Designated Event - ISDA Provision

2002 ISDA Master Agreement A Jolly Contrarian owner’s manual™ Resources and navigation [[{{{1}}} - 1992 ISDA Provision|This provision in the 1992]] Resources Wikitext | Nutshell wikitext | 1992 ISDA wikitext | 2002 vs 1992 Showdown | 2006 ISDA Definitions | 2008 ISDA | JC’s ISDA code project Navigation Preamble | 1 • (a) (b) (c) | 2 • (a) (b) (c) (d) | 3 • (a) (b) (c) (d) (e) (f) (g) | 4 • (a) (b) (c) (d) (e) | 5 • 5(a) Events of Default: 5(a)(i) Failure to Pay or Deliver 5(a)(ii) Breach of Agreement 5(a)(iii) Credit Support Default 5(a)(iv) Misrepresentation 5(a)(v) Default Under Specified Transaction 5(a)(vi) Cross Default 5(a)(vii) Bankruptcy 5(a)(viii) Merger Without Assumption 5(b) Termination Events: 5(b)(i) Illegality 5(b)(ii) Force Majeure Event 5(b)(iii) Tax Event 5(b)(iv) Tax Event Upon Merger 5(b)(v) Credit Event Upon Merger 5(b)(vi) Additional Termination Event (c) (d) (e) | 6 • (a) (b) (c) (d) (e) (f) | 7 | 8 • (a) (b) (c) (d) | 9 • (a) (b) (c) (d) (e) (f) (g) (h) | 10 | 11 | 12 • (a) (b) | 13 • (a) (b) (c) (d) | 14 | Index: Click ᐅ to expand: 2002 ISDA 1992 ISDA 'Definition of' Designated Event in a Nutshell™ Use at your own risk, campers! A “Designated Event” means that the relevant entity:― (1) merges with, or transfers substantially all of its assets into, or reorganises itself as another entity; (2) comes under the effective voting control of another entity; or (3) makes a substantial change in its capital structure by issuing or guaranteeing debt, equities or analogous interests, or securities convertible into them; view template Full text of Definition of Designated Event A “Designated Event” with respect to X means that:― (1) X consolidates or amalgamates with, or merges with or into, or transfers all or substantially all its assets (or any substantial part of the assets comprising the business conducted by X as of the date of this ISDA Master Agreement) to, or reorganises, reincorporates or reconstitutes into or as, another entity; (2) any person, related group of persons or entity acquires directly or indirectly the beneficial ownership of (A) equity securities having the power to elect a majority of the board of directors (or its equivalent) of X or (B) any other ownership interest enabling it to exercise control of X; or (3) X effects any substantial change in its capital structure by means of the issuance, incurrence or guarantee of debt or the issuance of (A) preferred stock or other securities convertible into or exchangeable for debt or preferred stock or (B) in the case of entities other than corporations, any other form of ownership interest; or view template Related agreements and comparisons Click here for the text of Section Designated Event in the 1992 ISDA There is no concept of Designated Event in the 1992 ISDA. Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

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Summary

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General discussion

All or substantially all is a modifier calculated to snooker that smart Alec who, for example, sells his entire business barring a single chair, to avoid breaching a covenant preventing him from disposing of “all of the business”. This is not the behaviour of a good egg and the better question to ask yourself is why you did business with him in the first place.

In any case, your qualifier leads only to a different kind of uncertainty: what counts as “substantial”? Discussions on the in-any-case tedious topic of Credit Event Upon Merger and Merger Without Assumption tend quickly to go this way. The countless learned articles and client briefing notes on the topic (let me Google that for you) will tell you that the benefit of this kind of drafting accrues mainly to those in the legal profession, but even then only through their very fear and loathing of the notion.

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See also

• Credit Event Upon Merger

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