EXHIBIT 10.3
TERMINATION AGREEMENT
This Termination Agreement (the “Termination Agreement”) is made and entered
into as of 27 September, 2010 by and among Primus Financial Products, LLC
(“Counterparty”), Lehman Brothers Special Financing Inc. (“Lehman”) and Lehman
Brothers Holdings Inc. (“Holdings”), as credit support provider of Lehman (each
of the foregoing a “Party” and collectively the “Parties”).
RECITALS:
WHEREAS, the Parties entered into one or more transactions (each a “Transaction”
and, together, the “Transactions”) that were governed by a 1992 Multicurrency —
Cross Border ISDA Master Agreement, dated as of June 13, 2002 (the “ISDA Master
Agreement”), which included certain schedules, documents, confirmations and a
guaranty of the obligations of Lehman by Holdings (collectively, the “Agreement
Documents”).
WHEREAS, commencing on September 15, 2008 and thereafter, Holdings and certain
of its affiliates, including Lehman, each filed voluntary petitions for relief
under chapter 11 of title 11 of the United States Code (collectively, the
“Bankruptcy Cases”).
WHEREAS, the Parties wish to terminate and/or acknowledge the termination of
each Transaction under the Agreement Documents as of the effective date of this
Termination Agreement.
WHEREAS, on December 16, 2008 the court having jurisdiction over the Bankruptcy
Cases (the “Bankruptcy Court”) entered an Order Pursuant to Sections 105 and 365
of the Bankruptcy Code to Establish Procedures for the Settlement or Assumption
or Assignment of Prepetition Derivative Contracts (the “Order”).
WHEREAS, as of the date hereof, the Parties have agreed a settlement amount in
favor of Lehman in the amount of $17,500,000 (the “Settlement Amount”) in
respect of the claims arising under the Agreement Documents.

 

 

--------------------------------------------------------------------------------

 

NOW, THEREFORE, in consideration of the recitals set forth above and promises
made herein, the receipt and sufficiency of which is hereby acknowledged, the
Parties hereto agree as follows:
Section 1. Payment and Release. Counterparty shall pay the Settlement Amount,
without deduction, set-off or counterclaim, to Lehman within one (1) business
days of the date hereof. In consideration of each other Party’s execution of
this Termination Agreement and payment of the Settlement Amount without
deduction, set-off or counterclaim to Lehman, each Party on behalf of itself and
any other party, person or entity claiming under or through it, hereby generally
releases, discharges and acquits each other Party, and its respective current
and former agents, servants, officers, directors, shareholders, employees,
subsidiaries, divisions, branches, units, affiliates, parents, attorneys,
successors, predecessors, heirs, personal representatives, and assigns (each of
the foregoing, a “Released Party”), from all manners of action, causes of
action, judgments, executions, debts, demands, rights, damages, costs, expenses,
and claims of every kind, nature, and character whatsoever, whether in law or in
equity, whether based on contract (including, without limitation, quasi-contract
or estoppel), statute, regulation, tort (including, without limitation,
intentional torts, fraud, misrepresentation, defamation, breaches of alleged
fiduciary duty, recklessness, gross negligence, or negligence) or otherwise,
accrued or unaccrued, known or unknown, matured, unmatured, liquidated or
unliquidated, certain or contingent, that such releasing Party ever had or
claimed to have, or now has or claims to have presently or at any future date,
against any Released Party arising under or related to the Agreement Documents
or the Transactions thereunder, their negotiation, execution, performance, any
breaches thereof, or their termination including, for the avoidance of doubt,
any claim for a payment in relation to an Early Termination Date under Section 6
of the ISDA Master Agreement or relating to any Credit Event under the ISDA
Master Agreement.
Section 2. Representations. Each Party represents and warrants to each other
Party that (i) the execution, delivery, and performance by such Party of this
Termination Agreement are within the powers of such Party and have been duly
authorized by all necessary action on the part of such Party, (ii) this
Termination Agreement has been duly executed and delivered by such Party and
constitutes a valid and binding obligation of such Party, enforceable against
such Party in accordance with the terms hereof, (iii) it is not relying upon any
statements, understandings, representations, expectations, or agreements other
than those expressly set forth in this Termination Agreement, (iv) it has had
the opportunity to be represented and advised by legal counsel in connection
with this Termination Agreement, which it enters voluntarily and of its own
choice and not under coercion or duress, (v) it has made its own investigation
of the facts and is relying upon its own knowledge and the advice of its
counsel, (vi) in negotiating this Termination Agreement it has not relied on any
expectation that any of the other Parties would disclose facts material to the
Agreement Documents or this Termination Agreement, (vii) it has not assigned,
transferred or conveyed to any person or entity any right, title, interest or
claim it may have or may have had in the Agreement Documents or any other matter
covered by the releases in Section 1 of this Termination Agreement and (viii) it
knowingly waives any and all claims that this Termination Agreement was induced
by any misrepresentation or non-disclosure and knowingly waives any and all
rights to rescind or avoid this Termination Agreement based upon presently
existing facts, known or unknown. Additionally, Lehman and Holdings represent
and warrant to Counterparty that this Termination Agreement is being entered
into in accordance with the terms of the Order. The Parties agree and stipulate
that each Party is relying upon the representations and warranties in this
Section in entering into the Termination Agreement. Furthermore, the Parties
agree that these representations and warranties are a material inducement for
entering into this Termination Agreement. These representations and warranties
shall survive the execution of this Termination Agreement indefinitely without
regard to statutes of limitations.
Section 3. Execution in Counterparts. This Termination Agreement may be executed
in any number of counterparts and by different Parties in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute but one and the same
instrument. Delivery of an executed counterpart of a signature page by facsimile
or PDF transmission shall be as effective as delivery of a manually executed
counterpart.

 

2

--------------------------------------------------------------------------------

 

Section 4. Effectiveness. This Termination Agreement shall become effective upon
execution hereof by each of the Parties and the payment, without deduction,
set-off or counterclaim, of the Settlement Amount to Lehman. The Transactions
that are not already terminated according to their terms will terminate as of
the effective date of this Termination Agreement.
Section 5. Related Claims. In order to reflect the entry into this Termination
Agreement, the Parties hereto acknowledge and agree that (i) Lehman may object
through a filing with the Bankruptcy Court to any proofs of claim filed by
Counterparty against Lehman in relation to the Agreement Documents or the
Transactions and (ii) Holdings may object through a filing with the Bankruptcy
Court to any proofs of claim filed by Counterparty against Holdings in relation
to the Agreement Documents or the Transactions. Pending the filing of such
objections, such proofs of claim and related Derivative Questionnaires and/or
Guarantee Questionnaire shall be deemed so amended. Counterparty agrees not to
challenge or object to such objections when filed.
Section 6. Governing Law. This Termination Agreement will be construed and
enforced in accordance with, and the rights of the Parties shall be governed by,
the laws of the State of New York (including Section 5-1401 of the New York
General Obligations Law), without regard to conflicts of laws principles that
would require the application of the law of another jurisdiction. The Bankruptcy
Court shall have exclusive jurisdiction over any action or proceeding with
respect to this Termination Agreement and each Party agrees to submit to such
jurisdiction and to waive any defense based on the location or jurisdiction of
such court.
Section 7. Confidentiality. Counterparty shall not disclose this Termination
Agreement or its terms, including the Settlement Amount (“Confidential
Information”), to any person other than to its shareholders, directors,
officers, employees, counsel, accountants and other advisors and the
shareholders, directors, officers, counsel, accountants and other advisors of
Primus Guaranty, Ltd. (hereinafter, collectively, the “Related Parties”), in
each case who need to know such information solely for the purpose of effecting
this Termination Agreement (it being understood that Counterparty shall ensure
that such Related Parties will be informed in advance of the confidential nature
of the Confidential Information and will be directed to maintain the
confidentiality of such Confidential Information and Counterparty shall be
responsible if any such Related Party fails to comply with any such
confidentiality obligations), except as may be required by law, including but
not limited to as may be required of Counterparty or any of its Related Parties
by United States federal securities and bankruptcy laws, rules and regulations.
Counterparty agrees that, when it enters into a confidentiality agreement with
respect to Confidential Information, it shall promptly provide Lehman with a
copy of said agreement.

 

3

--------------------------------------------------------------------------------

 

If Counterparty or any Related Party becomes legally obligated (whether by court
or regulatory order or otherwise), other than due to compliance with United
States federal securities or bankruptcy laws, rules and regulations, to disclose
any of the Confidential Information, Counterparty or such Related Party, as the
case may be, will promptly provide Lehman, if permitted by law, with notice of
such proposed disclosure so that Lehman may seek a protective order or other
appropriate remedy. If such a protective order or other protective remedy is not
obtained, Counterparty or such Related Party, as the case may be, will disclose
only that portion of the Confidential Information which is legally required, in
the opinion of its own counsel, and Counterparty or such Related Party, as the
case may be, will exercise its reasonable efforts to obtain reliable assurances
that confidential treatment will be accorded the Confidential Information.
Section 8. Successors and Assigns. The provisions of this Termination Agreement
will be binding upon and inure to the benefit of the Parties and their
respective successors and assigns.
Section 9. Amendment. This Termination Agreement may only be amended, modified,
superseded or canceled and any of the terms, covenants, representations,
warranties or conditions hereof may be waived only by an instrument in writing
signed by each of the Parties.
Section 10. Entire Agreement. This Termination Agreement constitutes the entire
agreement and understanding of the Parties relating to the subject matter hereof
and supersedes all prior agreements and understandings relating to the subject
matter hereof.
Section 11. Construction. This Termination Agreement has been negotiated by the
Parties and their respective legal counsel, and legal or equitable principles
that might require the construction of this Termination Agreement or any of its
provisions against the Party responsible for drafting this Termination Agreement
will not apply in any construction or interpretation of this Termination
Agreement.
[Remainder of page left blank intentionally]

 

4

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned have executed, or have caused to be
executed, this Termination Agreement as of the date first written above.

            PRIMUS FINANCIAL PRODUCTS, LLC
      By:           Name:           Title:           LEHMAN BROTHERS SPECIAL
FINANCING INC.
      By:           Name:           Title:           LEHMAN BROTHERS HOLDINGS
INC.
      By:           Name:           Title:      

 

5