EXHIBIT 10.1
(MULTICURRENCY -- CROSS BORDER)
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of June 30, 2004
J. ARON & COMPANY CAPITAL C OHIO, INC.
and
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows: --
1. INTERPRETATION
(a) DEFINITIONS. The terms defined in Section 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 parry at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) NETTING. If on any date amounts would otherwise be payable: --
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). This election may
be made separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.
(d) DEDUCTION OR WITHHOLDING FOR TAX.
(i) GROSS-UP. All payments 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 to this Agreement) or (II) a Change in Tax
Law.
2 ISDA(R) 1992
(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 is entered into
and, in the case of the representations in Section 3(f), at all times until the
termination of this Agreement) that: --
(a) BASIC REPRESENTATIONS.
(i) STATUS. It is duly organized and validly existing under the laws of
the jurisdiction of its organization or incorporation and, if relevant
under such laws, in good standing;
(ii) POWERS. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to
deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to perform
its obligations under this Agreement and any obligations it has under any
Credit Support Document to which it is a party and has taken all necessary
action to authorize such execution, delivery and performance;
(iii) NO VIOLATION OR CONFLICT. Such execution, delivery and performance
do not violate or conflict with any law applicable to it, any provision of
its constitutional documents, any order or judgment of any court or other
agency of government applicable to it or any of its assets or any
contractual restriction binding on or affecting it or any of its assets;
(iv) CONSENTS. All governmental and other consents that are required to
have been obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party have been obtained and are in mil
force and effect and all conditions of any such consents have been
complied with; and
(v) OBLIGATIONS BINDING. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal, valid
and binding obligations, enforceable in accordance with their respective
terms (subject to applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditors' rights generally and
subject, as to enforceability, to equitable principles of general
application (regardless of whether enforcement is sought in a proceeding
in equity or at law)).
3 ISDA(R) 1992
(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 REPRESENTATIONS. 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 AUTHORIZATIONS. It will use all reasonable efforts to maintain in
full force and effect all consents of any governmental or other authority that
are required to be obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party and will use all reasonable efforts to
obtain any that may become necessary in the future.
(c) COMPLY WITH LAWS. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
(d) TAX AGREEMENT. It will give notice of any failure of a representation made
by it under Section 3(1) to be accurate and true promptly upon learning of such
failure.
(e) PAYMENT OF STAMP TAX. Subject to Section 11, 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 ISDA(R) 1992
organized, 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 ISDA(R) 1992
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 ISDA(R) 1992
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 ISDA(R) 1992
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)(l), (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 or 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)(l) or a
Tax Event occurs and there are two Affected Parties, each party will use
all reasonable efforts to reach agreement within 30 days after notice
thereof is given under Section 6(b)(i) on action to avoid that Termination
Event.
(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, by not more than 20 days notice to the other
party and provided that the relevant Termination Event is then
8 ISDA(R) 1992
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 ISDA(R) 1992
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 (1) 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 ISDA(R) 1992
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 ISDA(R) 1992
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 they are legally bound by the terms of each
Transaction from the moment they agree to those terms (whether orally or
otherwise). A Confirmation shall he entered into as soon as practicable
and may he 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 organization 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 ISDA(R) 1992
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 ISDA(R) 1992
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 Transactions.
"AFFILIATE" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"APPLICABLE RATE" means: --
(a) in respect of obligations payable or deliverable (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
Rate; and
(d) in all other cases, the Termination Rate.
"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, authorization, exemption,
notice, filing, registration or exchange control consent.
"CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b).
"CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is specified as
such in this Agreement.
"CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule.
"DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
14 ISDA(R) 1992
"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(h)(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 organized, 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 panics 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 ISDA(R) 1992
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 arc 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, organized, 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 meanings specified in the Schedule.
16 ISDA(R) 1992
"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 ISDA(R) 1992
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.
J. ARON & COMPANY CAPITAL C OHIO, INC.
------------------------- ---------------------------
(Name of Party) (Name of Party)
By: /s/ L. PETER O'HAGAN BY: /s/ GREGORY BEARD
----------------------- -------------------------
Name: L. PETER O'HAGAN Name: GREGORY BEARD
Title: Title:
Date: Date:
18 ISDA(R) 1992
SCHEDULE
TO THE
ISDA MASTER AGREEMENT
DATED AS OF
JUNE 30, 2004
BETWEEN
J. ARON & COMPANY,
A GENERAL PARTNERSHIP ORGANIZED UNDER THE LAWS OF THE STATE OF NEW YORK
("J. ARON"),
AND
CAPITAL C OHIO, INC.,
A CORPORATION ORGANIZED UNDER THE LAWS OF OHIO ("CAPITAL C OHIO").
IN RELATION TO TRANSACTIONS ENTERED INTO IN ANTICIPATION OF AND IN
CONNECTION WITH THE MERGER OF CAPITAL C OHIO WITH AND INTO BELDEN
&BLAKE CORPORATION
PART 1. TERMINATION PROVISIONS.
(a) "SPECIFIED ENTITY"
(i) means, in relation to J. Aron, not applicable; and
(ii) means, in relation to Capital C Ohio, not applicable
(b) "SPECIFIED TRANSACTION" will have the meaning specified in Section
14 of the Agreement and will also include any transaction that is or
includes a forward, swap, future or option on or involving any
commodity (including, but not limited to, natural gas and oil). The
"CROSS DEFAULT" provisions of Section 5(a)(vi) will apply to J. Aron
and Capital C Ohio (and following the Merger, to Belden & Blake and
any Credit Support Provider of Belden & Blake), provided that (i)
the phrase "or becoming capable at such time of being declared"
shall be deleted from clause (1) of such Section 5(a)(vi) so that
only Specified Indebtedness that has actually been accelerated
triggers this Event of Default; and (ii) the following language
shall be added to the end thereof: "Notwithstanding the foregoing,
the default shall not constitute an Event of Default if (i) the
default was caused solely by error or omission of an administrative
or operational nature; and (ii) with respect to a default under
subsection (2) hereof, funds were available to enable the party to
make the payment when due, and the payment is made within two Local
Business Days of such party's receipt of written notice of its
failure to pay."
"SPECIFIED INDEBTEDNESS" will have the meaning specified in Section
14 of this Schedule.
1
(c) "THRESHOLD AMOUNT" means in relation to J. Aron, US$50,000,000 (or
its equivalent in another currency) and in relation to Capital C
Ohio, $500,000, and following the consummation of the Merger, in
relation to Belden & Blake, US$10,000,000 (or its equivalent in
another currency). The "CREDIT EVENT UPON MERGER" provisions of
Section 5(b)(iv) will apply to J. Aron but will not apply to Belden
& Blake; the "CREDIT EVENT UPON MERGER" provisions of Section
5(b)(iv) will not apply to the Merger of Capital C Ohio into Belden
& Blake in accordance with the provisions of the Merger Agreement.
(d) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a) will not
apply to J. Aron and will not apply to Capital C Ohio and Belden &
Blake.
(e) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e):
(i) Market Quotation will apply.
(ii) The Second Method will apply.
(f) "TERMINATION CURRENCY" means United States Dollars.
(g) ADDITIONAL EVENTS OF DEFAULT WITH RESPECT TO CAPITAL C OHIO. Prior
to the consummation of the Merger but not thereafter, Section 5(a)
is hereby amended by including the following as clause (ix) and upon
the occurrence of one or more of the events or circumstance set
forth in such clause (ix) an Event of Default shall have occurred
with respect to Capital C Ohio as Defaulting Party:
"(ix) ADDITIONAL EVENTS OF DEFAULT WITH RESPECT TO CAPITAL C OHIO:
(1) IMPERMISSIBLE INDEBTEDNESS. Capital C Ohio directly or
indirectly, creates, incurs, assumes or guaranties, or
otherwise becomes or remains directly or indirectly liable
with respect to any Indebtedness other than Indebtedness (i)
incurred pursuant to this Agreement and the Transactions
entered into hereunder and (ii) incurred pursuant to the
Merger Agreement.
(2) IMPERMISSIBLE LIENS. Capital C Ohio directly or indirectly,
creates, incurs, assumes or permits to exist any Lien on or
with respect to any property or asset of any kind (including
any document or instrument in respect of goods or accounts
receivable) of Capital C Ohio, whether now or hereafter
acquired, or any income or profits therefrom, or files or
permits the filing of, or permits to remain in effect, any
financing statement or other similar notice of any Lien with
respect to any such property, asset, income or profits under
the UCC of any State or under any similar recording or notice
statute other than Liens to secure its obligations under this
Agreement and the Transactions entered into hereunder.
(3) IMPERMISSIBLE BUSINESS ACTIVITIES. Capital C Ohio engages in
any activities other than entering into this Agreement, the
Merger and activities reasonably necessary to consummate or
perform any of the foregoing.
2
(4) FAILURE TO MAINTAIN REQUIRED CASH/CASH EQUIVALENTS.
(i) Failure of Capital C Ohio to own or maintain at any time
prior to the consummation of the Merger Cash and/or Cash
Equivalents in an amount equal to or greater than the Required
Base Capital Amount; or
(ii) Failure of Capital C Ohio to own or maintain within two
Local Business Days of delivery by J. Aron of an Additional
Capital Requirement Notice Cash and/or Cash Equivalents in an
amount equal to or greater than the sum of the Required Base
Capital Amount and the Additional Capital Amount.
The following terms have the meanings specified below for
purposes of this provision:
"Required Base Capital Amount" means $20,000,000;
"Additional Capital Requirement Notice" means a written notice
from J. Aron to Capital C Ohio delivered on any Local Business
Day on or after July 7, 2004 and before the consummation of
the Merger (i) stating that in J. Aron's reasonable judgment
the Merger is unlikely to be consummated prior to July 31,
2004 and (ii) setting forth the Additional Capital Amount; and
"Additional Capital Amount" means the amount (if positive)
equal to the difference of (x) the amount that would be owing
by Capital C Ohio to J. Aron if all the Transactions under
this Agreement were to be terminated on a determination date
in accordance with Section 6(e) of this Agreement based on the
occurrence of an Event of Default with respect to Capital C
Ohio minus (y) the sum of (i) $10,000,000 and (ii) any
Additional Capital Amount held by Capital C Ohio as of such
determination date.
(5) FAILURE TO CONSUMMATE MERGER OR DELEGATE LIABILITIES UNDER THE
AGREEMENT TO AN ACCEPTABLE AFFILIATED ENTITY. Either (i) the
Merger is not consummated on or before July 16, 2004 and
Capital C Ohio is not acting diligently and in good faith to
seek an affiliated entity to assume all liability under this
Agreement from Capital C Ohio that would be acceptable to J.
Aron in its discretion or (ii) the Merger is not consummated
on or before July 31, 2004 and the liabilities of Capital C
Ohio under this Agreement have not been assumed by an
affiliated entity acceptable to J. Aron in its discretion on
or before July 31, 2004.
(6) TERMINATION OF TRANSACTIONS. On any Local Business Day prior
to July 31, 2004, Capital C Ohio notifies J. Aron in writing
that Capital C Ohio is designating a day, not earlier than the
Local Business Day next following the date on which such
notice is received by J. Aron, as an Early Termination Date."
(h) ADDITIONAL EVENTS OF DEFAULT WITH RESPECT TO BELDEN & BLAKE.
Following the consummation of the Merger, Section 5(a) is hereby
amended by including the
3
following as clause (ix) and upon the occurrence of one or more of
the events or circumstance set forth in such clause (ix) an Event of
Default shall have occurred with respect to Belden & Blake as
Defaulting Party:,
"(ix) ADDITIONAL EVENTS OF DEFAULT WITH RESPECT TO BELDEN & BLAKE:
(a) Failure of Belden & Blake to comply with any of the
covenants set forth in Sections 5.1(b), (c), (d), (e), (f),
(g), (j), (n), (o) and (p) (Financial Statements and Other
Information), 5.11 (Additional Material Real Estate Assets),
6.1 (Indebtedness), 6.2 (Liens), 6.3 (Equitable Lien), 6.4 (No
Further Negative Pledges), 6.8 (Financial Covenants), 6.9
(Fundamental Changes; Disposition of Assets), 6.10
(Disposition of Subsidiary Interests), 6.15 (Amendments or
Waivers of Certain Related Agreements) and 6.16 (Amendment of
Senior Secured Indebtedness), as such covenants are amended,
modified, supplemented or waived by the Requisite Lenders (as
defined in the Credit Agreement); provided that for purposes
of this clause (ix) (i) any reference to the Administrative
Agent shall be deemed to be J. Aron; and (ii) any reference to
the "Obligations" shall include the obligations under this
Agreement (provided that any such reference shall not effect
the ranking of the security interest granted to J. Aron).
(b) Failure of Belden & Blake to comply with any of the
covenants set forth in Section 4.09 (Incurrence of
Indebtedness and Issuance of Preferred Stock) and Section 4.12
(Permitted Liens) as such Sections relate to the incurrence of
any Parity Lien Debt and any liens in connection therewith
pursuant to the definition of `Parity Lien Debt' and clause
(2) of the definition of `Permitted Liens,' as such covenants
are in effect as of the date of the Merger."
(i) EARLY TERMINATION. Notwithstanding anything to the contrary in
Section 6(a) or Section 6(b), the parties agree that the
Non-defaulting Party or the party that is not the Affected Party (in
a case where a Termination Event under Section 5(b)(iv) has
occurred) is not required to terminate the Transactions on a single
day, but rather may terminate the Transactions over a commercially
reasonable period of time (not to exceed ten days) (the "Early
Termination Period"). The last day of the Early Termination Period
shall be the Early Termination Date for purposes of Section 6;
provided, however, that interest shall accrue on the Transactions
terminated during the Early Termination Period prior to the Early
Termination Date at the Non-default Rate.
PART 2. TAX REPRESENTATIONS.
(a) PAYER TAX REPRESENTATIONS. For the purposes of Section 3(e), J.
Aron, Capital C Ohio and Belden & Blake 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 this
4
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 purposes of Section 3(f), each of
J. Aron, Capital C Ohio and Belden & Blake make the following
representations:
(i) It is not acting as an agent or intermediary for any foreign
person with respect to the payments received or to be received
by it in connection with this Agreement.
(ii) It is a United States person within the meaning of Section
7701(a)(30) of the Internal Revenue Code of 1986, as amended.
PART 3. AGREEMENT TO DELIVER DOCUMENTS
(a) For the purpose of Section 4(a):
Tax forms, documents, or certificates to be delivered are:
PARTY REQUIRED TO DATE BY WHICH
DELIVER DOCUMENT FORMS/DOCUMENTS/CERTIFICATES TO BE DELIVERED
- ----------------------- ------------------------------ ---------------------------------
J. Aron, Capital C Ohio United States Internal Revenue (i) On a date which is before the
and Belden & Blake Service Form W-9, or any first Scheduled Payment Date
successor form. under this Agreement, (ii)
promptly upon reasonable
demand by the other party, and
(iii) promptly upon learning that
any such form previously
provided by the other party has
become obsolete, incorrect, or
ineffective.
(b) Other documents to be delivered are:
PARTY COVERED BY
REQUIRED TO DATE BY WHICH TO BE SECTION 3(d)
DELIVER FORM/DOCUMENT/CERTIFICATE DELIVERED REPRESENTATION
J. Aron, Evidence of authority of signatories Upon execution of this Yes
Capital C Ohio Agreement and promptly
and Belden & following reasonable
demand by
5
Blake the other party
J. Aron Guaranty of the party's Credit Upon execution of this No
Support Provider Agreement, if not already
provided
J. Aron, Copy of the most recent, publicly available Promptly following Yes
Capital C Ohio audited annual financial statements and/or of reasonable demand by the
and Belden & the unaudited quarterly financial statements other party
Blake of, in the case of J. Aron, The Goldman Sachs
Group, Inc. or its successor ("Goldman
Group"), and, in the case of Capital C Ohio,
the pro forma unaudited financial statements
dated ______, 2004 prepared in accordance with
generally accepted accounting principles in
the country in which the party is organized.
Following the Merger, the financial reports of
Belden & Blake shall be delivered pursuant to
Part 1(h).
Capital C Certified resolutions of its board of Upon execution of this Yes
Ohio, Belden directors or other governing body authorizing Agreement in the case of
& Blake this Agreement and the Transactions Capital C Ohio, and upon
contemplated hereby consummation of the Merger
in the case of Belden &
Blake
Capital C Ohio Evidence of ownership of Cash and Cash Upon execution of this Yes
Equivalents in an amount not less than the Agreement and, thereafter,
amount specified in Part 1(g)(4) within two Business Days
of a written request by J.
Aron
Belden & Legal Opinion as to the authorization, Upon consummation of the No
Blake execution and delivery of this Agreement and Merger
the legal, valid and binding nature of this
Agreement against Belden & Blake. J. Aron
shall also receive a reliance letter with
respect to each opinion delivered to the
Administrative Agent or the Lenders under the
Credit Agreement.
PART 4. MISCELLANEOUS
(a) ADDRESSES FOR NOTICES. For the purpose of Section 12(a):
6
Address for notices or communications to J. Aron:
Address: J. Aron & Company
85 Broad Street
New York, New York 10004
NATURAL GAS
Attention: Energy Operations
Telephone: (212) 357-0326
Facsimile: (212) 493-9849
OIL
Attention: Energy Operations
Telephone: (212) 357-0326
Facsimile: (212) 493-9849
Address for notices or communications to Capital C Ohio (prior to
the consummation of the Merger):
Address: Capital C Ohio
333 Clay Street, Suite 4960
Houston, TX 77002
Attention: Frost Cochran
Telephone: (713) 571-9393
Facsimile: (713) 571-9533
Address for notices or communications to Belden & Blake (following
the consummation of the Merger only):
Address: Belden & Blake Corporation
5200 Stoneham Road
North Canton, OH 44720-0500
Attention: Duane Clark
Telephone: (330) 498-5737
Facsimile: (330) 498-8737
(b) PROCESS AGENT. For the purpose of Section 13(c):
J. Aron appoints as its Process Agent: Not applicable.
Capital C Ohio, and subsequent to the consummation of the Merger,
Belden & Blake appoints as its Process Agent: Not applicable.
(c) OFFICES. The provisions of Section 10(a) will apply to this
Agreement.
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c):
J. Aron is not a Multibranch Party.
Neither Capital C Ohio nor, subsequent to the consummation of the
Merger, Belden & Blake is a Multibranch Party.
7
(e) CALCULATION AGENT. The Calculation Agent is J. Aron.
(f) CREDIT SUPPORT DOCUMENT. Details of any other Credit Support
Document, each of which is incorporated by reference in, and made
part of, this Agreement and each Confirmation (unless provided
otherwise in a Confirmation) as if set forth in full in this
Agreement or such Confirmation:
Any guaranty or other form of credit support provided on behalf of
Belden & Blake at any time shall constitute a Credit Support
Document with respect to the obligations of Belden & Blake. Each of
the Collateral Trust Agreement and the mortgages, security
agreements and pledge agreements constituting Senior Secured Note
Documents (as defined in the Collateral Trust Agreement) shall
constitute Credit Support Documents with respect to Belden & Blake.
Belden & Blake and J. Aron acknowledge and agree that the Senior
Secured Note Documents constitute a source of credit support for the
obligations of Belden & Blake that is separate from, independent of,
and not limited by, the Credit Support Annex.
Guaranty by The Goldman Sachs Group, Inc. ("Goldman Group") in favor
of Belden & Blake as beneficiary thereof shall constitute a Credit
Support Document with respect to the obligations of J. Aron; and
(g) CREDIT SUPPORT PROVIDER.
Credit Support Provider means in relation to J. Aron, Goldman Group.
Credit Support Provider means in relation to Belden & Blake, each of
the wholly owned subsidiaries of Belden & Blake that are Guarantors
under the Credit Agreement and any party that at any time provides a
guaranty or other form of credit support on behalf of Belden & Blake
but shall not include any issuer of a Letter of Credit under the
terms of the Credit Support Annex.
Capital C Ohio shall not be required to have a Credit Support
Provider prior to the consummation of the Merger.
(h) GOVERNING LAW. Section 13(a) is hereby replaced with the following:
(i) GOVERNING LAW. This Agreement, each Transaction entered into
hereunder, and all matters arising in connection with this
Agreement will be governed by, and construed and enforced in
accordance with, the law of the State of New York.
(i) JURISDICTION. Section 13(b) is hereby amended by:
(i) deleting in the second line of subparagraph (i) thereof the
word "non-"; and
(ii) deleting the final paragraph thereof.
(j) NETTING OF PAYMENTS. Subparagraph (ii) of Section 2(c) will not
apply to Transactions.
8
PART 5. OTHER PROVISIONS.
(a) ACCURACY OF SPECIFIED INFORMATION. Section 3(d) is hereby amended by
adding in the third line thereof after the word "respect" and before
the period, the phrase "or, in the case of audited or unaudited
financial statements, a fair presentation in all material respects
of the financial condition of the relevant person subject, in the
case of any unaudited financial statements, to changes resulting
from audit and normal year-end adjustments ."
(b) SCOPE OF AGREEMENT. Notwithstanding anything contained in this
Agreement to the contrary, any transaction which may otherwise
constitute a "Specified Transaction" for purposes of this Agreement
which has been or will be entered into between J. Aron and Capital C
Ohio, and subsequent to the consummation of the Merger, Belden &
Blake, shall constitute a "Transaction" which is subject to,
governed by, and construed in accordance with the terms of this
Agreement, unless the Confirmation thereto expressly provides
otherwise.
(c) ADDITIONAL REPRESENTATIONS. The parties agree to amend Section 3 by
adding new Sections 3(g), (h), (i), and (j) as follows:
(i) ELIGIBLE CONTRACT PARTICIPANT. It is an "eligible contract
participant" as defined in the U.S. Commodity Exchange Act.
(ii) 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. No
communication (written or oral) received from the other party
shall be deemed to be an assurance or guarantee as to the
expected results of that Transaction.
(iii) ASSESSMENT AND UNDERSTANDING. It is capable of assessing the
merits of and understanding (on its own behalf or through
independent professional advice), and understands and accepts,
the terms, conditions and risks of that Transaction. It is
also capable of assuming, and assumes, the risks of that
Transaction.
(iv) STATUS OF PARTIES. The other party is not acting as a
fiduciary for or an adviser to it in respect of that
Transaction.
(d) TRANSFER. The following amendments are hereby made to Section 7:
(i) In the third line, insert the words "which consent will not be
arbitrarily withheld or delayed," immediately before the word
"except"; and
9
(ii) in clause (a), insert the words "or reorganization,
incorporation, reincorporation, or reconstitution into or as,"
immediately before the word "another."
(iii) The following new sentence is added after clause (b): "Nothing
in this Section 7 shall prevent (A) a party from granting a
security interest in this Agreement and the Transactions
entered into pursuant to this Agreement to secure its
obligations to its creditors or any one or more groups of its
creditors and (B) such party's secured creditors from
exercising remedies available to them in respect of this
Agreement; provided, however, that in all cases the grant of
such a security interest and the exercise of such remedies
shall be subject to the rights of the other party to this
Agreement to exercise its contractual and other rights
(including, without limitation, the right to designate an
Early Termination Date and effect rights to terminate,
liquidate and net Transactions, to exercise rights with
respect to Posted Credit Support and to exercise rights of
set-off)."
(e) CONSENT TO RECORDING. The parties agree that each party or its agent
may electronically record all telephone conversations between them,
with or without the use of a warning tone, and that, it may be used
in a Proceeding solely for the purpose of establishing, and only to
the extent reasonably necessary to establish, the existence of a
Transaction and the terms thereof.
(f) DEFINITIONS. The following amendments are hereby made to Section 14:
(i) "DEFAULT RATE" shall be the overnight London Interbank Offered
Rate, as determined by the relevant payee in a commercially
reasonable manner plus 1%, and
(ii) "TERMINATION CURRENCY" means U.S. Dollars.
(g) SEVERABILITY. If any term, provision, covenant, or condition of this
Agreement, or the application thereof to any party or circumstance,
shall be held to be invalid or unenforceable (in whole or in part)
for any reason, the remaining terms, provisions, covenants, and
conditions hereof shall continue in full force and effect as if this
Agreement had been executed with the invalid or unenforceable
portion eliminated, so long as this Agreement as so modified
continues to express, without material change, the original
intentions of the parties as to the subject matter of this Agreement
and the deletion of such portion of this Agreement will not
substantially impair the respective benefits or expectations of the
parties to this Agreement; provided, however, that this Agreement
shall be deemed to be invalid and unenforceable if any provision of
Sections 1(c), 2, 5, 6, or 13 (or any definition or provision in
Section 14 to the extent it relates to, or is used in or in
connection with, any such Section) shall be so held to be invalid or
unenforceable.
(h) SET-OFF. The parties agree to amend Section 6 by adding a new
Section 6(f) as follows:
10
"(f) Upon the occurrence of an Event of Default or Termination Event
under Section 5(b)(iv) with respect to a party ("X"), the other
party ("Y") will have the right (but not be obliged) without prior
notice to X or any other person to set-off or apply any obligation
of X owed to Y (whether or not matured or contingent and whether or
not arising under this Agreement, and regardless of the currency,
place of payment or booking office of the obligation) against any
obligation of Y owed to X (whether or not matured or contingent and
whether or not arising under this Agreement, and regardless of the
currency, place of payment or booking office of the obligation). Y
will give notice to the other party of any set-off effected under
this Section 6(f).
Amounts (or the relevant portion of such amounts) subject to set-off
may be converted by Y into the Termination Currency at the rate of
exchange at which such party would be able, acting in a reasonable
manner and in good faith, to purchase the relevant amount of such
currency.
If any obligation is unascertained, Y 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 6(f) 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)."
(i) DEFINITIONS. This Agreement, each Confirmation and each Transaction
is subject to the 2000 ISDA Definitions and the 1993 ISDA Commodity
Derivatives Definitions as supplemented by the 2000 Supplement to
the 1993 ISDA Commodity Derivatives Definitions as published by the
International Swaps and Derivatives Association, Inc. ("ISDA") and
the 1998 FX and Currency Option Definitions as published by ISDA,
the Emerging Markets Traders Association, and the Foreign Exchange
Committee (together, the "Definitions"), and will be governed in all
respects by the Definitions (except that references to "Swap
Transactions" in the Definitions will be deemed to be references to
"Transactions"). The Definitions are incorporated by reference in,
and made part of, this Agreement and each Confirmation as if set
forth in full in this Agreement and such Confirmations. In the event
of any inconsistency between the provisions of this Agreement and
the Definitions, this Agreement will prevail. Subject to Section
1(b), in the event of any inconsistency between the provisions of
any Confirmation, this Agreement, and the Definitions, such
Confirmation will prevail for the purpose of the relevant
Transaction.
(j) MARKET DISRUPTION EVENTS; DISRUPTION FALLBACKS. The following will
constitute Market Disruption Events within the meaning of the
Definitions: Price Source Disruption, Trading Suspension,
Disappearance of Commodity Reference Price, Material Change in
Formula, Material Change in Content. In the event of a Market
Disruption Event, the following Disruption Fallbacks will apply in
the order specified: (i) Fallback Reference Price, (ii) Postponement
(with two Maximum Days of Disruption), (iii) Negotiated Fallback and
(iv) Calculation Agent Determination. "Additional Market Disruption
Events" shall apply only if so specified in the relevant
Confirmation.
11
(k) WAIVER OF TRIAL BY JURY. Each party hereby irrevocably waives any
and all right to trial by jury in any Proceeding.
(l) COLLATERAL. So long as any Transaction is outstanding under this
Agreement and until termination of the obligations of Belden & Blake
under this Agreement, J. Aron shall have the benefit of a second
priority lien in the collateral identified in the Collateral
Documents. Other than as provided in the Collateral Trust Agreement,
no such Collateral shall be released by Belden & Blake or any other
owner of such Collateral without the prior written consent of J.
Aron.
(m) MERGER. For the avoidance of doubt, notwithstanding any provision in
this Agreement to the contrary, all obligations of Capital C Ohio
under this Agreement shall be assumed by Belden & Blake upon
consummation of the Merger.
(n) BANKRUPTCY. For purposes of this Agreement, Section 5(b)(ii) is
hereby modified by deleting the number "30" as it appears after the
word "within" and before the word "days" in the tenth and eighteenth
lines thereof and inserting the number "60" in place thereof.
(o) TAX EVENT. For purpose of this Agreement, Section 5(b)(ii) is hereby
amended to delete the words ", or there is a substantial likelihood
that it will," as they appear after the word "will" and before the
word "on" in the fourth line thereof.
(p) CONFIRMATIONS. Section 9(e)(ii) is hereby amended by deleting the
second sentence thereof and inserting the following in its place:
"On or promptly following a Trade Date of a Transaction, J. Aron
will send to Capital C Ohio (or after the Merger, Belden & Blake) a
Confirmation. Capital C Ohio (or after the Merger, Belden & Blake)
will promptly thereafter confirm the accuracy of, or require the
correction of, such Confirmation. If any disputes shall arise as to
whether an error exists in a Confirmation. If any disputes shall
arise as to whether an error exists in a Confirmation, the parties
shall in good faith make reasonable efforts to resolve the dispute.
If Capital C Ohio (or after the Merger, Belden & Blake) fails to
accept or dispute the Confirmation in the manner described above
within five (5) Local Business Days after such Confirmation was sent
by J. Aron, the Confirmation shall be deemed to correctly reflect
the parties' agreement on the terms of the Transaction referred to
therein, absent manifest error.
(q) LIMITATION OF LIABILITY. NO PARTY SHALL BE REQUIRED TO PAY OR BE
LIABLE FOR SPECIAL, PUNITIVE, EXEMPLARY INCIDENTAL, CONSEQUENTIAL,
OR INDIRECT DAMAGES (WHETHER OR NOT ARISING FROM ITS NEGLIGENCE) TO
THE OTHER PARTY; PROVIDED, HOWEVER, THAT NOTHING IN THIS PROVISION
SHALL AFFECT THE ENFORCEABILITY OR OPERATION OF SECTION 6(E) OF THIS
AGREEMENT. IF AND TO THE EXTENT ANY PAYMENT REQUIRED TO BE MADE
PURSUANT TO THIS AGREEMENT IS DEEMED TO CONSTITUTE LIQUIDATED
DAMAGES, THE PARTIES ACKNOWLEDGE AND AGREE THAT SUCH DAMAGES ARE
DIFFICULAT OR IMPOSSIBLE TO
12
DETERMINE AND THAT SUCH PAYMENT IS INTENDED TO BE A REASONABLE
APPROXIMATION OF THE AMOUNT OF SUCH DAMAGES AND NOT A PENALTY.
(r) APPLICATION OF UNIFORM COMMERCIAL CODE. The parties agree that
Section 2-609 of the New York Uniform Commercial Code and any
analogous common law rights shall not apply to this Agreement.
(s) ADDITIONAL DEFINITIONS. Section 14 is hereby amended to include the
following definitions in applicable alphabetical order:
"Cash" means money, currency or a credit balance in any demand or
Deposit Account.
"Cash Equivalents" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally
guaranteed as to interest and principal by the United States
Government or (b) issued by any agency of the United States the
obligations of which are backed by the full faith and credit of the
United States, in each case maturing no more than two months after
such date; (ii) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any
such state or any public instrumentality thereof, in each case
maturing no more than two months after such date and having, at the
time of the acquisition thereof, a rating of at least A-1 from
Standard & Poor's Ratings Group ("S&P") or at least P-1 from Moody's
Investor's Services, Inc. ("Moody's"); (iii) commercial paper
maturing no more than two months from the date of creation thereof
and having, at the time of the acquisition thereof, a rating of at
least A-1 from S&P or at least P-1 from Moody's; (iv) certificates
of deposit or bankers' acceptances maturing no more than two months
after such date and issued or accepted by any commercial bank
organized under the laws of the United States of America or any
state thereof or the District of Columbia that (a) is at least
"adequately capitalized" (as defined in the regulations of its
primary Federal banking regulator) and (b) has Tier 1 capital (as
defined in such regulations) of not less than $100,000,000; and (v)
shares of any money market mutual fund that (a) has substantially
all of its assets invested continuously in the types of investments
referred to in clauses (i) through (iv) above, (b) has net assets of
not less than $500,000,000, and (c) has the highest rating
obtainable from either S&P or Moody's.
"Credit Agreement" means the Credit and Guaranty Agreement to be
entered into by and among Belden & Blake Corporation, certain
Subsidiaries of Belden & Blake Corporation, as Guarantors, various
Lenders, Goldman Sachs Credit Partners, L.P. as Lead Arranger, Sole
Bookrunner, Syndication Agent and Administrative Agent, and entity
to be identified as Documentation Agent.
"Collateral Trust Agreement" has the meaning specified in the Credit
Agreement on the date of this Agreement.
"Deposit Account" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or
like organization, other than an account evidenced by a negotiable
certificate of deposit.
13
"Indebtedness", as applied to any Person, means, without
duplication, (i) all indebtedness for borrowed money; (ii) that
portion of obligations with respect to Capital Leases that is
properly classified as a liability on a balance sheet in conformity
with United States generally accepted accounting principles; (iii)
notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money; (iv) any
obligation owed for all or any part of the deferred purchase price
of property or services (excluding any such obligations incurred
under the Employment Retirement Income Security Act of 1974, as
amended from time to time), which purchase price is (a) due more
than six months from the date of incurrence of the obligation in
respect thereof or (b) evidenced by a note or similar written
instrument; (v) all indebtedness secured by any Lien on any property
or asset owned or held by that person regardless of whether the
indebtedness secured thereby shall have been assumed by that person
or is nonrecourse to the credit of that person; (vi) the face amount
of any letter of credit issued for the account of that person or as
to which that person is otherwise liable for reimbursement of
drawings; (vii) the direct or indirect guaranty, endorsement
(otherwise than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with
recourse by such person of the obligation of another; (viii) any
obligation of such person the primary purpose or intent of which is
to provide assurance to an obligee that the obligation of the
obligor thereof will be paid or discharged, or any agreement
relating thereto will be complied with, or the holders thereof will
be protected (in whole or in part) against loss in respect thereof;
(ix) any liability of such person for an obligation of another
through any agreement (contingent or otherwise) (a) to purchase,
repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock purchases,
capital contributions or otherwise) or (b) to maintain the solvency
or any balance sheet item, level of income or financial condition of
another if, in the case of any agreement described under subclauses
(a) or (b) of this clause (ix), the primary purpose or intent
thereof is as described in clause (viii) above; and (x) all
obligations of such person in respect of any exchange traded or over
the counter derivative transaction whether entered into for hedging
or speculative purposes.
"Indenture" means the Indenture to be entered into by and among
Belden & Blake, certain subsidiaries of Belden & Blake, and The Bank
of New York, as Indenture Trustee.
"LC Facility" means the Hedge L/C Commitment under the Credit
Agreement providing for the issuance of letters of credit having an
aggregate face amount not to exceed $40 million.
"Lien" means (i) any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any agreement
to give any of the foregoing, any conditional sale or other title
retention agreement, and any lease in the nature thereof) and any
option, trust or other preferential arrangement having the practical
effect of any of the foregoing and (ii) in the case of Securities,
any purchase option, call or similar right of a third party with
respect to such Securities.
14
"Merger" means the merger of Capital C Ohio with and into Belden &
Blake pursuant to the Merger Agreement.
"Merger Agreement" means the Agreement and Plan of Merger between
Capital C Ohio and Belden & Blake dated as of June 15, 2004.
"Securities" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds,
debentures, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of
interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to
subscribe to, purchase or acquire, any of the foregoing.
The defined terms used in this Agreement and not otherwise defined
shall have the respective meanings set forth in the Credit Agreement
as of the date of the consummation of the Merger; provided that the
definitions "CASH", "CASH EQUIVALENTS", "DEPOSIT ACCOUNT",
"INDEBTEDNESS", "LIEN" set forth herein shall only be effective
until the consummation of the Merger.
15
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.
CAPITAL C OHIO, INC. J. ARON & COMPANY
By: /s/ GREGORY BEARD By: /s/ L. PETER O'HAGAN
-------------------- -------------------------
Name: GREGORY BEARD Name: L. PETER O'HAGAN
Title: Title:
Date: Date:
16
(BILATERAL FORM) (ISDA AGREEMENTS SUBJECT TO NEW YORK LAW ONLY)
ISDA(R)
International Swap and Derivatives Association, Inc.
CREDIT SUPPORT ANNEX
to the Schedule to the
ISDA Master Agreement
________________________________________________________
dated as of June 30, 2004
J. ARON & COMPANY CAPITAL C OHIO, INC.
between
_____________________________________ and _____________________________________
("Party A") ("Party B")
This Annex supplements, forms part of, and is subject to, the above-referenced
Agreement, is part of its Schedule and is a Credit Support Document under this
Agreement with respect to each party.
Accordingly, the parties agree as follows:--
PARAGRAPH 1. INTERPRETATION
(a) DEFINITIONS AND INCONSISTENCY. Capitalized terms not otherwise defined
herein or elsewhere in this Agreement have the meanings specified pursuant to
Paragraph 12, and all references in this Annex to Paragraphs are to Paragraphs
of this Annex. In the event of any inconsistency between this Annex and the
other provisions of this Schedule, this Annex will prevail, and in the event of
any inconsistency between Paragraph 13 and the other provisions of this Annex,
Paragraph 13 will prevail.
(b) SECURED PARTY AND PLEDGOR. All references in this Annex to the "Secured
Party" will be to either party when acting in that capacity and all
corresponding references to the "Pledgor" will be to the other party when acting
in that capacity; provided, however, that if Other Posted Support is held by a
party to this Annex, all references herein to that party as the Secured Party
with respect to that Other Posted Support will be to that party as the
beneficiary thereof and will not subject that support or that party as the
beneficiary thereof to provisions of law generally relating to security
interests and secured parties.
PARAGRAPH 2. SECURITY INTEREST
Each party, as the Pledgor, hereby pledges to the other party, as the Secured
Party, as security for its Obligations, and grants to the Secured Party a first
priority continuing security interest in, lien on and right of Set-off against
all Posted Collateral Transferred to or received by the Secured Party hereunder.
Upon the Transfer by the Secured Party to the Pledgor of Posted Collateral, the
security interest and lien granted hereunder on that Posted Collateral will be
released immediately and, to the extent possible, without any further action by
either party.
Copyright(C)1994 by International Swaps and Derivatives Association, Inc.
PARAGRAPH 3. CREDIT SUPPORT OBLIGATIONS
(a) DELIVERY AMOUNT. Subject to Paragraphs 4 and 5, upon a demand made by the
Secured Party on or promptly following a Valuation Date, if the Delivery Amount
for that Valuation Date equals or exceeds the Pledger's Minimum Transfer Amount,
then the Pledgor will Transfer to the Secured Party Eligible Credit Support
having a Value as of the date of Transfer at least equal to the applicable
Delivery Amount (rounded pursuant to Paragraph 13). Unless otherwise specified
in Paragraph 13, the "DELIVERY AMOUNT" applicable to the Pledgor for any
Valuation Date will equal the amount by which:
(i) the Credit Support Amount
exceeds
(ii) the Value as of that Valuation Date of all Posted Credit Support held
by the Secured Party.
(b) RETURN AMOUNT. Subject to Paragraphs 4 and 5. upon a demand made by the
Pledgor on or promptly following a Valuation Date, if the Return Amount for that
Valuation Date equals or exceeds the Secured Party's Minimum Transfer Amount,
then the Secured Party will Transfer to the Pledgor Posted Credit Support
specified by the Pledgor in that demand having a Value as of the date of
Transfer as close as practicable to the applicable Return Amount (rounded
pursuant to Paragraph 13). Unless otherwise specified in Paragraph 13, the
"RETURN AMOUNT" applicable to the Secured Party for any Valuation Date will
equal the amount by which:
(i) the Value as of that Valuation Date of all Posted Credit Support held
by the Secured Party
exceeds
(ii) the Credit Support Amount.
"CREDIT SUPPORT AMOUNT" means, unless otherwise specified in Paragraph 13, for
any Valuation Date (i) the Secured Party's Exposure for that Valuation Date plus
(ii) the aggregate of all Independent Amounts applicable to the Pledgor, if any,
minus (iii) all Independent Amounts applicable to the Secured Party, if any,
minus (iv) the Pledgor's Threshold; provided, however, that the Credit Support
Amount will be deemed to be zero whenever the calculation of Credit Support
Amount yields a number less than zero.
PARAGRAPH 4. CONDITIONS PRECEDENT, TRANSFER TIMING, CALCULATIONS AND
SUBSTITUTIONS
(a) CONDITIONS PRECEDENT. Each Transfer obligation of the Pledgor under
Paragraphs 3 and 5 and of the Secured Party under Paragraphs 3, 4(d)(ii). 5 and
6(d) is subject to the conditions precedent that:
(i) no Event of Default, Potential Event of Default or Specified Condition
has occurred and is continuing with respect to the other party; and
(ii) no Early Termination Date for which any unsatisfied payment
obligations exist has occurred or been designated as the result of an
Event of Default or Specified Condition with respect to the other party.
(b) TRANSFER TIMING. Subject to Paragraphs 4(a) and 5 and unless otherwise
specified, if a demand for the Transfer of Eligible Credit Support or Posted
Credit Support is made by the Notification Time, then the relevant Transfer will
be made not later than the close of business on the next Local Business Day; if
a demand is made after the Notification Time, then the relevant Transfer will be
made not later than the close of business on the second Local Business Day
thereafter.
(c) CALCULATIONS. All calculations of Value and Exposure for purposes of
Paragraphs 3 and 6(d) will be made by the Valuation Agent as of the Valuation
Time. The Valuation Agent will notify each party (or the other party, if the
Valuation Agent is a party) of its calculations not later than the Notification
Time on the Local Business Day following the applicable Valuation Date (or in
the case of Paragraph 6(d), following the date of calculation).
2 ISDA(R)1994
(d) SUBSTITUTIONS.
(i) Unless otherwise specified in Paragraph 13. upon notice to the Secured
Party specifying the items of Posted Credit Support to be exchanged, the
Pledgor may, on any Local Business Day, Transfer to the Secured Party
substitute Eligible Credit Support (the "Substitute Credit Support"); and
(ii) subject to Paragraph 4(a). the Secured Party will Transfer to the
Pledgor the items of Posted Credit Support specified by the Pledgor in its
notice not later than the Local Business Day following the date on which
the Secured Party receives the Substitute Credit Support, unless otherwise
specified in Paragraph 13 (the "Substitution Date"); provided that the
Secured Party will only be obligated to Transfer Posted Credit Support
with a Value as of the date of Transfer of that Posted Credit Support
equal to the Value as of that date of the Substitute Credit Support.
PARAGRAPH 5. DISPUTE RESOLUTION
If a party (a "Disputing Party") disputes (I) the Valuation Agent's calculation
of a Delivery Amount or a Return Amount or (II) the Value of any Transfer of
Eligible Credit Support or Posted Credit Support, then (1) the Disputing Party
will notify the other party and the Valuation Agent (if the Valuation Agent is
not the other party) not later than the close of business on the Local Business
Day following (X) the dale that the demand is made under Paragraph 3 in the case
of (I) above or (Y) the date of Transfer in the case of (II) above, (2) subject
to Paragraph 4(a), the appropriate party will Transfer the undisputed amount to
the other party not later than the close of business on the Local Business Day
following (X) the date that the demand is made under Paragraph 3 in the case of
(I) above or (Y) the date of Transfer in the case of (II) above, (3) the parties
will consult with each other in an attempt to resolve the dispute and (4) if
they fail to resolve the dispute by the Resolution Time, then:
(i) In the case of a dispute involving a Delivery Amount or Return Amount,
unless otherwise specified in Paragraph 13, the Valuation Agent will
recalculate the Exposure and the Value as of the Recalculation Date by:
(A) utilizing any calculations of Exposure for the Transactions (or
Swap Transactions) that the parties have agreed are not in dispute;
(B) calculating the Exposure for the Transactions (or Swap
Transactions) in dispute by seeking four actual quotations at
mid-market from Reference Market-makers for purposes of calculating
Market Quotation, and taking the arithmetic average of those
obtained; provided that if four quotations are not available for a
particular Transaction (or Swap Transaction), then fewer than four
quotations may be used for that Transaction (or Swap Transaction);
and if no quotations are available for a particular Transaction (or
Swap Transaction), then the Valuation Agent's original calculations
will be used for that Transaction (or Swap Transaction); and
(C) utilizing the procedures specified in Paragraph 13 for
calculating the Value, if disputed, of Posted Credit Support.
(ii) In the case of a dispute involving the Value of any Transfer of
Eligible Credit Support or Posted Credit Support, the Valuation Agent will
recalculate the Value as of the date of Transfer pursuant to Paragraph 13.
Following a recalculation pursuant to this Paragraph, the Valuation Agent will
notify each party (or the other party, if the Valuation Agent is a party) not
later than the Notification Time on the Local Business Day following the
Resolution Time. The appropriate party will, upon demand following that notice
by the Valuation Agent or a resolution pursuant to (3) above and subject to
Paragraphs 4(a) and 4(b), make the appropriate Transfer.
3 ISDA(R)1994
PARAGRAPH 6. HOLDING AND USING POSTED COLLATERAL
(a) CARE OF POSTED COLLATERAL. Without limiting the Secured Party's rights under
Paragraph 6(c), the Secured Party will exercise reasonable care to assure the
safe custody of all Posted Collateral to the extent required by applicable law,
and in any event the Secured Party will be deemed to have exercised reasonable
care if it exercises at least the same degree of care as it would exercise with
respect to its own property. Except as specified in the preceding sentence, the
Secured Party will have no duty with respect to Posted Collateral, including,
without limitation, any duty to collect any Distributions, or enforce or
preserve any rights pertaining thereto.
(b) ELIGIBILITY TO HOLD POSTED COLLATERAL; CUSTODIANS.
(i) GENERAL. Subject to the satisfaction of any conditions specified in
Paragraph 13 for holding Posted Collateral, the Secured Party will be
entitled to hold Posted Collateral or to appoint an agent (a "Custodian")
to hold Posted Collateral for the Secured Party. Upon notice by the
Secured Party to the Pledgor of the appointment of a Custodian, the
Pledgor's obligations to make any Transfer will be discharged by making
the Transfer to that Custodian. The holding of Posted Collateral by a
Custodian will be deemed to be the holding of that Posted Collateral by
the Secured Party for which the Custodian is acting.
(ii) FAILURE TO SATISFY CONDITIONS. If the Secured Party or its Custodian
fails to satisfy any conditions for holding Posted Collateral, then upon a
demand made by the Pledgor, the Secured Party will, not later than five
Local Business Days after the demand, Transfer or cause its Custodian to
Transfer all Posted Collateral held by it to a Custodian that satisfies
those conditions or to the Secured Party if it satisfies those conditions.
(iii) LIABILITY. The Secured Party will be liable for the acts or
omissions of its Custodian to the same extent that the Secured Party would
be liable hereunder for its own acts or omissions.
(c) USE OF POSTED COLLATERAL. Unless otherwise specified in Paragraph 13 and
without limiting the rights and obligations of the parties under Paragraphs 3,
4(d)(ii), 5, 6(d) and 8, if the Secured Party is not a Defaulting Party or an
Affected Party with respect to a Specified Condition and no Early Termination
Date has occurred or been designated as the result of an Event of Default or
Specified Condition with respect to the Secured Party, then the Secured Party
will, notwithstanding Section 9-207 of the New York Uniform Commercial Code,
have the right to:
(i) sell, pledge, rehypothecate, assign, invest, use, commingle or
otherwise dispose of, or otherwise use in its business any Posted
Collateral it holds, free from any claim or right of any nature whatsoever
of the Pledgor, including any equity or right of redemption by the
Pledgor; and
(ii) register any Posted Collateral in the name of the Secured Party, its
Custodian or a nominee for either.
For purposes of the obligation to Transfer Eligible Credit Support or Posted
Credit Support pursuant to Paragraphs 3 and 5 and any rights or remedies
authorized under this Agreement, the Secured Party will be deemed to continue to
hold all Posted Collateral and to receive Distributions made thereon, regardless
of whether the Secured Party has exercised any rights with respect to any Posted
Collateral pursuant to (i) or (ii) above.
(d) DISTRIBUTIONS AND INTEREST AMOUNT.
(i) DISTRIBUTIONS. Subject to Paragraph 4(a), if the Secured Party
receives or is deemed to receive Distributions on a Local Business Day, it
will Transfer to the Pledgor not later than the following Local Business
Day any Distributions it receives or is deemed to receive to the extent
that a Delivery Amount would not be created or increased by that Transfer,
as calculated by the Valuation Agent (and the date of calculation will be
deemed to be a Valuation Date for this purpose).
4 ISDA(R)1994
(ii) INTEREST AMOUNT. Unless otherwise specified in Paragraph 13 and
subject to Paragraph 4(a), in lieu of any interest, dividends or other
amounts paid or deemed to have been paid with respect to Posted Collateral
in the form of Cash (all of which may be retained by the Secured Party),
the Secured Party will Transfer to the Pledgor at the times specified in
Paragraph 13 the Interest Amount to the extent that a Delivery Amount
would not be created or increased by that Transfer, as calculated by the
Valuation Agent (and the date of calculation will be deemed to be a
Valuation Date for this purpose). The Interest Amount or portion thereof
not Transferred pursuant to this Paragraph will constitute Posted
Collateral in the form of Cash and will be subject to the security
interest granted under Paragraph 2.
PARAGRAPH 7. EVENTS OF DEFAULT
For purposes of Section 5(a)(iii)(l) of this Agreement, an Event of Default will
exist with respect to a party if:
(i) that party fails (or fails to cause its Custodian) to make, when due,
any Transfer of Eligible Collateral, Posted Collateral or the Interest
Amount, as applicable, required to be made by it and that failure
continues for two Local Business Days after notice of that failure is
given to that party;
(ii) that party fails to comply with any restriction or prohibition
specified in this Annex with respect to any of the rights specified in
Paragraph 6(c) and that failure continues for five Local Business Days
after notice of that failure is given to that party; or
(iii) that party fails to comply with or perform any agreement or
obligation other than those specified in Paragraphs 7(i) and 7(ii) and
that failure continues for 30 days after notice of that failure is given
to that party.
PARAGRAPH 8. CERTAIN RIGHTS AND REMEDIES
(a) SECURED PARTY'S RIGHTS AND REMEDIES. If at any time (1) an Event of Default
or Specified Condition with respect to the Pledgor has occurred and is
continuing or (2) an Early Termination Date has occurred or been designated as
the result of an Event of Default or Specified Condition with respect to the
Pledgor, then, unless the Pledgor has paid in full all of its Obligations that
are then due, the Secured Party may exercise one or more of the following rights
and remedies:
(i) all rights and remedies available to a secured party under applicable
law with respect to Posted Collateral held by the Secured Party;
(ii) any other rights and remedies available to the Secured Party under
the terms of Other Posted Support, if any:
(iii) the right to Set-off any amounts payable by the Pledgor with respect
to any Obligations against any Posted Collateral or the Cash equivalent of
any Posted Collateral held by the Secured Party (or any obligation of the
Secured Party to Transfer that Posted Collateral); and
(iv) the right to liquidate any Posted Collateral held by the Secured
Party through one or more public or private sales or other dispositions
with such notice, if any, as may be required under applicable law, free
from any claim or right of any nature whatsoever of the Pledgor, including
any equity or right of redemption by the Pledgor (with the Secured Party
having the right to purchase any or all of the Posted Collateral to be
sold) and to apply the proceeds (or the Cash equivalent thereof) from the
liquidation of the Posted Collateral to any amounts payable by the Pledgor
with respect to any Obligations in that order as the Secured Party may
elect.
Each party acknowledges and agrees that Posted Collateral in the form of
securities may decline speedily in value and is of a type customarily sold on a
recognized market, and, accordingly, the Pledgor is not entitled to prior notice
of any sale of that Posted Collateral by the Secured Party, except any notice
that is required under applicable law and cannot be waived.
5 ISDA(R)1994
(b) PLEDGOR'S RIGHTS AND REMEDIES. If at any time an Early Termination Date has
occurred or been designated as the result of an Event of Default or Specified
Condition with respect to the Secured Party, then (except in the case of an
Early Termination Date relating to less than all Transactions (or Swap
Transactions) where the Secured Party has paid in full all of its obligations
that arc then due under Section 6(e) of this Agreement):
(i) the Pledgor may exercise all rights and remedies available to a
pledgor under applicable law with respect to Posted Collateral held by the
Secured Party;
(ii) the Pledgor may exercise any other rights and remedies available to
the Pledgor under the terms of Other Posted Support, if any;
(iii) the Secured Party will be obligated immediately to Transfer all
Posted Collateral and the Interest Amount to the Pledgor; and
(iv) to the extent that Posted Collateral or the Interest Amount is not so
Transferred pursuant to (iii) above, the Pledgor may:
(A) Set-off any amounts payable by the Pledgor with respect to any
Obligations against any Posted Collateral or the Cash equivalent of
any Posted Collateral held by the Secured Party (or any obligation
of the Secured Party to Transfer that Posted Collateral); and
(B) to the extent that the Pledgor does not Set-off under (iv)(A)
above, withhold payment of any remaining amounts payable by the
Pledgor with respect to any Obligations, up to the Value of any
remaining Posted Collateral held by the Secured Party, until that
Posted Collateral is Transferred to the Pledgor.
(c) DEFICIENCIES AND EXCESS PROCEEDS. The Secured Party will Transfer to the
Pledgor any proceeds and Posted Credit Support remaining after liquidation,
Set-off and/or application under Paragraphs 8(a) and 8(b) after satisfaction in
full of all amounts payable by the Pledgor with respect to any Obligations; the
Pledgor in all events will remain liable for any amounts remaining unpaid after
any liquidation, Set-off and/or application under Paragraphs 8(a) and 8(b).
(d) FINAL RETURNS. When no amounts are or thereafter may become payable by the
Pledgor with respect to any Obligations (except for any potential liability
under Section 2(d) of this Agreement), the Secured Party will Transfer to the
Pledgor all Posted Credit Support and the Interest Amount, if any.
PARAGRAPH 9. REPRESENTATIONS
Each party represents to the other party (which representations will be deemed
to be repeated as of each date on which it, as the Pledgor, Transfers Eligible
Collateral) that:
(i) it has the power to grant a security interest in and lien on any
Eligible Collateral it Transfers as the Pledgor and has taken all
necessary actions to authorize the granting of that security interest and
lien;
(ii) it is the sole owner of or otherwise has the right to Transfer all
Eligible Collateral it Transfers to the Secured Party hereunder, free and
clear of any security interest, lien, encumbrance or other restrictions
other than the security interest and lien granted under Paragraph 2;
(iii) upon the Transfer of any Eligible Collateral to the Secured Party
under the terms of this Annex, the Secured Party will have a valid and
perfected first priority security interest therein (assuming that any
central clearing corporation or any third-party financial intermediary or
other entity not within the control of the Pledgor involved in the
Transfer of that Eligible Collateral gives the notices and takes the
action required of it under applicable law for perfection of that
interest); and
(iv) the performance by it of its obligations under this Annex will not
result in the creation of any security interest, hen or other encumbrance
on any Posted Collateral other than the security interest and lien granted
under Paragraph 2.
6 ISDA(R)1994
PARAGRAPH 10. EXPENSES
(a) GENERAL. Except as otherwise provided in Paragraphs 10(b) and 10(c). each
party will pay its own costs and expenses in connection with performing its
obligations under this Annex and neither party will be liable for any costs and
expenses incurred by the other party in connection herewith.
(b) POSTED CREDIT SUPPORT. The Pledgor will promptly pay when due all taxes,
assessments or charges of any nature that are imposed with respect to Posted
Credit Support held by the Secured Party upon becoming aware of the same,
regardless of whether any portion of that Posted Credit Support is subsequently
disposed of under Paragraph 6(c), except for those taxes, assessments and
charges that result from the exercise of the Secured Party's rights under
Paragraph 6(c).
(c) LIQUIDATION/APPLICATION OF POSTED CREDIT SUPPORT. All reasonable costs and
expenses incurred by or on behalf of the Secured Party or the Pledgor in
connection with the liquidation and/or application of any Posted Credit Support
under Paragraph 8 will be payable, on demand and pursuant to the Expenses
Section of this Agreement, by the Defaulting Party or, if there is no Defaulting
Party, equally by the parties.
PARAGRAPH 11. MISCELLANEOUS
(a) DEFAULT INTEREST. A Secured Party that fails to make, when due, any Transfer
of Posted Collateral or the Interest Amount will be obligated to pay the Pledgor
(to the extent permitted under applicable law) an amount equal to interest at
the Default Rate multiplied by the Value of the items of property that were
required to be Transferred, from (and including) the date that Posted Collateral
or Interest Amount was required to be Transferred to (but excluding) the date of
Transfer of that Posted Collateral or Interest Amount. This interest will be
calculated on the basis of daily compounding and the actual number of days
elapsed.
(b) FURTHER ASSURANCES. Promptly following a demand made by a party, the other
party will execute, deliver, file and record any Financing statement, specific
assignment or other document and take any other action that may be necessary or
desirable and reasonably requested by that party to create, preserve, perfect or
validate any security interest or lien granted under Paragraph 2, to enable that
party to exercise or enforce its rights under this Annex with respect to Posted
Credit Support or an Interest Amount or to effect or document a release of a
security interest on Posted Collateral or an Interest Amount.
(c) FURTHER PROTECTION. The Pledgor will promptly give notice to the Secured
Party of, and defend against, any suit, action, proceeding or lien that involves
Posted Credit Support Transferred by the Pledgor or that could adversely affect
the security interest and lien granted by it under Paragraph 2, unless that
suit, action, proceeding or lien results from the exercise of the Secured
Party's rights under Paragraph 6(c).
(d) GOOD FAITH AND COMMERCIALLY REASONABLE MANNER. Performance of all
obligations under this Annex, including, but not limited to, all calculations,
valuations and determinations made by either party, will be made in good faith
and in a commercially reasonable manner.
(e) DEMANDS AND NOTICES. All demands and notices made by a party under this
Annex will be made as specified in the Notices Section of this Agreement, except
as otherwise provided in Paragraph 13.
(f) SPECIFICATIONS OF CERTAIN MATTERS. Anything referred to in this Annex as
being specified in Paragraph 13 also may be specified in one or more
Confirmations or other documents and this Annex will be construed accordingly.
7 ISDA(R)1994
PARAGRAPH 12. DEFINITIONS
As used in this Annex:--
"CASH" means the lawful currency of the United States of America.
"CREDIT SUPPORT AMOUNT" has the meaning specified in Paragraph 3.
"CUSTODIAN" has the meaning specified in Paragraphs 6(b)(i) and 13.
"DELIVERY AMOUNT" has the meaning specified in Paragraph 3(a).
"DISPUTING PARTY" has the meaning specified in Paragraph 5.
"DISTRIBUTIONS" means with respect to Posted Collateral other than Cash, all
principal, interest and other payments and distributions of cash or other
property with respect thereto, regardless of whether the Secured Party has
disposed of that Posted Collateral under Paragraph 6(c). Distributions will not
include any item of property acquired by the Secured Party upon any disposition
or liquidation of Posted Collateral or, with respect to any Posted Collateral in
the form of Cash, any distributions on that collateral, unless otherwise
specified herein.
"ELIGIBLE COLLATERAL" means, with respect to a party, the items, if any,
specified as such for that party in Paragraph 13.
"ELIGIBLE CREDIT SUPPORT" means Eligible Collateral and Other Eligible Support.
"EXPOSURE" means for any Valuation Date or other date for which Exposure is
calculated and subject to Paragraph 5 in the case of a dispute, the amount, if
any, that would be payable to a party that is the Secured Party by the other
party (expressed as a positive number) or by a party that is the Secured Party
to the other party (expressed as a negative number) pursuant to Section
6(e)(ii)(2)(A) of this Agreement as if all Transactions (or Swap Transactions)
were being terminated as of the relevant Valuation Time; provided that Market
Quotation will be determined by the Valuation Agent using its estimates at
mid-market of the amounts that would be paid for Replacement Transactions (as
that term is defined in the definition of "Market Quotation").
"INDEPENDENT AMOUNT" means, with respect to a party, the amount specified as
such for that party in Paragraph 13; if no amount is specified, zero.
"INTEREST AMOUNT" means, with respect to an Interest Period, the aggregate sum
of the amounts of interest calculated for each day in that Interest Period on
the principal amount of Posted Collateral in the form of Cash held by the
Secured Party on that day, determined by the Secured Party for each such day as
follows:
(x) the amount of that Cash on that day; multiplied by
(y) the Interest Rate in effect for that day; divided by
(z) 360.
"INTEREST PERIOD" means the period from (and including) the last Local Business
Day on which an Interest Amount was Transferred (or, if no Interest Amount has
yet been Transferred, the Local Business Day on which Posted Collateral in the
form of Cash was Transferred to or received by the Secured Party) to (but
excluding) the Local Business Day on which the current Interest Amount is to be
Transferred.
"INTEREST RATE" means the rate specified in Paragraph 13.
"LOCAL BUSINESS DAY", unless otherwise specified in Paragraph 13, has the
meaning specified in the Definitions Section of this Agreement, except that
references to a payment in clause (b) thereof will be deemed to include a
Transfer under this Annex.
8 ISDA(R)1994
"MINIMUM TRANSFER AMOUNT" means, with respect to a party, the amount specified
as such for that party in Paragraph 13; if no amount is specified, zero.
"NOTIFICATION TIME" has the meaning specified in Paragraph 13.
"OBLIGATIONS" means, with respect to a party, all present and future obligations
of that party under this Agreement and any additional obligations specified for
that party in Paragraph 13.
"OTHER ELIGIBLE SUPPORT" means, with respect to a party, the items, if any,
specified as such for that party in Paragraph 13.
"OTHER POSTED SUPPORT" means all Other Eligible Support Transferred to the
Secured Party that remains in effect for the benefit of that Secured Party.
"PLEDGOR" means either party, when that party (i) receives a demand for or is
required to Transfer Eligible Credit Support under Paragraph 3(a) or (ii) has
Transferred Eligible Credit Support under Paragraph 3(a).
"POSTED COLLATERAL" means all Eligible Collateral, other property,
Distributions, and all proceeds thereof that have been Transferred to or
received by the Secured Party under this Annex and not Transferred to the
Pledgor pursuant to Paragraph 3(b), 4(d)(ii) or 6(d)(i) or released by the
Secured Party under Paragraph 8. Any Interest Amount or portion thereof not
Transferred pursuant to Paragraph 6(d)(ii) will constitute Posted Collateral in
the form of Cash.
"POSTED CREDIT SUPPORT" means Posted Collateral and Other Posted Support.
"RECALCULATION DATE" means the Valuation Date that gives rise to the dispute
under Paragraph 5; provided, however, that if a subsequent Valuation Date occurs
under Paragraph 3 prior to the resolution of the dispute, then the
"Recalculation Date" means the most recent Valuation Date under Paragraph 3.
"RESOLUTION TIME" has the meaning specified in Paragraph 13.
"RETURN AMOUNT" has the meaning specified in Paragraph 3(b).
"SECURED PARTY" means either party, when that party (i) makes a demand for or is
entitled to receive Eligible Credit Support under Paragraph 3(a) or (ii) holds
or is deemed to hold Posted Credit Support.
"SPECIFIED CONDITION" means, with respect to a party, any event specified as
such for that party in Paragraph 13.
"SUBSTITUTE CREDIT SUPPORT" has the meaning specified in Paragraph 4(d)(i).
"SUBSTITUTION DATE" has the meaning specified in Paragraph 4(d)(ii).
"THRESHOLD" means, with respect to a party, the amount specified as such for
that party in Paragraph 13; if no amount is specified, zero.
"TRANSFER" means, with respect to any Eligible Credit Support, Posted Credit
Support or Interest Amount, and in accordance with the instructions of the
Secured Party, Pledgor or Custodian, as applicable:
(i) in the case of Cash, payment or delivery by wire transfer into one or
more bank accounts specified by the recipient;
(ii) in the case of certificated securities that cannot be paid or
delivered by book-entry, payment or delivery in appropriate physical form
to the recipient or its account accompanied by any duly executed
instruments of transfer, assignments in blank, transfer tax stamps and any
other documents necessary to constitute a legally valid transfer to the
recipient;
(iii) in the case of securities that can be paid or delivered by
book-entry, the giving of written instructions to the relevant depository
institution or other entity specified by the recipient, together with a
written copy thereof to the recipient, sufficient if complied with to
result in a legally effective transfer of the relevant interest to the
recipient; and
(iv) in the case of Other Eligible Support or Other Posted Support, as
specified in Paragraph 13.
9 ISDA(R)1994
"VALUATION AGENT" has the meaning specified in Paragraph 13.
"VALUATION DATE" means each date specified in or otherwise determined pursuant
to Paragraph 13.
"VALUATION PERCENTAGE" means, for any item of Eligible Collateral, the
percentage specified in Paragraph 13.
"VALUATION TIME" has the meaning specified in Paragraph 13.
"VALUE" means for any Valuation Date or other date for which Value is calculated
and subject to Paragraph 5 in the case of a dispute, with respect to:
(i) Eligible Collateral or Posted Collateral that is:
(A) Cash, the amount thereof; and
(B) a security, the bid price obtained by the Valuation Agent
multiplied by the applicable Valuation Percentage, if any;
(ii) Posted Collateral that consists of items that are not specified as
Eligible Collateral, zero; and
(iii) Other Eligible Support and Other Posted Support, as specified in
Paragraph 13.
10 ISDA(R)1994
CREDIT SUPPORT ANNEX
TO THE SCHEDULE TO THE
MASTER AGREEMENT
DATED AS OF JUNE 30, 2004,
BETWEEN
J. ARON & COMPANY ("J. ARON")
AND
CAPITAL C OHIO, INC.
("CAPITAL C OHIO").
IN RELATION TO TRANSACTIONS ENTERED INTO IN ANTICIPATION OF AND IN
CONNECTION WITH THE MERGER OF CAPITAL C OHIO WITH AND INTO BELDEN
&BLAKE CORPORATION
PARAGRAPH 13. ELECTIONS AND VARIABLES
(a) SECURITY INTEREST FOR "OBLIGATIONS". The term "OBLIGATIONS" as used in
this Annex includes the following additional obligations:
With respect to Belden & Blake: Not applicable.
(b) CREDIT SUPPORT OBLIGATIONS.
(i) DELIVERY AMOUNT, RETURN AMOUNT AND CREDIT SUPPORT AMOUNT.
(A) "DELIVERY AMOUNT" has the meaning specified in Paragraph 3(a).
Notwithstanding anything to the contrary in subparagraph 3(a), in
respect of the Delivery Amount applicable to Belden & Blake for any
Valuation Date:
a) if at any time between the date of the Credit Agreement and the
date that is 18 months following the date of the Credit Agreement,
the Delivery Amount would otherwise exceed $55,000,000 then the
Delivery Amount shall be deemed to be $55,000,000; and
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b) if at any time from and after the date that is 18 months
following the date of the Credit Agreement, the Delivery Amount
would otherwise exceed the Applicable Delivery Amount Cap, then the
Delivery Amount shall be deemed to be the Applicable Delivery Amount
Cap. For purposes of this provision, the "Applicable Delivery Amount
Cap" means, as of any determination date, the lesser of $40,000,000
and the lowest Potential Exposure Amount for J. Aron determined for
all Credit Support Annex Determination Dates occurring on or before
such determination date. "Potential Exposure" means the amount that
J. Aron could be owed if it were to terminate the Transactions under
this Agreement based on the occurrence of an Event of Default with
respect to Belden & Blake on any Credit Support Annex Determination
Date determined by J. Aron in a commercially reasonable manner and
consistent with its practices for determining potential exposures
for transactions of the same type as the Transactions under this
Agreement using statistical analysis of historical data with 95th
percentile confidence interval and "Credit Support Annex
Determination Date" means each of July 15, 2005, January 15, 2006,
July 15, 2006, January 15, 2007, July 15, 2007, January 15, 2008,
July 15, 2008, January 15, 2009, July 15, 2009, January 15, 2010,
July 15, 2010, January 15, 2011, July 15, 2011, January 15, 2012 and
July 15, 2012; provided, however that if any of the foregoing days
is not a Local Business Day then the Applicable Credit Support Annex
Determination Date that would have otherwise occurred on such date
shall be deemed to be the next following day that is a Local
Business Day. The parties acknowledge that Capital C Ohio (or Belden
& Blake after the Merger) intends, from time to time, to enter into
additional hedging arrangements and may approach J. Aron to request
a review of the Applicable Delivery Amount Cap and that J. Aron will
act in a commercially reasonable manner in consideration of such
requests taking into account the value of the Collateral provided
under the Collateral Trust Agreement.
(B) "RETURN AMOUNT" has the meaning specified in Paragraph
3(b).
(C) "CREDIT SUPPORT AMOUNT" has the meaning specified in
Paragraph 3.
(ii) ELIGIBLE COLLATERAL. The following items will qualify as "ELIGIBLE
COLLATERAL" for the party specified:
VALUATION
BELDEN & BLAKE PERCENTAGE
(A) Cash [X] 100%
(B) Negotiable debt obligations issued by the
U.S. Treasury Department having an original
maturity at issuance of not more than one
year ("Treasury Bills") and maturing not
more than 180 days from the date of Transfer
by the Pledgor to the Secured Party [X] 98.5%
- 2 -
(iii) OTHER ELIGIBLE SUPPORT. Letter of Credit as defined in Paragraph
13(j)(v) and any other mutually acceptable collateral will qualify
as "OTHER ELIGIBLE SUPPORT" for either party (provided that the
Collateral shall not constitute "OTHER ELIGIBLE SUPPORT"). In this
regard, the parties acknowledge and agree that it is the intention
of Belden & Blake to utilize the LC Facility to meet its obligations
under the Annex and that it shall constitute an Event of Default
with respect to Belden & Blake for the LC Facility to be used for
any other purpose except to the extent that the Applicable Delivery
Amount Cap is less than $40 million.
(iv) THRESHOLDS.
(A) "INDEPENDENT AMOUNT" MEANS with respect to Belden & Blake : (i)
at all times prior to July 15, 2008, $20,000,000 and (ii) after July
15, 2008, an amount equal to the lesser of $20,000,000 and the
lowest Maximum Exposure Amount determined for all Credit Support
Annex Determination Dates. For this purpose, "Maximum Exposure
Amount" means the largest exposure that J. Aron could have to Belden
& Blake during the course of three consecutive Local Business Days
in respect of Transactions under this Agreement (taking into account
the cost associated with terminating such Transactions) as
determined by J. Aron on each Credit Support Annex Determination
Date.
(B) "THRESHOLD" means with respect to Belden & Blake : $0
(C) "MINIMUM TRANSFER AMOUNT" means with respect to Belden & Blake :
$0
(D) ROUNDING. The Delivery Amount and the Return Amount will be
rounded up and down to the nearest integral multiple of $5,000,000
respectively.
(c) VALUATION AND TIMING.
(i) "VALUATION AGENT" means, for the purposes of this Annex, J. Aron.
(ii) "VALUATION DATE" means each New York Business Day (as defined below)
which, if treated as a Valuation Date, would result in a Delivery
Amount or a Return Amount. A notice of the Valuation Agent's
calculations may be combined with a demand for a Delivery Amount or
a Return Amount.
(iii) "VALUATION TIME" means the close of business in New York City on the
Valuation Date; provided that the calculations of Value and Exposure
will be made as of approximately the same time on the same date.
(iv) "NOTIFICATION TIME" means 12:00 noon, New York time, on a New York
Business Day. Notwithstanding Paragraph 4(b), if on any New York
Business Day a demand for
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Transfer of Eligible Credit Support or Posted Credit Support is made
by the Notification Time, then the relevant Transfer will be made by
the close of business on the third following New York Business Day
and, if any such demand is made after the Notification Time, the
relevant Transfer will be made by the close of business on the
fourth following New York Business Day.
(v) "NEW YORK BUSINESS DAY" means a Local Business Day in New York City.
(d) CONDITIONS PRECEDENT AND SECURED PARTY'S RIGHTS AND REMEDIES. The
following Termination Event(s) will be a "SPECIFIED CONDITION" for the
party specified (that party being the Affected Party if the Termination
Event occurs with respect to that party):
BELDEN &
J. ARON BLAKE
Illegality [ ] [ ]
Tax Event [ ] [ ]
Tax Event Upon Merger [ ] [ ]
Credit Event Upon Merger [ x ] [ ]
Additional Termination Event(s): [ ] [ ]
(e) SUBSTITUTION.
(i) "SUBSTITUTION DATE" has the meaning specified in Paragraph 4(d)(ii).
(ii) CONSENT. If specified here as applicable, then the Pledgor must
obtain the Secured Party's consent for any substitution pursuant to
Paragraph 4(d): Inapplicable.
(f) DISPUTE RESOLUTION.
(i) "RESOLUTION TIME" means 1:00 p.m., New York time, on the Local
Business Day following the date on which notice of the dispute is
given under Paragraph 5.
(ii) "VALUE". For purposes of Paragraphs 5(i)(c) and 5(ii), disputes over
Value will be resolved by the Valuation Agent seeking three
mid-market quotes as of the relevant Valuation Date or date of
Transfer from parties that regularly act as dealers in the
securities or other property in question. The Value will be the
arithmetic mean of the quotes received by the Valuation Agent.
(iii) "ALTERNATIVE". The provisions of Paragraph 5 will apply; provided,
however, that notwithstanding any contrary provision of Paragraph 5,
the full amount of each Delivery Amount as calculated by the
Valuation Agent shall be transferred by the Pledgor to the
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Secured Party in accordance with the requirements of Paragraphs 4(b)
and 13(c)(iv). The parties agree that the mechanisms herein
providing for resolution of disputes shall not be used if the amount
in dispute does not exceed US$500,000.
(g) HOLDING AND USING POSTED COLLATERAL.
(i) ELIGIBILITY TO HOLD POSTED COLLATERAL; CUSTODIANS. J. Aron and its
Custodian will be entitled to hold Posted Collateral pursuant to
Paragraph 6(b); provided that the following conditions applicable to
it are satisfied:
(1) J. Aron is not a Defaulting Party and there is no Specified
Condition that has occurred or is continuing with respect to J.
Aron.
(2) Posted Collateral may be held only in the United States.
Initially, the CUSTODIAN for J. Aron is Goldman Sachs & Co.
(ii) USE OF POSTED COLLATERAL. The provisions of Paragraph 6(c) will
apply to each party, provided that J. Aron will attempt to draw on
the Eligible Collateral and Other Eligible Support prior to seeking
to receive any portion of the Collateral upon the liquidation or
other disposition thereof pursuant to the Collateral Documents.
(h) DISTRIBUTIONS AND INTEREST AMOUNT.
(i) INTEREST RATE. The "INTEREST RATE" will be the Federal Funds
(Effective) rate minus 25 basis points as displayed on Telerate page
120. Notwithstanding anything herein to the contrary, each calendar
month shall be an "INTEREST PERIOD."
(ii) TRANSFER OF INTEREST AMOUNT. The Transfer of the Interest Amount
will be made on the third New York Business Day following the end of
each Interest Period and on termination pursuant to Section 6 of
this Agreement.
(iii) ALTERNATIVE TO INTEREST AMOUNT. The provisions of Paragraph 6(d)(ii)
will apply.
(i) ADDITIONAL REPRESENTATIONS. none.
(j) OTHER ELIGIBLE SUPPORT AND OTHER POSTED SUPPORT.
(i) "VALUE" with respect to Other Eligible Support and Other Posted
Support means: the Valuation Percentage multiplied by the stated
amount (undrawn portion) of any Letter of Credit maintained by the
Pledgor (or its Credit Support Provider) for the benefit of the
Secured Party.
(ii) "TRANSFER" with respect to Other Eligible Support and Other Posted
Support means:
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(1) For purposes of Paragraph 3(a), delivery of the Letter of
Credit by the Pledgor or issuer of the Letter of Credit to the
Secured Party at the address of the Secured Party specified in
the "Notices" Section of this Agreement, or delivery of an
executed amendment to such Letter of Credit in form and
substance satisfactory to the Secured Party (extending the
term or increasing the amount available to the Secured Party
thereunder) by the Pledgor or the issuer of the Letter of
Credit to the Secured Party at the address of the Secured
Party specified in the "Notices" Section of this Agreement;
and
(2) For purposes of Paragraph 3(b), by the return of an
outstanding Letter of Credit by the Secured Party to the
Pledgor, at the address of the Pledgor specified in the
"Notices" Section of this Agreement, or delivery of an
executed amendment to the Letter of Credit in form and
substance satisfactory to the Secured Party (reducing the
amount available to the Secured Party thereunder) by the
Pledgor or the issuer of the Letter of Credit to the Secured
Party at the Secured Party's address specified in the
"Notices" Section of this Agreement. If a transfer is to be
effected by a reduction in the amount of an outstanding Letter
of Credit previously issued for the benefit of the Secured
Party, the Secured Party shall not unreasonably withhold its
consent to a commensurate reduction in the amount of such
Letter of Credit and shall take such action as is reasonably
necessary to effectuate such reduction.
(iii) LETTER OF CREDIT PROVISIONS. Other Eligible Support and Other Posted
Support provided in the form of a Letter of Credit shall be subject
to the following provisions:
(1) Unless otherwise agreed in writing by the parties, each Letter
of Credit shall be provided in accordance with the provisions
of this Agreement, and each Letter of Credit shall be
maintained for the benefit of the Secured Party. The Pledgor
shall (i) renew or cause renewal of each outstanding Letter of
Credit on a timely basis as provided in the relevant Letter of
Credit, (ii) if the bank that issued an outstanding Letter of
Credit has indicated its intent not to renew such Letter of
Credit, provide a substitute Letter of Credit at least ten
(10) Business Days prior to the expiration of the outstanding
Letter of Credit, and (iii) if a bank issuing a Letter of
Credit shall fail to honor the Secured Party's properly
documented request to draw on an outstanding Letter of Credit,
provide for the benefit of the Secured Party, (x) a substitute
Letter of Credit, that is issued by a bank acceptable to the
Secured Party, other than the bank failing to honor the
outstanding Letter of Credit, or (y) Eligible Collateral, in
each case within one (1) Business Day after the Pledgor
receives notice of such failure; provided that, at the time
the Pledgor is required to perform in accordance with (i),
(ii), or (iii) above, the Delivery Amount applicable to the
Pledgor equals or exceeds the Pledgor's Minimum Transfer
Amount.
(2) If Letter of Credit is to expire within ten (10) Business
Days, the Secured Party
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shall have the right to draw on such Letter of Credit and
utilize the proceeds of such draw as Eligible Collateral to
satisfy the Credit Support Obligations owing to it under this
Annex.
(3) As one method of providing Eligible Credit Support, the
Pledgor may increase the amount of an outstanding Letter of
Credit or establish one or more additional Letters of Credit.
(4) If the Pledgor shall fail to renew, substitute, or
sufficiently increase the amount of an outstanding Letter of
Credit (as the case may be), or establish one or more
additional Letters of Credit, or otherwise provide sufficient
Eligible Credit Support and if the Delivery Amount applicable
to the Pledgor equals or exceeds the Pledgor's Minimum
Transfer Amount as a result of such failure, then the Secured
Party may draw on the entire, undrawn portion of any
outstanding Letter of Credit upon submission to the bank
issuing such Letter of Credit of one or more certificates
specifying the amounts due and owing to the Secured Party in
accordance with the specific requirements of the Letter of
Credit. The Pledgor shall remain liable for any amounts due
and owing to the Secured Party and remaining unpaid after the
application of the amounts so drawn by the Secured Party.
(5) If a party's Credit Support Provider shall furnish a Letter of
Credit hereunder, the amount otherwise required under such
Letter of Credit may at the option of such Credit Support
Provider be reduced by the amount of any Letter of Credit
established by such party (but only for such time as such
party's Letter of Credit shall be in effect). If a party shall
be required to furnish a Letter of Credit hereunder, the
amount otherwise required under such Letter of Credit may at
the option of such party be reduced by the amount of any
Letter of Credit established by such party's Credit Support
Provider (but only for such time as such Credit Support
Provider's Letter of Credit shall be in effect).
(6) Upon the occurrence of a Letter of Credit Default, the Pledgor
agrees to deliver a substitute Letter of Credit or other
Eligible Credit Support to the Secured Party in an amount at
least equal to that of the Letter of Credit to be replaced on
or before the first (1st) Business Day after written demand by
the Secured Party (or the fourth (4th) Business Day if only
clause (i) under the definition of Letter of Credit Default
applies) and failure to do so shall constitute an Event of
Default within the terms of clause 5(a)(iii) of the Master
Agreement (it being understood that if the relevant Letter of
Credit has been drawn and the proceeds are held by the Secured
Party as Eligible Credit Support, then the Pledgor shall not
be obligated to replace such Letter of Credit).
(7) Notwithstanding Paragraph 10, in all cases, the costs and
expenses (including but not limited to the reasonable costs,
expenses, and external attorneys' fees of the Secured Party)
of establishing, renewing, substituting, canceling,
increasing, and
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reducing the amount of (as the case may be) one or more
Letters of Credit shall be borne by the Pledgor.
(iv) CERTAIN RIGHTS AND REMEDIES.
(1) SECURED PARTY'S RIGHTS AND REMEDIES. For purposes of Paragraph
8(a)(ii), the Secured Party may draw on any outstanding Letter
of Credit (Other Posted Support) in an amount equal to any
amounts payable by the Pledgor with respect to any
Obligations.
(2) PLEDGOR'S RIGHTS AND REMEDIES. For purposes of Paragraph
8(b)(ii), (i) the Secured Party will be obligated immediately
to Transfer any Letter of Credit (Other Posted Support) to the
Pledgor and (ii) the Pledgor may do any one or more the
following: (x) to the extent that the Letter of Credit (Other
Posted Support) is not Transferred to the Pledgor as required
pursuant to (i) above, Set-off any amounts payable by the
Pledgor with respect to any Obligations against any such
Letter of Credit (Other Posted Support) held by the Secured
Party and to the extent its rights to Set-off are not
exercised, withhold payment of any remaining amounts payable
by the Pledgor with respect to any Obligations, up to the
Value of any remaining Posted Collateral and the Value of any
Letter of Credit (Other Posted Support) held by the Secured
Party, until any such Posted Collateral and such Letter of
Credit (Other Posted Support) is transferred to the Pledgor;
and (y) exercise rights and remedies available to the Pledgor
under the terms of the Letter of Credit.
(v) ADDITIONAL DEFINITIONS. As used in this Agreement:
"LETTER OF CREDIT" shall mean an irrevocable, transferable, standby
Letter of Credit substantially in the form attached in the Schedule,
issued by a major U.S. commercial bank or a foreign bank with a U.S.
branch office, with the respective rating then assigned to its
unsecured and senior, long-term debt or deposit obligations (not
supported by third party credit enhancement) by S&P or Moody's (the
"Letter of Credit Issuer Rating") of at least "A-" by S&P or "A3" by
Moody's.
"LETTER OF CREDIT DEFAULT" shall mean with respect to an outstanding
Letter of Credit, the occurrence of any of the following events: (i)
the Letter of Credit Issuer Rating ceases to be at least "A-" by S&P
or "A3" by Moody's; (ii) the issuer of the Letter of Credit shall
fail to comply with or perform its obligations under such Letter of
Credit if such failure shall be continuing after the lapse of any
applicable grace period; (iii) the issuer of such Letter of Credit
shall disaffirm, disclaim, repudiate or reject, in whole or in part,
or challenge the validity of, such Letter of Credit; (iv) such
Letter of Credit shall expire or terminate prior to being drawn by
the beneficiary thereof, or shall fail or cease to be in full force
and effect at any time during the term of any Transaction under this
Agreement, in each case, without having been replaced by another
Letter of Credit; or (v) any event analogous to an event specified
in Section 5(a)(vii) of this Agreement shall occur with respect to
the issuer of such Letter of Credit; provided, however, that no
Letter of Credit
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Default shall occur in any event with respect to a Letter of Credit
after the time such Letter of Credit is required to be canceled or
returned to the Pledgor in accordance with the terms of this
Agreement.
(k) DEMANDS AND NOTICES.
All demands, specifications and notices under this Annex will be made pursuant
to the Notices Section of this Agreement, unless otherwise specified here:
J. Aron: as specified in Part 4 of the Schedule to the Agreement.
Belden & Blake: as specified in Part 4 of the Schedule to the Agreement.
(l) ADDRESSES FOR TRANSFERS.
J. Aron: as notified in writing from time to time.
Belden & Blake : as notified in writing from time to time.
(m) OTHER PROVISIONS.
(i) In Paragraph 4(d)(ii), the phrase "(or less than, but as close as
practicable to)" shall be inserted in the second-to-last line after the
words "equal to."
(iii) Paragraph 8(a) is amended as follows: In the second line, the words
"Early Termination Period has commenced or an" are inserted before the
term "Early Termination Date," and on the fourth-from-last line, the words
"or commodities" are inserted after the phrase "in the form of
securities."
(iv) Paragraph 1(b) is deleted and replaced by the following:
"(b) Secured Party and Pledgor. All references in this Annex to the
`Secured Party' will be to J. Aron and all corresponding references
to the `Pledgor' will be to Belden & Blake; provided, however, that
if Other Posted Support is held by a party to this Annex, all
references herein to that party as the Secured Party with respect to
that Other Posted Support will be to that party as the beneficiary
thereof and will not subject that support or that party as
beneficiary thereof to provisions of law generally relating to
security interest and secured parties."
(v) Modifications to Paragraph 12. The following definitions of "Pledgor"
and "Secured Party" are substituted for the definitions of those terms
contained in Paragraph 12 of this Annex:
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`Pledgor' means Belden & Blake, when that party (i) receives a
demand for or is required to Transfer Eligible Credit Support under
Paragraph 3(a) or (ii) has Transferred Eligible Credit Support under
Paragraph 3(a).
`Secured Party' means J. Aron, when that party (i) makes a demand
for or is entitled to receive Eligible Credit Support under
Paragraph 3(a) or (ii) holds or is deemed to hold Posted
Collateral."
(vi) Belden & Blake , J. Aron and Goldman, Sachs & Co. ("GS&Co.") hereby
agree that Posted Credit Support may be held by GS&Co. as agent and
securities intermediary on behalf of J. Aron. Belden & Blake acknowledges
and GS&Co. agrees that GS&Co. will take only such actions with respect to
such Posted Credit Support as J. Aron shall direct (including, but not
limited to, instructions from J. Aron directing transfer of Posted Credit
Support in circumstances prescribed by the provisions of this Annex), and
in no event shall any consent of Belden & Blake be required for the taking
of any such action by GS&Co.
(vii) The provisions of this Annex shall not be effective until
consummation of the Merger.
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CAPITAL C OHIO INC. J. ARON & COMPANY
By: /s/ GREGORY A. BEARD By: /s/ L. PETER O'HAGAN
----------------------- -----------------------------
Name: GREGORY A. BEARD Name: L. PETER O'HAGAN
Title: Title:
GOLDMAN SACHS & CO.,
SOLELY IN ITS CAPACITY AS AN AGENT AND SECURITIES
INTERMEDIARY OF J. ARON & COMPANY
WITH RESPECT TO PARAGRAPH 13(m)(vi) HEREOF
By: /s/ L. PETER O'HAGAN
--------------------------------
Name: L. PETER O'HAGAN
Title:
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Schedule
"Standard" letter of credit format for securing collateral obligations
WE HEREBY ESTABLISH OUR IRREVOCABLE STAND-BY LETTER OF CREDIT NO._____________
IN FAVOR OF:
J. ARON & COMPANY
85 BROAD STREET
NEW YORK, NY 10004
Attn : Sherry Lankford
Telex : 6720148 GSPNY
BY ORDER AND FOR THE ACCOUNT OF:
(insert full style and address)
FOR AN AMOUNT OF:
US DOLLARS _________________________
(UNITED STATES DOLLARS __________________________________)
AVAILABLE FOR PAYMENT AT SIGHT UPON PRESENTATION AT OUR COUNTERS IN (insert city
and country where documents are to be presented) OF THE FOLLOWING DOCUMENT:
STATEMENT SIGNED BY A PURPORTEDLY AUTHORIZED REPRESENTATIVE OF J. ARON AND
COMPANY CERTIFYING THAT EITHER (I) (insert your company name) HAS NOT PERFORMED
IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT(S) BETWEEN J. ARON AND COMPANY AND
(insert your company name) OR (II) THIS LETTER OF CREDIT IS TO EXPIRE WITHIN TEN
(10) BUSINESS DAYS AND THAT THE AMOUNT BEING DRAWN OF USD_____________ DOES NOT
EXCEED THAT AMOUNT WHICH J. ARON AND COMPANY IS ENTITLED TO DRAW.
SPECIAL CONDITIONS:
1. PARTIAL AND MULTIPLE DRAWINGS ARE PERMITTED.
2. ALL CHARGES RELATED TO THIS LETTER OF CREDIT ARE FOR OPENER'S ACCOUNT.
3. DOCUMENTS MUST BE PRESENTED NOT LATER THAN (insert expiry date) OR IN THE
EVENT OF FORCE MAJEURE INTERRUPTING OUR BUSINESS, WITHIN THIRTY (30) DAYS
AFTER RESUMPTION OF OUR BUSINESS, WHICHEVER IS LATER.
UPON RECEIPT OF DOCUMENTS ISSUED IN COMPLIANCE WITH THE TERMS OF THIS CREDIT, WE
HEREBY IRREVOCABLY UNDERTAKE TO COVER YOU AS PER YOUR INSTRUCTIONS WITH VALUE
ONE BANK WORKING DAY.
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THIS STANDBY CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR
DOCUMENTARY CREDITS 1993 REVISION), I.C.C. PUBLICATION 500.
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