Document:

Unassociated Document

    
      Exhibit
        10.43

       

      MANAGEMENT
        SERVICES AGREEMENT

    

     

    This
      Management Services Agreement (this “Agreement”)
      is
      made effective as of the 11th
      day of
      May, 2007, by and among Tekoil & Gas Corporation, a Delaware corporation
      (“Manager”)
      and
      Tekoil and Gas Gulf Coast, LLC, a Delaware limited liability company
      (“Company”).

     

    WHEREAS,
      Company wishes for Manager to provide management and general and administrative
      support services to Company and Manager wishes to provide such management and
      services to Company as provided herein; and

     

    WHEREAS,
      Manager is an affiliate of the Company.

     

    NOW,
      THEREFORE, in consideration of the mutual covenants of the parties herein it
      is
      agreed as follows:

     

    Section
      1. Definitions.
      Capitalized terms used but not defined herein shall have the meanings given
      them
      in the Credit Agreement described below. The following terms shall have the
      following meaning when used herein:

     

    “Agent”
means
      the Person who, at the time in question, is the “Administrative Agent” under the
      Credit Agreement.

     

    “Credit
      Agreement”
means
      that certain Credit and Guaranty Agreement of even date herewith by and among
      Company, Agent and Lenders, as from time to time amended, supplemented or
      restated.

     

    “JOA”
means
      any joint operating agreement to which any of the Properties is
      subject.

     

    “Lenders”
means
      all Persons who at any time are “Lenders” under the Credit
      Agreement.

     

    “Operating
      Payables”
means
      the following costs and expenses of or attributable to Company for the ownership
      and operation of the Properties: (a) all leasehold operating expenses, capital
      expenditures, and other charges directly for operations on the Properties,
      (b)
      all charges and expenses for gathering, processing and transporting production
      from the Properties to the point of sale, (c) all severance and ad valorem
      taxes
      relating to Company’s interests in the Properties or in the production
      therefrom, (d) all costs and expenses of maintaining in connection with the
      Properties any bonds required by the Transaction Documents, by the terms of
      any
      laws, rules, or regulations or by the terms of any oil, gas or other mineral
      leases and other contracts and agreements forming a part of or pertaining to
      the
      Properties, (e) all delay rentals and royalties payable with respect to the
      Properties, (f) all costs or expenses necessary for the repair or replacement
      of
      the Properties resulting from damages or losses incurred, except those resulting
      from Manager’s gross negligence or willful misconduct, and (g) all costs
      incurred for the plugging and abandonment of any Property.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Properties”
means,
      collectively, those undivided interests in oil and gas properties and interests
      in other real and personal property which are, at the time in question, owned
      by
      Company or any of its Subsidiaries.

     

    “Service
      Fee”
means
      $250,000 for each calendar month (“Subject Month”) beginning June 1, 2007;
      provided that if a “Default” or “Event of Default” (as those terms are defined
      in the senior credit facility of the Company in effect from time to time) exists
      or existed in such Subject Month, then such amount shall be reduced to $125,000
      for such Subject Month.

     

    “Services”
has
      the
      meaning given to such term in Section 2.

     

    “Subordinated
      Liabilities”
has
      the
      meaning given to such term in Section 7.

     

    “Third
      Party Beneficiaries”
has
      the
      meaning given to such term in Section 11.

     

    As
      used
      in this Agreement: the word “or” is not exclusive; the word “including” (in its
      various forms) means “including without limitation”; pronouns in masculine,
      feminine and neuter genders shall be construed to include any other gender;
      and
      words in the singular form shall be construed to include the plural and vice
      versa, unless the context otherwise requires. References herein to any Section,
      Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a Schedule
      or
      an Exhibit, as the case may be, hereof unless otherwise specifically provided.
      This Agreement is the result of negotiations between, and has been reviewed
      by,
      Manager, General Partner and Agent and their respective counsel. Accordingly,
      this Agreement shall be deemed to be the joint product of the parties hereto,
      and no ambiguity shall be construed in favor of or against any party hereto
      or
      beneficiary hereof.

     

    Section
      2. Management
      Services.
      During
      the term hereof, Manager shall (i) advise and consult with Company
      regarding all aspects of Company’s development, operations and expansion,
      (ii) provide management expertise and consulting services for the
      development and implementation of operational and financial plans of Company
      and
      for strategic planning and decisions of Company, and (iii) provide
      administrative support services to Company as needed for the daily operations
      of
      the business of Company (collectively, the “Services”), including the following
      specific Services:

     

    (a) Overhead
      Services.
      Manager
      will provide, at its own cost, all general and administrative overhead services
      and other general and administrative services reasonably required by
      Company.

     

    (b) Reports
      and Information.
      Manager
      will provide, at its own cost, all assistance (both from Manager’s own staff and
      from outside accountants, engineers, attorneys, consultants and other service
      providers) required by Company in order to furnish to the Agent the reports
      and
      other information required to be furnished by Company under the Transaction
      Documents, including with respect to (i) the audit of the Company’s financial
      statements, (ii) environmental compliance, audit or reporting, (iii) land and
      title issues (including, without limitation, title opinions, title reports
      and
      curative matters), (iv) preparation of the Company’s tax returns and any audits
      or other responses or actions required in connection with such tax returns,
      (v)
      regulatory issues, including compliance matters, and (vi) engineering analysis
      and reporting;

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    (c) Funds
      in Trust.
      To the
      extent ever received by Manager, Manager will handle, account for, and pay
      over
      to Company all proceeds of production from the Properties, all other proceeds
      of
      the Properties, and all other funds in any way accruing to the Properties or
      otherwise belonging to Company, all in accordance with the requirements of
      the
      Transaction Documents. Pending such payments, Manager will hold all such funds
      in trust for Company and Lender and will keep such funds separate from Manager’s
      own funds.

     

    (d) Lease
      and Land Administration.
      Manager
      will administer all leases and division orders, and maintain all land, lease
      and
      other related records, and provide associated services;

     

    (e) Marketing.
      Manager
      will provide marketing, gas control, and contract administration services
      necessary to sell the hydrocarbons produced from the Properties;

     

    (f) Accounting.
      Manager
      will perform all revenue and joint interest accounting functions attributable
      to
      the Properties, including but not limited to:

     

    (i) royalty
      and other lease payments,

     

    (ii) payment
      of accounts payable,

     

    (iii) collection
      of accounts receivable,

     

    (iv) computation
      and payment of severance and other taxes based on production,

     

    (v) gas
      balancing, and

     

    (vi) general
      ledger and financial reporting activities.

     

    (g) Operations.
      To the
      extent any Properties are not subject to a JOA, or are subject to a JOA under
      which Company is named as operator, Manager will provide all operation functions
      attributable to the Properties that would be provided by a reasonable and
      prudent operator.

     

    (h) Information
      and Data Systems.
      Manager
      will provide computer use and/or facilities necessary to manage and operate
      the
      Properties and maintain the records of Company, and will provide applicable
      data
      services and licenses.

     

    (i) Tax
      Returns.
      Manager
      will prepare or cause to be prepared all federal, state and local tax returns
      required of Company.

     

    (j) Operating
      Payables.
      Manager
      will pay the Operating Payables using Company’s funds and in accordance with the
      requirements of the Credit Agreement.

     

    (k) Budgets
      & Forecasts.
      Manager
      will establish operating and capital budgets and forecasts for Company and
      monitor the receipts, income and expenditures of Company.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    (l) Compliance.
      Manager
      will use reasonable efforts to take all actions, and file all reports and
      notices, to cause Company’s operations to be in compliance with all applicable
      laws, rules and regulations. Manager will monitor the compliance by Company
      with
      covenants required by Company’s lenders.

     

    (m) Insurance.
      Manager
      will arrange for insurance policies as required under the Credit
      Agreement.

     

    (n) Accounting.
      Manager
      will maintain or cause to be maintained a general ledger with respect to
      Company’s business and attendant accounting matters.

     

    (o) Outside
      Professionals.
      Manager
      will manage and supervise the outside accountants, attorneys and financial
      consultants of Company and coordinate the annual audit of Company’s books and
      records and any capital raising efforts of Company.

     

    Section
      3. Performance
      and Authority.
      

     

    (a) Standard
      of Care.
      Manager
      shall provide the Services in a timely and current manner, consistent with
      management and administrative practices that it would provide for itself in
      the
      performance of services similar to the Services.

     

    (b) Independent
      Contractor Relationship.
      With
      respect to its performance of the Services, Manager is an independent
      contractor, with the authority to control, oversee and direct the performance
      of
      the details of the Services.

     

    (c) No
      Joint Venture or Partnership.
      This
      Agreement is not intended to and shall not be construed as creating a joint
      venture, partnership, agency or other association within the meaning of the
      common law or under the laws of any state.

     

    Section
      4. Compensation.
      For the
      Services provided hereunder by Manager to Company, Company shall pay to Manager
      the Service Fee, payable in advance on the first day of each Subject Month.
      In
      addition, Company agrees to reimburse Manager for any Operating Payables that
      may be paid with funds of Manager rather than funds of Company. The foregoing
      Service Fee and reimbursements shall be the only amounts payable by Company
      to
      Manager pursuant to this Agreement.

     

    Section
      5. Term.
      The
      respective rights, duties, and obligations of the parties hereunder shall
      commence on the effective date hereof and (a) shall continue initially
      until the earlier to occur of (i) the fourth anniversary of the effective date
      hereof, and (ii) the date the Obligations have been paid in full in cash and
      the
      Credit Agreement obligations have been terminated (other than those obligations
      which expressly survive termination), and (b) shall be renewed and shall
      continue automatically thereafter for additional one (1) year terms on such
      fourth anniversary and on each subsequent anniversary of the effective date
      hereof; provided that either party hereto may, once the Credit Agreement has
      been terminated, terminate this Agreement by giving written notice of
      termination to the other party at least thirty (30) days prior to the date
      such
      termination is to be effective. In addition, upon the occurrence and during
      the
      continuance of an “Event of Default” under the Credit Agreement, Agent may, in
      its discretion, elect to terminate this Agreement at any time, and in such
      event
      (x) Company’s only payment obligations to Manager will be for Services rendered
      prior to the date of such termination and reimbursement of any Operating
      Payables paid by the Manager on behalf of the Company, and (y) Manager will
      have
      no right or obligation hereunder to perform Services after the date of such
      termination. Finally, notwithstanding the foregoing, if the Company defaults
      on
      its required payment of the Services Fees or otherwise fails to reimburse the
      Manager for any Operating Payables paid by the Manager on the Company’s behalf,
      the Manager may elect to terminate this Agreement, such termination to be
      effective upon 30 days’ notice to the Company (it being understood that the
      Company shall still be liable to the Manager for any such unpaid Service Fees
      or
      other amounts accrued prior to termination).

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    Section
      6. Covenants
      Relating to Company & Performance.
      

     

    (a) Manager
      agrees to cause the Services to be performed as and when required by this
      Agreement and to provide all funds, personnel and assistance necessary or
      appropriate to cause such performance (it being understood, however, that in
      no
      event shall the Manager be required to provide funds for, or otherwise pay
      for,
      any Operating Payables), without any charge to Company in addition to the
      Service Fee.

     

    (b) Manager
      hereby agrees not to take any action that would prevent or delay Company from
      performing its obligations under the Transaction Documents.

     

    Section
      7. Subordination.
      As used
      herein, “Subordinated Liabilities” means any and all Liabilities (as defined in
      the Credit Agreement), other than the Service Fee and the reimbursements of
      Operating Payables described in Section 4, that are at any time owed by Company
      to Manager. Manager hereby subordinates and makes inferior to the Obligations
      (as defined in the Credit Agreement) any and all Subordinated Liabilities which
      now or at any time hereafter may be owed to it by Company. Manager agrees
      that:

     

    (a) it
      will
      never permit Company to pay any Subordinated Liabilities or any part thereof
      or
      accept payment from Company of any Subordinated Liabilities or any part thereof
      without the prior written consent of Agent, and

     

    (b) it
      will
      never accept or retain any Distributions (as defined in the Credit Agreement)
      except as permitted under the Credit Agreement or accept any other payments
      from
      Company other than the Service Fee and reimbursements of Operating Payables
      described in Section 4.

     

    If
      Manager receives any such payment or any such Distribution without the prior
      written consent of Agent, the amount so paid shall be held in trust for the
      benefit of Lenders, shall be segregated from the other funds of Manager and
      shall forthwith be paid over to Agent. Manager hereby further subordinates
      and
      makes inferior to the liens and security interests from time to time granted
      under the Transaction Documents any liens or security interests in favor of
      Manager which burden or encumber any of the Properties or assets of Company,
      and
      each agrees that it will, immediately upon request from Agent, release any
      such
      lien or security interest.

     

    Section
      8. Notices.
      Any
      notice which may be given hereunder shall be ineffective unless in writing
      and
      either delivered by registered or certified mail with return receipt requested
      to the addresses set out below or delivered by hand with written acknowledgment
      of receipt. The addresses for notice are as follows:

     

    
      	 For Company:	 	  Tekoil
              and Gas Gulf Coast, LLC
	 	 	 25050 I-45 North, Suite
              525
	 	 	 The
              Woodlands, Texas 77380
	 	 	 Attention:
              Mark S. Western
	 	 	 Telecopier: (281)
              364-8007

    

    
       

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

       

    

    Any
      such
      address may be changed at any time by written notice in accordance herewith.
      Each notice hereunder shall be deemed to have been given when delivered in
      person or by courier service and signed for against receipt thereof, or three
      business days after depositing it in the United States mail with postage prepaid
      and properly addressed.

     

    Section
      9. Construction.
      This
      Agreement shall be construed and interpreted in accordance with the laws of
      the
      State of Texas. Captions herein are inserted for convenience only and shall
      have
      no effect upon interpretation. Whenever the context requires, the singular
      shall
      include the plural and vice versa and the masculine or neuter shall include
      the
      masculine, neuter, or feminine.

     

    Section
      10. Assigns.
      This
      Agreement shall be binding upon and shall inure to the benefit of the parties
      hereto and their respective successors and permitted assigns; provided that
      (a)
      Company may not assign its rights hereunder without the written consent of
      Manager, and (b) Manager may not assign its rights and obligations hereunder
      without the written consent of Company and the Third Party Beneficiaries (as
      defined below).

     

    Section
      11. Express
      Beneficiaries. Manager agrees that Agent, each Lender, and each Lender
      Counterparty (collectively, the “Third Party Beneficiaries”) (i) is an express
      and intended third party beneficiary of the covenants and agreements made in
      this Agreement by Manager (which benefits are immediate and not incidental),
      and
      (ii) has acted in reliance upon its status as a third party beneficiary as
      set
      forth above (including entering into the loan documents to which it is a
      party).

     

    Section
      12. Amendment.
      No
      amendment of any provision of this Agreement shall be effective unless it is
      in
      writing and signed by all parties hereto and the Third Party Beneficiaries,
      and
      no waiver of any provision of this Agreement, and no consent to any departure
      by
      any party hereto therefrom, shall be effective unless it is in writing and
      signed by the other parties hereto and the Third Party Beneficiaries, and then
      such waiver or consent shall be effective only in the specific instance and
      for
      the specific purpose for which given.

     

    Section
      13. Entire
      Agreement.
      This
      Agreement sets forth the entire agreement of the parties with respect to the
      subject matter hereof and any prior agreements, written or oral, relating
      thereto are hereby superseded.

     

    Section
      14. Counterparts,
      Facsimile, Electronic Transmission.
      This
      Agreement may be executed in any number of counterparts, all of which shall
      constitute one and the same instrument, and any party hereto may execute this
      Agreement by signing and delivering one or more counterparts. This Agreement
      may
      be executed by facsimile signature or by electronic transmission and all such
      signatures shall be effective as originals.

     

    
      [Remainder
        of page intentionally left blank.]

    

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    
IN
      WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
      first above written.

     

    
      	 	 	 
	 	MANAGER:
	 	 
	 	
              TEKOIL
                & GAS CORPORATION,
                a
                Delaware corporation

            
	 
 	 
 	 
 
	 	By:  	/s/ Mark
              Western
	 	
              
Name:
              Mark Western
	 	Title:
              CEO and Chairman of the Board of
              Directors

    

     

    
      
        	 	 	 
	 	COMPANY:
	 	 
	 	Tekoil
                and Gas
                Gulf Coast, LLC, a Delaware limited liability company
	 	 	 
	 	By: 	Tekoil & Gas Corporation, its Managing
                Member
	 	
                 

                 

              	
              
	 	By:  	/s/
                Mark
                Western
	 	
                
Name:
                Mark Western
	 	Title:
                CEO and
                Chairman of the Board of
                Directors

      

Signature
      Page to Management Services AgreementUnassociated Document

    
      Exhibit
        10.44

       

      (Multicurrency—Cross
        Border)

    

    

    ISDA®

    International
      Swap Dealers Association. Inc.

    MASTER
      AGREEMENT

     

     

    dated
      as of

    May
      11, 2007

    

    
      	
                  

              J.
                ARON & COMPANY           
                 

            	
              between

               

              and

            	
               

              TEKOIL
                AND GAS GULF COAST, LLC

            

    

    

     

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

    

    Accordingly,
      the parties agree as follows:—

     

    1. Interpretation

     

    (a) Definitions. The
      terms
      defined in Section 14 and in the Schedule will have the meanings therein
      specified for the purpose of this Master Agreement.

    

    (b) Inconsistency. In
      the
      event of any inconsistency between the provisions of the Schedule and the other
      provisions of this Master Agreement, the Schedule will prevail. In the event
      of
      any inconsistency between the
      provisions of any Confirmation and this Master Agreement (including the
      Schedule), such Confirmation will prevail for the purpose of the relevant
      Transaction.

    

    (c) Single
      Agreement. All
      Transactions are entered into in reliance on the fact that this Master Agreement
      and all Confirmations form a single agreement
      between the parties (collectively referred to as this “Agreement”), and the
      parties would not otherwise enter into any Transactions.

    

    2. Obligations

     

    (a) General
      Conditions.

     

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

    

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

    

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b) Change
      of Account. 
      Either
      party may change its account for receiving a payment or delivery by giving
      notice to the other party at least five Local Business Days prior to the
      scheduled date for the payment or delivery to which such change applies unless
      such other party gives timely notice of a reasonable objection to such
      change.

    

    (c) Netting.
      If on
      any date amounts would otherwise be payable:—

     

    
      	(i)  	
              in
                the same currency; and

            

    

     

    
      	(ii)  	
              in
                respect of the same Transaction,

            

    

     

    by
      each
      party to the other, then, on such date, each party’s obligation to make payment
      of any such amount will be automatically satisfied and discharged and, if the
      aggregate amount that would otherwise have been payable by one party exceeds
      the
      aggregate amount that would otherwise have been payable by the other party,
      replaced by an obligation upon the party by whom the larger aggregate amount
      would have been payable
      to pay to the other party the excess of
      the
      larger aggregate amount over the smaller aggregate amount.

    

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

    

    (d) Deduction
      or Withholding for Tax.

    

    (i)  Gross-Up.All
      payments under this Agreement will be made without any deduction or withholding
      for or on account of any Tax unless such deduction or withholding is required
      by
      any applicable law, as modified by the practice of any relevant governmental
      revenue authority, then in effect. If a party is so required to deduct or
      withhold, then that party (“X”)
      will:—

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

    (2)  pay
      to
      the relevant authorities the full amount required to be deducted or withheld
      (including the full amount required to be deducted or withheld from any
      additional amount paid by X to Y under this Section 2(d)) promptly upon the
      earlier of determining that such deduction or withholding is required or
      receiving notice that such amount has been assessed against Y;

    (3)  promptly
      forward to Y an official receipt (or a certified copy), or other documentation
      reasonably acceptable to Y, evidencing such payment to such authorities;
      and

    (4)  if
      such
      Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to which
      Y is
otherwise
      entitled under this Agreement, such additional amount as is necessary to ensure
      that the net
      amount
      actually received by Y (free and clear of Indemnifiable Taxes,
      whether
      assessed
      against X or Y) will equal the full amount Y would have received had no such
      deduction or withholding
      been required. However, X will not be required to pay any additional amount
      to Y
      to
      the
      extent that it would not be required to be paid but for:—

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

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

     

    (B)  the
      failure of a representation made by Y pursuant to Section 3(f) to be
      accurate
      and true
      unless such failure would not have occurred but for (I) any action taken by
      a
      taxing authority, or brought in a court of competent jurisdiction, on or after
      the date on which a Transaction is entered into (regardless of whether such
      action is taken or brought with respect to a party to this Agreement) or (II)
      a
      Change in Tax Law.

     

    (ii)  Liability.
      If:—

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

    (2)  X
      does
      not so deduct or withhold; and

    (3)  a
      liability resulting from such Tax is assessed directly against X,

     

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

    

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

    

    3. Representations

    

    Each
      party represents to the other party (which representations will be deemed to
      be
      repeated by each party on each date on which a Transaction is entered into
      and,
      in the case of the representations in Section 3(f), at all times until the
      termination of this Agreement) that:3⁄4

    

    (a) Basic
      Representations.

     

    (i)
      Status.
      It is
      duly organised and validly existing under the laws of the jurisdiction of its
      organisation or incorporation and, if relevant under such laws, in good
      standing;

     

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

     

    (iii)
      No
      Violation or Conflict.
      Such
      execution, delivery and performance do not violate or conflict with
      any
      law applicable to it, any provision of its constitutional documents,
      any order or judgment of
      any
      court or other agency of government applicable to it or any of its assets or
      any
      contractual restriction
      binding on or affecting it or any of its assets;

    

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

    

    (v)
      Obligations
      Binding.
      Its
      obligations under this Agreement and any Credit Support Document to
      which it
      is a party constitute its legal, valid and binding obligations, enforceable
      in
      accordance with
      their respective terms (subject to applicable bankruptcy, reorganisation,
      insolvency, moratorium
      or
      similar laws affecting creditors’ rights generally and subject, as to
      enforceability, to equitable principles of general application (regardless
      of
      whether enforcement is sought in a proceeding
      in equity or at law)).

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

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

    

    (c) Absence
      of Litigation.
      There is
      not pending or, to its knowledge, threatened against it or any of its
Affiliates
      any action, suit or proceeding at law or in equity or before any court,
      tribunal, governmental body, agency
      or
      official or any arbitrator that is likely to affect the legality, validity
      or
      enforceability against it of this
      Agreement or any Credit Support Document to which it is a party or its ability
      to perform its obligations under this Agreement or such Credit Support
      Document.

    

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

    

    (e) Payer
      Tax Representation.
      Each
      representation specified in the Schedule as being made by it for the purpose
      of
      this Section 3(e) is accurate and true.

    

    (f) Payee
      Tax Representations.
      Each
      representation specified in the Schedule as being made by it for the purpose
      of
      this Section 3(f) is accurate and true.

    

    4. Agreements

     

    Each
      party agrees with the other that, so long as either party has or may have any
      obligation under this Agreement or under any Credit Support Document to which
      it
      is a party:3⁄4

     

     

    (a) Furnish
      Specified Information.
      It will
      deliver to the other party or, in certain cases under subparagraph
      (iii) below, to such government or taxing authority as the other party
      reasonably directs:3⁄4

     

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

     

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

     

    (iii)  upon
      reasonable demand by such other party, any form or document that may be required
      or reasonably
      requested in writing in order to allow such other party or its Credit Support
      Provider to make a payment under this Agreement or any applicable Credit Support
      Document without any deduction or withholding for or on account of any Tax
      or
      with such deduction or withholding at a reduced
      rate (so long as the completion, execution or submission of such form or
      document would not materially prejudice the legal or commercial position of
      the
      party in receipt of such demand), with
      any
      such form or document to be accurate and completed in a manner reasonably
      satisfactory to
      such
      other party and to be executed and to be delivered with any reasonably required
      certification,

     

    in
      each
      case by the date specified in the Schedule or such Confirmation or, if none
      is
      specified, as soon as reasonably practicable.

     

    (b)  Maintain
      Authorisations.
      It will
      use all reasonable efforts to maintain in full force and effect all consents
      of
      any governmental or other authority that are required to be obtained by it
      with
      respect to this Agreement or any Credit Support Document to which it is a party
      and will use all reasonable efforts to obtain any that may become necessary
      in
      the future.

     

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

     

    (d)  Tax
      Agreement.
      It will
      give notice of any failure of a representation made by it under Section 3(f)
      to
      be accurate and true promptly upon learning of such failure.

     

    (e)  Payment
      of Stamp Tax.
      Subject
      to Section 11, it will pay any Stamp Tax levied or imposed upon it
      or in
      respect of its execution or performance of this Agreement by a jurisdiction
      in
      which it is incorporated, organised,
      managed and controlled, or considered to have its seat, or in which a branch
      or
      office through which it is acting for the purpose of this Agreement is located
      (“Stamp Tax Jurisdiction”) and will indemnify the
      other
      party against any Stamp Tax levied or imposed upon the other party or in respect
      of the other
      party’s
      execution or performance of this Agreement by any such Stamp Tax Jurisdiction
      which is not also a Stamp Tax Jurisdiction with respect to the other
      party.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    5.
      Events
      of Default and Termination Events

    

    (a)  Events
      of Default. 
      The
      occurrence at any time with respect to a party or, if applicable, any Credit
      Support Provider of such party or any Specified Entity of such party
of
      any of
      the following events constitutes an event of default (an “Event of Default”)
      with respect to such party:—

     

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

     

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

    

    (iii)  Credit
      Support Default.

    

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

    

    (2)  the
      expiration or termination of such Credit Support Document or the failing or
      ceasing of
      such
      Credit Support Document to be in full force and effect for the purpose of
      this
      Agreement (in
      either case other than in accordance with its terms) prior to the satisfaction
      of all
      obligations of
      such
      party under each Transaction to which such Credit Support Document relates
      without the
      written
      consent of the other party; or

    

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

    

    (iv)  Misrepresentation.
      A
      representation (other than a representation under Section 3(e) or (f)) made
      or
      repeated or deemed to have been made or repeated by the party or any Credit
      Support Provider of such party in this Agreement or any Credit Support Document
      proves to have been incorrect or misleading in any material respect when made
      or
      repeated or deemed to have been made or repeated;

     

    (v)  Default
      under Specified Transaction.
      The
      party, any Credit Support Provider of such party or any applicable Specified
      Entity of such party (1) defaults under a Specified Transaction and, after
      giving effect to any applicable notice requirement or grace period, there occurs
      a liquidation of, an acceleration of obligations under, or an early termination
      of, that Specified Transaction, (2) defaults, after giving effect to any
      applicable notice requirement or grace period, in making any payment or delivery
      due on the last payment, delivery or exchange date of, or any payment on early
      termination of, a Specified Transaction (or such default continues for at least
      three Local Business Days if there is no applicable notice requirement or grace
      period) or (3) disaffirms, disclaims, repudiates or rejects, in whole or in
      part, a Specified Transaction (or such action is taken by any person or entity
      appointed or empowered to operate it or act on its behalf);

    

    (vi)  Cross
      Default.
      If
“Cross Default” is specified in the Schedule as applying to the party, the
      occurrence or existence of (1) a default, event of default or other similar
      condition or event (however described)
      in respect of such party, any Credit Support Provider of such party or any
      applicable Specified Entity of such party under one or more agreements or
      instruments relating to Specified Indebtedness
      of any of them (individually or collectively) in an aggregate amount of not
      less
      than the
      applicable Threshold Amount (as specified in the Schedule) which has resulted
      in
      such Specified Indebtedness becoming, or becoming capable at such time of being
      declared, due and payable under such agreements or instruments, before it would
      otherwise have been due and payable or (2) a default by
      such
      party, such Credit Support Provider or such Specified Entity (individually
      or
      collectively) in
      making
      one or more payments on the due date thereof in an aggregate amount of not
      less
      than the applicable Threshold Amount under such agreements or instruments (after
      giving effect to any applicable
      notice requirement or grace period);

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (vii)  Bankruptcy.
      The
      party, any Credit Support Provider of such party or any applicable Specified
      Entity of such party:—

    

    (1)  is
      dissolved (other than pursuant to a consolidation, amalgamation or merger);
      (2)
      becomes insolvent
      or is unable to pay its debts or fails or admits in writing its inability
      generally to pay its debts
      as
      they become due; (3) makes a general assignment, arrangement or composition
      with
      or
      for the
      benefit of its creditors; (4) institutes or has instituted against it a
      proceeding seeking a judgment of insolvency or bankruptcy or any other relief
      under any bankruptcy or insolvency law or other similar law affecting creditors’
rights, or a petition is presented for its winding-up or liquidation, and,
      in
      the case of any such proceeding or petition instituted or presented against
      it,
      such proceeding or petition (A) results in a judgment of insolvency or
      bankruptcy or the entry of an order for relief or the making of an order for
      its
      winding-up or liquidation
      or (B) is not dismissed, discharged, stayed or restrained in each case within
      30
      days of
      the
      institution or presentation thereof; (5) has a resolution passed for its
      winding-up, official management
      or liquidation (other than pursuant to a consolidation, amalgamation or merger);
      (6)
      seeks or
      becomes subject to the appointment of an administrator, provisional liquidator,
      conservator,
      receiver, trustee, custodian or other similar official for it or for all or
      substantially all its assets; (7) has a secured party take possession
of
      all or
      substantially all its assets or has a distress, execution, attachment,
      sequestration or
      other
      legal process levied, enforced or sued on
      or
      against all or substantially all its assets and such secured party maintains
      possession, or any
      such
      process is not dismissed, discharged, stayed or restrained, in each case within
      30 days thereafter;
      (8) causes or is subject to any event with respect to it which, under the
      applicable laws
      of
      any jurisdiction, has an analogous effect to any of the events specified in
      clauses (1) to
      (7)
      (inclusive); or (9) takes any action in furtherance of, or indicating its
      consent to, approval of,
      or
      acquiescence in, any of the foregoing acts; or

    

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

    

    (1)
      the
      resulting, surviving or transferee entity fails to assume all the obligations
      of
      such party or such Credit Support Provider under this Agreement or any Credit
      Support Document to which it or its predecessor was a party by operation of
      law
      or pursuant to an agreement reasonably satisfactory to the other party to this
      Agreement; or

    

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

    

    (b) Termination
      Events.
      The
      occurrence at any time with respect to a party or, if applicable, any Credit
      Support
      Provider of such party or any Specified Entity of such party of any event
      specified below constitutes an Illegality if the event is specified in (i)
      below, a Tax Event if the event is specified in (ii) below or a Tax Event
      upon Merger if the event is specified in (iii) below, and, if specified to
      be
      applicable, a Credit
      Event Upon
      Merger if the event is specified pursuant to (iv) below or an Additional
      Termination Event if the event is specified pursuant to (v) below:—

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (i) Illegality. Due
      to
      the adoption of, or any change in, any
      applicable law after the date on which a Transaction is entered into, or due
      to
      the promulgation of, or any change in, the interpretation
      by any
      court, tribunal or regulatory authority with competent jurisdiction of any
      applicable law after such date, it becomes unlawful (other than as a result
      of a
      breach by the party of Section 4(b)) for such party (which will be the Affected
      Party):—

    

    (1)
      to
      perform any absolute or contingent obligation to make a payment or delivery
      or
      to receive a payment or delivery in respect of such Transaction or to comply
      with any other material provision of this Agreement relating to such
      Transaction; or

    

    (2)
      to
      perform, or for any Credit Support Provider of such party to perform, any
      contingent or
      other
      obligation which the party (or such Credit Support Provider) has under any
      Credit Support Document relating to such Transaction;

    

    (ii)
       Tax
      Event.
      Due to
      (x) any action taken by a taxing authority, or brought in a court of competent
      jurisdiction, on or after the date on which a Transaction is entered into
      (regardless of whether such action
      is
      taken or brought with respect to a party to this Agreement) or (y) a Change
      in
      Tax Law, the
      party
      (which will be the Affected Party) will, or there is a substantial likelihood
      that it will, on the next succeeding Scheduled Payment Date (1) be required
      to
      pay to the other party an additional amount in respect of an Indemnifiable
      Tax
      under Section 2(d)(i)(4) (except in respect of interest under
      Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount
      is
      required to be
      deducted
      or withheld for or on account of a Tax (except in respect of interest under
      Section 2(e), 6(d)(ii)
      or 6(e)) and no additional amount is required to be paid in respect of such
      Tax
      under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A) or
      (B));

    

    (iii)
      Tax
      Event Upon Merger.
      The
      party (the “Burdened Party”) on the next succeeding Scheduled Payment Date will
      either (1) be required to pay an additional amount in respect of an
      Indemnifiable Tax
      under
      Section 2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii)
      or 6(e)) or (2) receive a payment from which an amount has been deducted or
      withheld for or on account of any
      Indemnifiable Tax in respect of which the
      other
      party is not required to pay an additional
      amount
      (other than by reason of Section 2(d)(i)(4)(A) or (B)), in either case as a
      result of a party consolidating or amalgamating with, or merging with or into,
      or transferring all or substantially all its assets to, another entity (which
      will be the Affected Party) where such action does not constitute an event
      described in Section 5(a)(viii);

    

    (iv)
       Credit
      Event Upon Merger.
      If
“Credit Event Upon Merger” is specified in the Schedule as applying to the
      party, such party (“X”), any Credit Support Provider of X or any applicable
      Specified Entity of X consolidates
      or amalgamates with, or merges with or into, or transfers all or substantially
      all its assets to,
      another
      entity and such action does not constitute an event described in Section
      5(a)(viii) but the creditworthiness of the resulting, surviving or transferee
      entity is materially weaker than that of X, such Credit Support Provider or
      such
      Specified Entity, as the case may be, immediately prior to such action
(and,
      in
      such event, X or its successor or transferee, as appropriate, will be the
      Affected Party); or

    

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

    

    (c) Event
      of Default and Illegality.
      If an
      event or circumstance which would otherwise constitute or give rise to an Event
      of Default also constitutes an Illegality, it will be treated as an Illegality
      and will not constitute an Event of Default.

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    

    6. Early
      Termination

    

    (a) Right
      to Terminate Following Event of Default. If
      at any
      time an Event of Default with respect to
      a
      party (the “Defaulting Party”) has occurred and is then continuing, the other
      party (the “Non-defaulting Party”)
      may, by not more than 20 days notice to the Defaulting Party specifying the
      relevant Event of
      Default,
designate
      a day not earlier than the day such notice is effective as an Early Termination
      Date in respect of all
      outstanding Transactions. If, however, “Automatic Early Termination” is
      specified in the Schedule as applying to a party, then an Early Termination
      Date
      in respect of all outstanding Transactions will occur immediately
      upon the occurrence with respect to such party of an Event of Default specified
      in Section
      5(a)(vii)(l), (3), (5), (6) or, to the extent analogous thereto, (8), and as
      of
      the time immediately preceding the institution of the relevant proceeding or
      the
      presentation of the relevant petition upon the occurrence with respect to such
      party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent
      analogous thereto, (8).

    

    (b) Right
      to Terminate Following Termination Event.

    

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

    

    (ii)
      Transfer
      to Avoid Termination Event.
      If
      either an Illegality under Section 5(b)(i)(l) or a Tax Event occurs and there
      is
      only one Affected Party, or if a Tax Event Upon Merger occurs and the
Burdened
      Party is the Affected Party, the Affected Party will, as a condition to its
      right to
      designate an
      Early
      Termination Date under Section 6(b)(iv), use all reasonable efforts (which
      will
      not require such party to incur a loss, excluding immaterial, incidental
      expenses) to transfer within 20 days after it gives notice under Section 6(b)(i)
      all its rights and obligations under this Agreement in respect of the Affected
      Transactions to another of its Offices or Affiliates so that such Termination
      Event ceases to exist.

    

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

    

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

    

    (iii)
       Two
      Affected Parties.
      If an
      Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there are two
      Affected Parties, each party will use all reasonable efforts to reach agreement
      within 30 days after notice thereof is given under Section 6(b)(i) on action
      to
      avoid that Termination Event.

    

    (iv) Right
      to Terminate.
      If:—

    

    (1)
      a
      transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii), as
      the
      case may be, has not been effected with respect to all Affected Transactions
      within 30 days after an Affected Party gives notice under Section 6(b)(i);
      or

    

    (2)
      an
      Illegality under Section 5(b)(i)(2), a Credit Event Upon Merger or an Additional
      Termination Event occurs, or a Tax Event Upon Merger occurs and the Burdened
      Party is not the Affected Party,

     

    either
      party in the case of an Illegality, the Burdened Party in the case of a Tax
      Event Upon Merger, any Affected Party in the case of a Tax Event or an
      Additional Termination Event if there is more than one Affected Party, or the
      party which is not the Affected Party in the case of a Credit Event Upon Merger
      or an Additional Termination Event if there is only one Affected Party may,
      by
      not more than 20 days notice to the other party and provided that the relevant
      Termination Event is then continuing,
      designate a day not earlier than the day such notice is effective as an Early
      Termination Date in respect of all Affected Transactions.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (c) Effect
      of Designation.

    

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

    

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

     

    (d) Calculations.

    

    (i) Statement. 
      On or as
      soon as reasonably practicable following the occurrence of an Early Termination
      Date, each party will make the calculations on its part, if any, contemplated
      by
      Section 6(e) and will provide to the other party a statement (1) showing, in
      reasonable detail, such calculations (including all relevant quotations and
      specifying any amount payable under Section 6(e)) and (2) giving details of
      the
      relevant account to which any amount payable to it is to be paid. In the absence
      of written confirmation from the source of a quotation obtained in determining
      a
      Market Quotation, the records of the party obtaining such quotation will be
      conclusive evidence of the existence and accuracy of such
      quotation.

    

    (ii)
      Payment
      Date. An
      amount
      calculated as being due in respect of any Early Termination Date under Section
      6(e) will be payable on the day that notice of the amount payable is effective
      (in the case of an Early Termination Date which is designated or occurs as
      a
      result of an Event of Default) and
      on
      the day which is two Local Business Days after the day on which notice of the
      amount payable is effective (in the case of an Early Termination Date which
      is
      designated as a result of a Termination Event).
      Such amount will be paid together with (to the extent permitted under applicable
      law) interest
      thereon
      (before as well as after judgment) in the Termination Currency, from (and
      including) the
      relevant Early Termination Date to (but excluding) the date such amount is
      paid,
      at the Applicable Rate. Such interest will be calculated on the basis of daily
      compounding and the actual number of days elapsed.

    

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

     

    (i)
      Events
      of Default.
      If the
      Early Termination Date results from an Event of Default:—

     

    (1)
      First
      Method and Market Quotation.
      If the
      First Method and Market Quotation apply, the Defaulting
      Party will pay to the Non-defaulting Party the excess, if a positive number,
      of
      (A) the sum of the Settlement Amount (determined by the Non-defaulting Party)
      in
      respect of the Terminated Transactions and the Termination Currency Equivalent
      of the Unpaid Amounts owing to the Non-defaulting Party over (B) the Termination
      Currency Equivalent of the Unpaid Amounts owing
      to
      the Defaulting Party.

     

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

     

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

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

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

     

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

     

    (ii) Termination
      Events.
      If the
      Early Termination Date results from a Termination Event:—

    

    (1)
      One
      Affected Party. 
      If there
      is one Affected Party, the amount payable will be determined in
      accordance with Section 6(e)(i)(3), if Market Quotation applies, or Section
      6(e)(i)(4), if Loss applies, except that, in either case, references to the
      Defaulting Party and to the Non-defaulting Party will be deemed to be references
      to the Affected Party and the party which is not the Affected Party,
      respectively, and, if Loss applies and fewer than all the Transactions are
      being
      terminated, Loss shall be calculated in respect of all Terminated
      Transactions.

    

    (2)
      Two
      Affected Parties.
      If
      there are two Affected Parties:—

    

    (A)
      if
      Market Quotation applies, each party will determine a Settlement Amount in
      respect of the Terminated Transactions, and an amount will be payable equal
      to
      (I) the sum of (a) one-half of the difference between the Settlement Amount
      of
      the party with the higher Settlement Amount (“X”) and the Settlement Amount of
      the party with the lower Settlement Amount (“Y”) and (b) the Termination
      Currency Equivalent of the Unpaid
      Amounts owing to X less (II) the Termination Currency Equivalent of
      the
      Unpaid
      Amounts owing to Y; and

    

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

    

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

    

    (iii)
      Adjustment
      for Bankruptcy.
      In
      circumstances where an Early Termination Date occurs because “Automatic Early
      Termination” applies in respect of a party, the amount determined under this
      Section 6(e) will be subject to such adjustments as are appropriate and
      permitted by law to reflect any payments or deliveries made by one party to
      the
      other under this Agreement (and retained by such other party) during the period
      from the relevant Early Termination Date to the date for payment determined
      under Section 6(d)(ii).

    

    (iv)
      Pre-Estimate. 
      The
      parties agree that if Market Quotation applies an amount recoverable under
      this
      Section 6(e) is a reasonable pre-estimate of loss and not a penalty. Such amount
      is payable for the
      loss
      of bargain and the loss of protection against future risks and except as
      otherwise provided in
      this
      Agreement neither party will be entitled to recover any additional damages
      as a
      consequence of such losses.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    7. Transfer

    

    Subject
      to Section 6(b)(ii), neither this Agreement nor any interest or obligation
      in or
      under this Agreement may be transferred (whether by way of security or
      otherwise) by either party without the prior written consent of the other party,
      except that:—

    

    (a) a
      party
      may make such a transfer of this Agreement pursuant to a consolidation or
      amalgamation with, or merger with or into, or transfer of all or substantially
      all its assets to, another entity (but without prejudice to any other right
      or
      remedy under this Agreement); and

    

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

    Any
      purported transfer that is not in compliance with this Section will be void.
      

     

    8. Contractual
      Currency

     

    (a) Payment
      in the Contractual Currency.
      Each
      payment under this Agreement will be made in the relevant currency specified
      in
      this Agreement for that payment (the “Contractual Currency”). To the extent
permitted
      by applicable law, any obligation to make payments under this Agreement in
      the
      Contractual Currency will not be discharged or satisfied by any tender in any
      currency other than the Contractual Currency, except to the extent such tender
      results in the actual receipt by the party to which payment is owed, acting
      in a
      reasonable manner and in good faith in converting the currency so tendered
      into
      this Contractual Currency, of the full amount in the Contractual Currency of
      all
      amounts payable in respect of this Agreement. If for any reason the amount
      in
      the Contractual Currency so received falls short of the amount in the
      Contractual Currency payable in respect of this Agreement, the party required
      to
      make the payment will, to the extent permitted by applicable law, immediately
      pay such additional amount in the Contractual Currency as may be necessary
      to
      compensate for the shortfall. If for any reason the amount in the Contractual
      Currency so received exceeds the amount in the Contractual Currency payable
      in
      respect of this Agreement, the party receiving the payment will refund promptly
      the amount of such excess.

    

    (b) Judgments.
      To the
      extent permitted by applicable law, if any judgment or order expressed in a
      currency other than the Contractual Currency is rendered (i) for the payment
      of
      any amount owing in respect of this Agreement, (ii) for the payment of any
      amount relating to any early termination in respect of this Agreement or (iii)
      in respect of a judgment or order of another court for the payment of any amount
      described in (i) or (ii) above, the party seeking recovery, after recovery
      in
      full of the aggregate amount to which such party is entitled pursuant to the
      judgment or order, will be entitled to receive immediately from the other party
      the amount of any shortfall of the Contractual Currency received by such party
      as a consequence of sums paid in such other currency and will refund promptly
      to
      the other party any excess of the Contractual Currency received by such party
      as
      a consequence of sums paid in such other currency if such shortfall or such
      excess arises or results from any variation between the rate of exchange at
      which the Contractual Currency is converted into the currency of the judgment
      or
      order for the purposes of such judgment or order and the rate of exchange at
      which such party is able, acting in a reasonable manner and in good faith in
      converting the currency received into the Contractual Currency, to purchase
      the
      Contractual Currency with the amount of the currency of the judgment or order
      actually received by such party. The term “rate of exchange” includes, without
      limitation, any premiums and costs of exchange payable in connection with the
      purchase of or conversion into the Contractual Currency.

    

    (c
      ) Separate
      Indemnities.
      To the
      extent permitted by applicable law, these indemnities constitute separate and
      independent obligations from the other obligations in this Agreement, will
      be
      enforceable as separate
      and independent causes of action, will apply notwithstanding any indulgence
      granted by the party to which any payment is owed and will not be affected
      by
      judgment being obtained or claim or proof being made for any other sums payable
      in respect of this Agreement.

    

    (d) Evidence
      of Loss.
      For the
      purpose of this Section 8, it will be sufficient for a party to demonstrate
      that
      it would have suffered a loss had an actual exchange or purchase been
      made.

    

    9. Miscellaneous

     

    (a) Entire
      Agreement.
      This
      Agreement constitutes the entire agreement and understanding of the parties
      with
      respect to its subject matter and supersedes all oral communication and prior
      writings with respect thereto.

     

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

     

    (c) Survival
      of Obligations.
      Without
      prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations of
      the
      parties under this Agreement will survive the termination of any
      Transaction.

     

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

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (e) Counterparts
      and Confirmations.

     

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

     

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

    

    (f) No
      Waiver of Rights.
      A
      failure or delay in exercising any right, power or privilege in respect of
      this
Agreement
      will not be presumed to operate as a waiver, and a single or partial exercise
      of
      any right, power or privilege will not be presumed to preclude any subsequent
      or
      further exercise, of that right, power or privilege or the exercise of any
      other
      right, power or privilege.

    

    (g) Headings.
      The
      headings used in this Agreement are for convenience of reference only and
      are
      not to
      affect the construction of or to be taken into consideration in interpreting
      this Agreement.

    

    10.
       Offices;
      Multibranch Parties

     

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

     

    (b) Neither
      party may change the Office through which it makes and receives payments or
      deliveries for the purpose of a Transaction without the prior written consent
      of
      the other party.

    

    (c) If
      a
      party is specified as a Multibranch Party in the Schedule, such Multibranch
      Party may make and
      receive
      payments or deliveries under any Transaction through any Office listed in the
      Schedule, and the Office through which it makes and receives payments or
      deliveries with respect to a Transaction will be specified in the relevant
      Confirmation.

     

    11. Expenses

     

    A
      Defaulting Party will, on demand, indemnify and hold harmless the other party
      for and against all reasonable out-of-pocket expenses, including legal fees
      and
      Stamp Tax, incurred by such other party by reason
      of
      the enforcement and protection of its rights under this Agreement or any Credit
      Support Document to
      which
      the Defaulting Party is a party or by reason of the early termination of any
      Transaction, including, but not limited to, costs of collection.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    12. Notices

     

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

     

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

    

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

    

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

    

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

    

    (v)
      if
      sent by electronic messaging system, on the date that electronic message is
      received,

     

    unless
      the date of that delivery (or attempted delivery) or that receipt, as
      applicable, is not a Local Business Day or that communication is delivered
      (or
      attempted) or received, as applicable, after the close of business on a Local
      Business Day, in which case that communication shall be deemed given and
      effective on the first following day that is a Local Business Day.

     

    (b) Change
      of Addresses.
      Either
      party may by notice to the other change the address, telex or facsimile
number
      or
      electronic messaging system details at which notices
      or other communications are to be given to it.

    

    13. Governing
      Law and Jurisdiction

     

    (a) Governing
      Law. This
      Agreement will be governed by and construed in accordance with the law specified
      in the Schedule.

    

    (b) Jurisdiction. 
      With
      respect to any suit, action or proceedings relating to this Agreement
      (“Proceedings”), each party irrevocably:—

    

    (i)
      submits to the jurisdiction of the English courts, if this Agreement is
      expressed to be governed by English law, or to the non-exclusive jurisdiction
      of
      the courts of the State of New York and the United States District Court located
      in the Borough of Manhattan in New York City, if this Agreement is expressed
      to
      be governed by the laws of the State of New York; and

    

    (ii)
      waives any objection which it may have at any time to the laying of venue of
      any
      Proceedings brought in any such court, waives any claim that such Proceedings
      have been brought in an inconvenient forum and further waives the right to
      object, with respect to such Proceedings, that such court does not have any
      jurisdiction over such party.

    

    Nothing
      in this Agreement precludes either party from bringing Proceedings in any other
      jurisdiction (outside,
      if this Agreement is expressed to be governed by English law, the Contracting
      States, as defined in
      Section 1(3) of the Civil Jurisdiction and Judgments Act 1982 or any
      modification, extension or re-enactment
      thereof for the time being in force) nor will the bringing of Proceedings in
      any
      one or more jurisdictions preclude the bringing of Proceedings in any other
      jurisdiction.

    

    (c) Service
      of Process.
      Each
      party irrevocably appoints the Process Agent (if any) specified
      opposite
its
      name
      in the Schedule to receive, for it and on its behalf, service of process in
      any
      Proceedings. If for any reason
      any party’s Process Agent is unable to act as such, such party will promptly
      notify the other party and within 30 days appoint a substitute process agent
      acceptable to the other party. The parties irrevocably consent to service of
      process given in the manner provided for notices in Section 12. Nothing in
      this
      Agreement will affect the right of either party to serve process in any other
      manner permitted by law.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

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

     

    14. Definitions

     

    As
      used
      in this Agreement:— 

     

    “Additional
      Termination Event”
      has the
      meaning specified in Section 5(b).

     

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

     

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

     

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

     

    “Applicable
      Rate”
      means:—

     

    (a) in
      respect of obligations payable or deliverable (or which would have been but
      for
      Section 2(a)(iii)) by a Defaulting Party, the Default Rate;

     

    (b) in
      respect of an obligation to pay an amount under Section 6(e) of either party
      from and after the date (determined in accordance with Section 6(d)(ii)) on
      which that amount is payable, the Default Rate;

     

    (c) in
      respect of all other obligations payable or deliverable (or which would have
      been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
      Rate;
      and

     

    (d) in
      all
      other cases, the Termination Rate.

    

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

     

    “Change
      in Tax Law”
      means
      the enactment, promulgation, execution or ratification of, or any change in
      or
amendment
      to, any law (or in the application or official interpretation of any law) that
      occurs on or after the date
      on which
      the relevant Transaction is entered into.

     

    “consent”
      includes
      a consent, approval, action, authorisation, exemption, notice, filing,
      registration or exchange control consent.

     

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

     

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

     

    “Credit
      Support Provider”
      has the
      meaning specified in the Schedule.

     

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

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

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

    

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

    

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

    

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

    

    “Indemnifiable
      Tax”
      means
      any Tax other than a Tax that would not be imposed in respect of a payment
      under
      this Agreement but for a present or former connection between the jurisdiction
      of the government or taxation authority imposing such Tax and the recipient
      of
      such payment or a person related to such recipient (including, without
      limitation, a connection arising from such recipient or related person being
      or
      having been a citizen or resident of such jurisdiction, or being or having
      been
      organised, present or engaged in a trade or business in such jurisdiction,
      or
      having or having had a permanent establishment or fixed place of business in
      such jurisdiction, but excluding a connection arising solely from such recipient
      or related person having executed, delivered, performed its obligations or
      received a payment under, or enforced, this Agreement or a Credit Support
      Document). 

     

    “law”
      includes
      any treaty, law, rule or regulation (as modified, in the case of tax matters,
      by
      the practice of any
      relevant governmental revenue authority) and “lawful”
      and
“unlawful”
      will be
      construed accordingly.

    

    “Local
      Business Day”
      means,
      subject to the Schedule, a day on which commercial banks are open for business
      (including dealings in foreign exchange and foreign currency deposits) (a)
      in
      relation to any obligation under Section 2(a)(i), in the place(s) specified
      in
      the relevant Confirmation or, if not so specified, as otherwise agreed by the
      parties in writing or determined pursuant to provisions contained, or
      incorporated by reference, in this Agreement, (b) in relation to any other
      payment, in the place where the relevant account is located and, if different,
      in the principal financial centre, if any, of the currency of such payment,
      (c)
      in relation
      to any notice or other communication, including notice contemplated under
      Section 5(a)(i), in the city specified in the address for notice provided by
      the
      recipient and, in the case of a notice contemplated by
      Section 2(b), in the place where the relevant new account is to be located
      and
      (d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
      with respect to such Specified Transaction.

    

    “Loss”
      means,
      with respect to this Agreement or one or more Terminated
      Transactions, as the case may be, and a
      party,
      the Termination Currency Equivalent of an amount that party reasonably
      determines in good faith to be its
      total
      losses and costs (or gain, in which case expressed as a negative number) in
      connection with this
      Agreement or that Terminated Transaction or group of Terminated Transactions,
      as
      the case may be, including any loss of bargain, cost of funding or, at the
      election of such party but without duplication, loss or cost incurred as a
      result of its terminating, liquidating, obtaining or reestablishing any hedge
      or
      related trading position (or any gain resulting from any of them). Loss includes
      losses and costs (or gains) in respect of any payment or delivery required
      to
      have been made (assuming satisfaction of each applicable condition precedent)
      on
      or before the relevant Early Termination Date and not made, except, so as to
      avoid duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies.
      Loss
      does not include a party’s legal fees and out-of-pocket expenses referred to
      under Section 11. A party will determine its Loss as of the relevant Early
      Termination Date, or, if that is not reasonably practicable, as of the earliest
      date thereafter as is reasonably practicable. A party may (but need not)
      determine its Loss by reference to quotations of relevant rates or prices from
      one or more leading dealers in the relevant markets.

    

    “Market
      Quotation”
      means,
      with respect to one or more Terminated Transactions and a party making the
      determination, an amount determined on the basis of quotations from Reference
      Market-makers. Each quotation
      will be for an amount, if any, that would be paid to such party (expressed
      as a
      negative number) or
      by
      such party (expressed as a positive number) in consideration of an agreement
      between such party (taking into
      account
      any existing Credit Support Document with respect to the obligations of such
      party) and the quoting
      Reference Market-maker to enter into a transaction (the “Replacement
      Transaction”) that would have the effect of preserving for such party the
      economic equivalent of any payment or delivery (whether the
      underlying obligation was absolute or contingent and assuming the satisfaction
      of each applicable condition precedent) by the parties under Section 2(a)(i)
      in
      respect of such Terminated Transaction or group of Terminated Transactions
      that
      would, but for the occurrence
      of the relevant Early Termination Date, have been
      required after that date. For this purpose, Unpaid Amounts in respect of the
      Terminated Transaction or group of Terminated Transactions are to be excluded
      but, without limitation, any payment or delivery that would, but for the
      relevant Early Termination Date, have been required (assuming satisfaction
      of
      each applicable condition precedent) after that Early Termination Date is to
      be
      included. The Replacement Transaction would be subject to such documentation
      as
      such party and the Reference Market-maker may, in good
      faith, agree. The party making the determination (or its agent) will request
      each Reference Market-maker
      to
      provide its quotation to the extent reasonably practicable as of the same day
      and time (without regard to different time zones) on or as soon as reasonably
      practicable after the relevant Early Termination Date. The day and time as
      of
      which those quotations are to be obtained will be selected in good faith by
      the
      party obliged to make a determination under Section 6(e), and, if each party
      is
      so obliged, after consultation with the other. If more than three quotations
      are
      provided, the Market Quotation will be the arithmetic mean of the quotations,
      without regard to the quotations having the highest and lowest values. If
      exactly three such quotations are provided, the Market Quotation will be the
      quotation remaining after disregarding the highest and lowest quotations. For
      this purpose, if more than one quotation has the same highest value or lowest
      value, then one of such quotations shall be disregarded. If fewer than three
      quotations are provided, it will be deemed that the Market Quotation in respect
      of such Terminated Transaction or group of Terminated Transactions cannot be
      determined.

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

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

    

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

    

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

    

    “Potential
      Event of Default”
      means
      any event which, with the giving of notice or the lapse of time or both, would
      constitute an Event of Default.

    

    “Reference
      Market-makers”
      means
      four leading dealers in the relevant market selected by the party determining
      a
      Market Quotation in good faith (a) from among dealers of the highest credit
      standing which satisfy
      all the criteria that such party applies generally at the time in deciding
      whether to offer or to make an
      extension of credit and (b) to the extent practicable, from among such dealers
      having an office in the same city.

     

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

     

    “Scheduled
      Payment Date”
      means a
      date on which a payment or delivery is to be made under Section 2(a)(i) with
      respect to a Transaction.

    

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

    

    “Settlement
      Amount”
      means,
      with respect to a party and any Early Termination Date, the sum
      of:—

     

    (a) the
      Termination Currency Equivalent of the Market Quotations (whether positive
      or
      negative) for each Terminated
      Transaction or group of Terminated Transactions for which a Market Quotation
      is
      determined; and

     

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

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    “Specified
      Entity”
      has the
      meaning specified in the Schedule.

    

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

    

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

    

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

    

    “Tax”
      means
      any present or future tax, levy, impost, duty, charge, assessment or fee of
      any
      nature (including interest, penalties and additions thereto) that is imposed
      by
      any government or other taxing authority in respect of any payment under this
      Agreement other than a stamp, registration, documentation or similar
      tax.

    

    “Tax
      Event”
      has the
      meaning specified in Section 5(b).

    

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

    

    “Terminated
      Transactions”
      means
      with respect to any Early Termination Date (a) if resulting from a Termination
      Event, all Affected Transactions and (b) if resulting from an Event of Default,
      all Transactions (in either case) in effect immediately before the effectiveness
      of the notice designating that Early Termination Date (or, if “Automatic Early
      Termination” applies, immediately before that Early Termination
      Date).

    

    “Termination
      Currency”
      has the
      meaning specified in the Schedule.

    

    “Termination
      Currency Equivalent”
      means,
      in respect of any amount denominated in the Termination Currency, such
      Termination Currency amount and, in respect of any amount denominated in a
      currency other than the Termination Currency (the “Other Currency”), the amount
      in the Termination Currency determined by the party making the relevant
      determination as being required to purchase such amount of such Other Currency
      as at the relevant Early Termination Date, or, if the relevant Market Quotation
      or Loss (as the case may
      be),
      is determined as of a later date, that later date, with the Termination Currency
      at the rate equal to the
      spot
      exchange rate of the foreign exchange agent (selected as provided below) for
      the
      purchase of such Other Currency with the Termination Currency at or about 11:00
      a.m. (in the city in which such foreign exchange agent is located) on such
      date
      as would be customary for the determination of such a rate for the purchase
      of
      such Other Currency for value on the relevant Early Termination Date or that
      later date. The foreign exchange agent will, if only one party is obliged to
      make a determination under Section 6(e), be selected in good faith by that
      party
      and otherwise will be agreed by the parties.

    

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

    

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

    

    “Unpaid
      Amounts”
      owing to
      any party means, with respect to an Early Termination Date, the aggregate of
      (a)
      in respect of all Terminated Transactions, the amounts that became payable
      (or
      that would have become payable but for Section 2(a)(iii)) to such party under
      Section 2(a)(i) on or prior to such Early Termination Date and which remain
      unpaid as at such Early Termination Date and (b) in respect of each Terminated
      Transaction,
      for each obligation under Section 2(a)(i) which was (or would have been but
      for
      Section
      2(a)(iii)) required to be settled by delivery to such party on or prior to
      such
      Early Termination Date and which has not been so settled as at such Early
      Termination Date, an amount equal to the fair market 

    value
      of
      that which was (or would have been) required to be delivered as of the
      originally scheduled date for
      delivery, in each case together with (to the extent permitted under applicable
      law) interest, in the currency of
      such
      amounts, from (and including) the date such amounts or
      obligations were or would have been required to have been paid or performed
      to
      (but excluding) such Early Termination Date, at the Applicable Rate. Such
      amounts of interest will be calculated on the basis of daily compounding and
      the
      actual number of days elapsed. The fair market value of any obligation referred
      to in clause (b) above shall be reasonably determined by the party obliged
      to
      make the determination under Section 6(e) or, if each party is so obliged,
      it
      shall be the average of the Termination Currency Equivalents of the fair market
      values reasonably determined by both parties.

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF the parties have executed this document on the respective dates
      specified below with effect from the date specified on the first page of this
      document.

    
      	 	 	 	 	 
	 	 	 	 	 
	J. ARON &
              COMPANY	 	TEKOIL AND GAS
              GULF COAST,
              LLC 
	 	 	 
	 	 	 	 	 
	By:	/s/ Colleen
              Foster	 	By:	/s/ Mark
              S.
              Western
	 	
              
Name: Colleen
              Foster	 	 	
              
Name:
              Mark S. Western
	 	Title:   Managing
              Director	 	 	
              Title:

            
	 	
              Date:

            	 	 	
              Date:

            

    

    
 

     

    

    
      
        
        

      

      
        18

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