EX-10.3






Exhibit 10.3




CREDIT SUPPORT ANNEX




to the Schedule to the

Master Agreement

dated as of June 30, 2004,




Amended and Restated as of August 16, 2005




between




J. ARON & COMPANY (“J. Aron”)




and




BELDEN & BLAKE CORPORATION, as successor to Capital C Ohio, Inc.

(“Belden & Blake”).




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, if the Delivery Amount would
otherwise exceed $40,000,000 then the Delivery Amount shall be deemed to be
$40,000,000.




(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:





	 	 	 	 	 	 	 
	 	 	Belden & Blake	 	Valuation 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%








	 	(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”). Any such Other Eligible Support shall have a Valuation Percentage of 100%.






	 	(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, $0.




(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
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):





	 	 	 	 	 
	 	 	J. Aron	 	Belden & Blake
	Illegality

	 	[ ]
	 	[ ]
	 
	 	 	 	 
	Tax Event

	 	[ ]
	 	[ ]
	 
	 	 	 	 
	Tax Event Upon Merger

	 	[ ]
	 	[ ]
	 
	 	 	 	 
	Credit Event Upon Merger (from

the date hereof through April

30, 2009 only)

	 	



[ x ]
	 	



[ 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 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:






	 	(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 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 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 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.”




	 	(ii)	 	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.”






(iii) 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.”




(iv) 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:




‘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).



1




‘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.”




	 	(v)	 	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.





	 	 	 
	BELDEN & BLAKE CORPORATION	 	J. ARON & COMPANY
	By: /s/ James M. Vanderhider

	 	By: /s/ Susan Rudov
	 

	 	 
	Name: James M. Vanderhider

Title: President and COO

Date: August 16, 2005

	 	Name: Susan Rudov

Title: Vice President

Date: August 15, 2005
	 
	 	 
	
 
	 	GOLDMAN, SACHS & CO.,

solely in its capacity as an agent and securities

intermediary of J. Aron & Company

with respect to Paragraph 13(m)(v) hereof
	 
	 	 
	
 
	 	By: /s/ Greg W. Tebbe
	
 
	 	 
	
 
	 	Name: Greg W. Tebbe

Title: Managing Director

Date: August 15, 2005
	 
	 	 






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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.



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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