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4. Bankruptcy Swap Provisions
- Payments. Except as provided below, in respect of each Bankruptcy Swap
entered into hereunder, the Buyer shall pay to the Seller the applicable Buyer
Amount on each Buyer Payment Date commencing on the first Buyer Payment Date to
occur after the Effective Date and ending on the Transaction Termination Date.
If the Buyer Payment Date is not a Business Day, the Buyer shall pay the Seller
the applicable Buyer Amount in respect of such Buyer Payment Date on the
Business Day immediately following the Buyer Payment Date.
If on or after the Effective Date and on or before the
Protection Termination Date a Bankruptcy Event occurs in respect of a Reference
Entity which is the subject of a Bankruptcy Swap and subsequently a valid
Bankruptcy Event Notice and Notice of Publicly Available
Information is delivered by one party to the other in respect of such Bankruptcy
Swap, each of which is effective on or before the date falling fourteen calendar
days after the Protection Termination Date, the Seller shall pay to the Buyer
the Credit Protection Settlement Amount on the Credit Protection Settlement
Date. If the Credit Protection Settlement Date is not a Business Day, the Seller
shall pay the Buyer the applicable Credit Protection Settlement Amount in
respect of such Credit Protection Settlement Date on the Business Day
immediately following the Credit Protection Settlement Date.
All Bankruptcy Event Notices and Notices of Publicly Available
Information delivered in respect of a Bankruptcy Swap must be delivered on a
London Business Day. Any such notice that is delivered on or prior to 4 p.m.
London time on a London Business Day will be effective on such day. A notice
delivered on or after 4 p.m. London time will be deemed delivered on the next
following London Business Day. Any notice hereunder may be delivered orally
(delivered when actually received by the intended recipient) or in writing by
hand delivery (delivered when actually received by the intended recipient),
overnight mail service (deemed delivered if delivered upon scheduled weekday
delivery day), telex (deemed delivered upon receipt of answerback) or
telefacsimile (deemed delivered upon receipt of evidence, including
telefacsimile evidence, that the telefacsimile was received). If the notice is
delivered orally a written confirmation will be executed and delivered
confirming the substance of that notice within one (1) London Business Day of
that notice. Failure to provide that written confirmation will not affect the
effectiveness of that oral notice. If the written confirmation is not received
within such time, the party obligated to deliver the confirmation will be deemed
to have satisfied such obligation at the time that the written confirmation of
the oral notice is received.
Only one Bankruptcy Event Notice and Notice of Publicly
Available Information may be delivered in respect of a Bankruptcy Swap and
either Enron or Counterparty may deliver such notices. Each party hereby agrees
that the determination of the Determination Agent as to the validity and
effectiveness of any such notice shall, in the absence of manifest error, be
final.
Where a Bankruptcy Event occurs before the Trade Date in
respect of the Reference Entity that is the subject of a Bankruptcy Swap, such
Bankruptcy Swap shall be void. Where a Bankruptcy Event occurs on or after the
Trade Date but before the Effective Date in respect of the Reference Entity
which is the subject of a Bankruptcy Swap, such Transaction shall automatically
terminate on the occurrence of such Bankruptcy Event and neither the Buyer nor
the Seller shall be required to make any payment in respect of such Transaction.
In both of the foregoing circumstances, if the parties have made payments to
each other under the Transaction the parties shall account to each other in
respect of such payments made.
Each payment will be made in the applicable Contractual
Currency without deduction, set-off or counterclaim (except as provided herein)
via wire transfer in immediately available funds prior to 3:00 p.m. London time
on the relevant payment date.
- Merger of Enron or Counterparty with a Reference Entity. In the event
that either party and a Reference Entity, consolidate or amalgamate with, or
merge into, or transfer all or substantially all its assets to, a Reference
Entity (in the case of a party) or a party (in the case of Reference Entity), or
a party and a Reference Entity become Affiliates, (each a "Merger
Event"") all Affected Bankruptcy Swaps shall be deemed automatically
terminated as of the date of the Merger Event (the "Merger Termination
Date"), such date to be determined and notified to the parties by the
Determination Agent. In such circumstances the Buyer shall, in respect of each
Affected Bankruptcy Swap, pay the Seller the proportion of the Buyer Amount
accrued up to and including the Merger Termination Date and, if applicable,
Seller shall account to Buyer in respect of the portion of the Buyer Amount
received in respect of the period after the Merger Termination Date. For the
purposes of this provision, "Affected Bankruptcy Swap" means any Bankruptcy Swap
entered into in respect of the Reference Entity that is the subject of the
Merger Event.
Each party agrees that it shall not enter into a Transaction
where it or any of its Affiliates is the Reference Entity which is the subject
of the Transaction and any such purported Transaction entered into by the
parties shall be deemed void and unenforceable.
- Bankruptcy Swap Definitions. The following definitions and provisions
shall apply in respect of Bankruptcy Swaps entered into between Enron and
Counterparty:
"Bankruptcy Event" means in respect of a Bankruptcy Swap
and
- a Reference Entity incorporated or organised under the laws of the United
Kingdom (excluding Northern Ireland), one or more of the events
specified under Annex A occurs in respect of the Reference Entity during
the Credit Protection Term;
- a Reference Entity incorporated or organised in the United States of
America, one or more of the events specified under Annex B occurs in
respect of the Reference Entity during the Credit Protection Term;
- a Reference Entity incorporated or organised under the laws of Canada
one or more of the events specified under Annex C occurs in
respect of the Reference Entity during the Credit Protection Term;
- a Reference Entity incorporated or organised under the laws of a
jurisdiction in the Sweden, one or more of the events specified under
Annex D occurs in respect of the Reference Entity during the Credit
Protection Term;
- a Reference Entity incorporated or organised under the laws of
Norway, one or more of the events specified under Annex E occurs
in respect of the Reference Entity during the Credit Protection Term;
- a Reference Entity incorporated or organised under the laws of a
jurisdiction in the Finland, one or more of the events specified under
Annex F occurs in respect of the Reference Entity during the Credit
Protection Term;
- a Reference Entity incorporated or organised under the laws of
Germany, one or more of the events specified under Annex G occurs
in respect of the Reference Entity during the Credit Protection Term;
- a Reference Entity incorporated or organised under the laws of
France, one or more of the events specified under Annex H occurs
in respect of the Reference Entity during the Credit Protection Term;
- a Reference Entity incorporated or organised under the laws of a
jurisdiction in the Italy, one or more of the events specified under
Annex I occurs in respect of the Reference Entity during the Credit
Protection Term;
- a Reference Entity incorporated or organised under the laws of
Switzerland, one or more of the events specified under Annex J
occurs in respect of the Reference Entity during the Credit Protection Term;
Without prejudice to the occurrence of any other event
specified in an Annex as a Bankruptcy Event, the passing of a resolution by a
Reference Entity or the making of an order by a court (or other authority) of
competent jurisdiction to dissolve or wind-up a Reference Entity (howsoever
described under applicable law), in each case pursuant to a consolidation,
merger, amalgamation, or the assumption of all or substantially all the
obligations of the Reference Entity by another entity or entities shall not
constitute a Bankruptcy Event.
"Bankruptcy Event Notice" means in respect of a Bankruptcy
Swap, an irrevocable notice from the notifying party (which may be oral,
including by telephone) describing in reasonable detail a Bankruptcy Event that
has occurred during the Credit Protection Term. For the avoidance of doubt, the
Bankruptcy Event that is the subject of the Bankruptcy Event Notice need not be
continuing on the date the Bankruptcy Event Notice is effective.
"Business Day" means in respect of payments under a
Bankruptcy Swap, a day (other than a Saturday or Sunday) on which commercial
banks are open for domestic business in London, the Currency Center of the
applicable Contractual Currency (or if the Contractual Currency is Euro a day on
which euro payments can be settled through the Trans-European Automated
Real-Time Gross Settlement Express Transfer System (each a "TARGET Settlement
Day"), and the relevant office of Counterparty as specified in the
applicable Confirmation, and recorded in Enron’s electronic records in respect
of the Transaction.
"Buyer" means in respect of a Bankruptcy Swap, the buyer of
the Credit Product specified as such on the Website and/or the applicable
Confirmation, and recorded in Enron’s electronic records in respect of such
Transaction.
"Buyer Amount" means in respect of a Bankruptcy Swap, an
amount calculated by the Determination Agent in accordance with the following
formula:
|
Credit Protection Notional Amount |
x |
Credit Protection Rate |
x |
Protection Period
Fraction |
"Buyer Amount Calculation Period" means in respect
of a Bankruptcy Swap and a Buyer Amount, the period from and including the
immediately preceding Buyer Payment Date to but excluding the Buyer Payment Date
in respect of which payment is being made; provided that (a) the initial
Buyer Amount Calculation Period will commence on and include the Effective Date,
and (b) the final Buyer Amount Calculation Period will end on and include the
earlier to occur of the Protection Termination Date and the Credit Protection
Trigger Date.
"Buyer Payment Date" means in respect of a Bankruptcy Swap
and a Buyer Amount, (a) the last day in each three month period following the
Effective Date and occurring prior to the Transaction Termination Date as
specified on the Website and/or in the applicable Confirmation, and recorded in
Enron’s electronic records in respect of such Transaction and (b) the
Transaction Termination Date.
"Contractual Currency" means in respect of payments under a
Bankruptcy Swap, the currency specified as such on the Website and/or in the
applicable Confirmation, and recorded in Enron’s electronic records in respect
of the Transaction, provided that if "Standard" is
specified the Contractual Currency shall be the currency of denomination of the
Credit Protection Settlement Amount.
"Credit Protection Notional Amount" means in respect of a
Bankruptcy Swap, the amount specified as such on the Website and/or in the
applicable Confirmation, and recorded in Enron’s electronic records in respect
of such Transaction.
"Credit Protection Rate" means in respect of a
Bankruptcy Swap and a Buyer Amount, the per annum rate specified as such on the
Website and/or in the applicable Confirmation, and recorded in Enron’s
electronic records in respect of such Transaction.
"Credit Protection Settlement Amount" means in
respect of a Bankruptcy Swap, the amount specified as such on the Website and/or
in the applicable Confirmation, and recorded in Enron’s electronic records in
respect of such Transaction; provided that if "Standard" is
specified the Credit Protection Settlement Amount shall be an amount equal to,
and in the same currency as, the Credit Protection Notional Amount.
"Credit Protection Settlement Date" means in respect
of a Bankruptcy Swap, the date specified as such on the Website and/or in the
applicable Confirmation, and recorded in Enron’s electronic records in respect
of such Transaction; provided that if "Standard" is specified the
Credit Protection Settlement Date shall be 5 Business Days after the Credit
Protection Trigger Date.
"Credit Protection Term" means in respect of a Bankruptcy
Swap, the period from and including the Effective Date to and including the
Protection Termination Date.
"Credit Protection Trigger Date" means in respect of a
Bankruptcy Swap, the first date upon which both a valid and effective Bankruptcy
Event Notice and Notice of Publicly Available Information is
delivered in respect of the Transactions in accordance with Clause 4a.
(Payments) above.
"Currency Center" means in respect of GBP, London,
in respect of USD, New York City and in respect of Yen, Tokyo.
"Determination Agent" means Enron. All calculations and
determinations in respect of each Bankruptcy Swap shall be made by the
Determination Agent in good faith and in a commercially reasonable manner, and
such determinations shall be binding on the parties in the absence of manifest
error.
"Effective Date" means in respect of a Bankruptcy Swap, the
date that is three calendar days after the Trade Date of the Transaction as
specified on the Website and/or in the applicable Confirmation, and recorded in
Enron’s electronic records in respect of the Transaction.
"London Business Day" means in respect of a
Bankruptcy Swap, a day (other than a Saturday or Sunday) on which commercial
banks are open for domestic business in London.
"Notice of Publicly Available Information" means in respect
of a Bankruptcy Swap, an irrevocable notice from the party delivering a
Bankruptcy Event Notice (which may be oral, including by telephone) confirming
the occurrence of the Bankruptcy Event described in the Bankruptcy Event Notice
with Publicly Available Information. The notice given must describe in
reasonable detail, or attach a copy of, the relevant Publicly Available
Information. If a Bankruptcy Event Notice confirms the existence or occurrence
of the Bankruptcy Event with Publicly Available Information, such notice will
also be deemed to be a Notice of Publicly Available Information.
"Publicly Available Information" means in respect of a
Bankruptcy Swap, information that reasonably confirms the facts relevant
to the determination that the Bankruptcy Event described in the Bankruptcy Event
Notice has occurred and that:
- has been published in not less than two of the following news sources (or
such news sources successors as determined by the Determination Agent):
Bloomberg Service, Dow Jones Telerate Service, Reuter Monitor Money Rates
Services, Dow Jones News Wire, Wall Street Journal, New York Times, Financial
Times, The Times, the Daily Telegraph, Nihon Keizai Shinbun or a Specified Local
News Source; provided that, if either of the parties or any of
their respective Affiliates is cited as the sole source of such information,
then such information shall not be deemed to be Publicly Available Information;
or
- is information contained in a petition or filing with, or order, decree or
notice (howsoever described) of, a court, tribunal, regulatory authority or
other similar administrative authority of competent jurisdiction and such
petition, filing, order, decree or notice, is a matter of public record on the
date the Notice of Publicly Available Information is delivered.
"Protection Termination Date" means in respect of a
Bankruptcy Swap, (a) the date specified as such on the Website and/or in the
applicable Confirmation, and recorded in Enron’s electronic records in respect
of the Transaction or (b) if "Standard" is specified, the fifth
(5th) anniversary of the Effective Date of the Transactions; and in
each case ending at 11.59 p.m. London time.
"Protection Period Fraction" means in respect of a
Bankruptcy Swap and a Buyer Amount, the actual number of days in the Buyer
Amount Calculation Period in respect of which payment is being made divided by
360.
"Reference Entity" means in respect of a Bankruptcy Swap,
(a) the entity in respect of which the Credit Product is being bought and sold
as specified as such on the Website and/or in the applicable Confirmation, and
recorded in Enron’s electronic records in respect of the Transaction and (b) any
Successor.
"Seller" means in respect of a Bankruptcy Swap, the seller
of the Credit Product as specified as such on the Website and/or in the
applicable Confirmation, and recorded in Enron’s electronic records in respect
of such Transaction.
"Specified Local News Source" means in respect of a
Bankruptcy Swap and:
- a Reference Entity incorporated or organised under the laws of the United
Kingdom (excluding Northern Ireland), any of the news sources specified as a
Specified Local News Source under Annex A;
- a Reference Entity incorporated or organised in the United States of
America, any of the news sources specified as a Specified Local News Source
under Annex B;
- a Reference Entity incorporated or organised under the laws of
Canada, any of the news sources specified as a Specified Local News
Source under Annex C;
- a Reference Entity incorporated or organised under the laws of a
jurisdiction in the Sweden, any of the news sources specified as a
Specified Local News Source under Annex D;
- a Reference Entity incorporated or organised under the laws of
Norway, any of the news sources specified as a Specified Local News
Source under Annex E;
- a Reference Entity incorporated or organised under the laws of a
jurisdiction in the Finland, any of the news sources specified as a
Specified Local News Source under Annex F;
- a Reference Entity incorporated or organised under the laws of
Germany, any of the news sources specified as a Specified Local News
Source under Annex G;
- a Reference Entity incorporated or organised under the laws of
France, any of the news sources specified as a Specified Local News
Source under Annex H;
- a Reference Entity incorporated or organised under the laws of a
jurisdiction in the Italy, any of the news sources specified as a
Specified Local News Source under Annex I;
- a Reference Entity incorporated or organised under the laws of
Switzerland, any of the news sources specified as a Specified Local News
Source under Annex J;
"Successor" means in respect of a Bankruptcy Swap and a
Reference Entity, a direct or indirect successor to a Reference Entity that
assumes all or substantially all of the obligations of the Reference Entity by
way of merger, consolidation, amalgamation, transfer or otherwise, whether by
operation of law or pursuant to any agreement, as determined by the
Determination Agent. For the avoidance of doubt a Reference Entity may only have
a single Successor at any one time.
"Trade Date" means in respect of a Bankruptcy Swap,
the date that the parties enter into the Transaction as specified as such on the
Website and/or in the applicable Confirmation, and recorded in Enron’s
electronic records in respect of the Transaction.
"Transaction Termination Date" means in respect of a
Bankruptcy Swap, the Protection Termination Date unless a valid Bankruptcy Event
Notice and Notice of Publicly Available Information is delivered
by one party to the other in respect of such Transaction, each of which is
effective on or before the date falling fourteen calendar days after the
Protection Termination Date, in which case the Transaction Termination Date
shall be the Credit Protection Settlement Date.
References in this Clause (including without limitation the
Annexes) to any statutes or other legislation are to such statutes or
legislation as amended, modified, replaced or re-enacted from time to
time.
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