UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 28, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number
0-24620
DARLING INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
Delaware 36-2495346
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification
Number)
251 O'Connor Ridge Blvd.
Suite 300
Irving, Texas 75038
(Address of principal executive offices) (Zip Code)
(972) 717-0300
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such report(s)), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
The number of shares outstanding of the Registrant's common stock, $0.01
par value, as of August 7, 1997 was 5,175,784.
<PAGE>
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
FORM 10-Q FOR THE THREE MONTHS ENDED JUNE 28, 1997
TABLE OF CONTENTS
Page No.
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets -
June 28, 1997 (unaudited) and December 28, 1996................... 3
Consolidated Statements of Operations (unaudited) -
Three Months and Six Months Ended June 28, 1997 and June 29, 1996.. 4
Consolidated Statements of Cash Flows (unaudited) -
Six Months Ended June 28, 1997 and June 29, 1996.................. 5
Notes to Consolidated Financial Statements (unaudited).............. 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ................................ 9
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS .................................................. 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................. 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ................................... 14
Signatures ....................................................... 16
Index to Exhibits.................................................. 17
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for certain forward-looking statements. Certain matters discussed
in the Form 10-Q could be characterized as forward-looking statements. Such
forward-looking statements involve important risks and uncertainties that
could cause actual results to differ materially from those expressed in
such forward-looking statements.
Page 2
<PAGE>
<TABLE>
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 28, 1997 and December 28, 1996
(in thousands, except shares and per share data)
<CAPTION>
June 28, December 28,
1997 1996
(unaudited)
----------- ------------
<S>
ASSETS <C> <C>
Current assets:
Cash and cash equivalents $ 6,158 $ 12,956
Accounts receivable, principally trade, less
allowance of $294 in 1997 and $302 in 1996 32,314 35,966
Inventories 11,830 12,643
Prepaid expenses 3,777 1,493
Deferred income tax assets 5,066 6,184
Other 342 484
Total current assets 59,487 69,726
Property, plant and equipment, less accumulated depreciation
of $68,390 at June 28, 1997 and $55,973 at December 28, 1996 169,880 175,786
Collection routes and contracts, less accumulated amortization
of $6,149 at June 28, 1997 and $3,222 at December 28, 1996 59,379 59,940
Goodwill, less accumulated amortization of $528
at June 28, 1997 and $293 at December 28, 1996 20,624 19,905
Other assets 5,397 4,288
$314,767 $329,645
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 5,113 $ 15,598
Accounts payable, principally trade 22,943 27,732
Accrued expenses 30,935 30,118
Accrued interest 528 4,293
Total current liabilities 59,519 77,741
Long-term debt, less current portion 135,113 138,173
Other noncurrent liabilities 24,226 20,376
Deferred income taxes 27,481 29,322
Total liabilities 246,339 265,612
Stockholders' equity
Common stock, $.01 par value;
10,000,000 shares authorized;
5,168,689 and 5,151,979 shares issued and outstanding at
June 28, 1997 and at December 28, 1996, respectively 52 52
Additional paid-in capital 34,766 34,570
Retained earnings 33,610 29,411
Total stockholders' equity 68,428 64,033
Contingencies (note 3)
$314,767 $329,645
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
Page 3
<PAGE>
<TABLE>
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months and six months ended June 28, 1997 and
June 29, 1996
(in thousands, except per share data)
<CAPTION>
Three Months Ended Six Months Ended
June 28, June 29, June 28, June 29,
1997 1996 1997 1996
(unaudited) (unaudited)
-------- -------- ---------- --------
<S> <C> <C> <C> <C>
Net sales $128,796 $114,253 $254,605 $223,994
Costs and expenses:
Cost of sales and operating expenses 103,259 91,071 205,623 178,606
Selling, general and administrative expenses 7,529 7,450 18,726 14,621
Depreciation and amortization 8,241 6,509 16,216 12,626
Total costs and expenses 119,029 105,030 240,565 205,853
Operating income 9,767 9,223 14,040 18,141
Other income (expense):
Interest expense (3,699) (3,089) (7,354) (6,094)
Other, net 143 (4) 247 428
Total other income (expense) (3,556) (3,093) (7,107) (5,666)
Income before income taxes 6,211 6,130 6,933 12,475
Income tax expense 2,399 2,517 2,734 4,930
Net earnings $ 3,812 $ 3,613 $ 4,199 $ 7,545
Net earnings per common share $ 0.70 $ 0.65$ 0.77$ 1.36
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
Page 4
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<TABLE>
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS Six months ended June
28, 1997 and June 29, 1996
(in thousands)
<CAPTION>
Six Months Ended
June 28, June 29,
1997 1996
(unaudited)
------------ ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 4,199 $ 7,545
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 16,216 12,626
Deferred income tax expense (benefit) (723) 234
Loss (gain) on sales of assets (622) 144
Changes in operating assets and liabilities, net of effects from
acquisitions:
Accounts receivable 3,652 (1,335)
Inventories and prepaid expenses (1,471) 1,734
Accounts payable and accrued expenses (3,133) 1,585
Accrued interest (3,765) 57
Other 3,746 (1,270)
Net cash provided by operating activities 18,099 21,320
Cash flows from investing activities:
Recurring capital expenditures (10,289) (11,505)
Capital expenditures related to acquisitions (1,001) (288)
Cash received upon purchase of stock of Standard Tallow - 2,375
Net proceeds from sale of property, plant and equipment
and other assets 5,051 185
Payments related to routes and other intangibles (3,607) (87)
Net cash used in investing activities (9,846) (9,320)
Cash flows from financing activities:
Proceeds from long-term debt 201,044 14,719
Payments on long-term debt (214,589) (28,899)
Contract payments (737) (71)
Deferred loan costs (965) -
Issuance of common stock 196 564
Net cash used in financing activities (15,051) (13,687)
Net decrease in cash and cash equivalents (6,798) (1,687)
Cash and cash equivalents at beginning of period 12,956 11,649
Cash and cash equivalents at end of period $ 6,158 $ 9,962
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
Page 5
<PAGE>
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 28, 1997
(unaudited)
(1) General
The accompanying consolidated financial statements for the three month
and six month periods ended June 28, 1997 and June 29, 1996 have been
prepared by Darling International Inc. (Company) without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission
(SEC). The information furnished herein reflects all adjustments
(consisting only of normal recurring accruals) which are, in the opinion
of management, necessary to present a fair statement of the financial
position and operating results of the Company as of and for the
respective periods. Certain information and footnote disclosures normally
included in annual financial statements prepared in accordance with
generally accepted accounting principles have been omitted pursuant to
such rules and regulations. However, management of the Company believes
that the disclosures herein are adequate to make the information
presented not misleading. The accompanying consolidated financial
statements should be read in conjunction with the consolidated financial
statements contained in the Company's Form 10-K for the fiscal year ended
December 28, 1996.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
(b) Fiscal Periods
The Company has a 52/53 week fiscal year ending on the Saturday
nearest December 31. Fiscal periods for the consolidated financial
statements included herein are for the 52 weeks ended December 28,
1996, the 13 and 26 weeks ended June 28, 1997, and the 13 and 26
weeks ended June 29, 1996.
(c) Earnings Per Common Share
Primary income per common share is computed by dividing net income
attributable to outstanding common stock by the weighted average
number of common stock shares outstanding during the period
increased by dilutive common equivalent shares (stock options)
determined using the treasury stock method. Primary weighted
average equivalent shares are determined based on the average
market price exceeding the exercise price of the stock options.
Fully diluted weighted average equivalent shares are determined
based on the higher of the average or ending market price
exceeding the exercise price of the stock options.
Page 6
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(3) Contingencies
(a) ENVIRONMENTAL
Blue Earth
During July, 1997, the Company, the United States, and the State of
Minnesota received Court approval of the proposed settlement to
resolve the government's criminal claims relating to environmental
law violations at the Company's Blue Earth rendering plant. The
Court approved the Plea Agreement under which Darling has paid
$2,700,000 in criminal fines and penalties, as well as $1.0 million
in restitution and remediation. A Consent Decree (the "Decree") to
resolve all state and federal civil and administrative claims
related to the Blue Earth allegations was lodged during July.
Pursuant to the Decree, subject to final Court approval, Darling
will pay $300,000 in civil and administrative penalties, and will
undertake other requirements of the Decree. The Company recorded a
provision for loss contingency of $6,100,000 during Fiscal 1996 to
cover the expected cost of the settlement as well as legal,
environmental and other related costs.
Chula Vista
The Company is the owner of an undeveloped property located in
Chula Vista, California (the "Site"). A rendering plant was
operated on the Site until 1982. From 1959 to 1978, a portion of
the Site was used as an industrial waste disposal facility which
was closed pursuant to Closure Order No. 80-06 issued by the State
of California Regional Water Quality Control Board for the San
Diego Region (the "RWQCB"). The Site has been listed by the State
of California as a site for which expenditures for removal and
remedial actions may be made by the State pursuant to the
California Hazardous Substances Account Act, California Health &
Safety Code Section 25300 et seq. Technical consultants retained by
the Company have conducted various investigations of the
environmental conditions at the Site, and in 1996, requested that
the RWQCB issue a "no further action" letter with respect to the
Site. The RWQCB has not yet taken any formal action in response to
such request.
(b) LITIGATION
Petruzzi
An antitrust class action suit was filed in 1986 by Petruzzi IGA
Supermarkets in the United States District Court for the Middle
District of Pennsylvania (the "Class Action Suit") seeking damages
from the Company. On September 14, 1995, the Company entered into a
settlement agreement providing for the disposal of all claims in
the Class Action Suit. The settlement agreement was approved by the
District Court on December 20, 1995. The District Court has yet to
rule on the petitions for attorneys' fees.
Other Litigation
The Company is also a party to several other lawsuits, claims and
loss contingencies incidental to its business.
Page 7
<PAGE>
The Company has established loss reserves for environmental and
other matters as a result of the matters discussed above. Although
the ultimate liability cannot be determined with certainty,
management of the Company believes that reserves for contingencies
are reasonable and sufficient based upon present governmental
regulations and information currently available to management. The
Company estimates the range of possible losses related to
environmental and litigation matters, based on certain assumptions,
is between $9,000,000 and $18,100,000 at June 28, 1997.
Additionally, the Company maintains reserves in connection with
potential claims under its workers compensation and auto liability
policies which are partially self-insured by the Company. The
accrued expenses and other noncurrent liabilities classifications
in the Company's consolidated balance sheets include reserves for
insurance, environmental and litigation contingencies of
$21,556,000 and $20,847,000 at June 28, 1997 and December 28, 1996,
respectively. There can be no assurance, however, that final costs
will not exceed current estimates. The Company believes that any
additional liability relative to such lawsuits and claims which may
not be covered by insurance would not likely have a material
adverse effect on the Company's financial position, although it
could potentially have a material impact on the results of
operations in any one year.
Page 8
<PAGE>
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
FORM 10-Q FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 28, 1997
PART I
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion summarizes information with respect to the
liquidity and capital resources of the Company at June 28, 1997 and factors
affecting its results of operations for the three months and six months ended
June 28, 1997 and the comparable periods ended June 29, 1996.
RESULTS OF OPERATIONS
Three Months Ended June 28, 1997 Compared to Three Months Ended June 29, 1996
GENERAL
The Company recorded net earnings of $3.8 million for the second quarter of
the fiscal year ending January 3, 1998 ("Fiscal 1997"), as compared to net
earnings of $3.6 million for the second quarter of the fiscal year ended
December 28, 1996 ("Fiscal 1996"). Operating income increased from $9.2 million
in the second quarter of Fiscal 1996 to $9.8 million in the second quarter of
Fiscal 1997. The increase in operating income was primarily attributable to the
acquisitions of Standard Tallow Corporation ("Standard Tallow") and
International Processing Corporation ("IPC") and a $1.9 million insurance
settlement of certain property and casualty claims with past insurers.
NET SALES
The Company collects and processes animal processing by-products (fat,
bones and offal), used restaurant cooking oil, and bakery by-products to produce
finished products of tallow, meat and bone meal, yellow grease and dried bakery
product. Sales are significantly affected by finished goods prices, quality of
raw material, and volume of raw material. Net sales include the sales of
produced finished goods as well as finished goods purchased for resale, which
constitute less than 10% of the total. During the second quarter of Fiscal 1997,
net sales increased 12.7% to $128.8 million as compared to $114.3 million during
the second quarter of Fiscal 1996. This increase in sales in the second quarter
of Fiscal 1997 was due primarily to the acquisitions of Standard Tallow and IPC.
Decreases in the volume of raw materials processed were offset by increases in
finished goods prices compared to a year earlier.
COST OF SALES AND OPERATING EXPENSES
Cost of sales and operating expenses includes prices paid to raw material
suppliers, the cost of product purchased for resale, and the cost to collect and
process raw material. The Company utilizes both fixed and formula pricing
methods for the purchase of raw materials. Fixed prices are adjusted where
possible in response to changes in finished goods market conditions, while raw
materials purchased under formula prices are correlated with specific finished
goods prices.
During the second quarter of Fiscal 1997, cost of sales and operating
expenses increased by $12.2 million (13.4%) to $103.3 million as compared to
$91.1 million during the second quarter of Fiscal 1996. Cost of sales and
operating expenses grew due to the acquisitions of Standard Tallow and IPC.
Page 9
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE COSTS
Selling, general and administrative costs remained flat at $7.5 million
during the second quarter of Fiscal 1997 as compared to the second quarter of
Fiscal 1996. A $1.9 million insurance settlement of certain property and
casualty claims from past insurers was offset by increases related to the
acquisitions of Standard Tallow and IPC.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization charges increased by $1.7 million to $8.2
million during the second quarter of Fiscal 1997 as compared to $6.5 million
during the second quarter of Fiscal 1996. This increase was due to the
acquisitions of Standard Tallow and IPC as well as additional depreciation
related to fixed asset additions. The Company adopted Fresh Start Accounting in
1994. Under this method of accounting, the assets acquired prior to December
1994 were restated at fair market value and depreciated over estimated remaining
lives of 5-15 years.
INTEREST EXPENSE
Interest expense increased by $0.6 million from $3.1 million during the
second quarter of Fiscal 1996 to $3.7 million during the second quarter of
Fiscal 1997 due to interest incurred on acquisition indebtedness.
INCOME TAXES
The tax expense of $2.4 million for the second quarter of Fiscal 1997
consists of $2.2 million of federal tax expense and $0.2 million for various
state taxes. Tax expense for the second quarter of Fiscal 1996 was $2.5 million.
CAPITAL EXPENDITURES
The Company made recurring capital expenditures of $4.9 million during the
second quarter of Fiscal 1997 compared to capital expenditures of $6.3 million
during the second quarter of Fiscal 1996. Capital expenditures related to
acquisitions were $700,000 for the quarter compared to no expenditures for the
same period in 1996.
Six Months Ended June 28, 1997 Compared to Six Months Ended June 29, 1996
GENERAL
The Company recorded net earnings of $4.2 million for the first six months
of Fiscal 1997, as compared to net earnings of $7.5 million for the first six
months of Fiscal 1996. Operating income decreased from $18.1 million in the
first six months of Fiscal 1996 to $14.0 million in the first six months of
Fiscal 1997. The decrease in operating income was primarily due an increase of
$3.6 million in depreciation and amortization expense related to acquisitions
and capital expenditures, and to a $1.7 million expenditure related to the buy
back of stock options of the former president of the Company during the first
quarter of Fiscal 1997. These were offset by a $1.9 million insurance settlement
of certain property and casualty claims with past insurers and operating income
contributed by the acquisitions of Standard Tallow and IPC.
Page 10
<PAGE>
NET SALES
During the first six months of Fiscal 1997, net sales increased by $30.6
million (13.7%) to $254.6 million as compared to $224.0 million during the first
six months of Fiscal 1996.
This increase in sales in the first six months of Fiscal 1997 was due
primarily to the acquisitions of Standard Tallow and IPC. Decreases in the
volume of raw materials processed were offset by increases in finished goods
prices compared to a year earlier.
COST OF SALES AND OPERATING EXPENSES
During the first six months of Fiscal 1997, cost of sales and operating
expenses increased $27.0 million (15.1%) to $205.6 million as compared to $178.6
million during the first six months of Fiscal 1996. Cost of sales and operating
expenses grew due to the acquisitions of Standard Tallow and IPC.
SELLING, GENERAL AND ADMINISTRATIVE COSTS
Selling, general and administrative costs were $18.7 million during the
first six months of Fiscal 1997, a $4.1 million increase from $14.6 million for
the first six months of Fiscal 1996. Approximately $3.9 million of the increase
was due to the acquisitions of Standard Tallow and IPC. An increase of $1.7
million related to the repurchase of stock options held by the former president
of the Company was offset by a $1.9 million refund from property and casualty
insurance claims.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization charges increased by $3.6 million to $16.2
million during the first six months of Fiscal 1997 as compared to $12.6 million
during the first six months of Fiscal 1996. This increase was due to the
acquisitions of Standard Tallow and IPC as well as the additional depreciation
on fixed asset additions.
INTEREST EXPENSE
Interest expense increased by $1.3 million from $6.1 million during the
first six months of Fiscal 1996 to $7.4 million during the first six months of
Fiscal 1997 due to interest charges incurred on acquisition indebtedness.
INCOME TAXES
The tax expense of $2.7 million for the first six months of Fiscal 1997
consists of $2.5 million of federal tax expense and $0.2 million for various
state taxes. Tax expense for the first six months of Fiscal 1996 was $4.9
million.
CAPITAL EXPENDITURES
The Company made recurring capital expenditures of $10.3 million during the
first six months of Fiscal 1997 compared to capital expenditures of $11.5
million during the first six months of Fiscal 1996. Capital expenditures related
to acquisitions were $1.0 million for the first six months of 1997 compared to
$0.3 million for the same period in 1996.
Page 11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Effective June 5, 1997, the Company entered into a Credit Agreement
(the "Credit Agreement") which provides for borrowings in the form of a
$50,000,000 Term Loan and $175,000,000 Revolving Credit Facility. As of June 28,
1997, the Company was in compliance with all provisions of the Credit Agreement.
The Term Loan provides for $50,000,000 of borrowing. The Term Loan
bears interest, payable monthly, at LIBOR (5.8125% at June 28, 1997) plus a
margin (the "Credit Margin") (1.25% at June 28, 1997) which floats based on the
achievement of certain financial ratios. The Term Loan is payable by the Company
in quarterly installments of $1,250,000 commencing on June 30, 1997 through
March 31, 1999; $2,500,000 commencing on June 30, 1999 through March 31, 2002;
and an installment of $10,000,000 due on June 30, 2002. As of June 28, 1997,
$50,000,000 was outstanding under the Term Loan.
The Revolving Credit Facility provides for borrowings up to a maximum
of $175,000,000 with sublimits available for letters of credit and a swingline.
Outstanding borrowings on the Revolving Credit Facility bear interest, payable
monthly, at various LIBOR rates (ranging from 5.6875% to 5.8125% at June 28,
1997) plus the Credit Margin as well as portions at a Base Rate (8.50% at June
28, 1997) or, for swingline advances, at a Base Rate (8.50% at June 28, 1997).
Additionally, the Company must pay a commitment fee equal to 0.25% per annum on
the unused portion of the Revolving Credit Facility. On June 27, 1997,
$73,439,812 of the Revolving Credit Facility was used to liquidate the
outstanding 11% subordinated note obligations at par ($69,976,000 in principal
and $3,463,812 in accrued interest) pursuant to an optional redemption under the
terms of the subordinated note indenture. The Revolving Credit Facility matures
on June 30, 2002. As of June 28, 1997, $90,000,000 was outstanding under the
Revolving Credit Facility. As of June 28, 1997, the Company had outstanding
irrevocable letters of credit aggregating $8,457,398.
Effective June 27, 1997, the Company entered into interest rate swap
transactions whereby the interest obligations on $70,000,000 of Credit Agreement
floating rate debt was exchanged for fixed rate contracts terminating June 27,
2002. The fixed rate contracts bear interest, payable quarterly, at an average
rate of 6.60% plus the Credit Margin.
On June 28, 1997, the Company had a working capital ratio of 1 to 1,
compared to a working capital deficit of $8.0 million and a working capital
ratio of 0.90 to 1 on December 28, 1996. Net cash provided by operating
activities has decreased by $3.2 million from $21.3 million during the first six
months of Fiscal 1996 to $18.1 million during the first six months of Fiscal
1997. The Company believes that cash from operations and current cash balances,
together with the undrawn balance from the Company's loan agreements, will be
sufficient to satisfy the Company's planned capital requirements.
ACQUISITIONS
The Company periodically makes acquisitions which on a stand-alone
basis are not considered significant acquisitions for disclosure purposes.
During the first six months of Fiscal 1997, the Company made acquisitions
totaling $4.2 million which included goodwill acquired of $821,000.
Page 12
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ACCOUNTING MATTERS
In February 1997, the Financial Accounting Standards Board issued SFAS
No. 128, Earnings Per Share. SFAS No. 128 is effective for both interim and
annual periods ending after December 15, 1997. This Statement specifies the
computation, presentation, and disclosure requirements for earnings per share
(EPS) for entities with publicly held common stock. It replaces the presentation
of primary EPS with a presentation of basic EPS and fully diluted EPS with
diluted EPS. Basic EPS excludes all dilution associated with common stock
equivalents while diluted EPS, like fully diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock. Although early application of
SFAS No. 128 application is not permitted, proforma EPS disclosure for periods
prior to adoption is permitted. Pro forma EPS for the three months and six
months ended June 28, 1997 and June 29, 1996 are as follows:
Three Months Ended Six Months Ended
June 28, June 29, June 28, June 29,
1997 1996 1997 1996
---------------------------------------------------------
(unaudited)
Basic EPS $ 0.74 $ 0.71 $ 0.81 $1.48
Diluted EPS $ 0.70 $ 0.65 $ 0.77 $1.36
Page 13
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DARLING INTERNATIONAL INC. AND SUBSIDIARIES
FORM 10-Q FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 28, 1997
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The information required by this item is included on pages 7 and 8 of this
report and is incorporated herein by reference.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fiscal quarter ended June 28, 1997.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibits
Exhibits No. Description
3.1* Restated Articles of Incorporation.
3.2 Amended and Restated Bylaws, dated March 10, 1994 and March
31, 1995.
10.1** Credit Agreement, dated as of June 5, 1997, among Darling
International Inc., BankBoston, N.A., Comerica Bank, Credit
Lyonnais New York Branch, and Wells Fargo Bank (Texas),
National Association as Co-Agents, and other banks as named
therein.
10.2 International Swap Dealers Association, Inc. (ISDA) Master
Agreement and Schedule between Credit Lyonnais and Darling
International Inc. dated as of June 6, 1997 related to
interest rate swap transaction.
10.3 International Swap Dealers Association, Inc. (ISDA) Master
Agreement and Schedule between Wells Fargo Bank, N.A. and
Darling International Inc. dated as of June 6, 1997 related
to interest rate swap transaction.
10.4 International Swap Dealers Association, Inc. (ISDA) Master
Agreement and Schedule between BankBoston, N.A. and Darling
International Inc. dated as of June 26, 1997 related to
interest rate swap transaction.
11 Statement re computation of per share earnings.
27 Financial Data Schedule
Page 14
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* Incorporated by reference to the Registrant's Registration
Statement on Form S-1 (Registration No. 33-79478).
** Incorporated by reference Form 8-K filed June 5, 1997.
REPORTS ON FORM 8-K
The Registrant filed the following Current Report on Form 8-K
during the quarter ended June 28, 1997: Current Report on Form
8-K dated June 5, 1997 including information regarding a
Credit Agreement the Company entered into providing for
borrowings in the form of a $50,000,000 Term Loan and a
$175,000,000 Revolving Credit Facility.
Page 15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DARLING INTERNATIONAL INC.
Registrant
Date: August 12, 1997 By:. /s/ Dennis B. Longmire
---------------------- ---------------------------------
Dennis B. Longmire
Chairman and
Chief Executive Officer
Date: August 12, 1997 By: /s/ John R Witt
---------------------- ---------------------------------
John R. Witt
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Page 16
<PAGE>
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 28, 1997
INDEX TO EXHIBITS
Exhibits No. Description Page
3.1* Restated Articles of Incorporation.
3.2 Amended and Restated Bylaws, dated March 10, 1994 and March 31,
1995.
10.1** Credit Agreement, dated as of June 5, 1997, among
Darling International Inc., BankBoston, N.A., Comerica Bank,
Credit Lyonnais New York Branch, and Wells Fargo Bank (Texas),
National Association as Co-Agents, and other banks as named
therein.
10.2 International Swap Dealers Association, Inc. (ISDA) Master
Agreement and Schedule between Credit Lyonnais and Darling
International Inc. dated as of June 6, 1997 related to interest
rate swap transaction.
10.3 International Swap Dealers Association, Inc. (ISDA) Master
Agreement and Schedule between Wells Fargo Bank, N.A. and
Darling International Inc. dated as of June 6, 1997 related to
interest rate swap transaction.
10.4 International Swap Dealers Association, Inc. (ISDA) Master
Agreement and Schedule between BankBoston, N.A. and Darling
International Inc. dated as of June 26, 1997 related to
interest rate swap transaction.
11 Statement re computation of per share earnings. 18
27 Financial Data Schedule
* Incorporated by reference to the Registrant's Registration
Statement on Form S-1 (Registration No. 33-79478).
** Incorporated by reference Form 8-K filed June 5, 1997.
Page 17
<PAGE>
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
The following table details the computation of primary and fully diluted
earnings per common share, in thousands except per share data.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
--------------------------- -------------------------
June 28, June 29, June 28, June 29,
1997 1996 1997 1996
============= ============= ============= ===========
<S> <C> <C> <C> <C>
Earnings:
Net earnings available to common stock $3,812 $3,613 $4,199 $7,545
====== ======= ====== ======
Shares (Primary):
Weighted average number of
common shares outstanding 5,168 5,114 5,163 5,101
Additional shares assuming exercise of
stock options 277 404 315 435
Average common shares outstanding
and equivalents 5,445 5,518 5,478 5,536
Primary Earnings per common share $ 0.70 $ 0.65 $ 0.77 $ 1.36
====== ======= ====== ======
Shares (Fully Diluted):
Weighted average number of
common shares outstanding 5,168 5,114 5,163 5,101
Additional shares assuming exercise of
stock options 289 408 317 435
Average common shares outstanding
and equivalents 5,457 5,522 5,480 5,536
Fully Diluted Earnings per common share $ 0.70 $ 0.65 $ 0.77 $ 1.36
====== ======= ====== ======
</TABLE>
Page 18
EXHIBIT 3.2
- -----------
AMENDED AND
RESTATED
BYLAWS
OF
DARLING INTERNATIONAL INC.
(March 10, 1994)
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware.
Section 2. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or as the business of the Corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. All meetings of the stockholders for the
election of directors shall be held at such place as may be fixed from time to
time by the Board of Directors, within or without the State of Delaware as shall
be designated from time to time by the Board of Directors and stated in the
notice of the meeting. Meetings of stockholders for any other purpose may be
held at such time and place, within or without the State of Delaware, as shall
be stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 2. Annual Meetings. Annual meetings of stockholders shall be held
on the second Monday of May, if not a legal holiday, otherwise on the next
regular business day following, at 10:00 a.m., or at such other date and time as
shall be designated from time to time by the Board of Directors and stated in
the notice of the meeting, at which they shall elect a Board of Directors and
transact such other business as may properly be brought before the meeting.
Section 3. Notice. Written or printed notice of the annual meeting stating
the place, date and hour of the meeting shall be given to each stockholder
entitled to vote at such meeting not less than ten (10) nor more than sixty (60)
days before the date of the meeting.
Section 4. List of Stockholders Entitled to Vote. The officer who has
charge of the stock ledger of the Corporation shall prepare and make, at least
ten (10) days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at a meeting, arranged in alphabetical order, and
showing the address of each stockholder and the number of shares registered in
the name of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten (10) days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
Section 5. Special Meetings. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may only be called by a majority of the Board of
Directors, the Chairman of the Board, the Chief Executive Officer or the
President. Such request shall state the purpose or purposes of the proposed
meeting,
Section 6. Notice. Written notice of a special meeting stating the place,
date and hour of the meeting and the purpose or purposes for which the meeting
is called, shall be given not less than ten (10) nor more than sixty (60) days
before the date of the meeting, to each stockholder entitled to vote at such
meeting.
Section 7. Business to be Transacted. Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in the notice
unless all of the stockholders are present in person or by proxy, in which case
any and all business may be transacted at the meeting even though the meeting is
held without notice.
Section 8. Quorum. The holders of a majority in number of the total
outstanding shares of stock of the Corporation entitled to vote on a matter,
present in person or represented by proxy, shall constitute a quorum at any
meeting of the stockholders for the transaction of business except as otherwise
provided by statute or by the Certificate of Incorporation; provided, that at
any meeting of the stockholders at which the holders of any class of stock of
the Corporation shall be entitled to vote separately as a class, the holders of
a majority in number of the total outstanding shares of such class, present in
person or represented by proxy, shall constitute a quorum for purposes of such
class vote except as otherwise provided by statute or the Certificate of
Incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, or, if no stockholder entitled to
vote is present, any officer of the Corporation, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. Voting. When a quorum is present at any meeting, the vote of the
holders of at least a majority of the stock having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which by express provision of the
statutes or of the Certificate of Incorporation or these Bylaws, a different
vote is required in which case such express provision shall govern and control
the decision of such question. Except as otherwise provided by law or by the
Certificate of Incorporation, directors shall be elected by a plurality of the
votes cast at a meeting of stockholders entitled to vote in the election of
directors. When directed by the presiding officer or upon the demand of any
stockholder, the vote upon any matter before a meeting of stockholders shall be
by ballot. The stockholders present at a duly constituted meeting may continue
to transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
Section 10. Proxies. (a) Each outstanding share, regardless of class, shall
be entitled to one vote on each matter submitted to a vote at a meeting of
stockholders, except to the extent that the voting rights of the shares of any
class or classes are limited, denied, increased or decreased by the Certificate
of Incorporation.
(b) Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by proxy, but no such proxy
shall be voted or acted upon after three (3) years from its date, unless the
proxy provides for a longer period. Each proxy shall be filed with the Secretary
of the Corporation prior to or at the time of the meeting.
(c) Without limiting the manner in which a stockholder may authorize
another person or persons to act for him as proxy pursuit to subsection (b) of
this section, the following shall constitute a valid means by which a
stockholder may grant such authority:
(i) A stockholder may execute a writing authorizing another person or
persons to act for him as proxy. Execution may be accomplished by the
stockholder or by an authorized officer, director, employee or agent of the
stockholder signing such writing or causing such stockholder's signature to
be affixed to such writing by any reasonable means including, but not
limited to, by facsimile signature.
(ii) A stockholder may authorize another person or persons to act for
him as proxy by transmitting or authorizing the transmission of a telegram,
cablegram, or other means of electronic transmission to the person who will
be the holder of the proxy or to a proxy solicitation firm, proxy support
service organization or like agent duly authorized by the person who will
be the holder of the proxy to receive such transmission, provided that any
such telegram, cablegram or other means of electronic transmission must
either set forth or be submitted with information from which it can be
determined that the telegram, cablegram or other electronic transmission
was authorized by the stockholder. If it is determined that such telegrams,
cablegrams, or other electronic transmissions are valid, the inspector(s)
shall specify the information upon which they relied.
(d) Any copy, facsimile telecommunication or other reliable reproduction of
the writing or transmission created pursuant to subsection (c) of this section
may be substituted or used in lieu of the original writing or transmission for
any and all purposes for which the original writing or transmission could be
used, provided that such copy, facsimile telecommunication or other reproduction
shall be a complete reproduction of the entire original writing or transmission.
(e) A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power.
Section 11. Fixing of Record Date. (a) In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting. If no record date is fixed by the Board of Directors, the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
(b) In order that the Corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten (10) days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the Board of Directors is
required by statute or these Bylaws, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in Delaware,
its principal place of business, or an officer or agent of the Corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Such delivery shall be by hand or by certified or registered mail,
return receipt requested. If no record date has been fixed by the Board of
Directors and prior action by the Board of Directors is required by statute or
these Bylaws, the record date for determining stockholders entitled to consent
to corporate action in writing without a meeting shall be at the close of
business on the day on which the Board of Directors adopts the resolution taking
such prior action.
(c) In order that the Corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty (60) days prior to
such action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
Section 12. Consent of Stockholders in Lieu of Meeting. (a) Any action
required or permitted to be taken at a meeting of the stockholders of the
Corporation may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Such consent or consents shall be delivered to the Corporation at its
registered office in Delaware, its principal place of business, or to an officer
or agent of the Corporation having custody of the book in which proceedings of
stockholders' meetings are recorded. Such delivery shall be by hand or by
certified or registered mail, return receipt requested.
(b) Every written consent shall bear the date of signature of each
stockholder who signs the written consent, and no consent shall be effective to
take the corporate action referred to therein unless, within sixty (60) days of
the earliest dated consent delivered in the manner required by this section to
the Corporation, written consents signed by a sufficient number of stockholders
to take action are delivered to the Corporation in the manner required by this
section.
Section 13. Inspectors. (a) The Corporation shall, in advance of any
meeting of stockholders, appoint one or more inspectors to act at the meeting
and make a written report thereof. The Corporation may designate one or more
persons as alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders, the person
presiding at the meeting shal1 appoint one or more inspectors to act at the
meeting. Each inspector, before entering upon the discharge of his duties, shall
take and sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his ability.
(b) The inspectors shall (i) ascertain the number of shares outstanding and
the voting power of each, (ii) determine the shares represented at a meeting and
the validity of proxies and ballots, (iii) count all votes and ballots, (iv)
determine and retain for a reasonable period a record of the disposition of any
challenges made to any determination by the inspectors, and (v) certify their
determination of the number of shares represented at the meeting, and their
count of all votes and ballots. The inspectors may appoint or retain other
persons or entities to assist them in the performance of their duties.
(c) The date and time of the opening and the closing of the polls for each
matter upon which the stockholders will vote at a meeting shall be announced at
the meeting. No ballot, proxies or votes, nor any revocations thereof or changes
thereto, shall be accepted by the inspectors after the closing of the polls
unless the Delaware Court of Chancery upon application by a stockholder shall
determine otherwise.
(d) In determining the validity and counting of proxies and ballots, the
inspectors shall be limited to an examination of the proxies, any envelopes
submitted with those proxies, any information provided in accordance with
212(c)(2) of the General Corporation Law of Delaware, ballots and the regular
books and records of the Corporation, except that the inspectors may consider
other reliable information for the limited purpose of reconciling proxies and
ballots submitted by or on behalf of banks, brokers, their nominees or similar
persons which represent more votes than the holder of a proxy is authorized by
the record owner to cast or more votes than the stockholder holds of record. If
the inspectors consider other reliable information for the limited purpose
permitted herein, the inspectors at the time they make their certification
pursuant to subsection (b)(v) of this section shall specify the precise
information considered by them including the person or persons from whom they
obtained the information, when the information was obtained, the means by which
the information was obtained and the basis for the inspectors' belief that such
information is accurate and reliable.
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors. Except as otherwise provided
in the Certificate of Incorporation, the number of directors which shall
constitute the whole board shall be fixed from time to time by resolution of the
Board of Directors. Except as otherwise provided in the Certificate of
Incorporation, the director shall be elected at the annual meeting of the
stockholders, and each director elected shall hold office until his successor is
elected and qualified or until his earlier death, resignation, retirement,
removal or disqualification. The Chairman of the Board of Directors shall be
selected by a majority of the Board of Directors at a meeting of the Board of
Directors at which a quorum is represented. Directors need not be stockholders.
Section 2. Vacancies. Unless otherwise provided in the Certificate of
Incorporation, vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and qualified or until
their earlier death, resignation, retirement, removal or disqualification. If
there are no directors in office, then an election of directors may be held in
the manner provided by statute.
Section 3. Duties and Powers. The business of the Corporation shall be
managed by or under the direction of its Board of Directors which may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by statute or by the Certificate of Incorporation or by these Bylaws
directed or required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. Meetings. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the Stare of
Delaware.
Section 5. Regular Meetings. Regular meetings of the Board of Directors may
be held without notice at such time and at such place as shall from time to time
be determined be the board.
Section 6. Special Meetings. Special meetings of the board may be called by
the Chairman of the Board, the Chief Executive Officer or the President on two
(2) days' notice to each director, either personally or by mail or by telegram;
special meetings may be called in like manner and on like notice on the written
request of any two of the directors. Except as may be otherwise expressly
provided by statute, the Certificate of Incorporation or these Bylaws, neither
the business to be transacted at, nor the purpose of, any special meeting need
be specified in a notice or waiver of notice.
Section 7. Quorum. At all meetings of the board, a majority of the
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 8. Actions of the Board. Any action required or permitted to be
taken at any meeting of the Board of Directors or of any committee thereof may
be taken without a meeting, if all members of the board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the board or committee.
Section 9. Meetings by Means of Conference Telephone. Members of the Board
of Directors, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors, or any committee, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other and such
participation in a meeting shall constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 10. Committees. The Board of Directors may, by resolution passed by
a majority of the whole board, designate one or more committees, each committee
to consist of one or more of the directors of the Corporation. The board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member.
Any such committee, to the extent provided in the resolution of the Board
of Directors, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the Certificate of Incorporation (except that
a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares or stock adopted by the Board of Directors
as provided us Section 151(a), fix any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the Corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same or any
other class or classes of stock of the Corporation), adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution of the Corporation or a revocation of a dissolution,
or amending the Bylaws of the Corporation; and, unless the resolution or the
Certificate of Incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock or to adopt a certificate of ownership and merger. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors.
Section 11. Minutes of Meetings. Each committee shall keep regular minutes
of its meetings and report the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
Section 12. Unless otherwise restricted by the Certificate of Incorporation
or these Bylaws, the Board of Directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
ARTICLE IV
NOTICES
Section 1. Notices. Whenever, under the provisions of the statutes or of
the Certificate of Incorporation or of these Bylaws, notice is required to be
given to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telecopy.
Section 2. Waivers of Notice. Whenever any notice is required to be given
under the provisions of the statutes or of the Certificate of Incorporation or
of these Bylaws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
Section 3. Exceptions from Notice Requirement. The giving of any notice
required under any provision of the General Corporation Law of Delaware, the
Certificate of Incorporation or these Bylaws shall not be required to be given
to any stockholder to whom (i) notice of two consecutive annual meetings, and
all notices of meetings or of the taking of action by written consent without a
meeting to such stockholder during the period between such two consecutive
annua1 meetings, or (ii) all, and at least two, payments (if sent by first class
mail) of dividends or interest on securities during a twelve-month period, have
been mailed addressed to such person at his address as shown on the records of
the Corporation and have been returned undeliverable. If any such stockholders
shall deliver to the Corporation a written notice setting forth his then current
address, the requirement that notice be given to such stockholder shall be
reinstated.
ARTICLE V
OFFICERS
Section 1. General. The officers of the Corporation shall be chosen by the
Board of Directors and shall consist of a chairman of the board, a president, a
chief executive officer, a chief operating officer, a chief financial officer,
one or more vice presidents, a secretary, a treasurer and such other officers as
the Board of Directors may from time to time elect or appoint. Any number of
offices may be held by the same person, unless the Certificate of Incorporation
or these Bylaws provide otherwise.
Section 2. Election. The Board of Directors at its first meeting after each
annual meeting of stockholders shall elect the officers of the Corporation, none
of whom need be a member of the Board of Directors, a stockholder or a resident
or the State of Delaware.
Section 3. Other Officers. The Board of Directors may appoint such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.
Section 4. Compensation. The salaries of all officers of the Corporation
shall be reviewed by the Board of Directors.
Section 5. Removal. Each officer of the Corporation shall hold office until
his successor is elected and qualified or until his earlier resignation or
removal. Any officer elected or appointed by the Board of Directors may be
removed at any time, with or without cause, by the affirmative vote of a
majority of the Board of Directors at a meeting of the Board of Directors or
authorized committee thereof at which a quorum is represented. Except as
otherwise provided in the Certificate of Incorporation, any vacancy occurring in
any office of the Corporation shall be filled by the Board of Directors or left
vacant, as determined by the Board of Directors.
THE CHAIRMAN OF THE BOARD
Section 6. The Chairman of the Board shall preside at all meetings of the
stockholders and of the Board of Directors; and he shall have such other powers
and duties as designated in these Bylaws and as from time to time may be
assigned to him by the Board of Directors. The Board of Directors may also
appoint a Vice Chairman or vice chairmen to serve in the absence of the
Chairman.
THE CHIEF EXECUTIVE OFFICER
Section 7. Subject to the direction and authority of the Board of
Directors, the Chief Executive Officer shall have general executive charge,
management and control of the properties, business and operations of the
Corporation with all such powers as may be reasonably incident to such
responsibilities; he may agree upon and execute all leases, contracts, evidences
of indebtedness and other obligations in the name of the Corporation and may
sign all certificates for shares of capital stock of the Corporation; unless the
Board of Directors otherwise determines, he shall, in the absence of the
Chairman of the Board, preside at all meetings of the stockholders and of the
Board of Directors; and he shall have such powers and duties as designated in
accordance with these Bylaws and as from time to time be assigned to him by the
Board of Directors. The Chief Executive Officer may from time to time delegate
any of the aforementioned duties and responsibilities in accordance with these
Bylaws to any officer who directly or indirectly reports to him.
THE PRESIDENT
Section 3. The President shall have charge of such properties, business,
and operations of the Corporation as may be assigned to him from time to time in
accordance with these Bylaws by the Chief Executive Officer, as well as all such
powers as may be reasonably incident to such charge and he shall have the
authority to agree upon and execute all leases, contracts, evidences of
indebtedness, and other obligations in the name of the Corporation; unless the
Board of Directors otherwise determines, he shall, in the absence of the
Chairman of the Board and the Chief Executive Officer, preside at all meetings
of the stockholders and of the Board of Directors; and he shall have such other
powers and duties as designated in accordance with these Bylaws and as from time
to time be assigned to him by the Board of Directors. The President shall report
directly to the Chief Executive Officer.
THE CHIEF OPERATING OFFICER
Section 9. The Chief Operating Officer shall have charge of such
properties, business, and operations of the Corporation as may be assigned to
him from time to time in accordance with these Bylaws by the Board of Directors.
THE CHIEF FINANCIAL OFFICER
Section 10. The Chief Financial Officer shall have general charge of the
financial affairs of the Corporation, as well as all such powers as may be
reasonably incident to such charge and he shall have the authority to agree upon
and execute all leases, contracts, evidences of indebtedness, and other
obligations in the name of the Corporation. The Chief Financial Officer shall
report directly to the Chief Executive Officer or the Chief Operating Officer,
as determined by the Board of Directors.
THE VICE PRESIDENTS
Section 11. The vice presidents shall have charge of such properties,
business, and operations of the Corporation as may be assigned to them from time
to time by the Chief Executive Officer or the Chief Operating Officer, as well
as such powers as may be reasonabily incident to such charge. The vice president
shall report directly to the Chief Executive Officer, the Chief Operating
Officer or the Chief Financial Officer, as designated by the Board of Directors.
THE SECRETARY AND ASSISTANT SECRETARY
Section 12. Secretary. The Secretary shall attend all meetings of the Board
of Directors and all meeting of the stockholders and record all the proceedings
of the meetings of the Corporation and of the Board of Directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. When required to be given, he shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors under whose supervision he shall be. He shall have custody of the
corporate seal of the Corporation and he, or an Assistant Secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the Corporation and to attest the affixing by his
signature.
Section 13. Assistant Secretary. The Assistant Secretary, or if there be
more than one, the assistant secretaries in the order determined by the Board of
Directors (or if there be no such determination, then in the order of their
election) shall, in the absence of the Secretary or in the event of his
inability or refusal to act, or if such powers shall be delegated him by the
Secretary, perform the duties and exercise the powers of the Secretary and shall
perform such other duties and have such other powers as the Board of Directors
may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURER
Section 14. The Treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all monies
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors. He shall
disburse the funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the Board of Directors, at its regular meetings, or when the Board of Directors
so requires, an account of all his transactions as Treasurer and of the
financial condition of the Corporation. If required by the Board of Directors,
he shall give the Corporation a bond, at the expense of the Company, in such sum
and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of his office and for the
restoration to the Corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
Corporation. In the absence of a duly appointed Treasurer, the Chief Financial
Officer of the Corporation shall perform the duties of Treasurer.
Section 15. Assistant Treasurer. The Assistant Treasurer, or if there shall
be more than one, the assistant treasurers, in the order determined by the Board
of Directors (or if there be no such determination, then in the order of their
election) shall, in the absence of the Treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
Treasurer and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe. In the absence of a duly
appointed Assistant Treasurer, the Chief Financial Officer of the Corporation
shall perform the duties of Assistant Treasurer.
ARTICLE VI
CERTIFICATES FOR SHARES
Section 1. Form of Certificates. The shares of the Corporation shall be
represented by a certificate or shall be uncertificated. Certificates shall be
signed by, or in the name of the Corporation by, the Chairman or Vice Chairman
of the Board of Directors, or the President or a Vice President and the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary
of the Corporation.
Upon the face or back of each stock certificate issued to represent any
partly paid shares, or upon the books and records of the Corporation in the case
of uncertificated partly paid shares, shall be set forth the number and class of
shares and the par value of such shares or a statement that such shares are
without par value.
If the Corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the Corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the Corporation shall issue to represent such class or
series of stock, a statement that the Corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
Within a reasonable time after the issuance or transfer of uncertificated
stock, the Corporation shall send to the registered owner thereof a written
notice containing the information required to be set forth stated on
certificates pursuant to Section 151, 156, 202(a) or 218(a) of the General
Corporation Law of Delaware or a statement that the Corporation will furnish
without charge to each stockholder who so requests the powers, designations,
preferences and relative participating, optional or other special rights of each
class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
Section 2. Signatures. Any or all of the signatures on a certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
Section 3. Legends. The Board of Directors shall have the power and
authority to provide that certificates representing shares of stock shall bear
such legends as the Board of Directors deems appropriate, including, without
limitation, such legends to assure that the Corporation does not become liable
for violations of federal or state securities laws or other applicable law.
LOST CERTIFICATES
Section 4. The Corporation may issue a new certificate or certificates or
uncertificated shares in place of any certificate or certificates theretofore
issued by the Corporation alleged to have been lost, stolen or destroyed, upon
the making of an affidavit of the fact by the person claiming the certificate of
stock to be lost, stolen or destroyed. When authorizing such issue of a new
certificate or certificates or uncertificated shares, the Board of Directors
may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed certificate or certificates,
or his legal representatives, to advertise the same in such manner as it shall
require and/or to give the Corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the Corporation with
respect to the certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 5. Upon surrender to the Corporation or the transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Upon receipt of proper transfer instructions from the registered owner of
uncertificated shares such uncertificated shares shall be cancelled and issuance
of new equivalent uncertificated shares or certificated shares shall be made to
the person entitled thereto and the transaction shall be recorded upon the books
of the Corporation.
REGISTERED STOCKHOLDERS
Section 6. The Corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
INDEMNIFICATION
Section 1. The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another Corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding to the fullest extent permitted by the Delaware General Corporation
Law as amended from time to time.
Section 2. Expenses (including attorneys' fees) incurred by an officer or
director in defending a civil, criminal, administrative or investigative action,
suit or proceeding shall be paid by the Corporation in advance or the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in this Article VII. Such expenses (including attorney
fees) incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
Section 3. The indemnification and advancement of expenses provided by, or
granted pursuant to, the other sections of this Article VII shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under the Corporation's Certificate of
Incorporation or any Bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office.
Section 4. The Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another Corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Article.
Section 5. For purposes of this Article VII, references to "the
Corporation" shall include, in addition to the Corporation or any surviving or
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent or another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the provisions
of this Article VII with respect to the Corporation or surviving or resulting
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
Section 6. For purposes of this Article VII, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director, officer, employee or agent of the
Corporation which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Article VII.
Section 7. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VII shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 8. If this Article VII or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify each director, officer, employee or agent of the
Corporation as to any expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative, including an action by
or in the right of the Corporation, to the full extent permitted by an
applicable portion of this Article VII that shall not have been invalidated and
to the full extent permitted by applicable law.
Section 9. No amendment, termination or repeal of this Article VII or of
relevant provisions of the Delaware General Corporation Law or any other
applicable law shall affect or diminish in any way the rights of any director,
officer, employee or agent of the Corporation to indemnification under the
provisions hereof with respect to any actions, suit or proceeding arising out
of, or relating to, any actions, transactions or facts occurring prior to the
final adoption of such amendment, termination or repeal.
ARTICLE VIII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the Corporation, subject to
the provisions of the Certificate of Incorporation, if any, may be declared by
the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the Certificate of Incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the Corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose as the directors shall think conducive to the interest of the
Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the Corporation shall be fixed by resolution
of the Board of Directors.
SEAL
Section 5. The Corporation seal shall have inscribed thereon the name of
the Corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
OTHER SECURITIES
Section 6. The Chief Executive Officer (or any other officer designated by
the Board of Directors) of the Corporation shall have power and authority to
transfer, endorse for transfer, vote, consent or take any other action with
respect to any securities of another issuer which may be held or owned by the
Corporation and to make, execute and deliver any waiver, proxy or consent with
respect to any such securities.
TRANSACTIONS WITH DIRECTORS AND OFFICERS
Section 7. No contract or other transaction between the Corporation and any
other corporation and no other act of the Corporation shall, in the absence of
fraud, be invalidated or in any way affected by the fact that any of the
directors of the Corporation are pecuniarily or otherwise interested in such
contract, transaction or other act, or are directors or officers of such other
corporation. Any director of the Corporation, individually, or any firm or
corporation of which any such director may be a member, may be a party to, or
may be pecuniarily or otherwise interested in, any contract or transaction of
the Corporation; provided, however, that the fact that the director,
individually, or the firm or corporation is so interested shall be disclosed or
shall have been known to the Board of Directors or a majority of such members
thereof as shall be present at any annual meeting or at any special meeting,
called for that purpose, of the Board of Directors at which action upon any
contract or transaction shall be taken. Any director of the Corporation who is
so interested may be counted in determining the existence of a quorum at any
such annual or special meeting of the Board of Directors which authorizes such
contract or transaction, and may vote thereat to authorize such contract or
transaction with like force and effect as if he were not such director or
officer of such other corporation or not so interested. Every director of the
Corporation is hereby relieved from any disability which might otherwise prevent
him from carrying out transactions with or contracting with the Corporation for
the benefit of himself or any firm, corporation, trust or organization in which
or with which he may be in anywise interested or connected.
ARTICLE IX
AMENDMENTS
These Bylaws may be altered, amended or repealed or new Bylaws may be
adopted by the stockholders or by the Board of Directors, when such power is
conferred upon the Board of Directors by the Certificate of Incorporation, at
any regular meeting of the stockholders or of the Board of Directors or at any
special meeting of the stockholders or of the Board of Directors if notice of
such alteration, amendment, repeal or adoption of new Bylaws be contained in the
notice of such special meeting.
CERTIFICATE BY SECRETARY
The undersigned, being the Secretary of the Corporation, hereby certifies
that the foregoing Amended and Restated Bylaws were duly adopted by the Board of
Directors of the Corporation, effective on March 10, 1994.
IN WITNESS WHEREOF, I have signed this certification as of the 10th day of
March, 1994.
/s/ Thomas W Hughes
---------------------------------------------
Thomas W. Hughes, Assistant Secretary
<PAGE>
DARLING INTERNATIONAL INC.
AMENDMENTS DATED MARCH 31, 1995 TO
AMENDED AND RESTATED BYLAWS DATED MARCH 10, 1994
The following amendments to the Amended and Restated Bylaws of Darling
International Inc. (the "Corporation") dated March 10, 1994 were adopted by the
Board of Directors of the Corporation by the Unanimous Consent in Lieu of
Special Meeting of Board of Directors dated March 31, 1995:
FURTHER RESOLVED, that Article V of the Corporation's Bylaws are hereby
amended as follows:
(a) Section 6 in hereby amended by adding the following sentence at the
end of such section:
"The person elected Chairman of the Board shall also be elected Chief
Executive Officer and such person shall serve in both offices."
(b) Section 7 is hereby amended by adding the following sentence at the
end of such section:
"The person elected Chief Executive Officer shall also be elected
Chairman of the Board and such person shall serve in both offices."
(c) Section 8 is hereby amended by adding the following sentence at the
end of such section:
"The person elected President shall also be elected Chief Operating
Officer and such person shall serve in both offices."
(d) Section 9 is hereby amended by adding the following sentence at the
end of such section:
"The person elected Chief Operating Officer shall also be elected
President and such person shall serve in both offices."
Multicurrency Border
ISDA
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of June 6, 1997
Credit Lyonnais New York Branch and Darling International Inc.
- ---------------------------------- ------------------------------
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.
<PAGE>
(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 (1) 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.
<PAGE>
(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 organized and validly existing under th
laws of the jurisdiction of its organization 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 authorize 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,
reorganization, 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)).
<PAGE>
(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 not materially prejudice the legal or
commercial position of the party in receipt of such demand), with
any such form or document to be accurate and completed in a
manner reasonably satisfactory to such other party and to be
executed and to be delivered with any reasonably required
certification,
in each case by the date specified in the Schedule or such Confirmation
or, if none is specified, as soon as reasonably practicable.
(b) Maintain Authorizations. It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other
authority that are required to be obtained by it with respect to this
Agreement or any Credit Support Document to which it is a party and
will use all reasonable efforts to obtain any that may become necessary
in the future.
(c) Comply with Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to
comply would materially impair its ability to perform its obligations
under this Agreement or any Credit Support Document to which it is a
party.
(d) Tax Agreement. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon
learning of such failure.
(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance
of this Agreement by a jurisdiction in which it is incorporated,
organized, 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.
(l) 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 (1) 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 or other similar condition or event (however described)
in respect of such party, any Credit Support Provider of such
party or any applicable Specified Entity of such party under one
or more agreements or instruments relating to Specified
Indebtedness of any of them (individually or collectively) 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, of
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.
(b) Termination Events. The occurrence at any time with respect to a party
or, if applicable, any Credit Support provider of such party or any
specified Entity of such party of any event specified below constitutes
an Illegality if the event is specified in (i) 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 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 (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)(viii) 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, 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.
<PAGE>
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)(`ii)(1), (3), (5), (6)
or, to the extent analogous thereto, (8), and as of the time
immediately preceding the institution of the relevant proceeding or the
presentation of the relevant petition upon the occurrence with respect
to such party of an Event of Default specified in Section 5(a)(vii)(4)
or, to the extent analogous thereto, (8).
(b) Right to Terminate Following Termination Event.
(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
(1) 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 Parts 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
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 Market 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 ongoing 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:
(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.
<PAGE>
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 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 convening 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 its 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 convened 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
other obligations in this Agreement, will be enforceable as separate
and independent causes of action, will apply notwithstanding any
indulgence granted by the party to which any payment is owed and will
not be affected by judgment being obtained or claim or proof being made
for any other sums payable in respect of this Agreement.
(d) Evidence of Loss. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a
loss had an actual exchange or purchase been made.
9. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter 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 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) 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
organization 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 harness 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
(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 still be governed by and construed in
accordance wraith 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
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 hare 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 still
the bringing of Proceedings in any one or more jurisdiction; 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 :(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 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, authorization, 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.
<PAGE>
"Defaulting Party" has the meaning specified in Section 6(a).
"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.
"Illegality" 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 organized, 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 (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)(1) 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 to, 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 Section6(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 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, organized, 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 (in 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 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 assent 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.
Credit Lyonnais New York Branch Darling International Inc.
- ------------------------------------ -----------------------------------
(Name of Party) (Name of Party)
By: /s/ Robert Ivosevich By: /s/ Brad Phillips
------------------------------ -------------------------------
Name: Robert Ivosevich Name: Brad Phillips
Title: Senior Vice President Title: Treasurer
Date: July 28, 1997 Date: July 25, 1997
<PAGE>
EXHIBIT 10.2
--------------------------------------------
26
SCHEDULE
to the
MASTER AGREEMENT
dated as of June 6, 1997
between
CREDIT LYONNAIS NEW YORK BRANCH ("PARTY A")
A NEW YORK LICENSED BRANCH OF CREDIT LYONNAIS,
S.A.
A BANKING CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS
OF THE REPUBLIC OF FRANCE
and
DARLING INTERNATIONAL, INC. ("PARTY B")
A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE
Part 1. Termination Provisions.
(a) "Specified Entity" means in relation to Party A for the purpose of:
Section 5(a)(v), None
Section 5(a)(vi), None
Section 5(a)(vii), None
Section 5(b)(iv), None
and in relation to Party B for the purpose of:
Section 5(a)(v), None
Section 5(a)(vi), None
Section 5(a)(vii), None
Section 5(b)(iv), None
(b) "Specified Transaction" will have the meaning specified in Section 14 of
this Agreement.
(c) The "Cross Default" provisions of Section 5(a)(vi) of this Agreement will
apply to both parties, but shall exclude any payment default that results
solely from wire transfer difficulties or an error or omission of an
administrative or operational nature (so long as sufficient funds are
available to the relevant party on the relevant date), but only if payment
is made within three Business Days after such transfer difficulties have
been corrected or the error or omission has been discovered.
If such provisions apply:
"Specified Indebtedness" will have the meaning specified in Section 14 of
this Agreement, except that such term shall not include any obligation in
respect of deposits received in the ordinary course of Party A's banking
business.
"Threshold Amount" means for Party A USD $10,000,000 and for Party B USD
$7,000,000. This amount includes the equivalent amount in the specified
currency of any obligations stated in any other currency, currency unit or
combination.
(d) "Termination Currency" means United States Dollars.
(e) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) of this
Agreement will apply to Party A and to Party B.
(f) The "Automatic Early Termination" provision of Section 6(a) of this
Agreement will not apply to Party A and will not apply to Party B.
(g) Payments on Early Termination. For the purpose of Section 6(e) of this
Agreement:
Market Quotation will apply.
The Second Method will apply.
(h) Additional Termination Event will not apply.
(i) Additional Event of Default will not apply.
Part 2. Tax Representations
(a) Payer Representations. For the purpose of Section 3(e) of this Agreement,
each of Party A and Party B represent that 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 representation made
by the other party pursuant to Section 3(f) of this Agreement; (ii) the
satisfaction of the agreement of the other party 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) of this Agreement by reason of material prejudice to its
legal or commercial position.
(b) Payee Representations
(i) Party A Payee Tax Representation. For the purpose of Section 3(f)
of this Agreement, Party A represents that 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
United States of America.
(ii) Party B Payee Tax Representation. For the purpose of Section
3(f)of this Agreement, Party B represents that it is a corporation
organized under the laws of the State of Delaware.
Part 3. Agreement to Deliver Documents
For the purpose of Sections 4(a)(i) and (ii) of this Agreement:
(a) Tax forms, documents or certificates to be delivered are:
Party A agrees to execute and deliver to Party B, a United States
Internal Revenue Service Form 4224, or any successor form, (i) upon
execution of this Agreement, (ii) promptly upon reasonable demand by
Party B, and (iii) promptly upon learning that any such form
previously provided by Party A has become obsolete or incorrect.
(b) Other documents to be delivered are:
<TABLE>
<CAPTION>
Covered by
Party Required to Date by Which Section 3(d)
Deliver Document Form/Document/Certificate to Be Delivered Representation
------------------ ---------------------------------------- ------------------ --------------
<S> <C> <C> <C>
Party B Certified copies of all documents Upon execution of Yes
evidencing necessary corporate and Agreement
other authorizations and approvals with
respect to the execution, delivery and
performance by the party of this Agreement,
each Confirmation and any applicable Credit
Support Document.
Party A and A certificate of an authorized officer Upon execution of the Yes
Party B of the party certifying the names, true Agreement
signatures and authority of the officers of
the party signing this Agreement, each
Confirmation and any applicable Credit
Support Document.
</TABLE>
Part 4. Miscellaneous
(a) Addresses for Notices. For the purpose of Section 12(a) of this Agreement:
Address for notices or communications to Party A:
Address: 1301 Avenue of the Americas, New York, New York 10019
Attention: Treasury Department
Telex No.: 62410 Answerback: CREDW
Telephone No: (212) 261-7290
Facsimile No.: (212) 459-3167
Electronic Messaging System Details: None.
Address for notices or communications to Party B:
Address: 251 O'Connor Ridge Boulevard, Suite 300
Irving, Texas 75038
Attention: Brad Philips, Treasurer
Telephone No.: (972) 281-4404
Facsimile No.: (972) 717-1588
(b) Process Agent. For the purpose of Section 13(c) of this Agreement, Party B
appoints as its Process Agent: None designated.
(c) Offices. The provisions of Section 10(a) will apply to Party A and Party B.
(d) Multibranch Party. For the purpose of Section 10(c), (i) Party A is not a
Multibranch Party, and (ii) Party B is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent shall be Party A.
(f) Credit Support Document. The Credit Support Document is: None.
(g) Credit Support Provider. Credit Support Provider means: (i) in relation to
Party A: Not Applicable; (ii) in relation to Party B, Not applicable.
(h) GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
(i) Netting of Payments. Subparagraph (ii) of Section 2(c) of this Agreement
will not apply to any Transaction.
(j) "Affiliate" will have the meaning specified in Section 14 of this
Agreement, except that for purposes of Section 3(c), "Affiliate" means with
respect to Party A, any entity controlled, directly or indirectly by Party
A. For this purpose, "control of a majority of person" means ownership of a
majority of the voting power of the entity or person.
Part 5. Other Provisions
(a) Procedures for Entering into Transactions. With respect to each Transaction
entered into pursuant to this Agreement, Party A will, on or promptly after
the Trade Date thereof (by mail, telex, telecopier or other electronic
means), send Party B a Confirmation of each Transaction between them on the
standard form used by Party A or in such other form as is mutually agreed
upon by the parties. Party B will promptly thereafter confirm the accuracy
of or request the correction of such Confirmation. If Party B fails to
accept or dispute the Confirmation in the manner set forth above within
three Local Business Days after receipt from Party A, its failure shall
constitute its acknowledgment that the Confirmation correctly reflects the
parties' agreement on the terms of the Transaction referenced to therein.
The requirement of this Agreement that the parties exchange Confirmations
shall for all purposes be deemed satisfied by a Confirmation sent and an
acknowledgment deemed given as provided herein.
(b) ISDA Definitions. Unless otherwise specified in a Confirmation, this
Agreement and each Transaction between the parties shall be subject to the
1991 ISDA Definitions (the "1991 Definitions") and the 1992 FX and Currency
Option Definitions (the "FX Definitions"), each as published by the
International Swaps and Derivatives Association, Inc. ("ISDA"), without
reference to any amendment subsequent to the date hereof. For these
purposes, (i) all references in the 1991 Definitions to a Swap Transaction
and all references in the FX Definitions to an FX Transaction or Currency
Option shall be deemed to apply to each Transaction under this Agreement
and (ii) all references in the 1991 Definitions to a Business Day shall be
deemed references to a Local Business Day under this Agreement. In the
event of any inconsistency between the 1991 Definitions and the FX
Definitions, the FX Definitions will prevail with respect to an FX
Transaction or a Currency Option. The provisions of the 1991 Definitions
relating to Market Disruption Events and Adjustments to Indices (and their
effects as well) will apply to a Transaction under this Agreement only to
the exent not inconsistent with the provisions of the applicable
Confirmation. In the event of any inconsistency between the provisions of
this Agreement and the 1991 Definitions or the FX Definitions, the
provisions of this Agreement shall prevail. Any definitions incorporated
into a Confirmation shall prevail over the provisions of this Agreement,
the 1991 Definitions and the FX Definitions.
(c) Affected Parties in Termination Events. For purposes of Section 6(e) of
this Agreement, both parties shall be deemed to be Affected Parties in
connection with any Illegality or Tax Event, so that payments in connection
with early termination shall be calculated as provided in Section 6(e)(ii)
of this Agreement.
(d) Deferral of Payments in Connection with Illegality. If a party gives a
notice of Illegality, the due date for any payment scheduled to be made by
either party pursuant to Section 2 of this Agreement in connection with any
Affected Transaction at any time after that notice is effective shall be
deferred to the earliest to occur of (i) the date for settlement payments
pursuant to Section 6(e) of this Agreement in connection with an Early
Termination Date, (ii) the final Scheduled Payment Date for the Affected
Transactions and (iii) the date on which arrangements made pursuant to
Section 6(b)(ii) of this Agreement to avoid the Illegality are effected.
Any payments deferred pursuant to this provision shall be made on the
deferred payment date together with interest accrued on each deferred
amount from and including its originally scheduled due date to but
excluding the deferred due date (or, if an Early Termination Date is
designated, to but excluding the day it is designated) at the Non-default
Rate.
(e) Conditions Precedent. The condition precedent in Section 2(a)(iii)(1) of
this Agreement shall not apply to a payment and delivery owing by a party
if the other party has satisfied in full all its payment or delivery
obligations under Section 2(a)(i) of this Agreement and has at the relevant
time no future payment or delivery obligations, whether absolute or
contingent, under Section 2(a)(i) of this Agreement.
(f) Indemnifiable Tax. For purposes of Section 14 of this Agreement, the
following shall be added at the end of the definition of "Indemnifiable
Tax":
"Notwithstanding the foregoing, "Indemnifiable Tax" also means any Tax
imposed in respect of payment under this Agreement by reason of a Change in
Tax Law by a government or taxing authority of a Relevant Jurisdiction with
respect to the party making such payment, unless the other party is
incorporated, organized, managed and controlled or considered to have its
seat in such jurisdiction, or is acting for purposes of this Agreement
through a branch office located in such jurisdiction."
(g) Additional Agreement. For purposes of Section 4(a)(iii) of this Agreement,
the following shall be added immediately prior to the existing text: "upon
learning that such form or document is required or".
(h) Right of Set-off. Any amount (the "Early Termination Amount") payable to
one party (the "Payee") by the other party (the "Payer") under Section
6(e), in circumstances where there is (i) a Defaulting Party or (ii) one
Affected Party in the case where a Termination Event under Section 5(b)
(iv) has occurred, will, at the option of the party ("X") other than the
Defaulting Party or the Affected Party (and without prior notice to the
Defaulting Party or the Affected party), be reduced by its set-off against
any amount(s) (the "Other Agreement Amount") payable (whether at such time
or in the future or upon the occurrence of a contingency) by the Payee to
the Payer (irrespective of the currency, place of payment or booking office
of the obligation) under any other agreement(s) between the Payee and the
Payer or instrument(s) or undertaking (s) issued or executed by one party
to, or in favor of, the other party except as otherwise specified in those
agreement(s), instruments(s), or undertaking(s) or separately agreed
between the Payer and the Payee (and the Other Agreement Amount will be
discharged promptly and in all respects to the extent it is so set-off). X
will give notice to the other party of any set-off so effected.
For this purpose, either the Early Termination Amount or the Other
Agreement Amount (or the relevant portion of such amounts) may be converted
by X into the currency in which the other is denominated at the rate of
exchange at which such party would be able, acting in a reasonable manner
and in good faith, to purchase the relevant amount of such currency.
If an obligation is unascertained, X may in good faith estimate that
obligation and set-off in respect of the estimate, subject to the relevant
party accounting to the other when the obligation is ascertained.
Nothing herein shall be effective to create a charge or other security
interest. This provision shall be without prejudice and in addition to any
right of set-off, combination of accounts, lien or other right to which any
party is at any time otherwise entitled (whether by operation of law,
contract or otherwise).
(i) Escrow. If either party in its reasonable judgment determines at any time
that there has been a material adverse change that is likely to affect the
other party's ability to perform its ensuing payment obligation in
connection with a Transaction or Transactions involving payments due from
each of the parties on the same day in different currencies, the party that
has formed that judgment may notify the other that the payments due on that
day in connection with that Transaction or those Transactions are to be
made in escrow, to a major commercial bank selected by that party in good
faith and that has offices in the cities in which both payments are to be
made. If such an election is made, each party shall make the payment due
from it on that day by deposit into escrow with that escrow agent, for
value on that day, with irrevocable instructions (i) to release the payment
to the intended payee upon receipt by the escrow agent of the required
counter payment due from that payee on the same day in connection with that
Transaction accompanied by irrevocable instructions to the same effect, or
(ii) if the required deposit in escrow of the counter payment due is not so
made on the same day, for value on that day, to return the payment
deposited in escrow to the party that made the escrow deposit. The party
that elects to have payments made in escrow shall pay the costs of the
escrow arrangements and cause those arrangements to provide that the escrow
agent will pay interest on each amount deposited in escrow with it in
either of the relevant cities, for each day such amount remains in escrow
past 5:00 p.m. local time in the city, at the same rate per annum, and
calculated in the same way, as it would pay on overnight deposits placed
with it in the relevant currency and city for value on such day. The escrow
arrangements shall also provide that such interest on any amount in escrow
shall be payable to the intended payee of that amount, provided that it has
deposited the counter payment due from it into escrow as contemplated
herein, and that, if it has not done so, such interest shall be payable to
the other party.
(j) The following paragraph shall be added to the Agreement as a new Section
15:
Jury Trial. Each party hereby waives its respective right to jury trial
with respect to any litigation arising under, or in connection with, this
Agreement or any Transaction.
(k) Representations. Section 3 is hereby amended by adding at the end thereof
the following Subparagraphs (g), (h), and (i):
Line of Business. It has entered into this Agreement (including each
Transaction evidenced hereby) in conjunction with its line of business
(including financial intermediation services) or the financing of its
business.
Eligible Swap Participant. It constitutes an "eligible swap participant" as
such term is defined in Rule 35.1 (b) (2) of the Commodity Futures Trading
Commission, 17 C.F.R. 35.1 (b) (2) (1993).
Relationship Between Parties. Absent a written agreement to the contrary:
Either party is not relying on any advice (whether written or oral) of
the other party regarding any Transaction, other than the representations
expressly made by that other party in this Agreement and in the
Confirmation in respect of that Transaction;
In respect of each Transaction under this Agreement,
Either party has the capacity to evaluate (internally or through
independent professional advice) that Transaction and has made its own
decisions to enter into that Transaction; and
Either party understands the terms, conditions, and risks of that
Transaction and is willing to accept those terms and conditions and to
assume (financially and otherwise) those risks.
(l) Monitoring and Recording. Each party (i) consents to the monitoring or
recording, at any time and from time to time, by the other party of any and
all communications between officers or employees of the parties, (ii)
waives any further notice of such monitoring or recording, (iii) agrees to
notify its officers and employees of such monitoring and recording, and
(iv) agrees that any such recordings may be submitted in evidence to any
court or in any proceeding relating to this Agreement.
(m) Severability. Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of
such provision in any other jurisdiction.
(n) Scope of Agreement. Notwithstanding anything contained in the Agreement to
the contrary, if the parties enter into any Specified Transaction, such
Specified Transaction shall be subject to, governed by and construed in
accordance with the terms of this Agreement unless the Confirmation
relating thereto shall specifically state to the contrary. Each such
Specified Transaction shall be a Transaction for the purposes of this
Agreement and each confirmation with respect thereto will constitute a
"Confirmation" subject, governed by and form part of this Agreement.
(o) Outstanding Specified Transactions. Upon the effectiveness of the
Agreement, unless otherwise agreed to in writing by the parties to this
Agreement with respect to specific Specified Transactions, all Specified
Transactions then outstanding shall be subject to, governed by and
construed in accordance with this Agreement. Each confirmation governing
any Specific Transaction entered into prior to the date hereof shall
constitute a supplement to, and form a part of, this Agreement, and will be
read and construed as one with this Agreement.
Please confirm your agreement to the terms of the foregoing Schedule by
signing below.
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Robert Ivosevich
------------------------
Name: Robert Ivosevich
Title: Senior Vice President
DARLING INTERNATIONAL, INC.
By: /s/ Brad Phillips
------------------------
Name: Brad Phillips
Title: Treasurer
By:
Name:
Title:
EXHIBIT 10.3
--------------------------------------------
Multicurrency Border
ISDA
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of June 6, 1997
Wells Fargo Bank, N.A. and Darling International Inc.
- ---------------------------------- ------------------------------
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.
<PAGE>
(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 (1) 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.
<PAGE>
(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 organized and validly existing under th
laws of the jurisdiction of its organization 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 authorize 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,
reorganization, 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)).
<PAGE>
(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 not materially prejudice the legal or
commercial position of the party in receipt of such demand), with
any such form or document to be accurate and completed in a
manner reasonably satisfactory to such other party and to be
executed and to be delivered with any reasonably required
certification,
in each case by the date specified in the Schedule or such Confirmation
or, if none is specified, as soon as reasonably practicable.
(b) Maintain Authorizations. It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other
authority that are required to be obtained by it with respect to this
Agreement or any Credit Support Document to which it is a party and
will use all reasonable efforts to obtain any that may become necessary
in the future.
(c) Comply with Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to
comply would materially impair its ability to perform its obligations
under this Agreement or any Credit Support Document to which it is a
party.
(d) Tax Agreement. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon
learning of such failure.
(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance
of this Agreement by a jurisdiction in which it is incorporated,
organized, 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.
(l) 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 (1) 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 or other similar condition or event (however described)
in respect of such party, any Credit Support Provider of such
party or any applicable Specified Entity of such party under one
or more agreements or instruments relating to Specified
Indebtedness of any of them (individually or collectively) 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, of
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.
(b) Termination Events. The occurrence at any time with respect to a party
or, if applicable, any Credit Support provider of such party or any
specified Entity of such party of any event specified below constitutes
an Illegality if the event is specified in (i) 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 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 (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)(viii) 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, 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.
<PAGE>
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)(`ii)(1), (3), (5), (6)
or, to the extent analogous thereto, (8), and as of the time
immediately preceding the institution of the relevant proceeding or the
presentation of the relevant petition upon the occurrence with respect
to such party of an Event of Default specified in Section 5(a)(vii)(4)
or, to the extent analogous thereto, (8).
(b) Right to Terminate Following Termination Event.
(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
(1) 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 Parts 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
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 Market 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 ongoing 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:
(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.
<PAGE>
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 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 convening 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 its 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 convened 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
other obligations in this Agreement, will be enforceable as separate
and independent causes of action, will apply notwithstanding any
indulgence granted by the party to which any payment is owed and will
not be affected by judgment being obtained or claim or proof being made
for any other sums payable in respect of this Agreement.
(d) Evidence of Loss. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a
loss had an actual exchange or purchase been made.
9. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter 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 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) 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
organization 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 harness 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
(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 still be governed by and construed in
accordance wraith 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
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 hare 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 still
the bringing of Proceedings in any one or more jurisdiction; 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 :(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 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, authorization, 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.
<PAGE>
"Defaulting Party" has the meaning specified in Section 6(a).
"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.
"Illegality" 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 organized, 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 (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)(1) 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 to, 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 Section6(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 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, organized, 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 (in 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 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 assent 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.
Wells Fargo Bank, N.A. Darling International Inc.
- ------------------------------------ -----------------------------------
(Name of Party) (Name of Party)
By: /s/ Oliver Perin By: /s/ Brad Phillips
------------------------------ -------------------------------
Name: Oliver Perin Name: Brad Phillips
Title: Vice President Title: Treasurer
Date: June 6, 1997 Date: July 25, 1997
<PAGE>
SCHEDULE
to the
MASTER AGREEMENT
This is the Schedule to that certain Master Agreement dated as of June
6, 1997 between Wells Fargo Bank, National Association ("Party A") and Darling
International, Inc. ("Party B").
PART 1
Termination Provisions
In this Agreement:
(A) "Specified Entity" does not apply in relation to Party A or Party
B.
(B) "Specified Transaction" will have the meaning specified in Section
14 of this Agreement.
(C) The "Cross-Default" provisions of Section 5(a)(vi) of this
Agreement will apply to Party B.
"Specified Indebtedness" means any obligation (whether present
or future, contingent or otherwise, as principal or surety or otherwise) in
respect of borrowed money or other indebtedness owing by Party B to Party A,
including, without limitation, any indebtedness owed by Party B to Party A under
that Promissory Note of Party B dated June 5, 1997 payable to Party A (as
amended, supplemented or modified the "Note").
"Threshold Amount" means $0.
(D) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) of
this Agreement will apply to 3Party B.
(E) The "Automatic Early Termination" provision of Section 6(a) of this
Agreement will not apply to Party A or to Party B.
(F) Payments on Early Termination. For the purpose of Section 6(e)
of this Agreement: (i) Market Quotation will apply, and (ii) Second Method will
apply.
(G) "Termination Currency" means United States Dollars.
(H) Additional Termination Event will apply. The following shall
constitute an Additional Termination Event for which Party B shall be the
Affected Party: Party B has repaid all amounts owed to Party A under the Note
and Party A has no further obligation to provide any additional credit extension
to Party B under that Loan Agreement by and between Party A and Party B dated as
of June 5, 1997 (as amended, supplemented or modified, the "Loan Agreement").
PART 2
Tax Representations
Not applicable.
PART 3
Agreement to Deliver Documents
For the purposes of Section 4(a)(i) and (ii) of this Agreement, the
parties agrees that the following documents will be delivered:
<TABLE>
<CAPTION>
- ------------------ -------------------------------------- ----------------------------- ---------------------
Party Required Covered by Section
to Deliver Date by which to be 3(d) Representation
Document Form/Document/Certificate delivered
- ------------------ -------------------------------------- ----------------------------- ---------------------
<S> <C> <C> <C>
Pary B [and Resolution adopted by the Board of Concurrent with the Yes
Credit Support Directors, certified by the execution of this Agreement
Provider of Secretary or an Assistant Secretary,
Party B] authorizing the execution, delivery
and performance of this Agreement
and each Confirmation
Party B [and Specimen signature certificate of Concurrent with the Yes
Credit Support the Secretary or an Assistant execution of this Agreement
Provider of Secretary, setting out names and
Party B] and specimen signatures of each person
Party A or persons authorized on behalf of
the party to execute and deliver
this Agreement and each Confirmation
</TABLE>
PART 4
Miscellaneous
(A) Addresses for Notices. For the purpose of Section 12(a) of this Agreement:
Address for notices or communications to Party B:
Address: Darling International, Inc.
251 O'Conner Ridge Road
Irving, TX 75038
Telecopy No.: (972) 717-1588
Confirmation No.: (972) 281-4404
Attention: Brad Phillips
Address for notices or communications to Party A:
Address: Wells Fargo Bank, National Association
Rate Risk Management Group (AU #1857)
420 Montgomery, MAC: 0101-063
San Francisco, California 94163
Telecopy No.: (415) 956-9581
Confirmation No.: (415) 394-4011
Attention: Oliver Perin
(B) Process Agent. For the purpose of Section 13(c) of the Agreement,
neither Party A nor Party B will appoint a Process Agent.
(C) Offices. The provisions of Section 10(a) will not 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 not a Multibranch Party.
(E) Calculation Agent. The Calculation Agent is Party A.
(F) Credit Support Document. None.
(G) Credit Support Provider.
Credit Support Provider means in relation to Party A: None.
Credit Support Provider means in relation to Party B: None.
(H) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York without reference to choice of
law doctrine.
(I) Netting of Payments . Subparagraph (ii) of Section 2(c) of this
Agreement will apply to the Transactions.
(J) "Affiliate" will have the meaning specified in Section 14 of this
Agreement.
PART 5
Other Provisions
(A) Confirmations. Notwithstanding anything to the contrary in this
Agreement:
(i) The parties hereto agree that with respect to each
Transaction hereunder a legally binding agreement shall exist
from the moment that the parties hereto agree on the essential
terms of such Transaction, which the parties anticipate will
occur by telephone.
(ii) For each Transaction Party A and Party B agree to enter
into hereunder, Party A shall promptly send to Party B a
Confirmation, substantially in the form of Exhibit I setting
forth the terms of such Transaction. Party B shall execute and
return the Confirmation to Party A or request correction of
any error within three Business Days of receipt. Failure of
Party B to respond within such period shall not affect the
validity or enforceability of such Transaction and shall be
deemed to be an affirmation of such terms.
(B) Collateral. All obligations of Party B to Party A hereunder are
secured pursuant to the terms of the Loan Agreement, between Party A and Party B
dated June 5, 1997.
(C) Definitions. For each Transaction (unless otherwise specified in
the relevant Confirmation for that Transaction), all provisions of the 1991
Interest Rate and Currency Exchange Definitions published by the International
Swap Dealers Association, Inc. are hereby incorporated by this reference into
this Agreement and shall form a part hereof as if set forth in full herein.
(D) Notice of Event of Default. Each party agrees, upon learning of the
occurrence of any event or commencement of any condition that constitutes (or
that with the giving of notice or passage of time or both would constitute) an
Event of Default with respect to that party, promptly to give the other party
notice of such event or condition.
(E) Eligible Swap Participant. Section 3 of this Agreement is hereby
amended by adding at the end thereof the following subsection (g):
"(g) Eligible Swap Participant. It is an "eligible swap participant"
as that term is defined by the Commodity Futures Trading Commission at 17 C.F.R.
ss.35.1(b)(2)."
(F) Right of Setoff. Section 6 of this Agreement is amended by adding
the following new Section 6(f):
"(f) Notwithstanding anything to the contrary contained in this
Agreement, in the event of a designation of an Early Termination Date
as a result of an Event of Default, if the Defaulting Party would be
owed amounts under this Agreement in respect of the Terminated
Transactions as a result of such designation, the Non-defaulting Party
shall be entitled, at its option, to setoff any obligations owed
(whether or not then due, in U.S. Dollars or any other currency) by the
Defaulting Party to the Non-defaulting Party (including any of its
offices or branches) other than under this Agreement, against the
amounts owed under this Agreement by the Nondefaulting Party to the
Defaulting Party in respect of Terminated Transactions as a result of
such designation of an Early Termination Date. The obligations of the
Non-defaulting Party hereunder in respect of such Terminated
Transactions shall be deemed satisfied and discharged to the extent of
any such setoff. Any obligation of the Non-defaulting Party to make any
payment to a Defaulting Party hereunder shall in any event be
conditioned upon and shall arise only upon the date of the payment (by
setoff, by cash payment or otherwise) in full by the Defaulting Party
of all obligations then due and owing by the Defaulting Party to the
Non-defaulting Party (including any of its offices or branches) and/or
its Affiliates."
(G) Assignability. Section 7 of this Agreement will not apply. Subject
to Section 6(b)(ii) of this Agreement, Party B shall not, without Party A's
prior written consent, assign Party B's rights or obligations under this
Agreement, and any purported assignment by Party B without such consent shall be
void. Subject to Section 6(b)(ii) of this Agreement, Party A may elect at any
time to assign or transfer all or any portion of its rights or obligations under
this Agreement and that any such assignment or transfer may be to one or more
financial institutions, private investors, trusts and/or other entitites, at
Party A's sole discretion.
(H) Expenses. Section 11 of this Agreement will not apply. If any
attorney is engaged by Party A to enforce or defend with respect to any
provision of this Agreement or as a consequence of (I) any breach or Event of
Default by Party B hereunder or (ii) the occurrence of a Termination Event in
which Party B is the Affected Party, then Party B shall pay to Party A
(immediately upon demand) all reasonable attorneys' fees and all costs incurred
by Party A (without regard to whether any legal action or proceeding has been
filed) in connection therewith.
(I) Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of the Agreement or affecting the validity
or enforceability of such provision in any other jurisdiction. The parties
hereto shall endeavor in good faith negotiations to replace the prohibited or
unenforceable provision with a valid provision, the economic effect of which
comes as close as possible to that of the prohibited or unenforceable provision.
(J) WAIVER OF JURY TRIAL. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY TRIAL OR LITIGATION ARISING OUT OF OR IN
CONNECTION WITH ANY TRANSACTION OR THIS AGREEMENT.
(K) No Reliance. In connection with the negotiation of and entering
into this Agreement, any Credit Support Document and each Transaction (i) the
other party hereto is not acting as a fiduciary or a financial or investment
advisor for it; (ii) it is not relying upon any advice, counsel or
representations (whether written or oral) of the other party hereto other than
the representations expressly set forth in this Agreement, in such Credit
Support Document and in any Confirmation; (iii) the other party hereto has not
given to it any advice or counsel as to the expected or projected success,
return, performance, result, consequence or benefit (either legal, regulatory,
tax, financial, accounting, or otherwise) of this Agreement, such Credit Support
Document or such Transaction; (iv) it has consulted with its own legal,
regulatory, tax, business, investment financial and accounting advisors to the
extent it has deemed necessary and has made its own investment, hedging, and
trading decisions (including decisions regarding the suitability of such
Transaction pursuant to this Agreement) based upon its own judgment and upon any
advice from such advisors as it has deemed necessary and not upon any view
expressed by the other party hereto; (v) it has determined that the rates,
prices, or amounts and other terms of such Transaction in the indicative
quotations (if any) provided by the other party hereto reflect those in the
relevant market for similar transactions, and all trading decisions have been
the result of arms length negotiations between the parties; (vi) it is entering
into this Agreement, such Credit Support Document and such Transaction with a
full understanding of all of the terms, conditions and risks thereof (economic
and otherwise), and it is capable of assuming and willing to assume (financially
and otherwise) those risks; and (vii) it is a sophisticated investor.
<PAGE>
IT 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.
"Party A" "Party B"
WELLS FARGO BANK, NATIONAL DARLING INTERNATIONAL, INC.
ASSOCIATION
By: /s/ Oliver Perin By: /s/ Brad Phillips
----------------------------- ------------------------------
Its: Vice President Its: Treasurer
Date: June 6, 1997 Date: July 25, 1997
----------------------------- ------------------------------
EXHIBIT 10.4
--------------------------------------------
Multicurrency Border
ISDA
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of June 26, 1997
BankBoston, N.A. and Darling International Inc.
(formerly The First National Bank of Boston)
- ---------------------------------- ----------------------------
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.
<PAGE>
(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 (1) 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.
<PAGE>
(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 organized and validly existing under th
laws of the jurisdiction of its organization 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 authorize 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,
reorganization, 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)).
<PAGE>
(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 not materially prejudice the legal or
commercial position of the party in receipt of such demand), with
any such form or document to be accurate and completed in a
manner reasonably satisfactory to such other party and to be
executed and to be delivered with any reasonably required
certification,
in each case by the date specified in the Schedule or such Confirmation
or, if none is specified, as soon as reasonably practicable.
(b) Maintain Authorizations. It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other
authority that are required to be obtained by it with respect to this
Agreement or any Credit Support Document to which it is a party and
will use all reasonable efforts to obtain any that may become necessary
in the future.
(c) Comply with Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to
comply would materially impair its ability to perform its obligations
under this Agreement or any Credit Support Document to which it is a
party.
(d) Tax Agreement. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon
learning of such failure.
(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance
of this Agreement by a jurisdiction in which it is incorporated,
organized, 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.
(l) 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 (1) 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 or other similar condition or event (however described)
in respect of such party, any Credit Support Provider of such
party or any applicable Specified Entity of such party under one
or more agreements or instruments relating to Specified
Indebtedness of any of them (individually or collectively) 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, of
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.
(b) Termination Events. The occurrence at any time with respect to a party
or, if applicable, any Credit Support provider of such party or any
specified Entity of such party of any event specified below constitutes
an Illegality if the event is specified in (i) 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 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 (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)(viii) 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, 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.
<PAGE>
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)(`ii)(1), (3), (5), (6)
or, to the extent analogous thereto, (8), and as of the time
immediately preceding the institution of the relevant proceeding or the
presentation of the relevant petition upon the occurrence with respect
to such party of an Event of Default specified in Section 5(a)(vii)(4)
or, to the extent analogous thereto, (8).
(b) Right to Terminate Following Termination Event.
(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
(1) 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 Parts 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
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 Market 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 ongoing 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:
(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.
<PAGE>
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 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 convening 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 its 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 convened 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
other obligations in this Agreement, will be enforceable as separate
and independent causes of action, will apply notwithstanding any
indulgence granted by the party to which any payment is owed and will
not be affected by judgment being obtained or claim or proof being made
for any other sums payable in respect of this Agreement.
(d) Evidence of Loss. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a
loss had an actual exchange or purchase been made.
9. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter 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 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) 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
organization 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 harness 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
(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 still be governed by and construed in
accordance wraith 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
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 hare 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 still
the bringing of Proceedings in any one or more jurisdiction; 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 :(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 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, authorization, 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.
<PAGE>
"Defaulting Party" has the meaning specified in Section 6(a).
"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.
"Illegality" 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 organized, 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 (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)(1) 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 to, 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 Section6(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 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, organized, 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 (in 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 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 assent 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.
BankBoston, N.A. Darling International Inc.
(formerly The First National Bank of Boston)
- ------------------------------------ ------------------------------
(Name of Party) (Name of Party)
By: /s/ William K. LePard By: /s/ Brad Phillips
------------------------------ -----------------------------
Name: William K. LePard Name: Brad Phillips
Title: Managing Director Title: Treasurer
Date: Date: July 25, 1997
Approved by:
/s/ Eunice M. Harps
- ------------------------
Eunice M. Harps
Senior Credit Manager
<PAGE>
(Multicurrency - Cross Border)
ISDA
International Swaps and Derivatives Association, Inc.
SCHEDULE
to the
Master Agreement
dated as of June 26, 1997
between
BANKBOSTON, N. A.
(formerly THE FIRST NATIONAL BANK OF BOSTON)
("Party A")
and
DARLING INTERNATIONAL INC.
("Party B")
Part 1. Termination Provisions.
(a) "Specified Entity" means in relation to Party A 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
and in relation to Party B for the purpose of:
Section 5(a)(v): All Affiliates
Section 5(a)(vi): All Affiliates
Section 5(a)(vii): All Affiliates
Section 5(b)(iv): All Affiliates
(b) "Specified Transaction" will have the meaning specified in Section 14.
(c) The "Cross Default" provisions of Section 5(a)(vi)
will not apply to Party A
will not apply to Party B*
*(See Part 1(h) below for alternative Cross Default provisions)
(d) The "Credit Event Upon Merger" provisions of Section 5(b)(iv)
will apply to Party A
will apply to Party B
(e) The "Automatic Early Termination" provisions of Section 6(a) will not
apply to Party A and will not apply to Party B, provided however, that
where the Event of Default specified in Sections 5(a)(vii)(1), (3),
(4), (5), (6) or, to the extent analogous thereto, (8) is governed by
a system of law which does not permit termination to the relevant
Termination provision of Section 6(a) will apply to the relevant
party. If Automatic Early Termination of the Agreement does occur as a
result of this provision, the Defaulting Party shall fully indemnify
the Non-Defaulting Party on demand against all expense, loss, damage
or liability that the Non-Defaulting Party may incur in respect of the
Agreement and each transaction as a consequence of movements in
interest, currency, exchange or other relevant rates or prices between
the Business Day on which such Automatic Early Termination occurs and
the Business Day on which the Non-Defaulting Party first becomes aware
that the Agreement has been terminated pursuant to this provision. The
Non-Defaulting Party may for this purpose convert any such expense,
loss, damage or liability to the Termination Currency.
(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 United States Dollars.
(h) Additional Event of Default.
The occurrence or existence of the following shall constitute an
additional Event of Default with respect to Party B:
The occurrence or existence of an "Event of Default" as that term is
defined in that certain Credit Agreement dated June 5, 1997 among Party
B, Party A, individually and as agent, and the other financial
institutions named therein, as the same may be amended or otherwise
modified (the "Credit Agreement") unless waived by the parties to the
Credit Agreement, or if Party A is no longer a "Bank" under the Credit
Agreement. Any reference in this Schedule to the "Credit Agreement"
shall mean the Credit Agreement whether or not the obligations owing by
Party B thereunder are outstanding or the Credit Agreement continues to
be a valid, binding and enforceable agreement of Party B. In the event
the Credit Agreement terminates prior to the termination of this
Agreement, the covenants and Events of Default contained in the Credit
Agreement which were in effect as of the date of such termination,
shall remain in effect for purposes of this Agreement until such date
on which all of Party B's obligations under this Agreement are fully
performed and for such purpose, the Credit Agreement is incorporated
herein by reference in its entirety.
Part 2. Tax Representations.
(a) Payer Representations. For the purpose of Section 3(e), Party A
and Party B will 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 Sections 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 representation made by the other party pursuant
to Section 3(f); (ii) the satisfaction of the agreement of the other
party contained in Section 4(a)(i) or 4(a)(iii) and the accuracy and
effectiveness of any document provided by the other party pursuant to
Section 4(a)(i) or 4(a)(iii); and (iii) the satisfaction of the
agreement of the other party contained in Section 4(d), 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 Representations. For the purpose of Section 3(f) of this Agreement,
Party A and Party B make the representations specified below, if any:
Party A represents that it is a national banking association organized
under the laws of the United States of America.
Party B represents that it is a corporation organized under the laws of
the State of Delaware.
Part 3. Agreement to Deliver Documents.
(a) Party B shall have delivered to Party A, prior to the execution of this
Agreement (unless otherwise provided herein): A certified copy of the
Articles of Incorporation and By-Laws of Party B.
(b) Party B shall deliver to Party A on an ongoing basis for as long as there
are outstandings hereunder:
(i) the documents and information required to be delivered under
Section 9.1 of the Credit Agreement; and (ii) a Certificate of the
principal financial or accounting officer of Party B certifying as of
the end of each quarter or year, as the case may be, the Absence of
Certain Events with respect to Party B and the full performance and
compliance of Party B with all of its agreements under Section 4(a)
(or, if an event has occurred or exists, the nature and period of
existence thereof), and setting forth in reasonable detail the
calculations required to determine compliance by Party B with all of
its agreements under Section 4(a).
(c)Party B shall deliver to Party A concurrent with execution of this Agreement:
(i) a certified copy (substantially in the form of Exhibit B attached
hereto) of the resolution of the Board of Directors of Party B
authorizing the execution by an officer of Party B and the performance
by Party B of the transactions contemplated hereby, and specifying the
names and specimen signatures of each person authorized to execute this
Agreement on behalf of Party B; and (ii) an opinion of legal counsel to
Party B substantially in the form of Exhibit A attached hereto.
Part 4. Miscellaneous.
(a) Address for Notices. For the purpose of Section 12(a) of this Agreement:
Address for notices to Party A:
Address: 100 Federal Street
Boston, Massachusetts 02110
Contact for Confirmations/Settlements/Collateral Transfers/Resets:
Attention: Senior Manager, Derivatives Operations, 01-12-02
Facsimile No: (617) 434-0505
Telephone No: (617) 434-7221
Contact for all notices or communications given in respect of Section
5, 6, 7 11 or 13 of this Agreement:
Attn: Managing Director, Derivatives, 01-12-04
Telephone No: (617) 434-7529
Facsimile No: (617) 434-1149 or 639-9342
with a copy to:
BankBoston, N. A.
Attn: General Counsel
100 Federal Street, 01-25-01
Boston, Massachusetts 02110
Address for notices or communications to Party B:
Address: 251 O'Connor Ridge Boulevard
Suite 300, Irving, TX 75038
Attention: Treasurer
Facsimile No: 972-717-1588
<PAGE>
(b) Process Agent. For the purpose of Section 13(c) of this Agreement:
Party A appoints as its Process Agent:
BankBoston, N. A.
c/o Bank of Boston International
152 West 57th Street, 20th Floor
New York, NY 10019
with a copy to:
BankBoston, N. A.
Attn: General Counsel
100 Federal Street
Boston, Massachusetts 02110
With respect to Party B this provision is not applicable.
(c) Offices. The provisions of Section 10(a) will apply to this Agreement.
(d) Multibranch Party. or the purpose of Section 10(c) of this Agreement:
Party A is not a Multibranch Party. Party B is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent is Party A, unless otherwise
specified in a Confirmation in relation to the relevant Transaction.
(f) Credit Support Document. Details of any Credit Support Document:
Each Guaranty (as defined in the Credit Agreement), the Borrower Pledge
Agreement (as defined in the Credit Agreement) and any pledge agreement
executed by a Subsidiary (as defined in the Credit Agreement) in
accordance with the Credit Agreement.
(g) Credit Support Provider. Credit Support Provider means in relation to
Party B:
Each Significant Subsidiary (as defined in the Credit Agreement).
(h) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
(i) Netting of Payments. Subparagraph (ii) of Section 2(c) of this
Agreement will not apply to any Transactions under this Agreement.
(j) "Affiliate" will have the meaning specified in Section 14.
Part 5. Other Provisions.
(a) Set-Off.
Any amount (the "Early Termination Amount") payable to one party (the
Payee) by the other party (the Payer) under Section 6(e), in circumstances where
there is a Defaulting Party or one Affected Party in the case where a
Termination Event under Section 5(b)(iv) has occurred, will, at the option of
the party ('X') other than the Defaulting Party or the Affected Party (and
without prior notice to the Defaulting Party or the Affected Party), be reduced
by its set-off against any amount(s) (the 'Other Agreement Amount') payable
(whether at such time or in the future or upon the occurrence of a contingency)
by the Payee to the Payer (irrespective of the currency, place of payment or
booking office of the obligation) under any other agreement(s) between the Payee
and the Payer or instrument(s) or undertaking(s) issued or executed by one party
to, or in favor of, the other party (and the Other Agreement Amount will be
discharged promptly and in all respects to the extent it is so set-off). X will
give notice to the other party of any set-off effected under this Section 5(a).
For this purpose, either the Early Termination Amount or the Other
Agreement Amount (or the relevant portion of such amounts) may be converted by X
into the currency in which the other is denominated at the rate of exchange at
which such party would be able, acting in a reasonable manner and in good faith,
to purchase the relevant amount of such currency.
If an obligation is unascertained, X may in good faith estimate that
obligation and set-off in respect of the estimate, subject to the relevant party
accounting to the other when the obligation is ascertained.
Nothing in the Section 5(a) shall be effective to create a charge or
other security interest. This Section 5 (a) shall be without prejudice and in
addition to any right of set-off, combination of accounts, lien or other right
to which any party is at any time otherwise entitled (whether by operation of
law, contract or otherwise).
(b) Definitions.
This Agreement, each Confirmation and each Transaction are subject to
the 1991 ISDA Definitions (as published by the International Swaps and
Derivatives Association, Inc.) (the "Definitions"), and will be governed in all
respects by the provisions set forth in the Definitions. The provisions of the
Definitions are incorporated by reference in, and shall be deemed to be part of,
this Agreement and each Confirmation, as if set forth in full in this Agreement
or in that Confirmation. 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, such Confirmation will prevail for the purpose of the relevant
Transaction.
<PAGE>
(c) Procedures for Entering into Transactions.
(i) With respect to each Transaction entered into pursuant hereto,
Party A shall, on or promptly after the Trade Date thereof, send Party B a
Confirmation substantially in the form of Exhibit C confirming such Transaction,
and Party B shall promptly thereafter confirm the accuracy of or request the
correction of such Confirmation.
(ii) Notwithstanding the terms of Sections 5 and 6 of this Agreement,
if at any time and so long as one of the parties to this Agreement ("X") shall
have satisfied in full all its payment obligations under Sections 2(a)(i) of
this Agreement and shall at the time have no future payment obligations, whether
absolute or contingent, under such Section, then unless the other party ("Y") is
required pursuant to appropriate proceedings to return to X or otherwise returns
to X upon demand of X any portion of any such payment, (a) the occurrence of an
event described in Section 5(a) of this Agreement with respect to X, any Credit
Support Provider of X, or any Specified Entity of X shall not constitute an
Event of Default or a Potential Event of Default with respect to X as the
Defaulting Party and (b) Y shall be entitled to designate an Early Termination
Date pursuant to Section 6 of this Agreement only as a result of the occurrence
of a Termination Event set forth in (i) either Section 5(b)(i) or 5(b)(ii) of
this Agreement with respect to Y as the Affected Party or (ii) Section 5(b)(iii)
of this Agreement with respect to Y as the Burdened Party.
(d) Additional Representations.
For purposes of Section 3 of this Agreement, the following shall be
added, immediately following paragraph (f) thereof:
"(g) This Agreement and each Transaction constitutes a "swap
agreement" within the meaning of Commodity Futures Trading
Commission ("CFTC") regulations Section 35.1(b)(1).
(h) It is an "eligible swap participant" within the
meaning of CFTC Regulations Section 35.1(b)(2).
(i) Neither this Agreement nor any Transaction is one of a
fungible class of agreements that are standardized as to their
material economic terms, within the meaning of CFTC
Regulations Section 35.2(b).
(j) The creditworthiness of the other party was or will be a
material consideration in entering into or determining the
terms of this Agreement and each Transaction, including
pricing, cost or credit enhancement terms of the Agreement or
Transaction, within the meaning of CFTC Regulations 35.2(c).
(k) It has entered into this Agreement (including each
Transaction evidenced hereby) in conjunction with its line of
business (including financial intermediation services) or the
financing of its business.
(l) Relationship Between Parties. Each party will be deemed to
represent to the other party on the date on which it enters
into a Transaction that (absent a written agreement between
the parties that expressly imposes affirmative obligations to
the contrary for the Transaction):
(i) 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. It
has not received from the other party any assurance or
guarantee as to the expected results of that Transaction.
(ii) 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.
(iii) Status of Parties. The other party is not
acting as a fiduciary for or as an advisor to it in respect
of that Transaction.
(e) Recording.
Each party hereto consents to the monitoring or recording, at any time
and from time to time, by the other party of any and all communications between
officers or employees of the parties, waives any further notice of such
monitoring or recording, and agrees to notify its officers and employees of such
monitoring or recording.
IN WITNESS WHEREOF, the parties have executed this ISDA Master
Agreement as of the date specified on the first page hereof.
BANKBOSTON, N. A. DARLING INTERNATIONAL INC.
By: /s/ William K. LePard By: /s/ Brad Phillips
------------------------- ----------------------------
Name: William K. LePard Name: Brad Phillips
Title: Managing Director Title: Treasurer
Approved {for BankBoston, N.A. internal use only}:
By: /s/ Eunice M. Harps
------------------------
Name: Eunice M. Harps
Title: Senior Credit Manager
<PAGE>
EXHIBIT A
[LETTERHEAD OF COUNSEL TO PARTY B]
[Date]
BankBoston, N.A.
Global Financial Markets, 12th Floor
100 Federal Street
Boston, Massachusetts 02106
Dear Sirs:
Re: Darling International Inc.
This opinion is furnished to you pursuant to Part 3 of the
Schedule to the Master Agreement dated as of the 19th day of June, 1997 and the
Transactions entered into pursuant thereto (the "Agreement") made between
Darling International Inc. (the "Counterparty") and BankBoston, N.A.
We have acted as counsel to the Counterparty in connection
with the preparation, execution and delivery of the Agreement. In that
connection we have examined such documents and considered such questions of law
as we have deemed necessary or appropriate for the opinion expressed herein.
Based on the foregoing we are of the opinion that:
1. The Counterparty is duly incorporated and organized and
validly existing under the laws of its jurisdiction of
incorporation and has full power and authority to execute and
deliver the Agreement and to perform its obligations
thereunder.
2. The execution, delivery and performance of the Agreement by
the Counterparty has been duly authorized by all necessary
corporate action of the Counterparty and will not conflict
with or result in a breach of the articles or by-laws of the
Counterparty, or of any indenture, agreement or other document
or instrument to which the Counterparty is a party or by which
it is bound or any order of any court or any law or regulation
applicable to the Counterparty.
3. All consents, authorizations, appropriations and approvals
requisite for the Counterparty's due execution, delivery and
performance of the Agreement have been duly obtained and
remain in full force and effect and no action by, and no
notice to or filing with any legislature, government,
governmental authority or regulatory body is required for such
execution, delivery or performance.
4. The Agreement is a legal, valid and binding obligation of the
Counterparty, enforceable against the Counterparty in
accordance with its terms subject to the qualification that
the enforceability of the Agreement may be limited by
bankruptcy, insolvency and other similar laws of general
application affecting the enforcement of creditors' rights
generally.
Yours truly,
<PAGE>
EXHIBIT B
DARLING INTERNATIONAL INC.
SECRETARY'S CERTIFICATE
I, Joseph R. Weaver, Jr., the duly elected, qualified and acting
Secretary of Darling International Inc. (the "Corporation"), a corporation duly
organized and existing under the laws of Delaware, hereby certify that:
1. The resolutions attached hereto as Exhibit I have been duly adopted by the
Board of Directors of the Corporation *[on ] [pursuant to a Unanimous Consent in
Lieu of a Meeting dated ]. Said resolutions have not been amended or repealed
and remain in full force and effect as of the date hereof;
2. Each of the following persons whose names appear below holds the office in
the Corporation set forth opposite his or her name and is authorized to execute
and deliver for and on behalf of the Corporation confirmations, agreements,
contracts, instruments and other documentation evidencing the transactions
described in Exhibit I hereto; and
3. The signature set forth opposite each of the following persons is the
genuine signature of the person so
named with which I am familiar.
Name Position Signature
Brad Phillips Treasurer
Joseph R. Weaver, Jr. Secretary
- ------------------------- ---------------------- ----------------------
- ------------------------- ---------------------- ----------------------
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
the said Corporation this day of , 1997.
----------------------------
Secretary
* Delete as applicable
EXHIBIT I
DARLING INTERNATIONAL INC.
RESOLVED: That Darling International Inc. (the "Corporation") is hereby
authorized to enter into interest rate and currency swap transactions, interest
rate cap, collar and floor transactions, interest rate and currency option
transactions and any and all similar derivative products ("Transactions") and
any borrowing or lending transactions related to any of the foregoing; and
RESOLVED: That each of the President, any Vice President or the Treasurer
of the Corporation, acting singly, is hereby authorized to take any and all
action and to execute any and all documents which the above named officer deems
necessary or appropriate to conclude the Transactions authorized by these
Resolutions, the necessity or appropriateness thereof being exclusively
established by the action taken.
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> DEC-29-1996
<PERIOD-END> JUN-28-1997
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<RECEIVABLES> 32,314
<ALLOWANCES> 294
<INVENTORY> 11,830
<CURRENT-ASSETS> 59,487
<PP&E> 238,270
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0
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<COMMON> 52
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<TOTAL-LIABILITY-AND-EQUITY> 314,767
<SALES> 254,605
<TOTAL-REVENUES> 254,605
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