PARTY FORM/DOCUMENT/ DATE BY WHICH TO BE COVERED BY
REQUIRED TO CERTIFICATE DELIVERED SECTION 3(D)
DELIVER REPRESEN-
DOCUMENT TATION
Party A and Certificate of incumbency containing specimen Upon execution of this Yes
Party B signatures of each person executing the Agreement, and if
Agreement. requested, each
Confirmation.
Party A Legal opinion of Netherlands counsel Upon execution of this No
substantially in the form of Exhibit I Agreement.
attached hereto.
Party A Credit Support documents referenced in Part 4 Promptly following Yes
of this Schedule. execution of this Agreement.
Party B Certified copy of a resolution of the Upon execution of this Yes
directors authorizing the execution and Agreement.
delivery of the Agreement.
PART 4
MISCELLANEOUS
(a) ADDRESSES FOR NOTICES. For the purposes of Section 12(a) of this
Agreement:-
ADDRESS(ES) FOR NOTICES OR COMMUNICATIONS TO PARTY A:-
Address: Chicago Bridge & Iron Company N.V.
c/o Chicago Bridge & Iron Company
1501 North Division Street
Plainfleld, ll. 60544
Attention: Treasurer
Facsimile:
Telephone: (815) 439-4072
ADDRESS(ES) FOR NOTICES OR COMMUNICATIONS TO PARTY B:-
Address: EMFISYS - Derivatives Operations
130 Adelaide Street West
Suite 500
Toronto, Ontario M5H 4E 1
Canada
Attention: Manager, Confirmations
Facsimile: (416) 867-4778/6827
Telephone: (416) 867-7173
Swift ID No.: BOFMCAM3
22
22
Any notice sent to Party B in connection with Sections 5, 6 or 9(b) shall
be sent to the following address:
Address: Bank of Montreal
Treasury Credit
22nd Floor
First Canadian Place
Toronto, Ontario M5X 1A1
Attention: Senior Manager, Documentation
Telephone: (416) 867-4178
(b) PROCESS AGENT. For purposes of Section 13(c) of this Agreement:-
Party A appoints as its Process Agent: Robert H. Wolfe
Chicago Bridge & Iron Company N.V.
c/o Chicago Bridge & Iron Company
1501 North Division Street
Plainfleld, ll. 60544
Party B appoints as its Process Agent its Office at 430 Park Avenue, New
York, N.Y. 10022.
(c) OFFICES. The provisions of Section 10(a) will apply to this Agreement.
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c) of this Agreement:-
Party A is not a Multibranch Party.
Party B is a Multibranch Party and, for purposes of this Agreement and
each Transaction entered into pursuant hereto, may act through its
Toronto, Chicago or London Office.
(e) CALCULATION AGENT. The Calculation Agent is Party B, unless otherwise
specified in a Confirmation in relation to the relevant Transaction.
(f) CREDIT SUPPORT DOCUMENTS means, in relation to Party A: Guarantees from
each of the Subsidiary Guarantors (as defined in the Credit Agreement) of
Party A's obligations under this Agreement.
CREDIT SUPPORT DOCUMENT means, in relation to Party B: Not applicable.
(g) CREDIT SUPPORT PROVIDERS means, in relation to Party A: each of the
Subsidiary Guarantors (as defined in the Credit Agreement).
CREDIT SUPPORT PROVIDER means, in relation to Party B: Not applicable.
(h) GOVERNING LAW. This Agreement will be governed by and consirued in
accordance with the laws of the State of New York (without reference to
choice of law doctrine).
(i) NETTING OF PAYMENTS. Subparagraph (ii) of Section 2(c) of this Agreement
will apply to all Transactions.
(j) "AFFILIATE" will have the meaning specified in Section 14 of this
Agreement.
23
23
PART 5
OTHER PROVISIONS
(a) 1991 ISDA DEFINITIONS. The provisions of the 1991 ISDA Definitions (the
"Definitions"), published by the International Swaps and Derivatives
Association, Inc., are incorporated by reference in, and will be deemed
to be part of, this Agreement and each Confirmation as if set forth in
full in this Agreement or in such Confirmation, without regard to any
revision or subsequent edition thereof. In the event-of any
inconsistency between the provisions of this Agreement and the
Definitions, this Agreement will prevail. In the event of any
inconsistency between the provisions of any Confirmation and this
Agreement or the Definitions, such Confirmation will prevail for the
purpose of the relevant Transaction.
(b) SUPERVENING ILLEGALITY. Without prejudice to a party's right to
terminate in the event of Illegality, a party shall not be excused~from
performance hereunder by supervening illegality (whether by reason of
passage or promulgation of a new law, regulation or interpretation or
of failure to obtain any required govenmental consent or approval),
impossibility or frustration, with the effect that, while neither party
shall be obligated to violate any applicable law by reason of this
Section, each party shall retain its right to payment pursuant to
Section 6(e) if the other party does not perform because of supervening
illegality, impossibility or frustration.
(c) CONDITIONS TO CERTAIN PAYMENTS. Notwithstanding the provisions of
Section 6(e)(i)(3) and (4), as applicable, if the amount referred to
therein is a positive number, the Defaulting Party will pay such amount
to the Non-defaulting Party, and if the amount referred to therein is a
negative number, the Non-defaulting Party shall have no obligation to
pay any amount thereunder to the Defaulting Party unless and until the
conditions set forth in (i) and (ii) below have been satisfied at which
time there shall arise an obligation of the Non-defaulting Party to pay
to the Defaulting Party an amount equal to the absolute value of such
negative number less any and all amounts which the Defaulting Party may
be obligated to pay under Section 11:
(i) the Non-defaulting Party shall have received confirmation
satisfactory to it in its sole discretion (which may include
an unqualified opinion of its counsel) that (1) no further
payments or deliveries under Section 2(a)(i) or 2(e) in
respect of Terminated Transactions will be required to be made
in accordance with Section 6(c)(ii); and (2) each Specified
Transaction shall have terminated pursuant to its specified
termination date or through the exercise by a party of a right
to terminate and all obligations owing under each such
Specified Transaction shall have been fully and finally
performed; and
(ii) all obligations (contingent or absolute, matured or unmatured)
of the Defaulting Party and any Affiliate of the Defaulting
Party to make any payment or delivery to the Non-defaulting
Party or any Affiliate of the Non-defaulting Party shall have
been fully and finally performed.
(d) RELATIONSHIP BETWEEN THE 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):
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 advisors 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 shall not be
considered investment advice or a recommendation to enter into that
Transaction. No communication
24
24
(written or oral) received from the other party shall be deemed to be
an assurance or guarantee as to the expected results of that
Transaction.
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.
STATUS OF PARTIES. The other party is not acting as a fiduciary for or
an advisor to it in respect of that Transaction.
(e) BANKRUPTCY CODE REPRESENTATION. The parties hereto intend that this
Agreement shall be a "master agreement" for purposes of 11 U.S.C. ss.
l0l(53B) and 12 U.S.C. ss. 1821(e)(8)(D)(vii), or any successor
provisions.
(f) CFTC REPRESENTATION. (i) Each party represents and warrants that (A) it
is an "eligible swap participant" as that term is defined by the
Commodity Futures Trading Commission at 17 C.F.R. ss. 35.l(b)(2); and
(B) this Agreement and the Transactions hereunder are entered into in
connection with its business or a line of business, and have been
individually tailored and negotiated.
(ii) With respect to any Transaction that is a commodity option, each
party when it is the offeree represents that (A) it is a producer,
processor, commercial user of or merchant handling the commodity; and
(B) it is entering into such Transaction solely for purposes relating
to its business as such.
(g) FEES AND EXPENSES. Party A agrees to (i) pay Party B, upon execution of
this Agreement (whether or not any Transactions hereby contemplated
shall be consummated) a fee of U.S.$75,000, and (ii) reimburse Party B
for its out-of-pocket legal fees and expenses incurred in connection
with the preparation of this Agreement, up to a maximum amount of U.S.$
10,000.
CHICAGO BRIDGE & IRON COMPANY N.V. BANK OF MONTREAL
By: CHICAGO BRIDGE & IRON COMPANY B.V. By: /s/ Kevin Holme
---------------
Its: Managing Director Name: Kevin Holme
Title: Managing Director
By: /s/ Timothy J. Wiggins Date: June 11, 1999
----------------------
Timothy J. Wiggins, Managing Director
Date: June 11, 1999
25
25
EXHIBIT I
[Letterhead of Netherlands Counsel]
[Date]
Bank of Montreal
First Canadian Place
Toronto, Ontario
M5X 1A1
Attention: Senior Counsel
Dear Sirs:
This opinion is furnished to you in connection with the ISDA
Master Agreernent dated as of [DATE] (the "Agreement") between Chicago Bridge &
Iron Company N.y. ("Counterparty") and Bank of Montreal (the "Bank"), and the
Equity Forward Transaction dated as of [DATE] (the "Transaction") entered into
by the Counterparty and the Bank pursuant to the Agreement. Terms defined in the
Agreement and used but not defined herein have the meanings given to them in the
Agreement.
We have acted as counsel to the Counterparty in connection
with the execution and delivery of the Agreement and in connection with the
Transaction. We have examined the Agreement, including the Confirmation for the
Transaction (the "Confirmation"), the Counterparty's constating documents and
such other documents as we have deemed necessary or appropriate for purposes of
the opinions expressed herein. We have also made such investigations and
considered such questions of law as we have considered necessary for the
purposes of rendering this opinion. In such examination we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity to original documents of all documents submitted
to us as copies, certified or otherwise.
We express no opinion with respect to the laws of any
jurisdiction other than the laws of the Netherlands.
Based on the foregoing we are of the opinion that:
1. The Counterparty has been duly incorporated and organized and is
validly existing and in good standing under the laws of the
Netherlands.
2. The execution and delivery of the Agreement and the Confirmation
by the Counterparty and the performance by the Counterparty of its
obligations thereunder are within the corporate power of the
Counterparty and do not conflict with or result in a breach of the
constating documents of the Counterparty or of any law or
regulation or of any agreement, decree, order, judgment,
injunction or other instrument binding on or affecting the
Counterparty.
3. All necessary and proper proceedings have been taken by the
Counterparty to duly authorize the execution and delivery of the
Agreement and the Confirmation to the Bank, including for the
avoidance of doubt, all corporate action required pursuant to
Section 2:98 Dutch Civil Code.
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26
4. No action by, notice to or filing with, or consent, authorization
or approval of, any governmental authority or regulatory body is
required in connection with the Counterparty's execution, delivery
and performance of the Agreement and the Confirmation.
5. The governing law clause, subjecting the Agreement to New York
law, is valid under the laws of the Netherlands. Under the laws of
the Netherlands, New York law will be applied to the Agreement,
provided that such choice of law is bona fide and provided that
such choice of law is not contrary to public policy, as that term
is understood under the laws of the Netherlands. To the best of
our knowledge, having made due inquiry, public policy would not be
breached by application of the chosen law.
6. Assuming that the Agreement and the Confirmation are legal, valid
and binding and enforceable under New York law, the Agreement and
the Confirmation constitute legal, valid and binding obligations
of the Counterparty enforceable in accordance with their terms and
the laws of the Netherlands.
The foregoing opinions are subject to the following qualifications:
1. The enforceability of the Agreement and the Confirmation against
the Counterparty is subject to applicable bankruptcy, insolvency,
reorganization, moratorium, and other similar laws and equitable
principles of general application affecting the rights of
creditors, as well, as to the availability of specific
performance, injunctive relief or any other equitable remedy; and
2. The assumption that the Agreement and the Confirmation have been
authorized, executed and delivered by, and constitutes a legal,
valid and binding obligation of the Bank.
This opinion is provided solely for your benefit and is not to be
relied upon for any purpose other than in respect of the Agreement and the
Confirmation, or by any other person.
Yours very truly,
27
27
[GRAPHIC OMITTED]
BANK OF MONTREAL
EMFISYS - DERIVATIVES OPERATIONS
130 Adelaide Street West
Suite 500
Toronto, Ontario
M5H 4E1
Telephone No. (416) 867-7173
Fax No. (416) 867-6827
June 11, 1999
Chicago Bridge & Iron Company N.V.
c/o Chicago Bridge & Iron Company
1501 North Division Street
Plainfield, Il 60544
ATTENTION: MS. JEAN BROWN, TREASURER
Dear Sirs:
RE: EQUITY FORWARD TRANSACTION
OUR REFERENCE NO. 196672/235431
The purpose of this letter agreement (this "Confirmation") is to
confirm the terms and conditions of the Transaction entered into between us on
the Trade Date specified below (the "Transaction"). This Confirmation
constitutes a "Confirmation" as referred to in the ISDA Master Agreement
specified below.
The definitions and provisions contained in the 1991 ISDA Definitions
(the "1991 Definitions") and in the 1996 ISDA Equity Derivatives Definitions
(the "Equity Definitions", and together with the 1991 Definitions, the
"Definitions"), in each case as published by the International Swaps and
Derivatives Association, Inc., are incorporated into this Confirmation. In the
event of any inconsistency between the 1991 Definitions and the Equity
Definitions, the Equity Definitions will govern. In the event of any
inconsistency between either set of Definitions and this Confirmation, this
Confirmation will govern.
1. This Confirmation supplements, forms part of, and is subject to, the ISDA
Master Agreement dated as of June 10, 1999, as amended and supplemented from
time to time (the "Agreement"), between Chicago Bridge & Iron Company N.V.
("Party A") and Bank of Montreal ("Party B"). All provisions contained in the
Agreement govern this Confirmation except as expressly modified below.
28
2
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
General Terms:
Trade Date: June 11, 1999
Forward Settlement
Date: August 17, 1999, and any Partial
Termination Date that may be designated in
accordance with the Partial Termination
provisions set forth herein.
Seller: Party B
Buyer: Party A
Shares: Common shares with a par value of 0.01 NLG
of Chicago Bridge & Iron Company N.V. (the
"Issuer")
Number of Shares
to be Delivered: 349,100 shares, subject to adjustment in
accordance with the Partial Termination
provisions set forth herein
Forward Price: USD 11.83 per Share
Exchange: New York Stock Exchange
Clearance System(s): Depository Trust Company
Business Days: New York
Settlement Terms:
Physical Settlement: Applicable
On the Settlement Date, Party A will pay
Party B an amount equal to the Number of
Shares to be Delivered multiplied by the
Forward Price, and Party B will deliver to
Party A the Number of Shares to be
Delivered
Settlement Date: "Settlement Date" means, in relation to
Shares to be delivered in respect of the
Forward Settlement Date, the first day on
which settlement of a sale of such Shares
executed on that Forward Settlement Date
customarily would take place through the
relevant Clearance System, unless a
Settlement Disruption Event prevents
delivery of such Shares on that
29
3
day. If a Settlement Disruption Event does
prevent delivery on that day, then the
Settlement Date will be the first
succeeding day on which delivery of the
Shares can take place through the relevant
Clearance System unless a Settlement
Disruption Event prevents settlement on
each of the 10 relevant Clearance System
Business Days immediately following the
original date that, but for the Settlement
Disruption Event, would have been the
Settlement Date. In that case, (a) if such
Shares can be delivered in any other
commercially reasonable manner, then the
Settlement Date will be the first day on
which settlement of a sale of Shares
executed on that 10th relevant Clearance
System Business Day customarily would take
place using such other commercially
reasonable manner of delivery (which other
manner of delivery will be deemed the
relevant Clearance System for the purposes
of delivery of the relevant Shares), and
(b) if such Shares cannot be delivered in
any other commercially reasonable manner,
then the Settlement Date will be postponed
until delivery can be effected through the
relevant Clearance System or in any other
commercially reasonable manner.
Dividends: (a) "Dividend Payment Date" means March
30, June 30, September 30 and December
30 of each calendar year during the
term of this Transaction, subject to
adjustment in accordance with the
Following Business Day Convention.
(b) "Dividend Amount" means, in respect of
each Dividend Payment Date, an amount
calculated by the Calculation Agent,
equal to $0.06 minus the amount of any
dividend per Share declared to be
payable by the Issuer for such
Dividend Payment Date, multiplied by
the Number of Shares to be Delivered.
(c) If the Dividend Amount so calculated
is a positive number, then Party A
will pay such Dividend Amount to Party
B on the Dividend Payment Date. If the
Dividend Amount so calculated by the
Calculation Agent is a negative
number, then Party B will pay the
absolute value of such Dividend Amount
to Party A on the Dividend Payment
Date.
Adjustments: Upon the occurrence of an event having, in
the determination of the Calculation Agent,
a diluting or concentrative effect on
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the theoretical value of the Shares, then
following the declaration by the Issuer of
the Shares of the terms of any Potential
Adjustment Event, the Calculation Agent
will make the corresponding adjustments to
the Forward Price and Number of Shares to
be Delivered, and to any other variable
relevant to the settlement or payment terms
of the Transaction as the Calculation Agent
determines appropriate to account for that
diluting or concentrative effect, and will
determine the effective date(s) of the
adjustment(s).
Extraordinary Events:
Consequences of Merger Events:
(a) Share-for-Share: Alternative Obligation
(b) Share-for-Other: Alternative Obligation
(c) Share-for-Combined: Alternative Obligation
Nationalization or Insolvency: Not applicable
Amendment of
Equity Definitions: For the purposes of this Transaction, the
Equity Definitions are amended as follows:
(A) A new Section 1.3A is added after
Section 1.3:
"SECTION 1.3A. SHARE FORWARD TRANSACTION.
"Share Forward Transaction" means an OTC
equity forward transaction relating to a
single share or other security."
(B) Section 1.5 is amended to read:
"SECTION 1.5. SHARE TRANSACTION. "Share
Transaction" means a Share Option
Transaction, a Share Swap Transaction, and
for the purposes of Article 9, a Share
Forward Transaction."
(C) A new clause (E) is added to Section
9.1(c):
"(E) in respect of a Share Forward
Transaction, the Forward Price per Share
and the Number of Shares to be Delivered,
as these are set forth in the Confirmation
of the Transaction;"
(D) Clause (vi) of Section 9.1(e) is
amended to read:
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"(vi) any other similar event that, in the
reasonable judgment of the Calculation
Agent, may have a diluting or concentrative
effect on the theoretical value of the
relevant Shares."
(E) A new clause (E) is added at the end of
Section 9.3(b)(i):
and (E) in the case of a Share Forward
Transaction, the number of New Shares to
which a holder of the number of Shares
equal to the Number of Shares to be
Delivered would be entitled upon
consummation of the Merger Event will be
deemed the "Number of Shares to be
Delivered" and the New Shares and their
issuer will be deemed to be "Shares" and
the "Issuer", respectively, and, if
necessary, the Calculation Agent will
adjust any relevant terms accordingly;
(F) A new clause (E) is added at the end of
Section 9.3(c)(i):
and (E) in the case of a Share Forward
Transaction, the amount of Other
Consideration (as subsequently modified in
accordance with any relevant terms) to
which a holder of the number of Shares
equal to the Number of Shares to be
Delivered would be entitled upon
consummation of the Merger Event will be
deemed the "Number of Shares to be
Delivered" and, if necessary, the
Calculation Agent will adjust any relevant
terms accordingly;
(G) A new clause (E) is added at the end of
Section 9.3(d)(i):
and (E) in the case of a Share Forward
Transaction, the number of New Shares and
the amount of Other Consideration (as
subsequently modified in accordance with
any relevant terms) to which a holder of
the number of Shares equal to the Number of
Shares to be Delivered would be entitled
upon consummation of the Merger Event will
be deemed the "Number of Shares to be
Delivered" and the New Shares and their
issuer will be deemed to be "Shares" and
the "Issuer", respectively, and, if
necessary, the Calculation Agent will
adjust any relevant terms accordingly.
3. Calculation Agent: Bank of Montreal
4. Condition Precedent: Party B's obligations under this Transaction are
subject to the condition precedent that Party A shall have caused each
Subsidiary Guarantor, as defined in the Credit Agreement, to execute
and deliver to Party B, prior to or promptly following the Trade Date
of this Transaction, a guarantee (in form and substance reasonably
satisfactory to Party B and its legal advisors) of the obligations of
Party A under the Agreement,
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including without limitation, under this Transaction.
5. Account Details. Account for delivery of Shares to Party A:
Chicago Bridge & Iron Company N.V.
Treasury Stock Account No. 737
Bank of New York
Account for Payments to Party B:
Harris Bank International Corporation New York
ABA 026-007-760
A/C number 210-77777
In favour of Bank of Montreal, Toronto,
Derivatives Operations
6. Offices:
(a) The Office of Party A for the Transaction is Hoofddorp, the
Netherlands; and
(b) The Office of Party B for the Transaction is Toronto
7. Partial Termination: (a) If Party B determines that (i) the Number of
Shares to be Delivered in respect of this Transaction, plus the Number
of Shares to be Delivered in respect of any other Transaction between
Party A and Party B, constitutes five (5) percent or more of any class
(as that term is used for purposes of the U.S. Bank Holding Company Act
of 1956, as amended) of outstanding voting securities of the Issuer or
(ii) the sum of the aggregate value of Shares of the Issuer included in
this Transaction, plus the aggregate value of Shares of the Issuer
included in any other Transaction between the parties, exceeds 24.9% of
the shareholders' equity of such Issuer, Party B may elect to terminate
this Transaction in part on any Business Day prior to the Termination
Date (the "Partial Termination Date") by giving irrevocable notice to
Party A (the "Partial Termination Notice") on a Business Day that is
not less than ten (10) calendar days prior to the Partial Termination
Date, designating such Partial Termination Date and the portion of the
Number of Shares to be Delivered to be terminated (the "Terminated
Share Amount").
(b) In such event, (i) the Number of Shares to be Delivered shall be
reduced by the Terminated Share Amount, and (ii) an Additional
Termination Event under the Agreement shall be deemed to occur with
Party B the sole Affected Party and this Transaction (after
consideration of any partial delivery) the Sole Affected Transaction;
and Loss will be deemed to apply for the purpose of determining if any
payment will be made in respect of the Affected Transaction. In all
other respects this Confirmation shall remain in full force and effect
and the Transaction shall remain outstanding.
8. Hedging Activity: (a) Party A acknowledges that Party B may (but is not
required to) hedge its risk exposure by investing in Shares or other
assets in respect of this Transaction and its obligations hereunder and
Party B makes no representations or warranties regarding the level
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of such investment or the extent of its hedging activities (if any).
(b) If Party B elects to hedge its position by acquiring Shares, the
following provisions shall apply:
Transacting Period: The period of time during which Party A is
prepared to enter into successive Share
Forward Transactions on the Shares similar
to this Transaction, which period shall
commence on the Trade Date and end (i) at
the close of the first Exchange Business
Day following the date on which Party A
notifies Party B that Party A does not
intend to enter into any additional Share
Forward Transactions for the time being or
(ii) on the Transacting Period Termination
Date, whichever first occurs, provided that
if, pursuant to a request by Party A to
enter into a Share Forward Transaction,
Party B has acquired Shares in excess of
Party B's hedging requirements for Share
Forward Transactions then outstanding and
is holding such Shares on the date that
Party A gives a notice under subclause (i),
Party A and Party B shall immediately enter
into a Share Forward Transaction similar to
this Transaction in respect of a like
number of Shares.
Exchange Business
Day: Any day on which the Exchange is open for
regular trading during regular trading
hours.
Transacting Period
Termination Date: August 17, 1999.
Party B Purchases: Party B's purchases of Shares during the
Transacting Period will be made in
accordance with Rule 10b-18 under the
Securities Exchange Act of 1934, as amended
("Rule 10b-18"), as if it were applicable
to this Transaction.
Party A Purchases: Party A shall not, and shall cause its
affiliated purchasers (as defined in Rule
10b-18) not to, purchase Shares during the
Transacting Period.
9. Chicago Branch as Agent: Each party agrees that with respect to this
Transaction Bank of Montreal, Chicago Branch ("Chicago Branch") has
acted as "agent" for Party A and Party B within the meaning of Rule
15a-6 under the U.S. Securities Exchange Act of 1934, as amended, and
Party A shall address all communications to Party B in connection with
this Transaction to its Chicago Branch, 115 South LaSalle Street,
Chicago, Illinois 60603, Attention: Managing Director, Global Financial
Products.
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10. Additional Representations and Covenants:
(a) In addition to the representations set forth in the Agreement,
Party A further represents to Party B that:
(i) it is not a resident of Canada and is not acting on behalf
of any resident of Canada;
(ii) its total assets, as shown on its last audited balance
sheet, exceeded CAD 100 million, or its equivalent in
another currency;
(iii) at the time of entering into this Transaction, it is in
compliance with the covenants set out in subsections
10(b)(ii)(A) to (E) of this Confirmation;
(iv) in entering into the Agreement and this Transaction, it is
in compliance with all applicable insider-trading laws and
regulations, including without limitation, the laws and
regulations of the Netherlands and the United States; and
(v) at the time of Party A's entry into this Transaction and on
the Settlement Date, no "restricted period" for purposes of
Rule 102 of Regulation M under the Securities Exchange Act
of 1934 ("Regulation M") and no tender offer for Shares
(whether by Party A or a third party) is in effect, and no
Party A tender offer has been in effect within the preceding
10 (ten) business days.
(b) In addition to the covenants set forth in the Agreement, Party A
further covenants and agrees that:
(i) this Transaction shall not be assigned by Party A to any
resident of Canada; and
(ii) at the time (the "Delivery Date") at which the Shares must
be or are delivered by Party B to Party A pursuant to this
Transaction:
(A) the Shares are fully paid;
(B) the articles of association of the Company (as in
force at the Delivery Date) allow for the acquisition
by the Company of the Shares;
(C) an authorization of Party A's General Meeting of
Shareholders for the acquisition by Party A of shares
in its own share capital, as referred to in Section
2:98 subsection 4 Dutch Civil Code is in full force
and effect and the Transaction (including the
acquisition by Party A of the Shares and the
acquisition price therefor) is within the limitations
set forth in such authorization;
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(D) Party A's shareholders' equity (calculated in
accordance with Section 2:98 subsection 3 Dutch Civil
Code), less the acquisition price for the Shares,
will not be less than the sum of (x) the paid and
called for part of Party A's share capital, and (y)
the reserves which must be maintained by law or under
Party A's articles of association (as in force at the
Delivery Date), as required under Section 2:98
subsections 2 and 3 Dutch Civil Code;
(E) not more than six months have elapsed since the end
of Party A's last financial year without the adoption
and, if necessary, the approval of its annual
accounts; and
(F) the sum of (X) the nominal amount of the shares in
Party A's share capital which it or a subsidiary
company (as defined in Section 2:24a Dutch Civil
Code) holds or holds as pledgee, and (Y) the nominal
amount of the Shares to be Delivered, is not more
than one-tenth of Party A's issued share capital.
(iii) if Party A commences a "distribution" (as defined in
Regulation M) during the Transacting Period, Party A shall
so notify Party B no later than the business day preceding
the first day of the restricted period applicable to Party A
under Regulation M and shall further notify Party B promptly
when the restricted period has ended.
(c) In addition to the representations and agreements set forth in the
Agreement, (i) Party A and Party B each represents to the other
that it is not entering into this Transaction while in possession
of material non-public information with respect to Party A; (ii)
Party A agrees that it will not disclose any material non-public
information with respect to itself to Party B without Party B's
prior consent; (iii) Party A agrees that if at any time during the
Transacting Period it comes to have possession of material
non-public information with respect to itself, it will immediately
notify Party B that a blackout period is in effect, and when Party
A ceases to be in possession of material non-public information,
Party A will promptly notify Party B that the blackout period has
ended; and (iv) Party B agrees that it will not purchase or sell,
nor make any offers to purchase or sell, Shares during any such
blackout period.
(d) Party B shall make no purchases of Shares during any restricted
period applicable to Party A under Regulation M that may occur
during the Transacting Period.
11. Additional Termination Events:
(a) In addition to the Termination Events set forth in the Agreement,
it shall be a Termination Event, with Party B as the sole Affected
Party and this Transaction (after consideration of any partial
delivery) the sole Affected Transaction, if Party B
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is unable to deliver the requisite number of Shares due to
illiquidity in the market for such Shares. Party B will (a) notify
Party A within one Clearance System Business Day of the Settlement
Date to that effect and (b) deliver on the Settlement Date such
number of Shares, if any, as it can deliver on that date. In such
case, irrespective of the payment measure elected by the parties
under the Agreement, Loss will be deemed to apply for the purpose
of determining if any payment will be made in respect of the
Affected Transaction.
(b) In addition to the Termination Events set forth in the Agreement,
it shall be a Termination Event, with Party A as the sole Affected
Party and this Transaction the sole Affected Transaction, if
delivery of Shares by Party B to Party A on the Settlement Date or
on any Partial Settlement Date would violate any applicable law or
regulation, including but not limited to Regulation M and Rules
10b-13, 13e-1 and 13e-4 under the Securities Exchange Act of 1934,
or Section 2:98 of the Dutch Civil Code. If a violation of the
kind referred to in the preceding sentence would otherwise
constitute an Event of Default under the Agreement, the preceding
sentence shall apply and the violation shall not constitute an
Event of Default. In addition, irrespective of the payment measure
elected by the parties under the Agreement, Loss will be deemed to
apply for the purpose of determining if any payment will be made
in respect of the Affected Transaction.
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.
Yours sincerely,
Confirmed as of the date
BANK OF MONTREAL first above written :
Chicago Bridge & Iron Company N.V.
By : Chicago Bridge & Iron Company B.V.
By: /s/ Rianna Yam Its :Managing Director
----------------------
Rianna Yam
Manager, Confirmations
By: /s/ Timothy J. Wiggins
Timothy J. Wiggins, Managing Director