**Exhibit 10.102**

 

**(Multicurrency-Cross Border)**

 

**ISDA®**

International Swaps & Derivatives Association, Inc.

 

**MASTER AGREEMENT**

dated as of 12 December 2005

 

**The Royal Bank of Scotland plc (“Party A”) andArlington Tankers Ltd. (“Party B”)**

 

haveentered and/or anticipate entering into one or more transactions (each a “Transaction”)that are or will be governed by this Master Agreement, which includes theschedule (the “Schedule”), and the documents and other confirming evidence(each a “Confirmation”) exchanged between the parties confirming thoseTransactions.

 

Accordingly,the parties agree as follows:-

 

**1.****          ****Interpretation**

 

*(a)**         **Definitions.*The termsdefined in Section 14 and in the Schedule will have the meanings thereinspecified for the purpose of this Master Agreement.

 

*(b)**         **Inconsistency.*In the event ofany inconsistency between the provisions of the Schedule and the otherprovisions of this Master Agreement, the Schedule will prevail. In the event ofany inconsistency between the provisions of any Confirmation and this MasterAgreement (including the Schedule), such Confirmation will prevail for thepurpose of the relevant Transaction.

 

*(c)**          **Single Agreement.*All Transactionsare entered into in reliance on the fact that this Master Agreement and allConfirmations form a single agreement between the parties (collectivelyreferred to as this “Agreement”), and the parties would not otherwise enterinto any Transactions.

 

**2.****            ****Obligations**

 

(a)           *GeneralConditions.*

 

(i)      Each party will make eachpayment or delivery specified in each Confirmation to be made by it, subject tothe other provisions of this Agreement.

 

(ii)     Payments under this Agreementwill be made on the due date for value on that date in the place of the accountspecified in the relevant Confirmation or otherwise pursuant to this Agreement,in freely transferable funds and in the manner customary for payments in therequired currency. Where settlement is by delivery (that is, other than bypayment), such delivery will be made for receipt on the due date in the mannercustomary for the relevant obligation unless otherwise specified in therelevant Confirmation or elsewhere in this Agreement.

 

(iii)    Each obligation of each partyunder Section 2(a)(i) is subject to (1) the condition precedentthat no Event of Default or Potential Event of Default with respect to theother party has occurred and is continuing, (2) the condition precedentthat no Early Termination Date in respect of the relevant Transaction hasoccurred or been effectively designated and (3) each other applicablecondition precedent specified in this Agreement.

 

Copyright © 1992 by International Swaps & DerivativesAssociation, Inc.

 

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(b)           *Change ofAccount.*Either party may change its account for receiving apayment or delivery by giving notice to the other party at least five LocalBusiness Days prior to the scheduled date for the payment or delivery to whichsuch change applies unless such other party gives timely notice of a reasonableobjection to such change.

 

*(c)**          **Netting.*If on any dateamounts would otherwise be payable:-

 

(i)in the same currency; and

 

(ii) inrespect of the same Transaction,

 

byeach party to the other, then, on such date, each party’s obligation to makepayment of any such amount will be payable by one party exceeds the aggregateamount that would otherwise have been payable by the other party, replaced byan obligation upon the party by whom the larger aggregate amount would havebeen payable to pay to the other party the excess of the larger aggregateamount over the smaller aggregate amount.

 

Theparties may elect in respect of two or more Transactions that a net amount willbe determined in respect of all amounts payable on the same date in the samecurrency in respect of such Transactions, regardless of whether such amountsare payable in respect of the same Transaction. The election may be made in theSchedule or a Confirmation by specifying that subparagraph (ii) above willnot apply to the Transactions identified as being subject to the election,together with the starting date (in which case subparagraph (ii) abovewill not, or will cease to, apply to such Transactions from such date). Thiselection may be made separately for different groups of Transactions and willapply separately to each pairing of Offices through which the parties make andreceive payments or deliveries.

 

(d)          *Deductionor Withholding for Tax.*

 

*(i) Gross-Up.*All payments under thisAgreement will be made without any deduction or withholding for or on accountof any Tax unless such deduction or withholding is required by any applicablelaw, as modified by the practice of any relevant governmental revenueauthority, then in effect. If a party is so required to deduct or withhold,then that party (“X”) will:-

 

(1)   promptly notify the otherparty (“Y”) of such requirement;

 

(2)   pay to the relevantauthorities the full amount required to be deducted or withheld (including thefull amount required to be deducted or withheld from any additional amount paidby X to Y under this Section 2(d)) promptly upon the earlier ofdetermining that such deduction or withholding is required or receiving noticethat such amount has been assessed against Y;

 

(3)   promptly forward to Y anofficial receipt (or a certified copy), or other documentation reasonablyacceptable to Y, evidencing such payment to such authorities; and

 

(4)     if such Tax is anIndemnifiable Tax, pay to Y, in addition to the payment to which Y is otherwiseentitled under this Agreement, such additional amount as is necessary to ensurethat the net amount actually received by Y (free and clear of IndemnifiableTaxes, whether assessed against X or Y) will equal the full amount Y would havereceived had no such deduction or withholding been required. However, X willnot he required to pay any additional amount to Y to the extent that it wouldnot be required to be paid but for:-

 

(A)  the failure by Y to complywith or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or4(d); or

 

(B)   the failure of arepresentation made by Y pursuant to Section 3(f) to be accurate andtrue unless such failure would not have occurred but for (I) any actiontaken 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 ofwhether such action is taken or brought with respect to a party to thisAgreement) or (II) a Change in Tax Law.

 

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(ii) *Liability.*If:-

 

(1)  X is required by anyapplicable law, as modified by the practice of any relevant governmentalrevenue authority, to make any deduction or withholding in respect of which Xwould not be required to pay an additional amount to Y under Section 2(d)(i)(4);

 

(2)  X does not so deduct orwithhold; and

 

(3)  a liability resulting fromsuch Tax is assessed directly against X, then,

 

exceptto the extent Y has satisfied or then satisfies the liability resulting fromsuch Tax, Y will promptly pay to X the amount of such liability (including anyrelated liability for interest, but including any related liability forpenalties only if Y has failed to comply with or perform any agreementcontained in Section 4(a)(i), 4(a)(iii) or 4(d)).

 

(e)           *DefaultInterest; Other Amounts.*Prior to the occurrence or effectivedesignation of an Early Termination Date in respect of the relevantTransaction, a party that defaults in the performance of any payment obligationwill, to the extent permitted by law and subject to Section 6(c), berequired to pay interest (before as well as after judgment) on the overdueamount to the other party on demand in the same currency as such overdueamount, for the period from (and including) the original due date for paymentto (but excluding) the date of actual payment, at the Default Rate. Suchinterest will be calculated on the basis of daily compounding and the actualnumber of days elapsed. If, prior to the occurrence or effective designation ofan Early Termination Date in respect of the relevant Transaction, a partydefaults in the performance of any obligation required to be settled bydelivery, it will compensate the other party on demand if and to the extentprovided for in the relevant Confirmation or elsewhere in this Agreement.

 

**3.****              ****Representations**

 

Eachparty represents to the other party (which representations will be deemed to berepeated 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 thetermination of this Agreement) that:-

 

(a)           *BasicRepresentations.*

 

*(i)** **Status.*It is dulyorganised and validly existing under the laws of the jurisdiction of itsorganisation or incorporation and, if relevant under such laws, in goodstanding;

 

*(ii)**   **Powers.*It has the powerto execute this Agreement and any other documentation relating to thisAgreement to which it is a party, to deliver this Agreement and any otherdocumentation relating to this Agreement that it is required by this Agreementto deliver and to perform its obligations under this Agreement and anyobligations it has under any Credit Support Document to which it is a party andhas taken all necessary action to authorise such execution, delivery andperformance;

 

*(iii)** **NoViolation or Conflict.*Such execution, delivery and performance donot violate or conflict with any law applicable to it, any provision of itsconstitutional documents, any order or judgment of any court or other agency ofgovernment applicable to it or any of its assets or any contractual restrictionbinding on or affecting it or any of its assets;

 

*(iv)**  **Consents.*All governmentaland other consents that are required to have been obtained by it with respectto this Agreement or any Credit Support Document to which it is a party havebeen obtained and are in full force and effect and all conditions of any suchconsents have been complied with; and

 

*(v)**   **ObligationsBinding.*Its obligations under this Agreement and any CreditSupport Document to which it is a party constitute its legal, valid and bindingobligations, enforceable in accordance with their respective terms (subject toapplicable bankruptcy, reorganisation, insolvency, moratorium or similar lawsaffecting creditors’ rights generally and subject, as to enforceability, toequitable principles of general application (regardless of whether enforcementis sought in a proceeding in equity or at law)).

 

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*(b)**         **Absence of Certain Events.*No Event ofDefault or Potential Event of Default or, to its knowledge, Termination Eventwith respect to it has occurred and is continuing and no such event orcircumstance would occur as a result of its entering into or performing itsobligations under this Agreement or any Credit Support Document to which it isa party.

 

*(c)**          **Absence of Litigation.*There is notpending or, to its knowledge, threatened against it or any of its Affiliatesany action, suit or proceeding at law or in equity or before any court,tribunal, governmental body, agency or official or any arbitrator that islikely to affect the legality, validity or enforceability against it of thisAgreement or any Credit Support Document to which it is a party or its abilityto perform its obligations under this Agreement or such Credit SupportDocument.

 

*(d)**         **Accuracy of SpecifiedInformation.*All applicable information that is furnished inwriting by or on behalf of it to the other party and is identified for thepurpose of this Section 3(d) in the Schedule is, as of the date ofthe information, true, accurate and complete in every material respect.

 

*(e)**          **Payer Tax Representation.*Eachrepresentation specified in the Schedule as being made by it for the purpose ofthis Section 3(e) is accurate and true.

 

*Payee Tax Representations.*Each representation specifiedin the Schedule as being made by it for the purpose of this Section 3(f) isaccurate and true.

 

**4.****            ****Agreements**

 

Eachparty agrees with the other that, so long as either party has or may have anyobligation under this Agreement or under any Credit Support Document to whichit is a party:-

 

(a)**          ***FurnishSpecified Information.*It will deliver to the other party or, in certaincases under subparagraph (iii) below, to such government or taxingauthority as the other party reasonably directs:-

 

(i)    any forms, documents orcertificates relating to taxation specified in the Schedule or anyConfirmation;

 

(ii)   any other documents specifiedin the Schedule or any Confirmation; and

 

(iii) uponreasonable demand by such other party, any form or document that may berequired or reasonably requested in writing in order to allow such other partyor its Credit Support Provider to make a payment under this Agreement or anyapplicable Credit Support Document without any deduction or withholding for oron 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 documentwould not materially prejudice the legal or commercial position of the party inreceipt of such demand), with any such form or document to be accurate andcompleted in a manner reasonably satisfactory to such other party and to beexecuted and to be delivered with any reasonably required certification,

 

ineach case by the date specified in the Schedule or such Confirmation or, ifnone is specified, as soon as reasonably practicable.

 

(b)           *MaintainAuthorisations.*It will use all reasonable efforts to maintain infull force and effect all consents of any governmental or other authority thatare required to he obtained by it with respect to this Agreement or any CreditSupport Document to which it is a party and will use all reasonable efforts toobtain any that may become necessary in the future.

 

(c)           *Comply withLaws. It*will comply in all material respects with allapplicable laws and orders to which it may be subject if failure so to complywould materially impair its ability to perform its obligations under thisAgreement or any Credit Support Document to which it is a party.

 

(d)           *TaxAgreement.*It will give notice of any failure of arepresentation made by it under Section 3(f) to be accurate and truepromptly upon learning of such failure.

 

(e)           *Payment ofStamp Tax.*Subject to Section 11, it will pay any Stamp Taxlevied or imposed upon it or in respect of its execution or performance of thisAgreement by a jurisdiction in which it is incorporated,

 

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organised,managed and controlled, or considered to have its seat, or in which a branch oroffice through which it is acting for the purpose of this Agreement is located(“Stamp Tax Jurisdiction”) and will indemnify the other party against any StampTax levied or imposed upon the other party or in respect of the other party’ sexecution or performance of this Agreement by any such Stamp Tax Jurisdictionwhich is not also a Stamp Tax Jurisdiction with respect to the other party.

 

**5.            Events of Default and TerminationEvents**

 

(a)           *Events ofDefault.*The occurrence at any time with respect to a partyor, if applicable, any Credit Support Provider of such party or any SpecifiedEntity of such party of any of the following events constitutes an event ofdefault (an “Event of Default”) with respect to such party:-

 

*(i) Failure to Pay or Deliver.*Failure by theparty to make, when due, any payment under this Agreement or delivery under Section 2(a)(i) or2(e) required to be made by it if such failure is not remedied on orbefore the third Local Business Day after notice of such failure is given tothe party;

 

(ii) *Breach of Agreement.*Failure by the partyto comply with or perform any agreement or obligation (other than an obligationto make any payment under this Agreement or delivery under Section 2(a)(i) or2(e) or to give notice of a Termination Event or any agreement orobligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be compliedwith or performed by the party in accordance with this Agreement if suchfailure is not remedied on or before the thirtieth day after notice of suchfailure is given to the party;

 

(iii) *Credit Support Default.*

 

(1)  Failure by the party or anyCredit Support Provider of such party to comply with or perform any agreementor obligation to be complied with or performed by it in accordance with anyCredit Support Document if such failure is continuing after any applicablegrace period has elapsed;

 

(2)  the expiration or terminationof such Credit Support Document or the failing or ceasing of such CreditSupport Document to be in full force and effect for the purpose of thisAgreement (in either case other than in accordance with its terms) prior to thesatisfaction of all obligations of such party under each Transaction to whichsuch Credit Support Document relates without the written consent of the otherparty; or

 

(3)  the party or such CreditSupport Provider disaffirms, disclaims, repudiates or rejects, in whole or inpart, or challenges the validity of, such Credit Support Document;

 

*(iv) Misrepresentation.*A representation (other thana representation under Section 3(e) or (f)) made or repeated ordeemed to have been made or repeated by the party or any Credit SupportProvider of such party in this Agreement or any Credit Support Document provesto have been incorrect or misleading in any material respect when made orrepeated or deemed to have been made or repeated;

 

*(v) Default under SpecifiedTransaction.*The party, any Credit Support Provider of such partyor any applicable Specified Entity of such party (I) defaults under aSpecified Transaction and, after giving effect to any applicable noticerequirement or grace period, there occurs a liquidation of, an acceleration ofobligations under, or an early termination of, that Specified Transaction, (2) defaults,after giving effect to any applicable notice requirement or grace period, inmaking any payment or delivery due on the last payment, delivery or exchangedate of, or any payment on early termination of, a Specified Transaction (orsuch default continues for at least three Local Business Days if there is noapplicable 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 tooperate it or act on its behalf);

 

*(vi) Cross Default.*If “CrossDefault” is specified in the Schedule as applying to the party, the occurrenceor existence of ( I) a default, event of default or other similar condition orevent (however

 

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described)in respect of such party, any Credit Support Provider of such party or anyapplicable Specified Entity of such party under one or more agreements orinstruments relating to Specified Indebtedness of any of them (individually orcollectively) in an aggregate amount of not less than the applicable ThresholdAmount (as specified in the Schedule) which has resulted in such SpecifiedIndebtedness becoming, or becoming capable at such time of being declared, dueand payable under such agreements or instruments, before it would otherwisehave been due and payable or (2) a default by such party, such CreditSupport Provider or such Specified Entity (individually or collectively) inmaking one or more payments on the due date thereof in an aggregate amount ofnot less than the applicable Threshold Amount under such agreements orinstruments (after giving effect to any applicable notice requirement or graceperiod);

 

(vii) *Bankruptcy.*The party, any Credit SupportProvider of such party or any applicable Specified Entity of such party:-

 

(1) isdissolved (other than pursuant to a consolidation, amalgamation or merger); (2) becomesinsolvent or is unable to pay its debts or fails or admits in writing itsinability generally to pay its debts as they become due; (3) makes ageneral assignment, arrangement or composition with or for the benefit of itscreditors; (4) institutes or has instituted against it a proceedingseeking a judgment of insolvency or bankruptcy or any other relief under anybankruptcy or insolvency law or other similar law affecting creditors’ rights,or a petition is presented for its winding-up or liquidation, and, in the caseof any such proceeding or petition instituted or presented against it, suchproceeding or petition (A) results in a judgment of insolvency orbankruptcy or the entry of an order for relief or the making of an order forits winding-up or liquidation or (B) is not dismissed, discharged, stayedor restrained in each case within 30 days of the institution or presentationthereof; (5) has a resolution passed for its winding-up, officialmanagement or liquidation (other than pursuant to a consolidation, amalgamationor merger); (6) seeks or becomes subject to the appointment of anadministrator, provisional liquidator, conservator, receiver, trustee,custodian or other similar official for it or for all or substantially all itsassets; (7) has a secured party take possession of all or substantiallyall its assets or has a distress, execution, attachment, sequestration or otherlegal process levied, enforced or sued on or against all or substantially allits assets and such secured party maintains possession, or any such process isnot dismissed, discharged, stayed or restrained, in each case within 30 daysthereafter; (8) causes or is subject to any event with respect to itwhich, under the applicable laws of any jurisdiction, has an analogous effectto any of the events specified in clauses (1) to *(7) *(inclusive); or (9) takesany action in furtherance of, or indicating its consent to, approval of, oracquiescence in, any of the foregoing acts; or

 

(viii) *Merger Without Assumption.*The party orany Credit Support Provider of such party consolidates or amalgamates with, ormerges with or into, or transfers all or substantially all its assets to,another entity and, at the time of such consolidation, amalgamation, merger ortransfer:-

 

(I) theresulting, surviving or transferee entity fails to assume all the obligationsof such party or such Credit Support Provider under this Agreement or anyCredit Support Document to which it or its predecessor was a party by operationof law or pursuant to an agreement reasonably satisfactory to the other partyto this Agreement; or

 

(2) thebenefits of any Credit Support Document fail to extend (without the consent ofthe other party) to the performance by such resulting, surviving or transfereeentity of its obligations under this Agreement.

 

(b)           *TerminationEvents.*The occurrence at any time with respect to a partyor, if applicable, any Credit Support Provider of such party or any SpecifiedEntity of such party of any event specified below constitutes an Illegality ifthe event is specified in (i) below, a Tax Event if the event is specifiedin (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

 

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UponMerger if the event is specified pursuant to (iv) below or an AdditionalTermination Event if the event is specified pursuant to (v) below:-

 

*(i) Illegality.*Due to the adoption of, orany change in, any applicable law after the date on which a Transaction isentered into, or due to the promulgation of, or any change in, theinterpretation by any court, tribunal or regulatory authority with competentjurisdiction of any applicable law after such date, it becomes unlawful (otherthan 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 orcontingent obligation to make a payment or delivery or to receive a payment ordelivery in respect of such Transaction or to comply with any other materialprovision of this Agreement relating to such Transaction; or

 

(2)  to perform, or for any CreditSupport Provider of such party to perform, any contingent or other obligationwhich the party (or such Credit Support Provider) has under any Credit SupportDocument relating to such Transaction;

 

(ii) *Tax Event.*Due to (x) any actiontaken 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 ofwhether such action is taken or brought with respect to a party to thisAgreement) or *(y) *a Changein Tax Law, the party (which will be the Affected Party) will, or there is asubstantial likelihood that it will, on the next succeeding Scheduled PaymentDate (1) be required to pay to the other party an additional amount inrespect of an Indemnifiable Tax under Section 2(d)(i)(4) (except inrespect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receivea payment from which an amount is required to be deducted or withheld for or onaccount of a Tax (except in respect of interest under Section 2(e), 6(d)(ii) or6(e)) and no additional amount is required to be paid in respect of such Tax underSection 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 “BurdenedParty”) on the next succeeding Scheduled Payment Date will either (1) berequired to pay an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) (exceptin respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receivea payment from which an amount has been deducted or withheld for or on accountof any Indemnifiable Tax in respect of which the other party is not required topay 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 assetsto, another entity (which will be the Affected Party) where such action doesnot constitute an event described in Section 5(a)(viii);

 

*(iv) Credit Event Upon Merger.*If “Credit EventUpon 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 Xconsolidates or amalgamates with, or merges with or into, or transfers all orsubstantially all its assets to, another entity and such action does not constitutean event described in Section 5(a)(viii) but the creditworthiness ofthe resulting, surviving or transferee entity is materially weaker than that ofX, 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 ortransferee, as appropriate, will be the Affected Party); or

 

*(v) Additional Termination Event.*If any “AdditionalTermination Event” is specified in the Schedule or any Confirmation asapplying, the occurrence of such event (and, in such event, the Affected Partyor Affected Parties shall be as specified for such Additional Termination Eventin the Schedule or such Confirmation).

 

*(c)**          **Event of Default andIllegality.*If an event or circumstance which would otherwiseconstitute 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 ofDefault.

 

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**6.****              ****Early Termination**

 

*(a)**        **Right toTerminate Following Event of Default.*If at any time an Event ofDefault with respect to a party (the “Defaulting Party”) has occurred and isthen continuing, the other party (the “Non-defaulting Party”) may, by not morethan 20 days notice to the Defaulting Party specifying the relevant Event ofDefault, designate a day not earlier than the day such notice is effective asan Early Termination Date in respect of all outstanding Transactions. If,however, “Automatic Early Termination” is specified in the Schedule as applyingto a party, then an Early Termination Date in respect of all outstandingTransactions will occur immediately upon the occurrence with respect to suchparty of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or,to the extent analogous thereto, (8), and as of the time immediately precedingthe institution of the relevant proceeding or the presentation of the relevantpetition upon the occurrence with respect to such party of an Event of Defaultspecified in Section 5(a)(vii)(4) or, to the extent analogousthereto, (8).

 

*(b)**        **Right toTerminate Following Termination Event.*

 

*(i)**         **Notice.*If a TerminationEvent occurs, an Affected Party will, promptly upon becoming aware of it,notify the other party, specifying the nature of that Termination Event andeach Affected Transaction and will also give such other information about thatTermination Event as the other party may reasonably require.

 

*(ii)**       **Transfer toAvoid Termination Event.*If either an Illegality under Section 5(b)(i)(1) ora Tax Event occurs and there is only one Affected Party, or if a Tax Event UponMerger occurs and the Burdened Party is the Affected Party, the Affected Partywill, 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 itgives notice under Section 6(b)(i) all its rights and obligationsunder this Agreement in respect of the Affected Transactions to another of itsOffices or Affiliates so that such Termination Event ceases to exist.

 

Ifthe Affected Party is not able to make such a transfer it will give notice tothe other party to that effect within such 20 day period, whereupon the otherparty may effect such a transfer within 30 days after the notice is given underSection 6(b)(i).

 

Anysuch transfer by a party under this Section 6(b)(ii) will be subjectto and conditional upon the prior written consent of the other party, whichconsent will not be withheld if such other party’s policies in effect at suchtime would permit it to enter into transactions with the transferee on theterms proposed.

 

*(iii)**      **TwoAffected Parties.*If an Illegality under Section 5(b)(i)(1) ora Tax Event occurs and there are two Affected Parties, each party will use allreasonable efforts to reach agreement within 30 days after notice thereof isgiven under Section 6(b)(i) on action to avoid that TerminationEvent.

 

*(iv)**       **Right toTerminate.*If:-

 

(1)  a transfer under Section 6(b)(ii) oran agreement under Section 6(b)(iii), as the case may be, has not beeneffected with respect to all Affected Transactions within 30 days after anAffected 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 TaxEvent Upon Merger occurs and the Burdened Party is not the Affected Party,

 

eitherparty in the case of an Illegality, the Burdened Party in the case of a TaxEvent Upon Merger, any Affected Party in the case of a Tax Event or anAdditional Termination Event if there is more than one Affected Party, or theparty which is not the Affected Party in the case of a Credit Event Upon Mergeror an Additional Termination Event if there is only one Affected Party may, bynot more than 20 days notice to the other party and provided that the relevantTermination Event is then

 

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continuing,designate a day not earlier than the day such notice is effective as an EarlyTermination Date in respect of all Affected Transactions.

 

*(c)**          **Effect of Designation.*

 

(i)   If notice designating anEarly Termination Date is given under Section 6(a) or (b), the EarlyTermination Date will occur on the date so designated, whether or not therelevant Event of Default or Termination Event is then continuing.

 

(ii)  Upon the occurrence oreffective designation of an Early Termination Date, no further payments ordeliveries under Section 2(a)(i) or 2(e) in respect of theTerminated Transactions will be required to be made, but without prejudice tothe other provisions of this Agreement. The amount, if any, payable in respectof an Early Termination Date shall be determined pursuant to Section 6(e).

 

(d)           *Calculations.*

 

*(i)**         **Statement.*On or as soon asreasonably 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) andwill provide to the other party a statement (1) showing, in reasonabledetail, such calculations (including all relevant quotations and specifying anyamount payable under Section 6(e)) and (2) giving details of therelevant account to which any amount payable to it is to be paid. In theabsence of written confirmation from the source of a quotation obtained in determininga Market Quotation, the records of the party obtaining such quotation will beconclusive evidence of the existence and accuracy of such quotation.

 

*(ii)**       **PaymentDate.*An amount calculated as being due in respect of any Early TerminationDate under Section 6(e) will be payable on the day that notice of theamount payable is effective (in the case of an Early Termination Date which isdesignated or occurs as a result of an Event of Default and on the day which istwo Local Business Days after the day on which notice of the amount payable iseffective (in the case of an Early Termination Date which is designated as aresult of a Termination Event). Such amount will be paid together with (to theextent permitted under applicable law) interest thereon (before as well asafter judgment) in the Termination Currency, from (and including) the relevantEarly Termination Date to (but excluding) the date such amount is paid, at theApplicable Rate. Such interest will be calculated on the basis of daily compoundingand the actual number of days elapsed.

 

(e)           *Payments onEarly Termination.*If an Early Termination Date occurs, the followingprovisions shall apply based on the parties’ election in the Schedule of apayment measure, either “Market Quotation” or “Loss”, and a payment method,either the “First Method” or the “Second Method”. If the parties fail todesignate a payment measure or payment method in the Schedule, it will bedeemed that “Market Quotation” or the “Second Method”, as the case may be,shall apply. The amount, if any, payable in respect of an Early TerminationDate and determined pursuant to this Section will be subject to anySet-off.

 

*(i) Events of Default.*If the Early Termination Dateresults from an Event of Default:-

 

*(1)****FirstMethod and Market Quotation.*If the First Method andMarket Quotation apply, the Defaulting Party will pay to the Non-defaultingParty the excess, if a positive number, of (A) the sum of the SettlementAmount (determined by the Non-defaulting Party) in respect of the TerminatedTransactions and the Termination Currency Equivalent of the Unpaid Amountsowing to the Non-defaulting Party over (B) the Termination CurrencyEquivalent of the Unpaid Amounts owing to the Defaulting Party.

 

*(2)****FirstMethod and Loss.*If the First Method and Loss apply, the DefaultingParty will pay to the Non-defaulting Party, if a positive number, theNon-defaulting Party’s Loss in respect of this Agreement.

 

*(3)****SecondMethod and Market Quotation.*If the Second Method andMarket Quotation apply, an amount will be payable equal to (A) the sum ofthe Settlement Amount (determined by the

 

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Non-defaultingParty) in respect of the Terminated Transactions and the Termination CurrencyEquivalent of the Unpaid Amounts owing to the Non-defaulting Party less (B) theTermination Currency Equivalent of the Unpaid Amounts owing to the DefaultingParty. If that amount is a positive number, the Defaulting Party will pay it tothe Non-defaulting Party; if it is a negative number, the Non-defaulting Partywill pay the absolute value of that amount to the Defaulting Party.

 

(4) *SecondMethod and Loss.*If the Second Method and Loss apply, an amount willbe payable equal to the Non-defaulting Party’s Loss .in respect of thisAgreement. If that amount is a positive number, the Defaulting Party will payit to the Non-defaulting Party; if it is a negative number, the Non-defaultingParty will pay the absolute value of that amount to the Defaulting Party.

 

(ii) *TerminationEvents.*If the Early Termination Date results from aTermination Event:-

 

*(1)****OneAffected Party.*If there is one Affected Party, the amount payablewill be determined in accordance with Section 6(e)(i)(3), if MarketQuotation applies, or Section 6(e)(i)(4), if Loss applies, except that, ineither case, references to the Defaulting Party and to the Non-defaulting Partywill be deemed to be references to the Affected Party and the party which isnot the Affected Party, respectively, and, if Loss applies and fewer than allthe Transactions are being terminated, Loss shall be calculated in respect ofall Terminated Transactions.

 

*(2)****TwoAffected Parties.*If there are two Affected Parties:-

 

(A)  if Market Quotation applies, each party willdetermine a Settlement Amount in respect of the Terminated Transactions, and anamount will be payable equal to (I) the sum of (a) one-half of thedifference between the Settlement Amount of the party with the higherSettlement Amount (“X”) and the Settlement Amount of the party with the lowerSettlement Amount *(“Y”)*and (b) theTermination Currency Equivalent of the Unpaid Amounts owing to X less (II) theTermination Currency Equivalent of the Unpaid Amounts owing to Y; and

 

(B)  if Loss applies, each partywill determine its Loss in respect of this Agreement (or, if fewer than all theTransactions are being terminated, in respect of all Terminated Transactions)and an amount will be payable equal to one-half of the difference between theLoss of the party with the higher Loss (“X”) and the Loss of the party with thelower Loss (“Y”).

 

Ifthe amount payable is a positive number, Y will pay it to X; if it is anegative number, X will pay the absolute value of that amount to Y.

 

(iii) *Adjustmentfor Bankruptcy.*In circumstances where an Early Termination Dateoccurs because “Automatic Early Termination” applies in respect of a party, theamount determined under this Section 6(e) will be subject to suchadjustments as are appropriate and permitted by law to reflect any payments ordeliveries made by one party to the other under this Agreement (and retained bysuch other party) during the period from the relevant Early Termination Date tothe date for payment determined under Section 6(d)(ii).

 

(iv) *Pre-Estimate.*The parties agree that if Market Quotation applies an amount recoverableunder this Section 6(e) is a reasonable pre-estimate of loss and nota penalty. Such amount is payable for the loss of bargain and the loss ofprotection against future risks and except as otherwise provided in thisAgreement neither party will be entitled to recover any additional damages as aconsequence of such losses.

 

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**7.             Transfer**

 

Subjectto Section 6(b)(ii), neither this Agreement nor any interest or obligationin or under this Agreement may be transferred (whether by way of security orotherwise) by either party without the prior written consent of the otherparty, except that:-

 

(a)             a party may makesuch a transfer of this Agreement pursuant to a consolidation or amalgamationwith, or merger with or into, or transfer of all or substantially all itsassets to, another entity (but without prejudice to any other right or remedyunder this Agreement); and

 

(b)             a party may makesuch a transfer of all or any part of its interest in any amount payable to itfrom a Defaulting Party under Section 6(e).

 

Anypurported transfer that is not in compliance with this Section will bevoid.

 

**8.                ContractualCurrency**

 

*(a)          Paymentin the Contractual Currency.*Each payment under thisAgreement will be made in the relevant currency specified in this Agreement forthat payment (the “Contractual Currency”). To the extent permitted by applicablelaw, any obligation to make payments under this Agreement in the ContractualCurrency will not be discharged or satisfied by any tender in any currencyother than the Contractual Currency, except to the extent such tender resultsin the actual receipt by the party to which payment is owed, acting in areasonable manner and in good faith in converting the currency so tendered intothe Contractual Currency, of the full amount in the Contractual Currency of allamounts payable in respect of this Agreement. If for any reason the amount inthe Contractual Currency so received falls short of the amount in theContractual Currency payable in respect of this Agreement, the party requiredto make the payment will, to the extent permitted by applicable law, immediatelypay such additional amount in the Contractual Currency as may be necessary tocompensate for the shortfall. If for any reason the amount in the ContractualCurrency so received exceeds the amount in the Contractual Currency payable inrespect of this Agreement, the party receiving the payment will refund promptlythe amount of such excess.

 

*(b)          Judgments.*To the extent permitted by applicable law, if any judgment or orderexpressed in a currency other than the Contractual Currency is rendered (i) forthe payment of any amount owing in respect of this Agreement, (ii) for thepayment of any amount relating to any early termination in respect of thisAgreement or (iii) in respect of a judgment or order of another court forthe payment of any amount described in (i) or (ii) above, the partyseeking recovery, after recovery in full of the aggregate amount to which suchparty is entitled pursuant to the judgment or order, will be entitled toreceive immediately from the other party the amount of any shortfall of theContractual Currency received by such party as a consequence of sums paid insuch other currency and will refund promptly to the other party any excess ofthe Contractual Currency received by such party as a consequence of sums paidin such other currency if such shortfall or such excess arises or results fromany variation between the rate of exchange at which the Contractual Currency isconverted into the currency of the judgment or order for the purposes of suchjudgment or order and the rate of exchange at which such party is able, actingin a reasonable manner and in good faith in converting the currency receivedinto the Contractual Currency, to purchase the Contractual Currency with theamount of the currency of the judgment or order actually received by suchparty. The term “rate of exchange” includes, without limitation, any premiumsand costs of exchange payable in connection with the purchase of or conversioninto the Contractual Currency.

 

*(c)           SeparateIndemnities.*To the extent permitted by applicable law, theseindemnities constitute separate and independent obligations from the otherobligations in this Agreement, will be enforceable as separate and independentcauses of action, will apply notwithstanding any indulgence granted by the partyto which any payment is owed and will not be affected by judgment beingobtained or claim or proof being made for any other sums payable in respect ofthis Agreement.

 

*(d)          Evidenceof Loss.*For the purpose of this Section 8, it will besufficient for a party to demonstrate that it would have suffered a loss had anactual exchange or purchase been made.

 

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**9.              Miscellaneous**

 

(a)           *Entire Agreement.*This Agreementconstitutes the entire agreement and understanding of the parties with respectto its subject matter and supersedes all oral communication and prior writingswith respect thereto.

 

(b)           *Amendments.*No amendment, modification orwaiver in respect of this Agreement will be effective unless in writing(including a writing evidenced by a facsimile transmission) and executed byeach of the parties or confirmed by an exchange of telexes or electronicmessages on an electronic messaging system.

 

*(c)           Survivalof Obligations.*Without prejudice to Sections 2(a)(iii) and6(c)(ii), the obligations of the parties under this Agreement will survive thetermination of any Transaction.

 

(d)           *Remedies Cumulative.*Except as provided inthis Agreement, the rights, powers, remedies and privileges provided in thisAgreement are cumulative and not exclusive of any rights, powers, remedies andprivileges provided by law.

 

(e)           *Counterpartsand Confirmations.*

 

(i)   This Agreement (and each amendment, modification and waiver inrespect of it) may be executed and delivered in counterparts (including byfacsimile transmission), each of which will be deemed an original.

 

(ii)  The parties intend that they are legally bound by the terms of eachTransaction from the moment they agree to those terms (whether orally orotherwise). A Confirmation shall be entered into as soon as practicable and maybe executed and delivered in counterparts (including by facsimile transmission)or be created by an exchange of telexes or by an exchange of electronicmessages on an electronic messaging system, which in each case will besufficient for all purposes to evidence a binding supplement to this Agreement.The parties will specify therein or through another effective means that anysuch counterpart, telex or electronic message constitutes a Confirmation.

 

(f)*            No Waiver of Rights.*A failure ordelay in exercising any right, power or privilege in respect of this Agreementwill not be presumed to operate as a waiver, and a single or partial exerciseof any right, power or privilege will not be presumed to preclude anysubsequent or further exercise, of that right, power or privilege or theexercise of any other right, power or privilege.

 

(g)*           Headings.*The headingsused in this Agreement are for convenience of reference only and are not to affectthe construction of or to be taken into consideration in interpreting thisAgreement.

 

**10.             Offices;Multibranch Parties**

 

(a)           If Section 10(a) isspecified in the Schedule as applying, each party that enters into aTransaction through an Office other than its head or home office represents tothe other party that, notwithstanding the place of booking office orjurisdiction of incorporation or organisation of such party, the obligations ofsuch party are the same as if it had entered into the Transaction through itshead or home office. This representation will be deemed to be repeated by suchparty on each date on which a Transaction is entered into.

 

(b)           Neither party maychange the Office through which it makes and receives payments or deliveriesfor the purpose of a Transaction without the prior written consent of the otherparty.

 

(c)           If a party isspecified as a Multibranch Party in the Schedule, such Multibranch Party maymake and receive payments or deliveries under any Transaction through anyOffice listed in the Schedule, and the Office through which it makes andreceives payments or deliveries with respect to a Transaction will be specifiedin the relevant Confirmation.

 

**11.           Expenses**

 

ADefaulting Party will, on demand, indemnify and hold harmless the other partyfor and against all reasonable out-of-pocket expenses, including legal fees andStamp Tax, incurred by such other party by reason of the enforcement andprotection of its rights under this Agreement or any Credit Support Document

 

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towhich the Defaulting Party is a party or by reason of the early termination ofany Transaction, including, but not limited to, costs of collection.

 

**12.           Notices**

 

(a)           *Effectiveness.*Any notice or other communication in respect of this Agreement maybe given in any manner set forth below (except that a notice or other communicationunder Section 5 or 6 may not be given by facsimile transmission orelectronic messaging system) to the address or number or in accordance with theelectronic messaging system details provided (see the Schedule) and will bedeemed effective as indicated:-

 

(i)    if in writing and delivered in person or by courier, on the dateit is delivered;

 

(ii)   if sent by telex, on thedate the recipient’ s answerback is received;

 

(iii)  if sent by facsimile transmission, on the date that transmission isreceived by a responsible employee of the recipient in legible form (it beingagreed that the burden of proving receipt will be on the sender and will not bemet by a transmission report generated by the sender’s facsimile machine);

 

(iv)  if sent by certified or registered mail (airmail, if overseas) orthe equivalent (return receipt requested), on the date that mail is deliveredor its delivery is attempted; or

 

(v)   if sent by electronic messaging system, on the date thatelectronic message is received, unless the date of that delivery (or attempteddelivery) or that receipt, as applicable, is not a Local Business Day or thatcommunication is delivered (or attempted) or received, as applicable, after theclose of business on a Local Business Day, in which case that communicationshall be deemed given and effective on the first following day that is a LocalBusiness Day.

 

(b)           *Changeof Addresses.*Either party may by notice to the other change theaddress, telex or facsimile number or electronic messaging system details atwhich notices or other communications are to be given to it.

 

**13.              GoverningLaw and Jurisdiction**

 

(a)           *GoverningLaw.*This Agreement will be governed by and construed in accordance with thelaw specified in the Schedule.

 

(b)           *Jurisdiction.*With respect to any suit,action or proceedings relating to this Agreement (“Proceedings”), each partyirrevocably:-

 

(i)   submits to the jurisdiction of the English courts, if thisAgreement is expressed to be governed by English law, or to the non-exclusivejurisdiction of the courts of the State of New York and the United StatesDistrict Court located in the Borough of Manhattan in New York City, if thisAgreement 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 ofvenue of any Proceedings brought in any such court, waives any claim that suchProceedings have been brought in an inconvenient forum and further waives theright to object, with respect to such Proceedings, that such court does nothave any jurisdiction over such party.

 

Nothingin this Agreement precludes either party from bringing Proceedings in any otherjurisdiction (outside, if this Agreement is expressed to be governed by Englishlaw, the Contracting States, as defined in Section 1(3) of the CivilJurisdiction and Judgments Act 1982 or any modification, extension orre-enactment thereof for the time being in force) nor will the bringing ofProceedings in any one or more jurisdictions preclude the bringing of Proceedingsin any other jurisdiction.

 

*(c)           Serviceof Process.*Each party irrevocably appoints the Process Agent (ifany) specified opposite its name in the Schedule to receive, for it and on itsbehalf, service of process in any Proceedings. If for any

 

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reasonany party’s Process Agent is unable to act as such, such party will promptlynotify the other party and within 30 days appoint a substitute process agentacceptable to the other party. The parties irrevocably consent to service ofprocess given in the manner provided for notices in Section 12. Nothing inthis Agreement will affect the right of either party to serve process in anyother manner permitted by law.

 

(d)           *Waiver of Immunities.*Each partyirrevocably waives, to the fullest extent permitted by applicable law, withrespect to itself and its revenues and assets (irrespective of their use orintended use), all immunity on the grounds of sovereignty or other similargrounds from (i) suit, (ii) jurisdiction of any court, (iii) reliefby way of injunction, order for specific performance or for recovery ofproperty, (iv) attachment of its assets (whether before or after judgment)and (v) execution or enforcement of any judgment to which it or itsrevenues or assets might otherwise be entitled in any Proceedings in the courtsof any jurisdiction and irrevocably agrees, to the extent permitted byapplicable law, that it will not claim any such immunity in any Proceedings.

 

**14.           Definitions**

 

Asused in this Agreement:-

 

*“Additional Termination Event”*has the meaningspecified in Section 5(b). 

 

*“Affected Party”*has the meaning specified in Section 5(b).

 

*“Affected Transactions”*means (a) with respectto any Termination Event consisting of an Illegality, Tax Event or Tax EventUpon Merger, all Transactions affected by the occurrence of such TerminationEvent and (b) with respect to any other Termination Event, allTransactions.

 

*“Affiliate”*means, subject to theSchedule, in relation to any person, any entity controlled, directly orindirectly, by the person, any entity that controls, directly or indirectly,the person or any entity directly or indirectly under common control with theperson. For this purpose, “control” of any entity or person means ownership ofa majority of the voting power of the entity or person.

 

*“Applicable Rate”*means:-

 

(a)  in respect of obligationspayable 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 topay an amount under Section 6(e) of either party from and after thedate (determined in accordance with Section 6(d)(ii)) on which that amountis payable, the Default Rate;

 

(c)  in respect of all otherobligations 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, theTermination 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) thatoccurs on or after the date on which the relevant Transaction is entered into.

 

*“consent”*includes a consent, approval,action, authorisation, exemption, notice, filing, registration or exchangecontrol consent.

 

*“Credit Event Upon Merger”*has the meaning specified in Section 5(b).

 

*“Credit Support Document”*means any agreement orinstrument that is specified as such in this Agreement. 

 

*“Credit Support Provider”*has the meaning specified inthe Schedule.

 

*“Default Rate”*means a rate per annum equalto the cost (without proof or evidence of any actual cost) to the relevantpayee (as certified by it) if it were to fund or of funding the relevant amountplus 1% per annum.

 

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*“Defaulting Party”*has the meaning specified in Section 6(a).

 

*“Early Termination Date”*means the datedetermined in accordance with Section 6(a) or 6(b)(iv). 

 

*“Event of Default”*has the meaning specified in Section 5(a) and,if applicable, in the Schedule. 

 

*“Illegality”*has the meaning specified in Section 5(b).

 

*“lndemnifiable Tax”*means any Tax other than aTax that would not be imposed in respect of a payment under this Agreement butfor a present or former connection between the jurisdiction of the governmentor taxation authority imposing such Tax and the recipient of such payment or aperson related to such recipient (including, without limitation, a connectionarising from such recipient or related person being or having been a citizen orresident of such jurisdiction, or being or having been organised, present orengaged in a trade or business in such jurisdiction, or having or having had apermanent establishment or fixed place of business in such jurisdiction, butexcluding a connection arising solely from such recipient or related personhaving executed, delivered, performed its obligations or received a paymentunder, or enforced, this Agreement or a Credit Support Document).

 

*“law”*includes any treaty, law, rule orregulation (as modified, in the case of tax matters, by the practice of anyrelevant governmental revenue authority) and “lawful” and “unlawful” will beconstrued accordingly.

 

*“Local Business Day”*means, subject to theSchedule, a day on which commercial banks are open for business (includingdealings in foreign exchange and foreign currency deposits) (a) inrelation to any obligation under Section 2(a)(i), in the place(s) specifiedin the relevant Confirmation or, if not so specified, as otherwise agreed bythe parties in writing or determined pursuant to provisions contained, orincorporated by reference, in this Agreement, (b) in relation to any otherpayment, 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) inrelation to any notice or other communication, including notice contemplatedunder Section 5(a)(i), in the city specified in the address for noticeprovided 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) inrelation to Section 5(a)(v)(2), in the relevant locations for performancewith respect to such Specified Transaction.

 

*“Loss”*means, with respect to thisAgreement or one or more Terminated Transactions, as the case may be, and aparty, the Termination Currency Equivalent of an amount that party reasonablydetermines in good faith to be its total losses and costs (or gain, in whichcase expressed as a negative number) in connection with this Agreement or thatTerminated Transaction or group of Terminated Transactions, as the case may be,including any loss of bargain, cost of funding or, at the election of suchparty but without duplication, loss or cost incurred as a result of itsterminating, liquidating, obtaining or reestablishing any hedge or relatedtrading position (or any gain resulting from any of them). Loss includes lossesand costs (or gains) in respect of any payment or delivery required to havebeen made (assuming satisfaction of each applicable condition precedent on orbefore the relevant Early Termination Date and not made, except, so as to avoidduplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies.Loss does not include a party’s legal fees and out-of-pocket expenses referredto under Section 11. A party will determine its Loss as of the relevantEarly Termination Date, or, if that is not reasonably practicable, as of theearliest date thereafter as is reasonably practicable. A party may (but neednot) determine its Loss by reference to quotations of relevant rates or pricesfrom one or more leading dealers in the relevant markets.

 

*“Market Quotation”*means, with respect to one ormore Terminated Transactions and a party making the determination, an amountdetermined on the basis of quotations from Reference Market-makers. Eachquotation 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 positivenumber) in consideration of an agreement between such party (taking intoaccount any existing Credit Support Document with respect to the obligations ofsuch party) and the quoting Reference Market-maker to enter into a transaction(the “Replacement Transaction”) that would have the effect of preserving forsuch party the economic equivalent of any payment or delivery (whether theunderlying obligation was absolute or contingent and assuming the satisfactionof each applicable condition precedent by the parties under Section 2(a)(i) inrespect of such Terminated Transaction or group of Terminated Transactions thatwould, but for the occurrence of the relevant Early Termination Date, have

 

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beenrequired after that date. For this purpose, Unpaid Amounts in respect of theTerminated Transaction or group of Terminated Transactions are to be excludedbut, without limitation, any payment or delivery that would, but for therelevant Early Termination Date, have been required (assuming satisfaction ofeach applicable condition precedent after that Early Termination Date is to beincluded. The Replacement Transaction would be subject to such documentation assuch party and the Reference Market-maker may, in good faith, agree. The partymaking the determination (or its agent) will request each ReferenceMarket-maker to provide its quotation to the extent reasonably practicable asof the same day and time (without regard to different time zones) on or as soonas reasonably practicable after the relevant Early Termination Date. The day andtime as of which those quotations are to be obtained will be selected in goodfaith 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 morethan three quotations are provided, the Market Quotation will be the arithmeticmean of the quotations, without regard to the quotations having the highest andlowest values. If exactly three such quotations are provided, the MarketQuotation will be the quotation remaining after disregarding the highest andlowest quotations. For this purpose, if more than one quotation has the samehighest value or lowest value, then one of such quotations shall bedisregarded. If fewer than three quotations are provided, it will be deemedthat the Market Quotation in respect of such Terminated Transaction or group ofTerminated Transactions cannot be determined.

 

*“Non-default Rate”*means a rate per annum equalto the cost (without proof or evidence of any actual cost) to theNon-defaulting Party (as certified by it) if it were to fund the relevantamount.

 

*“Non-defaulting Party”*has the meaning specified in Section 6(a).

 

*“Office”*means a branch or office of aparty, which may be such party’s head or home office.

 

*“Potential Event of Default”*means any eventwhich, with the giving of notice or the lapse of time or both, would constitutean Event of Default.

 

*“Reference Market-makers”*means fourleading dealers in the relevant market selected by the party determining aMarket Quotation in good faith (a) from among dealers of the highestcredit standing which satisfy all the criteria that such party appliesgenerally at the time in deciding whether to offer or to make an extension ofcredit and (b) to the extent practicable, from among such dealers havingan office in the same city.

 

*“Relevant Jurisdiction”*means, withrespect to a party, the jurisdictions (a) in which the party isincorporated, organised, managed and controlled or considered to have its seat,(b) where an Office through which the party is acting for purposes of thisAgreement is located, (c) in which the party executes this Agreement and (d) inrelation to any payment, from or through which such payment is made.

 

*“Scheduled Payment Date”*means a date onwhich a payment or delivery is to be made under Section 2(a){ i) withrespect to a Transaction.

 

*“Set-off*means set-off, offset,combination of accounts, right of retention or withholding or similar right orrequirement to which the payer of an amount under Section 6 is entitled orsubject (whether arising under this Agreement, another contract, applicable lawor otherwise) that is exercised by, or imposed on, such payer.

 

*“Settlement Amount”*means, with respect to aparty and any Early Termination Date, the sum of:-

 

(a)          the Termination CurrencyEquivalent of the Market Quotations (whether positive or negative) for eachTerminated Transaction or group of Terminated Transactions for which a MarketQuotation is determined; and

 

(b)         such party’s Loss(whether positive or negative and without reference to any Unpaid Amounts) foreach Terminated Transaction or group of Terminated Transactions for which aMarket Quotation cannot be determined or would not (in the reasonable belief ofthe party making the determination) produce a commercially reasonable result.

 

*“Specified Entity”*has the meaning specified inthe Schedule.

 

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*“Specified Indebtedness”*means, subjectto the Schedule, any obligation (whether present or future, contingent orotherwise, as principal or surety or otherwise) in respect of borrowed money.

 

*“Specified Transaction”*means, subjectto the Schedule, (a) any transaction (including an agreement with respectthereto) now existing or hereafter entered into between one party to thisAgreement (or any Credit Support Provider of such party or any applicableSpecified Entity of such party) and the other party to this Agreement (or anyCredit Support Provider of such other party or any applicable Specified Entityof such other party) which is a rate swap transaction, basis swap, forward ratetransaction, commodity swap, commodity option, equity or equity index swap,equity or equity index option, bond option, interest rate option, foreignexchange transaction, cap transaction, floor transaction, collar transaction,currency swap transaction, cross-currency rate swap transaction, currencyoption or any other similar transaction (including any option with respect toany of these transactions), (b) any combination of these transactions and (c) anyother transaction identified as a Specified Transaction in this Agreement orthe relevant confirmation.

 

*“Stamp Tax”*means any stamp,registration, documentation or similar tax.

 

*“Tax”*means any present or futuretax, levy, impost, duty, charge, assessment or fee of any nature (includinginterest, penalties and additions thereto) that is imposed by any government orother taxing authority in respect of any payment under this Agreement otherthan 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 anyEarly Termination Date (a) if resulting from a Termination Event, allAffected Transactions and (b) if resulting from an Event of Default, allTransactions (in either case) in effect immediately before the effectiveness ofthe notice designating that Early Termination Date (or, if “Automatic EarlyTermination” applies, immediately before that Early Termination Date).

 

*“Termination Currency”*has the meaning specified inthe Schedule.

 

*“Termination Currency Equivalent”*means, inrespect of any amount denominated in the Termination Currency, such TerminationCurrency amount and, in respect of any amount denominated in a currency otherthan the Termination Currency (the “Other Currency”), the amount in theTermination Currency determined by the party making the relevant determinationas being required to purchase such amount of such Other Currency as at therelevant 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, withthe Termination Currency at the rate equal to the spot exchange rate of theforeign exchange agent (selected as provided below) for the purchase of suchOther Currency with the Termination Currency at or about 11:00 a.m. (inthe city in which such foreign exchange agent is located) on such date as wouldbe customary for the determination of such a rate for the purchase of suchOther Currency for value on the relevant Early Termination Date or that laterdate. The foreign exchange agent will, if only one party is obliged to make adetermination under Section 6(e), be selected in good faith by that partyand otherwise will be agreed by the parties.

 

*“Termination Event”*means an Illegality, a TaxEvent or a Tax Event Upon Merger or, if specified to be applicable, a CreditEvent Upon Merger or an Additional Termination Event.

 

*“Termination Rate”*means a rate per annum equalto the arithmetic mean of the cost (without proof or evidence of any actualcost) to each party (as certified by such party) if it were to fund or offunding such amounts.

 

*“Unpaid Amounts”*owing to any party means,with respect to an Early Termination Date, the aggregate of (a) in respectof all Terminated Transactions, the amounts that became payable (or that wouldhave become payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) onor prior to such Early Termination Date and which remain unpaid as at such EarlyTermination Date and (b) in respect of each Terminated Transaction, foreach obligation under Section 2(a)(i) which was (or would have beenbut for Section 2(a)(iii)) required to be settled by delivery to suchparty on or prior to such Early Termination Date and which has not been sosettled as at such Early Termination Date, an amount equal to the fair marketvalue of that which was (or would have been) required to be delivered as of theoriginally scheduled date for delivery, in each case together with (to theextent permitted under applicable law) interest, in the currency of suchamounts, from (and including) the date such amounts or obligations were orwould have been required to have been paid or performed to (hut excluding) suchEarly Termination Date, at the Applicable Rate. Such amounts of interest willbe calculated on the basis of

 

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daily compounding and theactual number of days elapsed. The fair market value of any obligation referredto in clause (b) above shall be reasonably determined by the party obligedto make the determination under Section 6(e) or, if each party is soobliged, it shall be the average of the Termination Currency Equivalents of thefair market values reasonably determined by both parties.

 

IN WITNESS WHEREOF theparties have executed this document on the respective dates specified belowwith effect from the date specified on the first page of this document.

 

 
| **The  Royal Bank of Scotland plc** | **Arlington Tankers Ltd.**    |
|-------------------------------------|-------------------------------|
| (Name  of Party A)                  | (Name  of Party B)            |
| ** **                          | ** **                    |
|                                |                          |
| By:                                 | /s/ Graham Locker             |   | By: | /s/ Edward Terino |
| Name: Graham  Locker                | Name: Edward  Terino          |
| Title:  Attorney-in-fact            | Title: Co-CEO  and CFO        |
| Date:  December 12, 2005       | Date:  December 12, 2005 |
|                                     |                               |  |  |  |

 

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**THIS IS AN IMPORTANT DOCUMENT: YOU SHOULD TAKEINDEPENDENT LEGAL ADVICEBEFORE SIGNING AND SIGN ONLY IF YOU WANT TO BE LEGALLY BOUND BY THE TERMSOF THE DOCUMENT**

 

SCHEDULE

 

to the

 

Master Agreement

 

dated as of 12 December 2005 betweenThe Royal Bank of Scotland plc (“Party A”)and

 

Arlington Tankers Ltd. (“Party B”)Part 1

 

Termination Provisions

 

(a)             “Specified Entity” means inrelation to Party A for the purpose of:-

 

Section 5(a)(v), (vi) and (vii)                                                       Not applicable

Section 5(b)(iv),

 

and in relation to Party B for the purpose of:-

 

Section 5(a)(v),

Section 5(a)(vi),                                                               AnyAffiliate of Party B

Section 5(a)(vii),

Section 5(b)(iv),

 

(b)                                 “SpecifiedTransaction” will have the meaning specified in Section 14 of thisAgreement.

 

(c)           The “Cross Default”provisions of Section 5(a)(vi) will not apply to Party A.

 will apply to Party B.

 

Ifsuch provisions apply:-

 

“SpecifiedIndebtedness” will have the meaning specified in Section 14 

 

“ThresholdAmount” means, in relation to Party B, zero.

 

(d)                                 The “CreditEvent Upon Merger” provisions of Section 5(b)(iv) will apply to PartyA. 

will apply to Party B.

 

(e)                                  The “AutomaticEarly Termination” provision of Section 6(a) will not apply to eitherParty A or Party B.

 

(f)                                    Payments onEarly Termination. For the purpose of Section 6(e) of thisAgreement:-

 

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(i)              Market Quotationwill apply.

 

(ii)             The Second Methodwill apply.

 

(g)           “TerminationCurrency” means such currency of any Transaction as may be selected by theparty which is not the Defaulting Party or the Affected Party as the case maybe if such currency is freely available and convertible or, if there are twoAffected Parties such currency as may be agreed between the parties if suchcurrency is freely available and, otherwise, United States Dollars.

 

(h)         AdditionalTermination Event will apply.

 

Thefollowing events shall constitute Additional Termination Events in relation toParty B only:-

 

(a)                                  “Anycircumstances arise which, in the opinion of Party A, give reasonable groundsfor belief that Party B or any Credit Support Provider of Party B may not, ormay be unable to, perform its respective obligations under this Agreement orthe Credit Support Document.”

 

Forthe purpose of the foregoing Additional Termination Events, Party B shall bethe Affected Party.

 

Part 2

 

TaxRepresentations

 

(a)                                  PayerRepresentations. For the purpose of Section 3(e) of this Agreement,Party A and Party B will both make the following representation:-

 

Itis not required by any applicable law, as modified by the practice of anyrelevant governmental revenue authority, of any Relevant Jurisdiction to makeany 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) ofthis Agreement) to be made by it to the other party under this Agreement.

 

Inmaking this representation, it may rely on:-

 

(i)            the accuracy of anyrepresentations made by the other party pursuant to Section 3(f) ofthis Agreement;

 

(ii)                                  the satisfactionof the agreement contained in Section 4(a)(i) or 4(a)(iii) ofthis Agreement and the accuracy and effectiveness of any document provided bythe other party pursuant to Section 4(a)(i) or 4(a)(iii) of thisAgreement; and

 

(iii)                               the satisfactionof the agreement of the other party contained in Section 4(d) of thisAgreement; 

 

provided that it shall not be a breach of this representation wherereliance is placed on clause (ii) and the other party does not deliver aform or document under Section 4(a)(iii) by reason of materialprejudice to its legal or commercial position.

 

(b)            PayeeRepresentations. For the purpose of Section 3(f) of this Agreement:-

 

PartyA and Party B make no representation.

 

Part 3

 

Agreement to Deliver Documents

 

Forthe purpose of Sections 4(a)(i) and (ii) of this Agreement, eachparty agrees to deliver the following documents, as applicable:-

 

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(a)           Tax forms, documentsor certificates to be delivered:- Not applicable

 

(b)           Other documents to bedelivered where relevant are:-

 
| **Party**         | ** ** | ** **                                                                                                                                                                                                                                                                                       | ** ** | ** **                                                          | ** ** | ** **            |
|-------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------|------------|-----------------------|
| **required to**   | ** ** | ** **                                                                                                                                                                                                                                                                                       | ** ** | ** **                                                          | ** ** | **Covered by**        |
| **deliver**       | ** ** | **Form/Document/**                                                                                                                                                                                                                                                                               | ** ** | ** **                                                          | ** ** | **Section 3(d)** |
| **document**      | ** ** | **Certificate**                                                                                                                                                                                                                                                                                  | ** ** | **Date by which to be delivered**                                   | ** ** | **Representation**    |
|              |       |                                                                                                                                                                                                                                                                                             |       |                                                                |       |                  |
| Party A/  Party B |       | Such  evidence of the due authorisation of the person(s) signing this Agreement and  each Confirmation on its behalf as the other party may reasonably request                                                                                                                                   |       | Date  of execution of this Agreement and each relevant Confirmation |       | Yes                   |
|              |       |                                                                                                                                                                                                                                                                                             |       |                                                                |       |                  |
| Party B           |       | A  copy of the Memorandum and Articles of Association and Certification of  Incorporation (or other constitutive documents) of Party B                                                                                                                                                           |       | Date  of execution of this Agreement                                |       | Yes                   |
|              |       |                                                                                                                                                                                                                                                                                             |       |                                                                |       |                  |
| Party B           |       | A  copy of the resolution of the board of directors of Party B approving this  Agreement and the Transactions contemplated hereby and authorising a  specified person or persons to execute this Agreement and any Confirmation on  behalf of Party B                                            |       | Date  of execution of this Agreement                                |       | Yes                   |
|              |       |                                                                                                                                                                                                                                                                                             |       |                                                                |       |                  |
| Party B           |       | Copies  of such statutory and/or regulatory consents, approvals and authorisations as  may be necessa ry for Party B to enter into this Agreement and the  Transactions contemplated hereby                                                                                                      |       | Date  of execution of this Agreement                                |       | Yes                   |
|              |       |                                                                                                                                                                                                                                                                                             |       |                                                                |       |                  |
| Party B           |       | Confirmation  in form and substance satisfactory to Party A that all conditions precedent  relating to the Loan Facility (as defined in Section 14 pursuant to  Part 5(f) of the Schedule to this Agreement) have been met in full  (as set out in clause 9 of the Loan Facility) |       | Date  of execution of this Agreement                                |       | Yes                   |
|              |       |                                                                                                                                                                                                                                                                                             |       |                                                                |       |                  |
| Party B           |       | The  Credit Support Documents referred to in Part 4(f) of the Schedule  to this Agreement duly executed by the parties thereto                                                                                                                                                         |       | Date  of execution of this Agreement                                |       | Yes                   |
|              |       |                                                                                                                                                                                                                                                                                             |       |                                                                |       |                  |
| Party B           |       | Legal  opinions in form and substance satisfactory to Party A from solicitor(s)/law  firm(s) approved by Party A                                                                                                                                                                                 |       | Date  of execution of this Agreement                                |       | Yes                   |

 

----

 
| Party B |   | A copy of the written  acceptance by Party B’s Process Agent (as defined in Part 4(b) of  the Schedule to this Agreement) of its appointment to receive for Party B and  on behalf service of process in any Proceedings under this Agreements) |   | Date of execution of  this Agreement                                                                                                                                                                                                                       |   | Yes    |
|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|    |   |                                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                                                       |   |   |
| Party B |   | The annual financial  statements of Party B                                                                                                                                                                                                                    |   | Upon demand in respect  of those which became publicly available as at the date hereof, as soon as  possible, and in any event, within 120 days of the end of Party B’s financial  year (or as soon as practicable after becoming publicly available) |   | Yes    |
|    |   |                                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                                                       |   |   |
| Party B |   | A copy of the  Memorandum and Articles of Association and Certificate of Incorporation (or  other constitutive documents) of each Credit Support Provider of Party B                                                                                           |   | Upon demand in respect  of those which became publicly available prior to the date of this Agreement  and, in respect of those statements, which are not publicly available)                                                                               |   | Yes    |
|    |   |                                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                                                       |   |   |
| Party B |   | A copy of the  Memorandum and Articles of Association and Certificate of incorporation (or  other constitutive documents) of each Credit Support Providers of Party B                                                                                          |   | Date of execution of  this Agreement                                                                                                                                                                                                                       |   | Yes    |
|    |   |                                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                                                       |   |   |
| Party B |   | A copy of the  resolutions of the board of directors of each Credit Support Provider of  Party B approving the Credit Support Document(s) and authorizing a  specific person or persons to execute the Credit Support Document(s)                         |   | Date of execution of  this Agreement                                                                                                                                                                                                                       |   | Yes    |
|    |   |                                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                                                       |   |   |
| Party B |   | The annual financial  statements of each Credit Support provider of Party B                                                                                                                                                                                    |   | Date of execution of  this Agreement                                                                                                                                                                                                                       |   | Yes    |

 

----

 

Anycopy documents shall be certified by a competent senior official of Party B orthe respective Credit Support Provider of Party B, as the casemay be, as being correct, complete and in full force and effect as at a date noearlierthan the date of this Agreement.

 

Part 4

 

Miscellaneous

 

(a)            Addresses forNotices. For the purpose of Section 12(a) of this Agreement:-

 

Addressfor notices or communications to Party A (other than for Section 5 or 6Notices) to be sent to the address listed in the Confirmation provided by PartyA, or if prior to this Confirmation being received, to:-

 
| Address:                                                                    |   | The  Royal Bank of Scotland plc   |
|-----------------------------------------------------------------------------|--------|-----------------------------------|
|                                                                        |   | c/o Financial Markets             |
|                                                                        |   | 280 Bishopsgate                   |
|                                                                        |   | London EC2M 4RB                   |
|                                                                        |   |                              |
| Attention:                                                                  |   | Swaps  Administration             |
|                                                                        |   |                              |
| Facsimile  No: 020 7085 5050                                                |
|                                                                        |
| Telephone  No:020 7085 5000                                                 |
|                                                                        |
| Address  for notices or communications to Party A for Section 5 or 6:- |
|                                                                        |
| Address:                                                                    |   | The  Royal Bank of Scotland plc   |
|                                                                        |   | c/o  Financial Markets            |
|                                                                        |   | 135  Bishopsgate, London EC2M 3UR |
|                                                                        |   |                              |
| Attention:                                                                  |   | Head  of Legal, Financial Markets |
|                                                                        |   |                              |
| Facsimile  No: 020 7085 8411                                                |
|                                                                        |
| Address  for notices or communications to Party B:-                         |
|                                                                        |   |                              |
| Address:                                                                    |   |  Arlington Tankers Ltd.      |
|                                                                        |   | Hayward  Building                 |
|                                                                        |   | 22  Bermudian Road                |
|                                                                        |   | Hamilton  HM 1 I                  |
|                                                                        |   | Bermuda                           |
|                                                                        |   |                              |
| Attention:                                                                  |   |                              |
|                                                                        |   |                              |
| Facsimile No: +1 441 292 4258 with copy always to  +1 203 221 2763          |

 

(b)                                      Process Agent.For the purpose of Section 13(c) of this Agreement:- 

 

Party A does not appoint a Process Agent.

 

PartyB appoints as its Process Agent [Conyers, Dill & Pearman, 34Threadneedle Street, London EC2R 8AY, England]

 

(c)                                       Offices. Theprovisions of Section 10(a) will not apply to this Agreement.

 

(d)                                      MultibranchParty. For the purpose of Section 10(c) of this Agreement:-

 

----

 

NeitherParty A nor Party B is a Multibranch Party.

 

(e)                                  CalculationAgent. The Calculation Agent is Party A unless otherwise specified in aConfirmation in relation to the relevant Transaction.

 

(f)                                    Credit SupportDocument. Details of any Credit Support Document:-

 

PartyB’s obligations to Party A under this Agreement and all Transactionscontemplated hereby are secured by the Security Documents (as such term isdefined in the Loan Facility) each of which shall be deemed to be a CreditSupport Document for the purposes of this Agreement.

 

(g)                                 Credit SupportProvider. Credit Support Provider does not apply in relation to Party A.

 

(h)                                 Credit SupportProvider(s) mean(s), in relation to Party B, each party (other than PartyA) that executes and/or has obligations under the Security Documents (SecurityDocuments is not a defined term in the LA) as defined in Clause 1.2 of the LoanAgreement.

 

(i)                                     Governing Law.This Agreement will be governed by and construed in accordance with Englishlaw.

 

Nettingof Payments. Sub-paragraph (ii) of Section 2(c) of thisAgreement will apply to all Transactions with effect from the date of thisAgreement, except as mutually agreed by Party A and Party B and detailed in therelevant Confirmation(s) evidencing a Transaction or group(s) ofTransactions, as the case may be.

 

(k)                                  “Affiliate” willhave the meaning specified in Section 14 of this Agreement.

 

----

 

Part 5Other Provisions

 

(a)                                  2000 ISDADefinitions. The 2000 Definitions published by ISDA (the “Definitions”) areincorporated by reference herein. Any terms used and not otherwise definedherein which are contained in the Definitions shall have the meaning set forththerein.

 

(b)                                 Representations.Section 3(a) of this Agreement is hereby amended by, firstly, thedeletion of the word “and” at the end of subsection (iv); secondly, thesubstitution of a semi-colon for the full-stop at the end of subsection (v); and, thirdly,the addition of the following subsections:-

 

“(vi) Capacity. It is acting as principal (andnot as agent or any other capacity, fiduciary or otherwise); and

 

(vii) Physical Delivery.In respect of any physically-settled Transactions, it will, at the time of delivery,be the legal and beneficial owner, free of liens and encumbrances, of anysecurities or commodities, which it delivers to the other party.”

 

(c)                                  RelationshipBetween Parties. Each party shall be deemed to represent to the other party onthe date on which it enters into a Transaction that (absent a written agreementbetween the parties that expressly imposes affirmative obligations to thecontrary for that Transaction):-

 

(i)                                     Non-Reliance. Itis acting for its own account, and it has made its own independent decisions toenter into that Transaction and as to whether that Transaction is appropriateor proper for it based upon its own judgment and upon advice from such advisorsas it has deemed necessary. It is not relying on any communication (written ororal) of the other party as investment advice or as a recommendation to enterinto that Transaction; it being understood that information and explanationsrelated to the terms and conditions of a Transaction shall not be consideredinvestment advice or a recommendation to enter into that Transaction. Nocommunication (written or oral) received from the other party shall be deemedto be assurance or guarantee as to the expected results of that Transaction.

 

(ii)                                  Assessment andUnderstanding. It is capable of assessing and understanding (on its own behalfor through independent professional advice), and understands and accepts, theterms, conditions and risks of that Transaction. It is also capable ofassuming, and assumes, the financial and other risks of that Transaction.

 

(iii)                               Status ofParties. The other party is not acting as a fiduciary for or an advisor for itin respect of that Transaction.

 

(d)             Set-off. The followingprovision is incorporated as Section 6(f) of this Agreement:

 

“6(f) Any amount (the “Early Termination Amount”)payable to one party (the Payee) by the other party (the Payer) under Section 6(e),in circumstances where there is a Defaulting Party or one Affected Party, will,at the option of the party (“X”) other than the Defaulting Party or theAffected Party (and without prior notice to the Defaulting Party or theAffected Party), be reduced by its set-off against any amount(s) (the “OtherAgreement Amount”) payable (whether at such time or in the future or upon theoccurrence of a contingency) by the Payee to the Payer (irrespective of thecurrency, place of payment or booking office of the obligation) under any otheragreement(s) between the Payee and the Payer or instrument(s) orundertaking(s) issued or executed by one party to, or in favour of theother party (and the Other Agreement Amount will be discharged promptly and inall respects to the extent it is so set-off). X will give notice to the otherparty of any set-off effected under this Section 6(f).

 

Forthis purpose, either the Early Termination Amount or the Other Agreement Amount(or the relevant portion of such amounts) may be converted by X into thecurrency in which the other is denominated at the rate of exchange at whichsuch party would be able acting in a reasonable manner and in good faith topurchase the relevant amount of such currency.

 

----

 

Ifan obligation is unascertained X may in good faith estimate that obligation andset-off in respect of the estimate subject to the relevant party accounting tothe other when the obligation is ascertained.

 

Nothingherein shall be effective to create a charge or other security interest. Inaddition the right of set-off detailed herein shall be without prejudice, andin addition, to any right of set-off combination of accounts, lien or otherright to which any party is, at any time, otherwise entitled (whether byoperation of law, contract or otherwise)”.

 

(e)                                  Recording ofConversations. Each party to this Agreement acknowledges and agrees to the taperecording of conversations between the parties to this Agreement whether by oneor other or both the parties.

 

LoanFacility. Section 14 of this Agreement is hereby amended by theincorporation of the following Definition:-

 

““LoanFacility” means the term loan facility of US$229,500,000 (Two hundred andthirty five million United States Dollars) made available to Party B (asborrower) by Party A (as lender) evidenced by a loan agreement dated (12 December 2005.)

 

Allterms and expressions incorporated into this Agreement, which are defined inthe Loan Facility, shall have the same meaning, mutatis mutandis, when used inthis Agreement.

 

(g)                             Security. PartyB irrevocably and unconditionally undertakes and confirms to Party A that the obligationsto Party A by Party B pursuant to this Agreement shall be secured by theSecurity Documents as defined in clause 1.2 of the Loan Agreement.

 

(h)                             Default underLoan Facility. In addition to the Events of Default set out in Section 5(a) ofthis Agreement, in relation to Party B only, the occurrence or existence of anyof the events or circumstances included as an “Event of Default” in Clause 19of the Loan Facility (whether or not the Loan Facility at the time of any suchoccurrence or existence is still in force and effect or has been terminated oramended or the indebtedness owed by Party B to Party A under the Loan Facilityhas been repaid in full) shall constitute an Event of Default under thisAgreement, such that the provisions of the aforementioned clause 19 of the LoanFacility shall be incorporated, mutatis mutandis, into this Agreement as if setout in this Agreement in full.

 

(i)                                 Interest Periodsunder the Loan Facility. In the event that the parties enter into a Transactionfor the specific purpose of hedging (either in whole or in part) Party B’sindebtedness to Party A under the Loan Facility, where Party B (as borrower)has the right to elect interest periods of a different duration, it is herebyagreed that interest periods under the Loan Facility shall be of the sameduration as Calculation Periods in respect of the relevant Transaction, suchthat interest payment dates under the Loan Facility shall coincide in allrespects with Payment Dates in respect of that Transaction. For this purpose,both parties agree that payments due to or from each other pursuant to therelevant Transactions may (if Party A so determines at its sole discretion) beset off against payments due to or from each other pursuant to the LoanFacility.

 

Furthermore,whilst it is the intention of both parties that floating interest payments inrespect of a Transaction payable by Party A to Party B, as aforementioned,shall always match (so far as reasonably possible) the interest rate payments(less the applicable margin) due under the Loan Facility by Party B to Party A,it is accepted and agreed by Party B that the conventions and practices in theLondon Swap Market may be different to those in the London Interbank Marketand, in this connection, Party A shall only be liable to pay the floating rateestablished in respect of a Transaction notwithstanding that it may not equateexactly to the interest rate (less the applicable margin) payable by Party B underthe Loan Facility.

 

Anyspecific provisions relating to the determination of interest rates in thelight of the foregoing paragraph shall be detailed in the Confirmationevidencing a particular Transaction. 

 

Contracts(Rights of Third Parties) Act 1999. No term of this Agreement is enforceable bya person who is not a party to it.

 

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