EXHIBIT 10.18
BANK ONE
35 N. Fourth Street, Lower Level
Columbus, Ohio 43271-0103
Fax Cover Sheet
DATE: February 26, 1998
TO: Matrix Service Company
Attention: Mr. C. William Lee
FAX: (918) 838-8810
Pages including this cover page:
RE: INTEREST RATE SWAP TRANSACTION
Our Reference No.: 52292NA
Bank One, Oklahoma, N.A. has entered into an Interest Rate Swap transaction with
you as attached.
If you agree with the terms specified therein, please arrange for the
confirmation to be signed by your authorized signatory and return the signed
copy to this office to the facsimile number detailed below.
Section 3 of the "Confirmation" ("Account Details~') asks you to provide us with
your payment instructions. These should include the following information for
wire transfers:
Bank One, Oklahoma, N.A. (Affiliate Name)
Account Number: 028004046
ABA Number. 10300648
The ISDA Master Agreement provides for the netting of payments. In accordance
with Section 2 (c) of the ISDA Master Agreement all payments made under this
transaction will be made on a net basis.
If you have"any amendments or comments to make, please do not hesitate to
contact the Derivative Documentation Department of Banc One Funds Management.
Telephone Number (614) 248-2982 Facsimile Number (614) 248-1241
Tonya M. Melsop
Derivative Documentation Coordinator
cc: Mark Poole (918) 586-5474
CONFIDENTIALITY NOTICE; The information contained in and accompanying this
facsimile cover sheet is strictly and intended solely for the use of the
addressee(s) named above. It you are not a named addresses (or a person
responsible delivering this facsimile to a named addressee), you are hereby
notified that any review, distribution or copying of this facsimiles strictly
prohibited. If you have received this facsimile in error, please notify the
sender immediately by telephone at the number set forth above and destroy this
facsimile. Thank you.
BANK ONE
February 26, 1998
Mr. C. William Lee
Matrix Service Company
10701 East UTE Street
Tulsa, Oklahoma 74116-1517
Dear Mr. Lee:
This confirmation sets out the terms and conditions of the Interest Rate Swap
entered into between us on the Trade Date specified below. This constitutes a
Confirmation as referred to in the ISDA Master Agreement dated as of February 1,
1998 (the "Agreement") between Matrix Service Company, ("Matrix Service") and
Bank One, Oklahoma, N.A. ("Bank One").
This facsimile transmission will be the only written communication regarding
this Swap Transaction exchanged between us and will be deemed for all purposes
an original document, unless you request that we sign hard copy versions of this
Confirmation. Please contact the individual indicated in the last paragraph of
this letter to receive such copies.
1. The definitions and provisions contained in the 1991 ISDA Definitions (as
published by the International Swap Dealers Association, Inc.) are incorporated
into this Confirmation. In the event of any inconsistency between those
definitions and provisions and this Confirmation, this Confirmation will govern.
This Confirmation shall supplement, form part of, and be subject to the
Agreement.
Each party hereto represents and warrants to the other party hereto that, in
connection with the Transaction, (i) it has and will continue to consult with
its own legal, regulatory, tax, business, investment, financial and accounting
advisors to the extent it deems necessary, and it has and will continue to make
its own investment, hedging and trading decisions (including without limitations
decisions regarding the appropriateness and/or suitability of the Transaction)
based upon its own judgment and upon any advice from such advisors as it deems
necessary, and not in reliance upon the other party hereto or any of its
branches, subsidiaries or affiliates or any of their respective
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officers, directors or employees, or any view expressed by any of them, (ii) it
has evaluated and it fully understands all the terms, conditions and risks of
the Transaction, and it is willing to assume (financially and otherwise) all
such risks, (iii) it has and will continue to act as principal, and not agent of
any person, and the other party hereto and its branches, subsidiaries and
affiliates have not and will not be acting as a fiduciary or financial,
investment, commodity trading or other advisor to it and (iv) it is entering
into the Transaction for purposes of hedging its assets or liabilities or in
connection with a line of business, and not for the purpose of speculation.
2. The terms of this particular transaction to which this Confirmation relates
are as follows:
Notional Amount: USD 10,000,000 (See Exhibit "A")
Trade Date: February 26, 1998
Effective Date: March 2,1998
Termination Date: February 28, 2003
Fixed Amounts:
- --------------
Fixed Rate Payer: Matrix Service
Fixed Rate Payer The first of each month of each year, commencing
Payment Dates: on April 1, 1998, up to and including the
Termination Date, subject to adjustment in
accordance with the Modified Following Business
Day Convention.*
Fixed Rate: 7.50%
Fixed Rate Day Count Actual/360
Fraction:
Fixed Rate Period End The first of each month of each year, commencing
Dates: on April 1, 1998, up to and including the
Termination Date, subject to adjustment in
accordance with the Modified Following Business
Day Convention.*
Floating Amounts:
- -----------------
Floating Rate Payer: Bank One
Floating Rate Payer The first of each month of each year, commencing
Payment Dates: on April 1, 1998, up to and including the
Termination Date, subject to adjustment in
accordance with the Modified Following Business
Day Convention.*
Floating Rate Option: USD-LIBOR-BBA
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Floating Rate Designated One (1) Month
Maturity:
Floating Rate Spread: Plus 150 Basis Points
Floating Rate Reset Dates: The first day of each Calculation Period.
Floating Rate Day Count Actual/360
Fraction:
Floating Rate Period End The first of each month of each year, commencing
Dates: on April 1, 1998, up to and including the
Termination Date, subject to adjustment in
accordance with the Modified Following Business
Day Convention.*
Floating Initial Rate: 5.67188%
Method of Averaging: Not Applicable
Compounding: Not Applicable
Business Days: New York and London
Calculation Agent: Bank One
Governing Law: Laws of New York
3. Account Details:
Payments to Matrix Service: Bank One, Oklahoma, N.A.
Account #: 028004046
ABA #: 10300648
Payments to Bank One: Wire Transfer to:
Bank One, N.A.
ABA#: 044-0000-37
Account #: 151010-0630
Atten: Swap Operations
4. Offices:
(a) The Office of Bank One, Oklahoma, N.A. for this transaction is 150
E. Gay Street, 171, Floor, Columbus, Ohio 43271-0103.
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(b) The Office of Matrix Service Company for this transaction is 10701
East UTE Street, Tulsa, Oklahoma 74116-1517.
Please confirm that the foregoing correctly sets out the terms and conditions of
our agreement by responding within one (1) business day by returning via
facsimile an executed copy of this Confirmation on (614) 248-1241, Attention:
Tonya Melsop, telephone: (614) 248-2982. Failure to respond within such period
shall not affect the validity or enforceability of this transaction, and shall
be deemed to be an affirmation of the terms and conditions contained herein,
absent manifest error.
Banc One Corporation signing on For on behalf of be
behalf of Bank One, Oklahoma, N.A. Matrix Service Company
- ---------------------------------- ------------------------------
Shannon M. Goldrick Name: C. William Lee
Authorized Agent Title: Vice President-Finance
Date February 26, 1998 Date: February 27, 1998
Banc One Corporation signing on
behalf of Bank One, Oklahoma, N.A.
- ----------------------------------
David R. King
Vice President
Date: February 26, 1998
*Modified Following is specified, that date will be the first following day that
is a Business Day unless that day falls in the next calendar month, in which
case that date will be the first preceding day that is a Business Day.
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DATES
- ------------------
From To Notional
---- -- --------
3/2/98 4/1/98 $10,000,000.00
4/1/98 5/1/98 9,833,333.33
5/1/98 6/1/98 9,666,666.66
6/1/98 7/1/98 9,499,999.99
7/1/98 8/1/98 9,333,333.32
8/1/98 9/1/98 9,166,666.65
9/1/98 10/1/98 8,999,999.98
10/1/98 11/1/98 8,833,333.31
11/1/98 12/1/98 8,666,666.64
12/1/98 1/1/99 8,499,999.97
1/1/99 2/1/99 8,333,333.30
2/1/99 3/1/99 8,166,666.63
3/1/99 4/1/99 7,999,999.96
4/1/99 5/1/99 7,833,333.29
5/1/99 6/1/99 7,666,666.62
6/1/99 7/1/99 7,499,999.95
7/1/99 8/1/99 7,333,333.28
8/1/99 9/1/99 7,166,666.61
9/1/99 10/1/99 6,999,999.94
10/1/99 11/1/99 8,833,333.27
11/1/99 12/1/99 6,666,666.60
12/1/99 1/1/00 6,499,999.93
1/1/00 2/1/00 6,333,333.26
2/1/00 3/1/00 6,166,666.59
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From To Notional
---- -- --------
3/1/00 4/1/00 5,999,999.92
4/1/00 5/1/00 5,833,333.25
5/1/00 6/1/00 5,666,666.58
6/1/00 7/1/00 5,499,999.91
7/1/00 8/1/00 5,333,333.24
8/1/00 9/1/00 5,166,666.57
9/1/00 10/1/00 4,999,999.90
10/1/00 11/1/00 4,833,333.23
11/1/00 12/1/00 4,866,666.56
12/1/00 1/1/01 4,499,999.89
1/1/01 2/1/01 4,333,333.22
2/1/01 3/1/01 4,166,666.55
3/1/01 4/1/01 3,999,999.88
4/1/01 5/1/01 3,833,333.21
5/1/01 6/1/01 3,666,666.54
6/1/01 7/1/01 3,499,999.87
7/1/01 8/1/01 3,333,333.20
8/1/01 9/1/01 3,166,666.53
9/1/01 10/1/01 2,999,999.86
10/1/01 11/1/01 2,833,333.19
11/1/01 12/1/01 2,666,666.52
12/1/01 1/1/02 2,499,999.85
1/1/02 2/1/02 2,333,333.18
2/1/02 3/1/02 2,186,666.51
3/1/02 4/1/02 1,999,999.84
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From To Notional
---- -- --------
4/1/02 5/1/02 1,833,333.17
5/1/02 6/1/02 1,668,686.50
6/1/02 7/1/02 1,499,999.83
7/1/02 8/1/02 1,333,333.16
8/1/02 9/1/02 1,166,666.49
9/1/02 10/1/02 999,999.82
10/1/02 11/1/02 833,333.15
11/1/02 12/1/02 565,666.48
12/1/02 1/1/03 499,999.81
1/1/03 2/1/03 333,333.14
2/1/03 2/28/03 166,666.47
-8-
(Local Currency-Single Jurisdiction)
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of _________________________________________
BANK ONE, OKLAHOMA, N.A. and MATRIX SERVICE COMPANY 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 12 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
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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.
(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 branches or offices through which the parties make
and receive payments or deliveries.
(d) 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
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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) that-
(a) Basic Representations.
(i) Status. It is duly organized and validly existing under the 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)).
-11-
(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.
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 any
forms, documents or certificates specified in the Schedule or any
Confirmation 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.
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(d)
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;
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(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(d) or to give
notice of a Termination Event) to be complied with or performed by the
party in accordance with this Agreement if such failure is not remedied on
or before the thirtieth day after notice of such failure is given to the
party;
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider of such party
to comply with or perform any agreement or obligation to be complied with
or performed by it in accordance with any Credit Support Document if such
failure is continuing after any applicable grace period has elapsed;
(2) the expiration or termination of such Credit Support Document or
the failing or ceasing of such Credit Support Document to be in full force
and effect for the purpose of this Agreement (in either case other than in
accordance with its terms) prior to the satisfaction of all obligations of
such party under each Transaction to which such Credit Support Document
relates without the written consent of the other party; or
(3) the party or such Credit Support Provider disaffirms, disclaims,
repudiates or rejects, in whole or in part, or challenges the validity of,
such Credit Support Document;
(iv) Misrepresentation. A representation 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, event
of default or other similar condition
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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, 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
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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, and, if specified to be applicable,
a Credit Event Upon Merger if the event is specified pursuant to (ii) below
or an Additional Termination Event if the event is specified pursuant to
(iii) 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) 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, X or its successor or transferee, as appropriate, will
be the Affected Party); or
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(iii) 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 all Event of Default also constitutes
an Illegality, it will be treated as an Illegality and will not constitute
an Event of Default.
6. Early Termination
(a) Right to Terminate Following Event of Default. If at any time an Event of
Default with respect to a party (the "Defaulting Party") has occurred and
is then continuing, the other party (the "Non-defaulting Party") may, by
not more than 20 days notice to the Defaulting Party specifying the
relevant Event of Default, designate a day not earlier than the day such
notice is effective as an Early Termination Date in respect of all
outstanding Transactions. If, however, "Automatic Early Termination" is
specified in the Schedule as applying to a party, then an Early Termination
Date in respect of all outstanding Transactions will occur immediately upon
the occurrence with respect to such party of an Event of Default specified
in Section 5(a)(vii)(1), (3), (5), (6) or, to the extent analogous thereto,
(8), and as of the time immediately preceding the institution of the
relevant proceeding or the 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) Two Affected Parties. If an Illegality under Section 5(b)(i)(1) 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.
(iii) Right to Terminate. If:
(1) an agreement under Section 6(b)(ii) 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 other than that referred to in Section 6(b)(ii), a
Credit Event Upon Merger or an Additional Termination Event occurs,
-16-
either party in the case of an Illegality, any Affected Party in the case of 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(d) 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), 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
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"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 Unpaid Amounts owing to the
Non-defaulting Party over (B) 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 Unpaid Amounts owing to
the Non-defaulting Party less (B) 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.
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(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 (1) the sum of (a) one-half of
the difference between the Settlement Amount of the party with the
higher Settlement Amount CW') and the. Settlement Amount of the
party with the lower Settlement Amount ("Y") and (b) the Unpaid
Amounts owing to X less (H) 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 (")C') and the
Loss of the party with the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X; if it is a
negative number, X will pay the absolute value of that amount to Y.
(iii) Adjustment for Bankruptcy. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies in
respect of a party, the amount determined under this Section 6(e) will be
subject to such adjustments as are appropriate and permitted by law to
reflect any payments or deliveries made by one party to the other under
this Agreement (and retained by such other party) during the period from
the relevant Early Termination Date to the date for payment determined
under Section 6(d)(ii).
(iv) Pre-Estimate. The parties agree that if Market Quotation applies an
amount recoverable under this Section 6(e) is a reasonable pre-estimate of
loss and not a penalty. Such amount is payable for the loss of bargain and
the loss of protection against future risks and except as otherwise
provided in this Agreement neither party will be entitled to recover any
additional damages as a consequence of such losses.
7. Transfer
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
ail or substantially all its assets to, another entity (but without
prejudice to any other right or remedy under this Agreement); and
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(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. 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) No Waiver of Rights. A failure or delay in exercising any right, power or
privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege
will not be presumed to preclude any subsequent or further exercise, of
that right, power or privilege or the exercise of any other right, power or
privilege.
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(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.
9. Expenses
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees,
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.
10. 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 answer back 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.
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11. Governing Law and Jurisdiction
(a) Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings"), each party irrevocably:
(i) submits to the jurisdiction of the English courts, if this Agreement is
expressed to be governed by English law, or to the non-exclusive
jurisdiction of the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New York City, if
this Agreement is expressed to be governed by the laws of the State of New
York; and
(ii) waives any objection which it may have at anytime to the laying of
venue of any Proceedings brought in any such cowl, waives any claim that
such Proceedings have been brought in an inconvenient forum and further
waives the right to object, with respect to such Proceedings, that such
court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement - is expressed to be governed
by English law, the Contracting States, as defined in Section 10) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or re-
enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) 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 W suit, (ii)
jurisdiction of any court, (iii) relief by way of injunction, order for
specific performance or for recovery of property, GO 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.
12. Definitions
As used in this Agreement:
"Additional Termination Event" has the meaning specified in Section 5(b).
"Affected Party" has the meaning specified in Section 5(b).
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"Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality, 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.
"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.
"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)(iii).
"Event of Default" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.
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"Illegality" has the meaning specified in Section 5(b).
"law" includes any treaty, law, rule or regulation 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, (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, 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 9. A
party will determine its Loss as of the relevant Early Termination Date, or, if
that is not reasonably practicable, as of the earliest date thereafter as is
reasonably practicable. A party may (but need not) determine its Loss by
reference to quotations of relevant rates or prices from one or more leading
dealers in the relevant markets.
"Market Quotation" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference Market-
maker to enter into a transaction (the "Replacement Transaction") that would
have the effect of preserving for such party the economic equivalent of any
payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such Terminated Transaction
or group of Terminated Transactions that would, but for the occurrence of the
relevant Early Termination Date, have been required after
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that date. For this purpose, Unpaid Amounts in respect of the Terminated
Transaction or group of Terminated Transactions are to be excluded but, without
limitation, any payment or delivery that would, but for the relevant Early
Termination Date, have been required (assuming satisfaction of each applicable
condition precedent) after that Early Termination Date is to be included. The
Replacement Transaction would be subject to such documentation as such party and
the Reference Market-maker may, in good faith, agree. The party making the
determination (or its agent) will request each Reference Market-maker to provide
its quotation to the extent reasonably practicable as of the same day and time
(without regard to different time zones) on or as soon as reasonably practicable
after the relevant Early Termination Date. The day and time as of which those
quotations are to be obtained will be selected in good faith by the party
obliged to make a determination under Section 6(e), and, if each party is so
obliged, after consultation with the other. If more than three quotations are
provided, the Market Quotation will be the arithmetic mean of the quotations,
without regard to the quotations having the highest and lowest values. If
exactly three such quotations are provided, the Market Quotation will be the
quotation remaining after disregarding the highest and lowest quotations. For
this purpose, if more than one quotation has the same highest value or lowest
value, then one of such quotations shall be disregarded. If fewer than three
quotations are provided, it will be deemed that the Market Quotation in respect
of such Terminated Transaction or group of Terminated Transactions cannot be
determined.
"Non-default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount-
"Non-defaulting Party" has the meaning specified in Section 6(a).
"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 Lime 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.
"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:-
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(a) 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.
"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 Event" means an Illegality 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
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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 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.
BANK ONE, OKLAHOMA, N.A. MATRIX SERVICE COMPANY
(Name of Party) (Name of Party)
By: By:
------------------------ ------------------------------
Name: Name:
Title: Title:
Date: Date:
-27-
(Local Currency-Single Jurisdiction)
ISDA(R)
International Swaps and Derivatives Association, Inc.
SCHEDULE
to the
MASTER AGREEMENT
dated as of February 1, 1998
between
BANK ONE, OKLAHOMA N.A.,
a national banking association
with its main office located in Oklahoma City, Oklahoma
("Party All)
and
MATRIX SERVICE COMPANY,
a Delaware corporation
with its principal place of business in Tulsa, Oklahoma
("Party B")
Part 1. Termination Provisions and Certain Other Matters
In this Agreement:
(a) "Specified Entity" will not apply to Party A and for Party B will mean, for
purposes of Sections 5(a)(v), 5(a)(vi) and 5(a)(vii) of this Agreement, any
Affiliate of Party B.
(b) "Specified Transaction" includes for Party 13, in addition to the
transactions specified in Section 12 of this Agreement, any transaction
between Party A (or any Affiliate of Party A), on the one hand, and Party B
(or any Affiliate of Party B), on the other.
(c) The "Cross Default" provisions of Section 5(a)(vi) of this Agreement will
not apply to Party A and will apply to Party B and, with respect thereto,
"Specified Indebtedness " will have for Party B the meaning specified in
Section 12 of this Agreement and "Threshold Amount" will mean for Party
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B $0 (including the United States Dollar equivalent on the date of any Cross
Default of any obligation stated in any other currency).
(d) The "Credit Event upon Merger" provisions of Section 5(b)(ii) will not
apply to Party A and will apply to Party B.
(e) The "Automatic Early Termination" provision of Section 6(a) will not apply
to Party A or to Party B.
(f) Payments on Early Termination. For the purpose of Section 6(e):
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(g) Additional Termination Event will not apply.
Part 2. Agreement to Deliver Documents
Party B agrees to deliver to Party A, upon execution of this Agreement and upon
consummation of any Transaction, such evidence as Party A may reasonably require
(including, without limitation, an opinion reasonably acceptable in form and
substance to Party A of legal counsel reasonably acceptable to Party A) that
Party B is duly authorized to enter into this Agreement or into such
Transaction, and that the person(s) executing this Agreement or any Confirmation
on Party B's behalf is duly authorized by Party B to do so.
Part 3. Miscellaneous
(a) Addresses for Notices. For the purpose of Section 10(a) of this Agreement:
Address for notices or communications to Party A:
Address: 35 North Fourth Street, Lower Level
Columbus, Ohio 43271-0103
Attention: Swap Operations
Facsimile No.: 614/248-5209 Telephone No.:614/248-5621
Address for notices or communications to Party B:
Address: 10701 East UTE Street
Tulsa, Oklahoma 74116-1517
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Attention: C. William Lee or Doyl West
Facsimile No.: 918/838-8810 Telephone No.:8918/838-8822
(b) Calculation Agent. "Me Calculation Agent is Party A, unless otherwise
specified in a Confirmation in relation to the relevant Transaction.
(c) Credit Support Document. Does not apply to Party A and, with respect to
Party B, means each contract, agreement, instrument and other document
listed in Annex A hereto, each of which is intended by both Parties to
secure the full and timely performance of Party B's obligations under this
Agreement. Annex A is hereby incorporated herein in its entirety.
(d) Credit Support Provider. Does not apply to Party A and, with respect to
Party B, means each party to any Credit Support Document of Party B other
than Party A or Party 13, any Affiliate of Party A, and any other secured
party under any such Credit Support Document.
(e) 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).
(d) Netting of Payments. Subparagraph (ii) of Section 2(c) will not apply to
any Transaction unless otherwise provided in the Confirmation for such
Transaction.
(g) "Affiliate" means, with respect to each Party, any entity that, directly or
indirectly, controls, is controlled by, or is under common control with
such Party. For this purpose, a person shall be deemed to "control" any
entity if such person, directly or indirectly or acting through one or more
other persons, (a) owns, controls or has the power to vote 50% or more of
any class of voting securities of such entity, (b) is a general partner of
such entity, (c) controls in any manner the election of a majority of the
directors, trustees or other similar officials of such entity, or (d)
otherwise exercises a controlling influence over the management or policies
of such entity.
(h) "Party" means Party A and/or Party B, as the context may require.
Part 4. Other Provisions
(a) Additional Representations. Each Party hereby represents and warrants 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) as follows:
(i) The necessary action to authorize referred to in the representation in
Section 3(a)(ii) includes all authorizations, if any, required by such
Party under the Federal Deposit Insurance Act, as amended, including
amendments effected by the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, and under any
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agreement, writ, decree, or order entered into with such party's
supervisory authorities;
(ii) This Agreement is a "qualified financial contract" as defined in
Section 11 (e)(8)(D)(i) of the Federal Deposit Insurance Act, 12 U.S.C.
(S)1821(e)(8)(D)(i); a "swap agreement" as defined in Section 11
(e)(8)(D)(vi) of the Federal Deposit Insurance Act, 12 U.S.C. (S) 182 1
(e)(8)(D)(vi); and a "swap agreement" as defined in Section 10 1 (53B) of
the Bankruptcy Code, 11 U.S.C. (S) 10 1 (53 B);
(iii) It is not relying (for purposes of making any investment decision
or otherwise) upon any advice, counsel or representations (whether written
or oral) of the other party to this Agreement, other than the
representations expressly set forth in this Agreement, each Credit Support
Document and in any Confirmation;
(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 any 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 to this Agreement;
(v) It has a full understanding of all the terms, conditions and risks
(economic and otherwise) of this Agreement, each Credit Support Document
and each Transaction, and is capable of assuming and willing to assume
(financially and otherwise) such risks;
(vi) It is entering into this Agreement, each Credit Support Document and
each Transaction for the purposes of managing its borrowings or
investments, hedging its underlying assets or liabilities or in connection
with a line of business, and not for purposes of speculation; and
(vii) It is entering into this Agreement and will enter into all
Transactions as principal and in connection with its business or the
management of its business, and not as agent or in any other capacity,
fiduciary or otherwise.
(b) Exchange of Confirmations. Anything in this Agreement to the contrary
notwithstanding, for each Transaction entered into hereunder, Party A shall
promptly send to Party B a Confirmation, via telex or facsimile
transmission, in such form as the parties may from time to time agree. The
parties agree that any such exchange of telexes or facsimile transmissions
shall constitute a Confirmation for all purposes hereunder.
(c) Right of Set-Off. If an Early Termination Date occurs as the result of (i)
an Event of Default or (ii) a Termination Event with respect to which there
is only one Affected Party, the
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Non-Defaulting or Non-Affected Party may Set-off (x) against any amount due
and payable by it under Section 6(e) of this Agreement, any Other
Obligations of the Defaulting or Affected Party; and (y) against any of its
Other Obligations, any amount due and payable to it under Section 6(e) of
this Agreement. A Party may exercise such Set-off rights without prior
notice to the other Party, but shall notify the other Party promptly, after
any exercise of such rights. If the amount of any Other Obligation Set-off
is unascertained, the Non-Defaulting or Non-Affected Party may in good
faith estimate such amount and Set-off based on such estimate, subject to
an accounting to the other Party when such amount is ascertained, and to
appropriate adjustment. The Set-off rights of each Party hereunder shall be
in addition to, and not in lieu of, such other remedies, including such
other set-off rights, as such Party may have by contract, operation of law,
in equity or otherwise. As used herein, the term "Other Obligations- means,
with respect to either Party, any amount payable by it or any of its
Affiliates to the other Party, whether such amount is payable-under this
Agreement, another contract, applicable law or otherwise, and whether such
amount is due at the time in question, in the future or subject to a.
contingency.
(d) Events of Default Termination Event Designation of Early Termination Date.
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 CW~ shall have
satisfied in full all its payment and delivery obligations under Section
2(a)(i) of this Agreement and shall at such time have no future payment or
delivery obligations thereunder, whether absolute or contingent, 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 or delivery, (i) 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 with respect to X as the Defaulting Party and (ii) 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 Section 5(b)(i) with respect to Y as the Affected Party.
(e) Condition to Payments. The condition precedent in Section 2(a)(iii)(1) does
not apply to a payment and delivery owing by a Party if the other Party
shall have satisfied in full all its payment or delivery obligations under
Section 2(a)(i) of this Agreement and shall at the relevant time have no
future payment or delivery obligations, whether absolute or contingent,
under Section 2(a)(i).
ACCEPTED AND AGREED:
BANK ONE, OKLAHOMA, N.A. MATRIX SERVICE COMPANY
By: By:
--------------------- ---------------------
Name: Name:
------------------- -------------------
Title: Title:
------------------ ------------------
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ANNEX A
Credit Support Documents
Each of the following is a Credit Support Document of Party B for purposes of
this Agreement, and is intended by both Parties to secure the full and timely
performance of Party B's obligations under this Agreement:
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