EXHIBIT 10.5
(MULTICURRENCY--CROSS BORDER)
[ISDA(R) LOGO]
INTERNATIONAL SWAP DEALERS ASSOCIATION, INC.
MASTER AGREEMENT
DATED AS OF FEBRUARY 10, 2003
BNP PARIBAS AND GRANITE CONSTRUCTION INCORPORATED
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 defied in Section 14 and in the Schedule will
have the meanings therein specified for the purpose of this Master Agreement.
(b) INCONSISTENCY. In the event of any inconsistency between the provisions
of the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.
(c) SINGLE AGREEMENT. All Transactions are entered into in reliance on the
fact that this Master Agreement and all Confirmations form a single agreement
between the parties (collectively referred to as this "Agreement"), and the
parties would not otherwise enter into any Transactions.
2. OBLIGATIONS
(a) GENERAL CONDITIONS.
(i) Each party will make each payment or delivery specified in
each Confirmation to be made by it, subject to the other provisions of
this Agreement.
(ii) Payments under this Agreement will be made on the due date for
value on that date in the place of the account specified in the
relevant Confirmation or otherwise pursuant to this Agreement, in
freely transferable funds and in the manner customary for payments in
the required currency. Where settlement is by delivery (that is, other
than by payment), such delivery will be made for receipt on the due
date in the manner customary for the relevant obligation unless
otherwise specified in the relevant Confirmation or elsewhere in this
Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject
to (1) the condition precedent that no Event of Default or Potential
Event of Default with respect to the other party has occurred and is
continuing, (2) the condition precedent that no Early Termination Date
in respect of the relevant Transaction has occurred or been effectively
designated and (3) each other applicable condition precedent specified
in this Agreement.
COPYRIGHT (C) 1992 BY INTERNATIONAL SWAP DEALERS ASSOCIATION, INC.
(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 large
aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transaction that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). This election may
be made separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.
(d) DEDUCTION OR WITHHOLDING FOR TAX.
(i) GROSS-UP. All payment under this Agreement will be made
without any deduction or withholding for or on account of any Tax
unless such deduction or withholding is required by any applicable law,
as modified by the practice of any relevant governmental revenue
authority, then in effect. If a party is so required to deduct or
withhold, then that party ("X") will:--
(1) promptly notify the other party ("Y") of such
requirement;
(2) pay to the relevant authorities the full amount
required to be deducted or withheld (including the full amount
required to be deducted or withheld from any additional amount
paid by X to Y under this Section 2(d)) promptly upon the
earlier of determining that such deduction or withholding is
required or receiving notice that such amount has been
assessed against Y;
(3) promptly forward to Y an official receipt (or a
certified copy), or other documentation reasonably acceptable
to Y, evidencing such payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in
addition to the payment to which Y is otherwise entitled under
this Agreement, such additional amount as is necessary to
ensure that the net amount actually received by Y (free and
clear of Indemnifiable Taxes, whether assessed against X or Y)
will equal the full amount Y would have received had no such
deduction or withholding been required. However, X will not be
required to pay any additional amount to Y to the extent that
it would not be required to be paid but for:--
(A) the failure by Y to comply with or perform
any agreement contained in Section 4(a)(i), 4(a)(iii)
or 4(d); or
(B) the failure of a representation made by Y
pursuant to Section 3(f) to be accurate and true
unless such failure would not have occurred but for
(I) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or
after the date on which a Transaction is entered into
(regardless of whether such action is taken or
brought with respect to a party this Agreement) or
(II) a Change in Tax Law.
2
(ii) LIABILITY. If:--
(1) X is required by any applicable law, as modified by
the practice of any relevant governmental revenue authority,
to make any deduction or withholding in respect of which X
would not be required to pay an additional amount to Y under
Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed
directly against X,
then, except to the extent Y has satisfied or then satisfies the
liability resulting from such Tax, Y will promptly pay to X the amount
of such liability (including any related liability for interest, but
including any related liability for penalties only if Y has failed to
comply with or perform any agreement contained in Section 4(a)(i),
4(a)(iii) or 4(d)).
(e) DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.
(3) REPRESENTATIONS
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction entered into
and, in the case of the representations in Section 3(f), at is all times until
the termination of this Agreement) that:--
(a) BASIC REPRESENTATIONS.
(i) STATUS. It is duly organised and validly existing under the
laws of the jurisdiction of its organisation 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 authorise 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,
recorganisation, 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)).
3
(b) ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.
(c) ABSENCE OF LITIGATION. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding at
law or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.
(d) ACCURACY OF SPECIFIED INFORMATION. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
(e) PAYER TAX REPRESENTATION. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(e) is accurate and true.
(f) PAYEE TAX REPRESENTATION. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(f) is accurate and true.
4. AGREEMENTS
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:--
(a) FURNISH SPECIFIED INFORMATION. It will deliver to the other party or,
in certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:--
(i) any forms, documents or certificates relating to taxation
specified in the Schedule or any Confirmation.
(ii) any other documents specified in the Schedule or any
Confirmation; and
(iii) upon reasonable demand by such other party, any form or
document that may be required or reasonably requested in writing in
order to allow such other party or its Credit Support Provider to make
a payment under this Agreement or any applicable Credit Support
Document without any deduction or withholding for or on account of any
Tax or with such deduction or withholding at a reduced rate (so long as
the completion, execution or submission of such form or document would
not materially prejudice the legal or commercial position of the party
in receipt of such demand), with any such form or document to be
accurate and completed in a manner reasonably satisfactory to such
other party and to be executed and to be delivered with any reasonably
required certification,
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.
(b) MAINTAIN AUTHORISATIONS. It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other authority
that are required to be obtained by it with respect to this Agreement or any
Credit Support Document to which it is a party and will use all reasonable
efforts to obtain any that may become necessary in the future.
(c) COMPLY WITH LAWS. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
(d) TAX AGREEMENT. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon learning of
such failure.
(e) PAYMENT OF STAMP TAX. Subject to Section II, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated,
4
organised, managed and controlled, or considered to have its seat, or in which a
branch or office through which it is acting for the purpose of this Agreement is
located ("Stamp Tax Jurisdiction") and will indemnify the other party against
any Stamp Tax levied or imposed upon the other party or in respect of the other
party's execution or performance of this Agreement by any such Stamp Tax
Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the
other party.
5. EVENTS OF DEFAULT AND TERMINATION EVENTS
(a) EVENTS OF DEFAULT. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an "Event of Default") with respect to such party:--
(i) FAILURE TO PAY OR DELIVER. Failure by the party to make, when
due, any payment under this Agreement or delivery under Section 2(a)(i)
or 2(e) required to be made by it if such failure is not remedied on or
before the third Local Business Day after notice of such failure is
given to the party;
(ii) BREACH OF AGREEMENT. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to make
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) or to give notice of a Termination Event or any agreement or
obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied
with or performed by the party in accordance with this Agreement if
such failure is not remedied on or before the thirtieth day after
notice of such failure is given to the party;
(iii) CREDIT SUPPORT DEFAULT.
(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 (other than a
representation under Section 3(e) or (f)) made or repeated or deemed to
have been made or repeated by the party or any Credit Support Provider
of such party in this Agreement or any Credit Support Document proves
to have been incorrect or misleading in any material respect when made
or repeated or deemed to have been made or repeated;
(v) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit
Support Provider of such party or any applicable Specified Entity of
such party (1) defaults under a Specified Transaction and, after giving
effect to any applicable notice requirement or grace period, there
occurs a liquidation of, an acceleration of obligations under, or an
early termination of, that Specified Transaction, (2) defaults, after
giving effect to any applicable notice requirement or grace period, in
making any payment or delivery due on the last payment, delivery or
exchange date of, or any payment on early termination of, a Specified
Transaction (or such default continues for at least three Local
Business Days if there is no applicable notice requirement or grace
period) or (3) disaffirms, disclaims, repudiates or rejects, in whole
or in part, a Specified Transaction (or such action is taken by any
person or entity appointed or empowered to operate it or act on its
behalf);
(vi) CROSS DEFAULT. If "Cross Default" is specified in the Schedule
as applying to the party, the occurrence or existence of (1) a default,
event of default or other similar condition or event (however
5
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 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, a Tax Event if the event is specified in
(ii) below or a Tax Event Upon Merger if the event is specified in (iii) below,
and, if specified to be applicable, a Credit Event
6
Upon Merger if the event is specified pursuant to (iv) below or an Additional
Termination Event if the event is specified pursuant to (v) below:--
(i) ILLEGALITY. Due to the adoption of, or any change in, any
applicable law after the date on which a Transaction is entered into,
or due to the promulgation of, or any change in, the interpretation by
any court, tribunal or regulatory authority with competent jurisdiction
of any applicable law after such date, it becomes unlawful (other than
as a result of a breach by the party of Section 4(b)) for such party
(which will be the Affected Party):--
(1) to perform any absolute or contingent obligation to
make a payment or delivery or to receive a payment or delivery
in respect of such Transaction or to comply with any other
material provision of this Agreement relating to such
Transaction; or
(2) to perform, or for any Credit Support Provider of
such party to perform, any contingent or other obligation
which the party (or such Credit Support Provider) has under
any Credit Support Document relating to such Transaction;
(ii) TAX EVENT. Due to (x) any action taken by a taxing authority,
or brought in a court of competent jurisdiction, on or after the date
on which a Transaction is entered into (regardless of whether such
action is taken or brought with respect to a party to this Agreement)
or (y) a Change in Tax Law, the party (which will be the Affected
Party) will, or there is a substantial likelihood that it will, on the
next succeeding Scheduled Payment Date (1) be required to pay to the
other party an additional amount in respect of an Indemnifiable Tax
under Section 2(d)(i)(4) (except in respect of interest under Section
2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount
is required to be deducted or withheld for or on account of a Tax
(except in respect of interest under Section 2(e),6(d)(ii) or 6(e)) and
no additional amount is required to be paid in respect of such Tax
under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A)
or (B));
(iii) TAX EVENT UPON MERGER. The party (the "Burdened Party") on the
next succeeding Scheduled Payment Date will either (1) be required to
pay an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has
been deducted or withheld for or on account of any Indemnifiable Tax in
respect of which the other party is not required to pay an additional
amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in
either case as a result of a party consolidating or amalgamating with,
or merging with or into, or transferring all or substantially all its
assets to, another entity (which will be the Affected Party) where such
action does not constitute an event described in Section 5(a)(viii);
(iv) CREDIT EVENT UPON MERGER. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity of
X consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and
such action does not constitute an event described in Section
5(a)(viii) but the creditworthiness of the resulting, surviving or
transferee entity is materially weaker than that of X, such Credit
Support Provider or such Specified Entity, as the case may be,
immediately prior to such action (and, in such event, X or its
successor or transferee, as appropriate, will be the Affected Party);
or
(v) ADDITIONAL TERMINATION EVENT. If any "Additional Termination
Event" is specified in the Schedule or any Confirmation as applying,
the occurrence of such event (and, in such event, the Affected Party or
Affected Parties shall be as specified for such Additional Termination
Event in the Schedule or such Confirmation).
(c) EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which
would otherwise constitute or give rise to an Event of Default also constitutes
an Illegality, it will be treated as an Illegality and will not constitute an
Event of Default.
7
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) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality
under Section 5(b)(i)(l) or a Tax Event occurs and there is only one
Affected Party, or if a Tax Event Upon Merger occurs and the Burdened
party is the Affected Party, the Affected Party will, as a condition to
its right to designate an Early Termination Date under Section
6(b)(iv), use all reasonable efforts (which will not require such party
to incur a loss, excluding immaterial, incidental expenses) to transfer
within 20 days after it gives notice under Section 6(b)(i) all its
rights and obligations under this Agreement in respect of the Affected
Transactions to another of its Offices of Affiliates so that such
Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days
after the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be
subject to and conditional upon the prior written consent of the other
party, which consent will not be withheld if such other party's
policies in effect at such time would permit it to enter into
transactions with the transferee on the terms proposed.
(iii) TWO AFFECTED PARTIES. If an Illegality under Section
5(b)(i)(1) or a Tax Event occurs and there are two Affected Parties,
such party will use all reasonable efforts to reach agreement within
30 days after notice thereof is given under Section 6(b)(i) on action
to avoid that Termination Event.
(iv) RIGHT TO TERMINATE IF:--
(1) a transfer under Section 6(b)(ii) or an agreement
under Section 6(b) (iii), as the case may be has not been
effected with respect to all Affected Transactions within 30
days after an Affected Party gives notice under Section
6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a credit
Event Upon Merger or an Additional Termination Event occurs,
or a Tax Event Upon Merger occurs and the Burdened Party is
not the Affected Party.
either party in the case of an Illegality ,the Burdened Party in the
case of a Tax Event Upon Merger, any Affected Party in the case of a
Tax Event or an Additional Termination Event if there is more than one
Affected Party, or the party which is not the Affected Party in the
case of a Credit Event Upon Merger or an Additional Termination Event
if there is only one Affected Party may, be not more than 20 days
notice to the other party and provided that the relevant Termination
Event is then
8
continuing, designate a day not earlier than the day such notice is
effective as an Early Termination Date in respect of all Affected
Transactions.
(c) EFFECT OF DESIGNATION.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the date
so designated, whether or not the relevant Event of Default or
Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(e) in respect of the Terminated Transactions will be
required to be made, but without prejudice to the other provisions of
this Agreement. The amount, if any, payable in respect of an Early
Termination Date shall be determined pursuant to Section 6(e).
(d) CALCULATIONS.
(i) STATEMENT. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and will
provide to the other party a statement (1) showing, in reasonable
detail, such calculations (including all relevant quotations and
specifying any amount payable under Section 6(e)) and (2) giving
details of the relevant account to which any amount payable to it is to
be paid. In the absence of written confirmation from the source of a
quotation obtained in determining a Market Quotation, the records of
the party obtaining such quotation will be conclusive evidence of the
existence and accuracy of such quotation.
(ii) PAYMENT DATE. An amount calculated as being due in respect of any
Early Termination Date under Section 6(e) will be payable on the day
that notice of the amount payable is effective (in the case of an Early
Termination Date which is designated or occurs as a result of an Event
of Default) and on the day which is two Local Business Days after the
day on which notice of the amount payable is effective (in the case of
an Early Termination Date which is designated as a result of a
Termination Event). Such amount will be paid together with (to the
extent permitted under applicable law) interest thereon (before as well
as after judgment) in the Termination Currency, from (and including)
the relevant Early Termination Date to (but excluding) the date such
amount is paid, at the Applicable Rate. Such interest will be
calculated on the basis of daily compounding and the actual number of
days elapsed.
(e) PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.
(i) EVENTS OF DEFAULT. If the Early Termination Date results from an
Event of Default:--
(1) First Method and Market Quotation. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the
Non-defaulting Party the excess, if a positive number, of (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the
Termination Currency Equivalent of the Unpaid Amounts owing to the
Non-defaulting Party over (B) the Termination Currency Equivalent
of the Unpaid Amounts owing to the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply, the
Defaulting Party will pay to the Non-defaulting Party, if a
positive number, the Non-defaulting Party's Loss in respect of this
Agreement.
(3) Second Method and Market Quotation. If the Second Method and
Market Quotation apply, an amount will be payable equal to (A) the
sum of the Settlement Amount (determined by the
9
Non-defaulting Party) in respect of the Terminated Transactions and the
Termination Currency Equivalent of the Unpaid Amounts owing to the
Non-defaulting Party less (B) the Termination Currency Equivalent of the
Unpaid Amounts owing to the Defaulting Party. If that amount is a positive
number, the Defaulting Party will pay it to the Non-defaulting Party; if it
is a negative number, the Non-defaulting Party will pay the absolute value
of that amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss apply, an amount
will be payable equal to the Non-defaulting Party's Loss in respect of this
Agreement. If that amount is a positive number, the Defaulting Party will
pay it to the Non-defaulting Party; if it is a negative number, the
Non-defaulting Party will pay the absolute value of that amount to the
Defaulting, Party.
(ii) TERMINATION EVENTS. If the Early Termination Date results from a
Termination Event:--
(1) One Affected Party. If there is one Affected Party, the amount payable
will be determined in accordance with Section 6(e)(i)(3), if Market
Quotation applies, or Section 6(e)(i)(4), if Loss applies, except that, in
either case, references to the Defaulting Party and to the Non-defaulting
Party will be deemed to be references to the Affected Party and the party
which is not the Affected Party, respectively, and, if Loss applies and
fewer than all the Transactions are being terminated, Loss shall be
calculated in respect of all Terminated Transactions.
(2) Two Affected Parties. If there are two Affected Parties:--
(A) if Market Quotation applies, each party will determine a
Settlement Amount in respect of the Terminated Transactions, and an
amount will be payable equal to (I) the sum of (a) one-half of the
difference between the Settlement Amount of the party with the higher
Settlement Amount ("X") and the Settlement Amount of the party with
the lower Settlement Amount ("Y") and (b) the Termination Currency
Equivalent of the Unpaid Amounts owing to X less (II) the Termination
Currency Equivalent of the Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its Loss in respect of
this Agreement (or, if fewer than all the Transactions are being
terminated, in respect of all Terminated Transactions) and an amount
will be payable equal to one-half of the difference between the Loss
of the party with the higher Loss ("X") and the Loss of the party with
the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X; if it is a
negative number, X will pay the absolute value of that amount to Y.
(iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early Termination
Date occurs because "Automatic Early Termination" applies in respect of a party,
the amount determined under this Section 6(e) will be subject to such
adjustments as are appropriate and permitted by law to reflect any payments or
deliveries made by one party to the other under this Agreement (and retained by
such other party) during the period from the relevant Early Termination Date to
the date for payment determined under Section 6(d)(ii).
(iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies an amount
recoverable under this Section 6(e) is a reasonable pre-estimate of loss and not
a penalty. Such amount is payable for the loss of bargain and the loss of
protection against future risks and except as otherwise provided in this
Agreement neither party will be entitled to recover any additional damages as a
consequence of such losses.
10
7. TRANSFER
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that:--
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be void.
8. CONTRACTUAL CURRENCY
(a) PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement
will be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable law,
any obligation to make payments under this Agreement in the Contractual Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual Currency, except to the extent such tender results in the actual
receipt by the party to which payment is owed, acting in a reasonable manner and
in good faith in converting the currency so tendered into the Contractual
Currency, of the full amount in the Contractual Currency of all amounts payable
in respect of this Agreement. If for any reason the amount in the Contractual
Currency so received falls short of the amount in the Contractual Currency
payable in respect of this Agreement, the party required to make the payment
will, to the extent permitted by applicable law, immediately pay such additional
amount in the Contractual Currency as may be necessary to compensate for the
shortfall. If for any reason the amount in the Contractual Currency so received
exceeds the amount in the Contractual Currency payable in respect of this
Agreement, the party receiving the payment will refund promptly the amount of
such excess.
(b) JUDGMENTS. To the extent permitted by applicable law, if any judgment
or order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange payable in connection with the purchase of or conversion into the
Contractual Currency.
(c) SEPARATE INDEMNITIES. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed and will not be affected by judgment being obtained
or claim or proof being made for any other sums payable in respect of this
Agreement.
(d) EVIDENCE OF LOSS. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss had an
actual exchange or purchase been made.
11
9. MISCELLANEOUS
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) AMENDMENTS. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.
(c) SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive
the termination of any Transaction.
(d) REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) COUNTERPARTS AND CONFIRMATIONS.
(i) This Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts (including
by facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that the 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.
(g) HEADINGS. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. OFFICES; MULTIBRANCH PARTIES
(a) If Section 10(a) is specified in the Schedule as applying, each party
that enters into a Transaction through an Office other than its head or home
office represents to the other party that, notwithstanding the place of booking
office or jurisdiction of incorporation or organisation of such party, the
obligations of such party are the same as if it had entered into the Transaction
through its head or home office. This representation will be deemed to be
repeated by such party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.
11. EXPENSES
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document
12
to which the Defaulting Party is a party or by reason of the early termination
of any Transaction, including, but not limited to, costs of collection.
12. NOTICES
(a) EFFECTIVENESS. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--
(i) if in writing and delivered in person or by courier, on the
date it is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that
transmission is received by a responsible employee of the recipient in
legible form (it being agreed that the burden of proving receipt will
be on the sender and will not be met by a transmission report generated
by the sender's facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas)
or the equivalent (return receipt requested), on the date that mail is
delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that
electronic message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) CHANGE OF ADDRESSES. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
13. GOVERNING LAW AND JURISDICTION
(a) GOVERNING LAW. This Agreement 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 any time to the
laying of venue of any Proceedings brought in any such court, waives
any claim that such Proceedings have been brought in an inconvenient
forum and further waives the right to object, with respect to such
Proceedings, that such court does not 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 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent
(if any) specified opposite its name in the Schedule to receive, for it and on
its behalf, service of process in any Proceedings. If for any
13
reason any party's Process Agent is unable to act as such, such party will
promptly notify the other party and within 30 days appoint a substitute process
agent acceptable to the other party. The parties irrevocably consent to service
of process given in the manner provided for notices in Section 12. Nothing in
this Agreement will affect the right of either party to serve process in any
other manner permitted by law.
(d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues and
assets (irrespective of their use or intended use), all immunity on the grounds
of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
14. DEFINITIONS
As used in this Agreement:--
"ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b).
"AFFECTED PARTY" has the meaning specified in Section 5(b).
"AFFECTED TRANSACTIONS" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transaction.
"AFFILIATE" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"APPLICABLE RATE" means:--
(a) in respect of obligations payable or deliverable (or which would have
been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of
either party from and after the date (determined in accordance with Section
6(d)(ii)) on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which
would have been but for Section 2(a)(iii)) by a Non-defaulting party, the
Non-default Rate; and
(d) in all other cases, the Termination Rate.
"BURDENED PARTY" has the meaning specified in Section 5(b).
"CHANGE IN TAX LAW" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs on or after the date on which the
relevant Transaction is entered into.
"CONSENT" includes a consent, approval, action, authorisation, 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.
14
"DEFAULTING PARTY" has the meaning specified in Section 6(a).
"EARLY TERMINATION DATE" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.
"ILLEGALITY" has the meaning specified in Section 5(b).
"INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation authority imposing such
Tax and the recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such jurisdiction,
or being or having been organised, present or engaged in a trade or business in
such jurisdiction, or having or having had a permanent establishment or fixed
place of business in such jurisdiction, but excluding a connection arising
solely from such recipient or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this
Agreement or a Credit Support Document).
"LAW" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority) and
"lawful" and "unlawful" will be construed accordingly.
"LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
with respect to such Specified Transaction.
"LOSS" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case expressed as a negative number)
in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain resulting from
any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each
applicable condition precedent) on or before the relevant Early Termination Date
and not made, except, so as to avoid duplication, if Section 6(e)(i)(l) or (3)
or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and
out-of-pocket expenses referred to under Section 11. A party will determine
its Loss as of the relevant Early Termination Date, or, if that is not
reasonably practicable, as of the earliest date thereafter as is reasonably
practicable. A party may (but need not) determine its Loss by reference to
quotations of relevant rates or prices from one or more leading dealers in the
relevant markets.
"MARKET QUOTATION" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether 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
15
been required after that date. For this purpose, Unpaid Amounts in respect of
the Terminated Transaction or group of Terminated Transactions are to be
excluded but, without limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required (assuming satisfaction
of each applicable condition precedent) after that Early Termination Date is to
be included. The Replacement Transaction would be subject to such documentation
as such party and the Reference Market-maker may, in good faith, agree. The
party making the determination (or its agent) will request each Reference
Market-maker to provide its quotation to the extent reasonably practicable as of
the same day and time (without regard to different time zones) on or as soon as
reasonably practicable after the relevant Early Termination Date. The day and
time as of which those quotations are to be obtained will be selected in good
faith by the party obliged to make a determination under Section 6(e), and, if
each party is so obliged, after consultation with the other. If more than three
quotations are provided, the Market Quotation will be the arithmetic mean of the
quotations, without regard to the quotations having the highest and lowest
values. If exactly three such quotations are provided, the Market Quotation will
be the quotation remaining after disregarding the highest and lowest quotations.
For this purpose, if more than one quotation has the same highest value or
lowest value, then one of such quotations shall be disregarded. If fewer than
three quotations are provided, it will be deemed that the Market Quotation in
respect of such Terminated Transaction or group of Terminated Transactions
cannot be determined.
"NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.
"NON-DEFAULTING PARTY" has the meaning specified in Section 6(a).
"OFFICE" means a branch or office of a party, which may be such party's head or
home office.
"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.
"REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.
"RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organised, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, from or through which such payment
is made.
"SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"SET-OFF" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
"SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination
Date, the sum of:--
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference
to any Unpaid Amounts) for each Terminated Transaction or group of terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"SPECIFIED ENTITY" has the meaning specified in the Schedule.
16
"SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.
"SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.
"STAMP TAX" means any stamp, registration, documentation or similar tax.
"TAX" means any present or future tax levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto that is
imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax.
"TAX EVENT" has the meaning specified in Section 5(b).
"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).
"TERMINATED TRANSACTIONS" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"TERMINATION CURRENCY" has the meaning specified in the Schedule.
"TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case, may be), is determined as of
a later date that later date, with the Termination Currency at the rate equal to
the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a rate
for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.
"TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.
"TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"UNPAID AMOUNTS" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii)) required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market
17
value of that which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with to the extent
permitted under applicable law) interest, in the currency of such amounts, from
(and including) the date such amounts or obligations were or would have been
required to have been paid or performed to (but excluding) such Early
Termination Date, at the Applicable Rate. Such amounts of interest will be
calculated on the basis of daily compounding and the actual number of days
elapsed. The fair market value of any obligation referred to in clause (b) above
shall be reasonably determined by the party obliged to make the determination
under Section 6(e) or, if each party is so obliged, it shall be the average of
the Termination Currency Equivalents of the fair market values reasonably
determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
BNP PARIBAS SECURITIES CORP.
ON BEHALF OF BNP PARIBAS GRANITE CONSTRUCTION INCORPORATED
- -------------------------------- ---------------------------------
(Name of Party) (Name of Party)
By : /s/ Christine Smith Howard By : /s/ WILLIAM E. BARTON,
---------------------------- ------------------------------
Name: Christine Smith Howard Name: WILLIAM E. BARTON,
Title: Authorized Signatory Title: SR. VICE PRESIDENT
Date: February 18, 2003 Date:
By : /s/ Mindy Sperling By : /s/ R.C. ALLBRITTON,
---------------------------- -----------------------------
Name: Mindy Sperling R.C. ALLBRITTON, VICE PRESIDENT
Title: Authorized Signatory
Date: February 18, 2003
18
EXECUTION COPY
SCHEDULE
TO THE
MASTER AGREEMENT
DATED AS OF FEBRUARY 10, 2003
BETWEEN
BNP PARIBAS ("PARTY A ")
AND
GRANITE CONSTRUCTION INCORPORATED ("PARTY B")
PART 1
TERMINATION PROVISIONS
(a) "SPECIFIED ENTITY " means in relation to Party A and Party B for the
purpose of:-
Section 5(a) None
Section 5(a)(v), None
Section 5(a)(vi), None
Section 5(a)(vii), None
Section 5(b) None
Section 5(b)(iv), None
(b) "SPECIFIED TRANSACTION" will have the meaning specified in Section 14
of this Agreement.
(c) The "CROSS DEFAULT" provisions of Section 5(a)(vi) will apply to Party
A and will apply to Party B.
If such provisions apply:-
"SPECIFIED INDEBTEDNESS" will have the meaning specified in Section 14
of this Agreement but will exclude deposits received by a party in the
ordinary course of its banking business.
"THRESHOLD AMOUNT" means USD 10,000,000 (or the equivalent thereof in
any other currency or currencies) with respect to Party A and Party B.
(d) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv) will
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 and will not apply to Party B.
(f) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e) of this
Agreement:-
(i) Loss will apply.
(ii) The Second Method, incorporating the set-off provisions set
out in paragraph (a) of Part 5 hereof, will apply.
19
EXECUTION COPY
(g) "TERMINATION CURRENCY" means United States Dollars.
(h) "ADDITIONAL TERMINATION EVENT" will apply.
The following shall constitute an Additional Termination Event:-
If at any time Party A ceases to be a Lender under the Credit Agreement
dated as of June 29, 2001 among Party B, as the Borrower, Bank of
America, N.A., as Administrative Agent, as a Lender, and as L/C Issuer
and the other Lenders party thereto, as such agreement may from time to
time be restated, amended or otherwise modified or any substitute or
replacement agreement with respect thereto (the "Credit Agreement").
Capitalized terms used herein and not defined shall have the meaning
assigned to such term in the Credit Agreement.
For the purpose of the foregoing Termination Event, the Affected Party
or Affected Parties shall be:-
Party B
PART 2
TAX REPRESENTATIONS
(a) PAYER REPRESENTATIONS. For the purpose of Section 3(e) of this
Agreement, Party A will make the following representation and Party B
will make the following representation:-
It is not required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account of
any Tax from any payment (other than interest under Section 2(e),
6(d)(ii) or 6(e) of this Agreement) to be made by it to the other party
under this Agreement. In making his representation, it may rely on:-
(i) the accuracy of any representations made by the other party
pursuant to Section 3(f) of this Agreement;
(ii) the satisfaction of the agreement contained in Section 4(a)(i)
or 4(a)(iii) of this Agreement and the accuracy and
effectiveness of any document provided by the other party
pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement;
and
(iii) the satisfaction of the agreement of the other party contained
in Section 4(d) of this Agreement,
provided that it shall not be a breach of this representation where
reliance is placed on clause (ii) and the other party does not deliver
a form or document under Section 4(a)(iii) by reason of material
prejudice to its legal or commercial position.
(b) PAYEE TAX REPRESENTATIONS. For the purpose of Section 3(f) of this
Agreement, Party A and Party B will not make any representations.
PART 3
AGREEMENT TO DELIVER DOCUMENTS
For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party
agrees to deliver the following documents, as applicable:-
(a) Tax forms, documents or certificates to be delivered are: None
20
EXECUTION COPY
(B) OTHER DOCUMENTS TO BE DELIVERED ARE:
DATE BY WHICH COVERED BY
PARTY REQUIRED TO TO BE SECTION 3(D)
DELIVER DOCUMENT FORM/DOCUMENT/CERTIFICATE DELIVERED REPRESENTATION
Party A such proof as Party B may reasonably on signing Yes
request of the names, true signatures and
authority of persons signing this
Agreement or its behalf and any other
document referred to herein to which it is a
party
Party B Certified copies of all corporate on signing Yes
authorizations and any other documents
with respect to the execution, delivery and
performance of this Agreement; together
with a certificate of authority and
specimen signatures of the persons
executing this Agreement;
Party B A copy of its most recently available promptly after a Yes
annual report containing audited financial request by Party
statements for its most recently ended A
fiscal year certified by its independent
public accountants as fairly presenting its
financial condition and results of
operations for and as at the close of such
fiscal year;
Party B A copy of its most recently available promptly after a
unaudited financial statements for its most request by
recently ended fiscal quarter certified by Party A
its chief financial officer as fairly
presenting its financial condition and
results of operations for and as at the close
of such quarter;
Party B Each regular financial and/or business promptly after a Yes
reporting document that is distributed or is request by
generally available to its partners, Party A
shareholders, creditors or investors or is
filed with any regulatory authorities and is
publicly available or relates to its financial
condition;
Party B Such other information respecting Party promptly after Yes
B's condition or operations, financial or a request by
otherwise, as Party A may reasonably Party A
request from time to time; and
Party B Opinion of general counsel for Party B in upon execution Yes
the form of Exhibit I and delivery of
this Agreement
21
EXECUTION COPY
PART 4
MISCELLANEOUS
(a) ADDRESSES FOR NOTICES. For the purpose of Section 12(a) of this
Agreement:-
Address for notices or communications to Party A:-
Address: BNP Paribas, 20 Boulevard des Italiens, 75009 Paris, France
Attention: BFI/BOLTIT
Telex No. 282919 Answerback: BNP 282919F
copy to: BNP Paribas, 10 Harewood Avenue, London NWI 6AA, England
Attention: Legal and Transaction Management Group
Telex No: 296723 Answerback: PARCAP
Electronic Messaging System Details: BPCMGB2X
(For all purposes)
Address for notices or communications to Party B:-
Address: Granite Construction Incorporated, P.O. Box 50085 Watsonville,
CA 95077-5085
Attention: Jigisha Desai, Director of Corporate Treasury
Telex No: 831-761-4784
Jigisha.Desai@goinc.com
copy to: Granite Construction Incorporated, P.O. Box 50085 Watsonville,
CA 95077-5085
Attention: R. C. Allbritton, Vice President & Treasurer
Telex No. 831-761-4772
R.C.Allbritton@goinc.com
Electronic Messaging System Details:
(For all purposes)
(b) "PROCESS AGENT". For the purpose of Section 13(c) of this Agreement:-
Party A appoints as its Process Agent:
its New York Branch at 787 Seventh Avenue, New York, New York 10019.
Party B appoints as its Process Agent:
Michael FutchGranite Construction Incorporated
P.O. Box 50085
Watsonville, CA 95077-5085
(c) OFFICES. The provisions of Section 10(a) will apply to this Agreement.
22
EXECUTION COPY
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c)of this Agreement:-
Party A is a Multibranch Party and may act through the following
Offices:-
BNP Paribas Head Office Its New York Branch at Its other United States
20, Boulevard des Italiens The Equitable Tower Branches
75009 Paris 31st Floor
France 787 Seventh Avenue
New York, NY 10019
USA
Its Tokyo Branch at Its London Branch at Its Hong Kong Branch at 11th
Sankei Building 18F 10 Harewood Avenue Floor
1-7-2, Otemachi, London NW16AA Central Tower
Chiyoda-ku England 28 Queen's Road Central
Tokyo 100-0004 Hong Kong
Japan
Its Singapore Branch Its Dublin Branch Its Sydney Branch
Tung Centre 5 George's Dock 12 Castlereagh Street
20 Collyer Quay IFSC Sydney NSW 2001
Singapore 0104 Dublin I Australia
Ireland
Its Grand Caymon Branch
Party B is not a Multibranch Party.
(e) CALCULATION AGENT. The Calculation Agent is Party A, unless otherwise
specified in a Confirmation in relation to the relevant Transaction.
The Calculation Agent's calculation and determinations shall be
conclusive and binding in the absence of manifest error. The failure by
Party A to perform its obligations as Calculation Agent hereunder shall
not be construed as an Event of Default or Termination Event.
(f) CREDIT SUPPORT DOCUMENT. With respect to Party A: Not Applicable.
With respect to Party B:
(i) The Credit Agreement, the Guaranty, and any other material
document in which Party A is a beneficiary of or may become a
beneficiary of at any time after the date hereof which
expressly provides that it guarantees or secures the material
obligations of Party B under this Agreement.
(g) CREDIT SUPPORT PROVIDER. With respect to Party A: Not Applicable.
With respect to Party B:
All pledgors and guarantors, or other persons or parties
providing collateral or security, however such term may be
defined in the Credit Agreement, the Guaranty, or any other
Credit Support Document, including without limitation any
guarantors thereto.
(h) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of New York without reference to
choice of law doctrine.
(i) NETTING OF PAYMENTS. Subparagraph (ii) of Section 2(c) of this
Agreement will apply unless otherwise stated in any Confirmation.
23
EXECUTION COPY
(j) AFFILIATE" will have the meaning specified in Section 14 of this
Agreement.
PART 5
OTHER PROVISIONS
(a) SET-OFF. Section 6 of this Agreement shall be amended by the insertion
of the following additional provision:
"(f) Set-off. Any amount (the "Early Termination Amount") payable to
one party (the "Payee") by the other party (the "Payer") under Section
6(e), in circumstances where there is a Defaulting Party or one
Affected Party where a Termination Event under Section 5(b)(iv) has
occurred, will, at the option of the party ("X") other than the
Defaulting Party or the Affected Party (and without prior notice to the
Defaulting Party or the Affected Party),be reduced by its Set-off
against any amount(s) (the "Other Agreement Amount") payable (whether
at such time or in the future or upon the occurrence of a contingency)
by the Payee to the Payer (irrespective of the currency, place of
payment or booking office of the obligation) under any other
agreement(s) between the Payee and the Payer or instrument(s) or
undertaking(s) issued or executed by one party to, or in favor of, the
other party (the "Other Agreement") (and the Other Agreement Amount
will be discharged pro tanto). X will give notice to the other party of
any set-off so effected.
For this purpose, either the Early Termination Amount or the Other
Agreement Amount (or the relevant part of such amounts) may be
converted at the applicable prevailing exchange rate into the currency
in which the other is denominated.
If an obligation is unascertained, X may in good faith estimate that
obligation and set-off in respect of the estimate, subject to the
relevant party accounting to the other when the obligation is
ascertained.
Nothing in this Section 6(f) shall be effective to create a charge or
other security interest. This Section shall be without prejudice and in
addition to any right of set-off, combination of accounts, lien or
other right to which any party is at any time otherwise entitled
(whether by operation of law, contract or otherwise).
(b) ISDA DEFINITIONS. The definitions and provisions contained in the 2000
ISDA Definitions, the 1999 ISDA Credit Derivatives Definitions, , each
as published by the International Swaps and Derivatives Association,
Inc. (collectively, the "Definitions", as such Definitions may be
further amended) are incorporated into any Confirmation which
supplements and forms part of this Agreement, and all capitalized terms
used in a Confirmation shall have the meaning set forth in the
Definitions, unless otherwise defined in a Confirmation. In the event
of any conflict between the provisions of this Agreement and the
provisions of the Definitions, the provisions of the Agreement shall
apply and in the event of any conflict between the provisions of this
Agreement and a Confirmation, the provisions of the Confirmation shall
apply.
(c) CONFIRMATIONS. A new Section l(d) is hereby added to the Agreement as
follows
(d) CONFIRMATIONS. Any transaction entered into by the parties, whether
or not prior to the date hereof, which would otherwise constitute a
"Specified Transaction" under this Agreement [excluding Repo
Transactions] shall be deemed to be a Transaction for the purposes of
this Agreement, even where not so specified in the documentation for
such transaction. Any document or other writing (including telexes,
faxes and electronic messages) evidencing the terms of such a
Transaction shall, unless otherwise specified in such writing, be
deemed to be a Confirmation for the purposes of this Agreement and,
unless otherwise agreed by the parties, each such Confirmation shall
supplement, form a part of, and be subject to this Agreement and all
provisions in the Agreement will govern the Confirmation except as
modified therein."
(d) REPRESENTATIONS. Each party will be deemed represent to the other party
on the date on which it enters into a Transaction that (absent a
written agreement between the parties that expressly imposes
affirmative obligations to the contrary for that Transaction:
24
EXECUTION COPY
(i) NON-RELIANCE. It is acting for its own account and it has made its
own independent decisions to enter into that Transaction and as to
whether that Transaction is appropriate or proper for it based upon its
own judgment and upon advice from such advisers as it has deemed
necessary. It is not relying on any communication (written or oral) of
the other party as investment advice or as a recommendation to enter
into that Transaction; it being understood that information and
explanations related to the terms and conditions of a Transaction shall
not be considered investment advice or a recommendation to enter into
that Transaction. It has not received from the other party any
assurance or guarantee as to the expected results of the Transaction.
(ii) EVALUATIONS AND UNDERSTANDING. It is capable of evaluating and
understanding (on its own behalf or through professional advice), and
understands and accepts, the terms, conditions and risks of that
Transaction. It is also capable of assuming, and assumes, the financial
and other risks of that Transaction.
(iii) STATUS OF PARTIES. The other party is not acting as a fiduciary
or an adviser for it in respect of that Transaction.
(iv) ACTING AS PRINCIPAL. It is acting as principal and not as agent or
in any other capacity, fiduciary or otherwise.
(v) BENEFICIAL OWNER. With respect to any physically settled
Transactions, it shall at the time of delivery be the legal and
beneficial owner free of liens and other encumbrances of any securities
or commodities it delivers to the other party.
(vi) ELIGIBLE CONTRACT PARTICIPANT. It is an "eligible contract
participant" within the meaning of the Commodity Exchange Act".
(e) ADDITIONAL PARTY B REPRESENTATIONS. Party B will be deemed to represent
to the other party on the date hereof and each date on which it enters
into a Transaction that this Agreement is a Swap Contract (as defined
in the Credit Agreement), and this Agreement and any Transaction ranks
pari passu with Party B's obligations under all senior secured credit
facilities.
(f) DEFAULT INTEREST. Section 2(e) of this Agreement is hereby amended by
the deletion of the final sentence and the subsitution of the following
thereof;
"If, prior to the occurrence or effective designation of an Early
Termination Date, a party defaults in the performance of any obligation
required to be settled by delivery, it will indemnify the other party
on demand for any costs, losses or expenses (including the costs of
borrowing the shares or other equity securities, bonds or other debt
securities or other instrument or commodity as the case may be, if
applicable) resulting from such default. A certificate signed by the
deliveree setting out such costs, losses or expenses in reasonable
detail will be conclusive evidence that they have been incurred."
(g) DEFAULT CAUSED BY ILLEGALITY. An Event of Default pursuant to Section
5(a)(vi) shall not be deemed to have occurred if it is caused by an
event that would constitute an Illegality if it occurred in connection
with this Agreement.
(h) EVENTS OF DEFAULT. Section 5 (a) of the Agreement is amended by
inserting the following at the end of subsection (vii) (3) thereof:
"or a notice is sent convening a meeting to propose a voluntary
arrangement of its creditors"
(i) EXPENSES. Section 11 of the Agreement is amended by inserting the word
"reasonable" between the words "including" and "legal" in the second
line thereof.
(j) NOTICES. Section 12(a) of the Agreement is amended by (i) removing the
words "or its delivery is attempted" in the thirteenth line; (ii)
removing the words "(or attempted delivery)" in the fifteenth line; and
(iii) removing the words "(or attempted)" in the sixteenth line.
25
(k) WAIVER OF JURY TRIAL. Each party waives to the fullest extent permitted
by applicable law any right it may have to have a trial by jury in
respect of any Proceedings and acknowledges that it and the other party
have been induced to enter into this Agreement (and provide for any
Credit Support Document, as applicable) by, among other things, the
mutual waivers in this Section.
(l) NOTIFICATION OF THE RECORDING OF TELEPHONE CONVERSATIONS. Each Party
(i) consents to the recording of telephone conversations of trading and
marketing personnel of the parties in connection with this Agreement
and any Transactions hereunder and to the submission of such recordings
in evidence in any Proceedings and (ii) agrees to obtain any necessary
consent of, and give notice of such recording to, such personnel.
IN WITNESS WHEREOF the parties have executed this Schedule to the Agreement with
effect from the date specified on the first page of this document.
BNP PARIBAS SECURITIES CORP. GRANITE CONSTRUCTION INCORPORATED
ON BEHALF OF BNP PARIBAS
By: /s/ Christine Smith Howard By: /s/ William E. Barton
-------------------------- ----------------------
Name: Christine Smith Howard Name: WILLIAM E. BARTON
Title: Authorized Signatory Title: SR. VICE PRESIDENT
By: /s/ Mindy Sperling By: /s/ R.C. Allbritton
--------------------------- -----------------------
Name: Mindy Sperling Name: R.C. ALLBRITTON
Title: Authorized Signatory Title: VICE PRESIDENT
26
OPINION OF COUNSEL FOR THE COUNTERPARTY
____________, 2003
BNP Paribas
20 Boulevard des Italiens
75009 Paris
France
Dear Sirs
I have acted as counsel for Granite Construction Incorporated (the
"Counterparty") in connection with the ISDA Master Agreement (the "Agreement")
dated as of February 10, 2003 between the Counterparty and BNP Paribas ("BNP
Paribas"), pursuant to which this opinion is furnished.
I have examined originals or copies, certified or otherwise identified to my
satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for purposes of this
opinion.
I express no opinion as to any laws other than the laws and regulations
of________________as currently in effect. In addition, I have assumed that the
Agreement has been, and any Confirmation exchanged between the parties
confirming the Transaction which supplements and is subject to the Agreement (a
"Confirmation") will be, duly authorized, executed and delivered (or, in the
case of a Confirmation, entered into, as provided for therein) by BNP Paribas
[and that the Agreement constitutes, and when confirmed, as provided for
therein, any Confirmation will constitute, a valid and binding obligation under
the laws of the State of New York.
Upon the basis of the foregoing, I am of the opinion that:
1. The Counterparty is a _________duly incorporated, validly existing and
in good standing under the laws of ________________ and has full power
and authority to execute, deliver and perform the Agreement and to
confirm, as provided for therein, and perform any Confirmation.
2. The execution, delivery and performance by the Counterparty of the
Agreement and the entering into, as provided for therein, and
performance of any Confirmation have been duly authorized by all
necessary corporate action, require no action by or in respect of, or
filing with, any governmental body, agency or official and do not
contravene, or constitute a default under, any provision of applicable
law or regulation or of the certificate of incorporation or by-laws of
the Counterparty or of any agreement, judgement, injunction, order,
decree or other instrument binding upon the Counterparty.
3. The Agreement constitutes and, when confirmed, as provided for therein,
any Confirmation, together with the Agreement, will constitute, a valid
and binding obligation of the Counterparty enforceable in accordance
with its terms except as enforcement may be limited by the provisions
of any applicable bankruptcy, liquidation, insolvency and
reorganization or other laws, relating to or affecting, generally the
enforcement of creditor's rights.
4. No authorization, approvals or consents are required under the laws of
_________ to permit the purchase by the Counterparty of any currency
which may be needed to make payment pursuant to the Agreement.
5. The submission to the non exclusive jurisdiction of the State and
Federal courts in New York City for all purposes in connection with,
and the consent to service of process in, the Agreement are valid and
binding upon the Counterparty and not subject to revocation. There are
no provisions in the Agreement which are repugnant to the public
thereof. If any final and conclusive judgement of a State or Federal
court sitting in New York City
27
is rendered against the Counterparty in connection with any action
arising out of or relating to the Agreement, such judgement would be
recognized and enforced by the courts of ______________ without any
re-trial or re-examination of the merits of action; provided that the
______________ court in which enforcement is sought determines that:
[brief description of the grounds under which such judgement would be
recognized without a re-examination of the merits]
Very truly yours,
28
CERTIFICATE OF AUTHORITY
I, Dominique Hoenn, Chief Operating Officer of BNP PARIBAS, hereby confirm that
BNP PARIBAS has consented to and has delegated authority to BNP PARIBAS
SECURITIES Corporation,
New York to:
(i) arrange on behalf of and in the name of BNP PARIBAS (A) any transaction
or agreement which is a rate swap transaction, swap option, basis swap,
forward rate transaction, commodity swap, commodity option, equity or
equity index swap, equity or equity index option, bond option, interest
rates option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option, credit
protection transaction, credit swap, credit default swap, credit
default option, total return swap, credit spread transaction,
repurchase transaction, reverse repurchase transaction, buy-sell back
transaction or securities lending transaction or any transaction
similar to the foregoing (including any option with respect to any of
these transactions or any combination of such transactions or
agreements) including any margin or collateral provisions related
thereto or (B) the purchase and/or sale of any securities (including
but not limited to government securities), bank debt (including but not
limited to floating rate par/near par and distressed bank debt),
participations in and options on the foregoing, and any other items as
may be related to the foregoing as may be approved by BNP PARIBAS from
time to time: (all of the foregoing in (A) or (B) referred to as a
transaction) and
(ii) execute in connection with such authority any confirmation or agreement
or documentation evidencing any such transaction specified above or
margin or collateral arrangement or any agreement to which such
transaction or margin or collateral arrangement is subject and to take
any other action or execute any other instrument or paper necessary or
proper in relation thereto.
Any transaction undertaken or agreement executed by BNP PARIBAS SECURITIES
Corporation on behalf of BNP PARIBAS in respect of the foregoing prior to or
subsequent to the date hereof is hereby ratified.
By /s/ Dominique Hoenn
-------------------
Dominique Hoenn
Dated the 22nd day of January 2001.
PARIBAS CORPORATION
I, David L. Brummer, President of Paribas Corporation (the
"Corporation"), pursuant to Resolutions duly adopted by the Board of Directors
of the Corporation on February 25, 2000, hereby appoint and authorize the
employees of the Corporation whose names are listed below to prepare, negotiate,
execute and deliver any contract or agreement (including any margin or
collateral provisions related thereto) necessary, advisable or convenient in
connection with the business for the Corporation's account in (A) currencies,
securities, and financial instruments and contracts of every type, (B) credit
default swaps or credit default options and other credit derivative
transactions, total return swaps, rate swaps, basis swaps, forward rate
agreements, commodity swaps or commodity options, equity or equity index swaps,
equity or equity index options, bond options, interest rate options, foreign
exchange, caps, floors, collars, cross-currency rate swaps, currency swaps or
currency option transactions and any combination of these transactions or
contracts of every type, (C) forward contracts of every type and (D) repurchase
agreements, reverse repurchase agreements, and buy/sell back agreements of every
type. The foregoing appointment and authorization shall include the authority of
such persons to exercise the foregoing powers on behalf of BNP Paribas with
respect to its business pursuant to the authority granted to the Corporation by
BNP Paribas.
Authorized Employees
Douglas Cook
James Lettiere
John Powers
Mindy Sperling
Christine M. Smith
The appointments and authorizations granted hereunder supersede all
appointments and authorizations previously granted by the President of Paribas
Corporation with respect to the foregoing.
IN WITNESS WHEREOF, I have hereunto set my hand this 25th day of
August, 2000.
/s/ David L. Brummer
- --------------------
David L. Brummer
President
[PARIBAS CORPORATION LOGO]
/s/ Christine M. Smith
----------------------
Christine M. Smith
787 Seventh Avenue, New York, NY 10019
[PARIBAS CORPORATION LOGO]
/s/ Mindy Sperling
-------------------
Mindy Sperling
787 Seventh Avenue, New York, NY 10019
[GRANITE CONSTRUCTION INCORPORATED LOGO]
OPINION OF COUNSEL FOR THE COUNTERPARTY
February 11, 2003
BNP Paribas
20 Boulevard des Italiens
75009 Paris
France
Dear Sirs
I have acted as counsel for Granite Construction Incorporate (the
"Counterparty") in connection with the ISDA Master Agreement (the "Agreement")
dated as of February 10, 2003 between the Counterparty and BNP Paribas ("BNP
Paribas"), pursuant to which this opinion is furnished.
I have examined originals or copies, certified or otherwise identified to my
satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for purposes of this
opinion.
I express no opinion as to any laws other than the laws and regulations of
California, the Delaware General Corporation Law and the federal laws of the
United States of America as currently in effect. In addition, I have assumed
that the Agreement has been, and any Confirmation exchanged between the parties
confirming the Transaction which supplements and is subject to the Agreement (a
"Confirmation") will be, duly authorized, executed and delivered (or, in the
case of a Confirmation, entered into, as provided for therein) by BNP Paribas
and that the Agreement constitutes, and when confirmed, as provided for therein,
any Confirmation will constitute, a valid and binding obligation under the laws
of the state of New York.
Upon the basis of the foregoing, I am of the opinion that:
1. The Counterparty is a corporation duly incorporated, validly existing
and in good standing under the laws of Delaware and has full power and
authority to execute, deliver and perform the Agreement and to confirm,
as provided for therein, and perform any Confirmation.
Box 50085
Watsonville, CA 95077-5085
Phone 831/724-1011
FAX 831/722-9657
BNP Paribas
February 10, 2003
Page 2
2. The execution, delivery and performance by the Counterparty of the
Agreement and the entering into, as provided for therein, and
performance of any confirmation have been duly authorized by all
necessary corporate action, require no action by or in respect of, or
filing with, any government body, agency or official and do not
contravence, or constitute a default under, any provision of applicable
law or regulation or of the certificate of incorporation or by-laws of
the Counterparty or of any agreement, judgement, injunction, order
decree or other instrument binding upon the Counterparty.
3. The Agreement constitutes and, when confirmed, as provided for therein,
any Confirmation, together with the Agreement, will constitute, a valid
and binding obligation of the Counterparty enforceable in accordance
with its terms except as enforcement may be limited by the provisions
of any applicable bankruptcy, liquidation, insolvency and
reorganization or other laws, relating to or affecting, generally the
enforcement of creditor's rights.
4. No authorizations, approvals or consents are required under the laws of
California to permit the purchase by the Counterparty of any currency
which may be needed to make payment pursuant to the Agreement.
5. The submission to the non-exclusive jurisdiction of the State and
Federal courts in New York City for all purposes in connection with,
and the consent to service of process in, the Agreement are valid and
binding upon the Counterparty and not subject to revocation. There are
no provisions in the Agreement which are repugnant to the public policy
thereof. If any final and conclusive judgement of a State or Federal
court sitting in New York City is rendered against the Counterparty in
connection with any action arising out of or relating to the Agreement,
such judgement would be recognized and enforced by the courts of
California without any re-trial or re-examination of the merits of
action; provided that the California court in which enforcement is
sought determines that the judgment should not be vacated pursuant to
C.C.P. Section 1710.40.
Sincerely,
/s/ Michael Futch
-----------------
Michael Futch, Esq.
Vice President and General Counsel
MF\pac
GRANITE CONSTRUCTION INCORPORATED
WHEREAS, the Company is obligated to pay fixed rates of 6.54% and 6.96%
to holders of its Senior Notes purchased on March 1, 1998 and May 1, 2001
respectively; and
WHEREAS, the Company desires to enter into swap transactions with BNP
Paribas wherein it will swap its fixed rates for floating rates of 6m LIBOR +
386.75 bps and 6m LIBOR + 418 bps respectively pursuant to a ISDA Master
Agreement and related schedules and exhibits pertaining thereto (collectively
the "Agreement"); and
WHEREAS, Management has reviewed the Agreement and found it to be
acceptable in form and substance.
NOW, THEREFORE, BE IT RESOLVED, that the Executive Committee does
hereby approve the Agreement and the schedules, exhibits and other related
documents pertaining to the transaction described above and attached to the
Agreement.
FURTHER RESOLVED, that any two Responsible Officers of the Company (as
defined in the Company's Credit Agreement dated June 29, 2001) be, and each of
them acting together are hereby authorized, empowered and directed, for and on
behalf of the Company, to take or cause to be taken any and all actions,
including, without limitation, the execution, acknowledgment, filing, amendment
and delivery of any and all papers, agreements, documents, instruments and
certificates, and the payment of such sums, as such officers may deem necessary
or advisable to carry out and perform the obligations of the Company under the
Agreement and consummate the transaction contemplated therein.
CERTIFICATE OF SECRETARY
I certify that:
I am duly qualified as Secretary of GRANITE CONSTRUCTION INCORPORATED,
a Delaware corporation, (the "Company").
The foregoing is a true copy of resolution adopted by the Board of
Directors at a regular meeting held on February 11, 2003 and entered in the
Minute Book of the Company.
The action is in conformity with the Articles of Incorporation and
Bylaws of the Company, has not been modified or repealed, and is now in full
force and effect.
Dated: February 21, 2003 /s/ Michael Futch
-----------------
Michael Futch