Document:

Exhibit 10.2

                         SKYRIDER ENERGY, LLC AGREEMENT

     THIS SKYRIDER ENERGY,  LLC AGREEMENT ("LLC  Agreement") is made and entered
into effective 11th day of August,  2005,  between Generon IGS, Inc., a Delaware
corporation ("Generon"), and Superior Energy LLC, ("Superior")

                               BACKGROUND RECITALS

         1.  Generon  and  Superior  desire to enter  into a  written  agreement
setting  forth  all  the  terms  and  agreements  between  them  respecting  the
operation, management, control, and ownership of International Superior Energy.

                                    ARTICLE I
                     FORMATION OF LIMITED LIABILITY COMPANY

                  1.1 DEFINED TERMS.  In addition to  capitalized  terms used in
this LLC Agreement and otherwise  defined  herein,  the definitions set forth in
Article XVI hereof shall be applicable throughout this LLC Agreement.

                  1.2 FORMATION.  A Certificate  of Formation for  International
Superior  Energy,  LLC was filed in the Office of the  Secretary of State of the
State of Delaware on February 20, 2001 forming a limited liability company under
the Delaware  Limited  Liability  Company Act, as amended (the "Act").  This LLC
Agreement sets forth the agreement among the initial Members of the Company.  In
the event of a conflict between any provision of this LLC Agreement and the Act,
the  provision  of this  LLC  Agreement  shall  control  to the  fullest  extent
permitted under the Act. The Members intend that the Company shall be taxed as a
partnership.  Promptly following the execution hereof, the Members shall execute
or cause to be executed all necessary certificates and documents, and shall make
all such filings and recordings, and shall do all other acts as may be necessary
or  appropriate  from  time to time to  comply  with  all  requirements  for the
formation,  continued existence, and/or operation of a limited liability company
under the Act.

                  1.3  NAME.  The name of the  Company  shall  be  International
Superior Energy, LLC or such other name as the Members may unanimously determine
from time to time.

                  1.4  PRINCIPAL  OFFICE.  The  principal  office of the Company
shall initially be at 800 Bering Drive, Suite 100, Houston,  TX 77057 or at such
other location as determined by the Manager of the Company. The Company may have
such other offices,  within or without the State of Delaware, as the Members may

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designate or as the business of the Company may from time to time require.

                  1.5 REGISTERED  OFFICE. The Company shall have and maintain in
the State of Delaware a registered office,  which may but need not be a place of
business in the State of Delaware, and a registered agent for service of process
on the Company.  The address of the initial  registered office of the Company in
the State of Delaware shall be 25 Greystone  Manor,  Lewes,  Delaware 19958. The
name of the registered agent at such address is Harvard Business Services, Inc..
The registered  office and registered  agent may be changed from time to time by
action of the Members,  in accordance  with the terms and conditions of the Act.
The  Company's  registered  agent  for  service  of  process  may be  either  an
individual  resident of the State of Delaware whose business office is identical
with  the  Company's  registered  office,  or a  domestic  corporation,  limited
partnership  or  limited  liability  company  or  business  trust,  or a foreign
corporation,  limited  partnership or limited liability company authorized to do
business in the State of Delaware having a business,  office identical with such
registered  office,  which is generally  open during  normal  business  hours to
accept  service of process and  otherwise  perform the functions of a registered
agent, or the Company itself.

                  1.6 TERM.  The  Company was formed on  February,  20, 2001 the
date of the filing of a Certificate  of Formation in the Office of the Secretary
of State of the State of Delaware,  and, unless earlier  terminated or dissolved
pursuant to this LLC  Agreement,  the Company shall  continue until December 31,
2099 (the "Term").

                  1.7  TAX  MATTERS  PARTNER.  Superior  shall  together  be the
initial tax matters manager of the Company,  unless and until the Manager of the
Company designates another Member to be the Tax Matters Manager.

                                   ARTICLE II
                                     PURPOSE

                  2.1      PURPOSE.  The Company organized to

                    (a) workover, redevelop and operate existing oil and natural
gas wells using proprietary  technologies each party shall make available to the
LLC and in such  activities as may from time to time by added thereto or deleted
therefrom, by unanimous agreement of the Members as set forth on Schedule 2.1(a)
hereto  (modifications  to such Schedule  2.1(a) to be noted thereon,  dated and
effective only when executed by all Members) (the "Core Business");

                    (b) any and all  activities  necessary or  incidental to the
foregoing   purposes,   but  not  including   manufacturing   (the   "Incidental
Activities").

                  2.2 POWERS. The Company shall possess and may exercise all the

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powers  and  privileges  granted by the Act,  by any other law,  and by this LLC
Agreement,  together with any powers incidental  thereto,  so far as such powers
and  privileges  are  necessary  or  convenient  to the  conduct,  promotion  or
attainment  of the business,  purposes or  activities  of the Company  permitted
under Section 2.1. Anything herein or otherwise to the contrary notwithstanding,
the Company shall not have the power to, and shall not,  sublicense or otherwise
alienate  or  transfer  any  interest in the  patents,  technology,  products or
methods licensed to the Company by Generon pursuant to the License  Agreement of
even date  herewith,  except that:  (a) the Company may afford its customers the
right to use the  products  sold or  rented  by the  Company  in their  intended
fashion, and (b) the Company shall be permitted to grant the license referred to
in Section 13.5.

                                   ARTICLE III
                     NAMES, ADDRESSES, PERCENTAGE INTERESTS,
                      AND DISTRIBUTION INTERESTS OF MEMBERS

                  3.1 NAMES,  ADDRESSES,  PERCENTAGE  INTERESTS AND DISTRIBUTION
INTERESTS. The names, addresses, Percentage Interests and Distribution Interests
of the  Members  are as set  forth in  Exhibit  A. In the  event of a change  in
Members, a Member's name, address, Percentage Interest or Distribution Interest,
the Manager  shall cause a revised  Exhibit A to be attached to an original copy
of this LLC Agreement maintained with the books and records of the Company.

                                   ARTICLE IV
                      MANAGEMENT RIGHTS, POWERS, AND DUTIES

                  4.1      MANAGEMENT OF THE COMPANY.

                    (a) Except as otherwise  agreed by the Members,  the Manager
shall serve without compensation from the Company. The Manager shall be entitled
to reimbursement from the Company for reasonable and necessary expenses actually
incurred in connection with the business of the LLC.

                    (b Superior Energy,  LLC shall be the Manager of the Company
until,  such time as it  resigns  or is  removed  by  unanimous  consent  of the
Members.

                  4.2      LIMITATION OF PERSONAL LIABILITY.

                    (a) To the fullest extent permitted by the laws of the State
of  Delaware,  as such may be  amended  from time to time,  with  respect to the
elimination  or  limitation of the personal  liability of members,  employees or
agents of limited  liability  companies.  Manager and  employees  of the Company
shall not be personally liable for monetary damages for any action taken, or any
failure to take any action, in their respective capacities, unless:

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               (i)  the person's performance or non-performance of the duties of
                    his or her office or employment  is not in  accordance  with
                    the standard of conduct set forth in the applicable statute,
                    if any; and

               (ii) the breach or failure to perform  constitutes  self-dealing,
                    willful misconduct or recklessness.

                    (b) The  foregoing  provisions of this Section 4.2 shall not
apply to:

               (i)  responsibility   or  liability   pursuant  to  any  criminal
                    statute; or

               (ii) liability for the payment of taxes pursuant to local,  state
                    or federal law.

                  4.3      SCOPE OF INDEMNIFICATION.

                    (a) Definitions. For purposes of this Article:

               (i)  "indemnified  capacity" any and all past, present and future
                    service by an  representative  in one or more  capacities as
                    Manager,  officer,  employee or agent of the Company, or, at
                    the  request  of  the  Company,  as  a  director,   officer,
                    employee,  agent,  fiduciary or trustee of any  corporation,
                    limited  liability  company,  partnership,   joint  venture,
                    trust, employee benefit plan or other entity or enterprise;

               (ii) "indemnified  representative"  means any and all officers of
                    the Manager and officers of the Company and any other person
                    designated as an indemnified  representative (which may, but
                    need not,  include any person  serving at the request of the
                    Company, as a director,  officer, employee, agent, fiduciary
                    or trustee of any corporation,  limited  liability  company,
                    partnership,  joint venture, trust, employee benefit plan or
                    other entity or enterprise);

               (iii)"liability"  means  any  damage,  judgment,  amount  paid in
                    settlement,  fine,  penalty,  punitive  damages,  excise tax
                    assessed  with respect to an employee  benefit plan, or cost
                    or  expense of any nature  (including,  without  limitation,
                    attorneys' fees and disbursements); and

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               (iv) "proceeding"  means any  threatened,  pending  or  completed
                    action,  suit,  appeal or other  proceeding  of any  nature,
                    whether civil,  criminal,  administrative  or investigative,
                    whether formal or informal, and whether brought by or in the
                    right of the Company, its members or otherwise.

                    (b) GENERAL RULE. The Company shall indemnify an indemnified
representative  against any liability incurred in connection with any proceeding
in which the indemnified  representative may be involved as a party or otherwise
by  reason of the fact that such  person  is or was  serving  in an  indemnified
capacity,  including, without limitation,  liabilities resulting from any actual
or  alleged  breach  or  neglect  of duty,  error,  misstatement  or  misleading
statement, negligence, gross negligence or act giving rise to strict or products
liability, except:

               (i)  where  such   indemnification  is  expressly  prohibited  by
                    applicable Delaware law;

               (ii) where the conduct of the indemnified representative has been
                    finally determined pursuant to Section 4.8 or otherwise;

                    (A)  to constitute willful misconduct or recklessness; or

                    (B)  to be based upon or attributable  solely to the receipt
                         by the indemnified representative from the Company of a
                         personal    benefit    to   which    the    indemnified
                         representative is not legally entitled; or

               (iii)to  the  extent  such   indemnification   has  been  finally
                    determined in a final  adjudication  pursuant to Section 4.8
                    to be otherwise unlawful.

                    (c) PARTIAL  PAYMENT.  If an indemnified  representative  is
entitled  to  indemnification  in  respect  of a  portion,  but not all,  of any
liabilities  to which such person may be subject,  the Company  shall  indemnify
such  indemnified  representative  to the maximum extent for such portion of the
liabilities.

                    (d)   Presumption.   The  termination  of  a  proceeding  by
judgment,  order,  settlement or conviction or upon a plea of nolo contendere or
its  equivalent  shall not of itself create a presumption  that the  indemnified
representative is not entitled to indemnification.

                  4.4  PROCEEDINGS  INITIATED  BY  INDEMNIFIED   REPRESENTATIVE.
Notwithstanding any other provision of this LLC Agreement, the Company shall not
indemnify  an  indemnified  representative  for  any  liability  incurred  in  a
proceeding  initiated  (which  shall not be deemed to include  counterclaims  or

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affirmative  defenses) or  participated  in as an intervenor or amicus curiae by
the person seeking indemnification unless such initiation of or participation in
the proceeding is authorized,  either before or after its  commencement,  by the
affirmative vote of a majority of the members of the Manager.  This section does
not apply to reimbursement of expenses  incurred in successfully  prosecuting or
defending an arbitration under Section 4.8 or otherwise successfully prosecuting
or defending the rights of an indemnified  representative granted by or pursuant
hereto.

                  4.5  ADVANCING  EXPENSES.  The Company  shall pay the expenses
(including  attorneys'  fees and  disbursements)  incurred  in good  faith by an
indemnified  representative  in advance of the final disposition of a proceeding
described  in Section  4.3 or the  initiation  of or  participation  in which is
authorized  pursuant  to Section  4.4 upon  receipt of an  undertaking  by or on
behalf of the indemnified representative to repay the amount if it is ultimately
determined  pursuant  to  Section  4.8 that such  person is not  entitled  to be
indemnified   by  the  Company.   The  financial   ability  of  an   indemnified
representative  to repay an advance  shall not be a  requisite  to the making of
such advance.

                  4.6  SECURING  OF  INDEMNIFICATION   OBLIGATIONS.  To  further
effect,  satisfy or secure the  indemnification  obligation  provided  herein or
otherwise, the Company may maintain insurance, obtain a letter of credit, act as
self-insurer,  create a reserve, trust, escrow, cash collateral or other fund or
account,  enter  into  indemnification  agreements,  pledge or grant a  security
interest in any assets or properties of the Company,  or use any other mechanism
or arrangement  whatsoever in such amounts,  at such costs,  and upon such other
terms and conditions as the Manager shall deem  appropriate.  Absent fraud,  the
determination  of the Manager with  respect to such  amounts,  costs,  terms and
conditions shall be conclusive a against all Members, officers and directors and
shall not be subject to voidability.

                  4.7 PAYMENT OF INDEMNIFICATION.  An indemnified representative
shall be entitled  to  indemnification  within  thirty (39) days after a written
request for indemnification has been delivered to the President.

                  4.8      ARBITRATION.

                    (a)  GENERAL  RULE.  Any  dispute  related  to the  right to
indemnification,  contribution or advancement of expenses as provided under this
LLC Agreement,  except with respect to indemnification  for liabilities  arising
under the  Securities Act of 1933 that the Company has undertaken to submit to a
court for adjudication, shall be decided only by arbitration in the metropolitan
area in which the  principal  place of business of the Company is located at the
time, in accordance with the commercial  arbitration rules then in effect of the
American Arbitration Association,  before a panel of three (3) arbitrators,  one
of whom shall be selected by the  Company,  the second of whom shall be selected
by the indemnified representative and the third of whom shall be selected by the
other two arbitrators.  In the absence of the American Arbitration  Association,
or if for any reason  arbitration  under the  arbitration  rules of the American

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Arbitration Association cannot be initiated,  and if one of the parties fails or
refuses to select an arbitrator or the  arbitrators  selected by the Company and
the  indemnified  representative  cannot  agree on the  selection  of the  third
arbitrator  within  thirty  (30) days  after  such time as the  Company  and the
indemnified  representative  have each been  notified  of the  selection  of the
other's arbitrator, the necessary arbitrator or arbitrators shall be selected by
the  presiding  judge of the  federal  court  of  general  jurisdiction  in such
metropolitan area.

                    (b) QUALIFICATION OF ARBITRATORS.  Each arbitrator  selected
as  provided  herein is  required  to be or have been a  director  or  executive
officer of a  corporation  whose  shares of common  stock were listed  during at
least one year of such  service on the New York Stock  Exchange or the  American
Stock  Exchange or quoted on the  National  Association  of  Securities  Dealers
Automated Quotations System.

                    (c) BURDEN OF PROOF.  The party or parties  challenging  the
right of an  indemnified  representative  to the indemnity  benefits of this LLC
Agreement shall have the burden of proof.

                    (d)  EXPENSES.  The Company shall  reimburse an  indemnified
representative  for the expenses  (including  attorneys' fees and disbursements)
incurred in successfully prosecuting or defending such arbitration.

                    (e) EFFECT.  Any award entered by the  arbitrators  shall be
final,  binding and  nonappealable  and judgment  may be entered  thereon by any
party in accordance with applicable law in any court of competent  jurisdiction,
except that the Company  shall be entitled to interpose as a defense in any such
judicial enforcement  proceeding any prior final judicial  determination adverse
to the indemnified  representative under Section 4.3 (b)(ii) in a proceeding not
directly involving  indemnification  hereunder. This arbitration provision shall
be specifically enforceable.

                  4.9 CONTRIBUTION.  If the indemnification  provided for herein
or  otherwise  is  unavailable  for any reason in respect  of any  liability  or
portion  thereof,  the Company shall  contribute to the liabilities to which the
indemnified  representative  may be subject in such proportion as is appropriate
to reflect the intent of this LLC Agreement.

                  4.10  MANDATORY   INDEMNIFICATION.   To  the  extent  that  an
indemnified  representative  has been  successful  on the merits or otherwise in
defense of any proceeding or in defense of any claim,  issue or matter  therein,
such person shall be indemnified against expenses (including attorneys' fees and
disbursements)  actually and  reasonably  incurred by such person in  connection
therewith.

                  4.11 CONTRACT  RIGHTS:  AMENDMENT OR REPEAL.  All rights under
Sections 4.2 through 4.13 shall be deemed a contract between the Company and the
indemnified  representative  pursuant to which the Company and each  indemnified

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representative intend to be legally bound. Any repeal, amendment or modification
hereof shall be prospective  only and shall not affect any rights or obligations
then existing,,,

                  4.12 RIGHTS NOT EXCLUSIVE. The rights granted herein shall not
be deemed exclusive of any other rights to which those seeking  indemnification,
contribution  or  advancement  of expenses  may be entitled  under any  statute,
agreement,  vote of Members  Members of the Management or otherwise,  both as to
action in an indemnified  representative  capacity and as to action in any other
capacity. The indemnification, contribution and advancement of expenses provided
by or granted pursuant hereto shall continue as to a person who has ceased to be
an indemnified  representative in respect of matters arising prior to such time,
and shall  inure to the  benefit of the  heirs,  executors,  administrators  and
personal representatives of indemnified representatives.

                  4.13 RELIANCE ON  PROVISIONS.  Each person who shall act as an
indemnified  representative  of the  Company  shall be  deemed to be doing so in
reliance upon the rights of  indemnification,  contribution  and  advancement of
expenses provided herein.

                                    ARTICLE V
                        RIGHTS AND OBLIGATIONS OF MEMBERS

                  5.1 LIMITATION OF LIABILITY.  Each Member's liability shall be
limited as set forth in this LLC Agreement,  the Act, and other  applicable law.
Except as otherwise provided in the Act, the debts,  obligations and liabilities
of the Company, whether arising in contract, tort otherwise, shall be solely the
debts,  obligations and liabilities of the Company, and no Member of the Company
shall be  liable  or  obligated  personally  for any such  debt,  obligation  or
liability of the Company solely by reason of being a Member of the Company.

                  5.2 COMPANY DEBT  LIABILITY.  A Member will not be  personally
liable for any debts or losses of the  Company  beyond the  Member's  respective
Capital  Contributions and any unpaid obligation of the Member under Section 7.2
below to make additional Capital Contributions.

                  5.3 LIST OF MEMBERS.  Upon written request of any Member,  the
Manager shall provide a list showing the names and addresses of all Members.

                  5.4 COMPANY BOOKS. Upon reasonable request,  each Member shall
have the right, during ordinary business hours, to inspect the books and records
of the Company at such Member's own expense.

                  5.5 PRIORITY AND RETURN OF CAPITAL. Except as may be expressly
provided in this LLC  Agreement,  no Member shall have  priority  over any other
Member, either for the return of Capital  Contributions or for Profits,  Losses,
or  distributions;  provided  that  this  Section  shall  not apply to loans (as
distinguished  from  Capital  Contributions)  which a Member has made,  with the
approval of the Members Management Committee, to the Company.

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                                   ARTICLE VI
                        MEETINGS OF AND VOTING BY MEMBERS

                  6.1 MEETINGS OF AND VOTING BY MEMBERS.

                  1. The  company is to have at least four member  meetings  per
year scheduled at the end of each quarter.  The agenda and meeting  logistics is
to be provided at least one week prior. The meeting is to be held in the Houston
vicinity.  All Members presence is required for the meeting to be held. If after
proper  notice  one of the  Member  can not  attend  than  the  meeting  will be
rescheduled one time only.  Official  meeting minutes must be published within 3
working days of the meetings.

                    (a) A meeting  of the  Members  may be called at any time by
written request of one or more Members of the Company. Meetings of Members shall
be held at the  Company's  principal  place of  business  or at any other  place
reasonably  convenient  to all  Members  designated  by the Member  calling  the
meeting.  Not less than ten (10) nor more than  ninety  (90)  days  before  each
meeting, the Member calling the meeting shall give written notice of the meeting
to each Member entitled to vote at the meeting. The notice shall state the time,
place,  and purpose of the meeting.  Notwithstanding  the foregoing  provisions,
each  Member  who is  entitled  to notice  waives  notice if before or after the
meeting the Member  signs a waiver,  which is filed with the records of Members'
meetings,  or is present at the  meeting in person or by proxy.  Unless this LLC
Agreement specifically provides otherwise, at a meeting of Members, the presence
in person or by proxy of Members  holding not less than eighty  percent (90%) of
the Percentage Interests then held by Members constitutes a quorum and a meeting
shall not be convened and no action shall be taken unless a quorum is present. A
Member may vote either in person or by written  proxy signed by the Member or by
the Member's duly authorized  attorney-in-fact.  Voting in respect of any matter
presented  for  action  of the  Members  shall be in  accordance  with  Members'
respective Percentage Interests.

                    (b) Except as otherwise provided in this LLC Agreement,  the
affirmative  vote  of  Members  holding  eighty  percent  (90%)  or  more of the
Percentage  Interests  then held by all Members shall be required to approve any
matter coming before the Members.

                  2. The following  items  require 90% of the members  agreement
prior to any actions by the board:

                    a.   Change in ownership structure of the company.

                    b.   Change in allocation of operating costs.

                    c.   Change  in  operating   objectives   (as  described  in
                         attachment I).
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                    d.   Selling of Company Assets

                    e.   Starting of a new Development Project.

                    f.   Change in the ownership structure of the company

                    g.   Entering into loans (external or from Members)  (except
                         of  the  Manager  may  call  for  additional   capital,
                         contributions, pro rata from Members, and if any Member
                         fails to  contribute  within 7 days,  the other Members
                         contributing  may loan the money as a priority loan due
                         in full in 90 days.

                    (c) In lieu of holding a meeting,  the  Members  may vote or
otherwise take action by a written  instrument  indicating the unanimous consent
of the Members approving such action.

                    (d) Wherever the Act requires  unanimous  consent to approve
or take any action,  that  consent  shall be given in writing and, in all cases,
shall mean the  consent of Members  holding one  hundred  percent  (100%) of the
Percentage Interests held by all Members.

                                   ARTICLE VII
                CONTRIBUTIONS TO THE COMPANY AND CAPITAL ACCOUNTS

                  7.1      MEMBERS' CAPITAL CONTRIBUTIONS.

                    1. Cost to drill or work over wells through  casing,  set up
cost of the corporation, engineering expense, etc to be paid by Superior.

                    2. Generon IGS agrees to provide as its  contribution  at no
cost to Company the Nitrogen System  including Feed Air Compression and Portable
Generator  for up to 1500  scfm at a  discharge  pressure  of at least 300 psig.
Generon  IGS  will  assist  in  the  initial  set  up  of  the  unit   including
interconnecting  hoses.  If long field run piping is  required  this will be the
responsibility of Superior. The supplied compressor and generator will be diesel
powered.  The agreed equipment will be supplied for up to thirty days for trials
or if the results are positive  (revenues  exceed  expenses by an agreed amount)
the equipment will provided so long as necessary to maintain  positive cash flow
production.

                    3. Superior will be responsible  for all operating cost with
the exception of the power costs (diesel or possibly electric). Power costs will
be shared based upon the percent ownership.

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                    4. This venture  will be based on the proposal  submitted by
Superior  Energy - Attachment  I. The land leases  proposed  must be supplied as
presented in the  attachment I or if a change has occurred  must be presented to
the Members for approval

                    (a)  Each   Member   shall  be  deemed  to  have  made  such
contribution  to the capital of the Company as is set forth in Exhibit A as such
Member's Capital Account.

                  7.2  ADDITIONAL  CONTRIBUTIONS.  The Members shall make,  from
time to time, such additional Capital Contributions as unanimously determined by
the Members.  Any such additional Capital  Contribution shall be made within ten
(10) days of the written  approval  thereof by the  Members.  None of the terms,
covenants,  obligations  or rights  contained in this Section 7.2 is or shall be
deemed to be for the benefit of any Person other than the  Company,  and no such
third Person shall under any circumstances  have any right to compel any actions
or payments by the Members or additional Capital Contributions.

                  7.3      CAPITAL ACCOUNTS.

                    (a) A separate  Capital  Account will be maintained for each
Member.  Exhibit  A sets  forth,  as at the date  hereof,  the  Capital  Account
balances of the Members.

                    (b)  Upon  liquidation  of  the  Company  (or  any  Member's
Membership Interest),  liquidating distributions will be made in accordance with
the positive Capital Account balances of the Members, as determined after taking
into account all Capital  Account  adjustments  for the  Company's  taxable year
during which the liquidation  occurs.  The Company may offset damages for breach
of this LLC Agreement by a Member whose interest is liquidated  (either upon the
withdrawal of the Member or the  liquidation of the Company)  against the amount
otherwise distributable to the Member.

                    (c) Except as otherwise  required in the Act (and subject to
Sections 7.1 and 7.2 above),  no Member shall have any  liability to restore all
or any portion of a deficit balance in such Member's Capital Account.

                  7.4  WITHDRAWAL  OR  REDUCTION  OF MEMBERS'  CONTRIBUTIONS  TO
CAPITAL.  Except as otherwise provided in this LLC Agreement, no Member shall be
entitled to a return of such member's Capital Contributions.

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                                  ARTICLE VIII
                        ALLOCATION OF PROFITS AND LOSSES

                  8.1 PROFITS.  After giving  effect to any special  allocations
set forth in Exhibit A, Profits for each Fiscal Year (or portion  thereof) shall
be allocated to the Members in proportion to their Distribution Interests.

                  8.2 LOSSES. After giving effect to any special allocations set
forth in Exhibit A, Losses for each Fiscal  Year (or portion  thereof)  shall be
allocated to the Members in proportion to their Distribution Interests.

                                   ARTICLE IX
                                  DISTRIBUTIONS

                  9.1 NET CASH FLOW.  Except as  otherwise  provided in this LLC
Agreement,  Net Cash  Flow,  if any,  shall be  allocated  among the  Members in
proportion to their Distribution Interests and distributed quarterly, payable on
the 45th, day following the end of each calendar  quarter,  commencing  with the
period beginning on the effective date of this LLC Agreement and ending December
31,1998.

                  9.2  AMOUNTS  OF TAX PAID OR  WITHHELD.  All  amounts  paid or
withheld pursuant to the IRC or any provision of any state or local tax law with
respect to any Member  shall be  treated  as amounts  distributed  to the Member
pursuant to this Article IX for all purposes under this LLC Agreement.

                                    ARTICLE X
                        AFFIRMATIVE COVENANTS OF MEMBERS

                  10.1  NON-COMPETITION   AGREEMENT.   Upon  the  execution  and
delivery of this LLC Agreement, the Members and of their Affiliates hereby agree
that they will not  compete or seek to  compete  in any way to  acquire  further
interest in for the exact mineral prospects under contract by Superior described
as follows:

Being a total of 106 acres  situated  in the N.M.L.  Anderson  Survey  (A-24) of
Navarro County, Texas. TRACT ONE, as follows: being a total of 50 acres situated
in the N.M.L.  Anderson Survey (A-24) of Navarro County, Texas. TRACT TWO: being
a total of 56 acres  situated in the N.M.L.  Anderson  Survey  (A-24) of Navarro
County,  Texas.  The lessor is Jill A.  (Benton)  Guidry  whose  address is 6604
Lancaster Drive, Orange County, Texas 77632.

All that certain lot,  tract or parcel of land being 81.92 acres of land, out of
the D.D.  Anderson  Survey,  in Navarro  County,  State of Texas.  The lessor is
Kenneth and Debra Craig, PO Box 235, Wortham Texas 76693.

                                       12
<PAGE>

                  10.2  MEMBERS  FREE  TO ACT.  Except  as  otherwise  expressly
provided in the  Non-Competition  Agreement  referred to in Section 10. 1 above,
nothing in this LLC  Agreement or  otherwise  shall be deemed to restrict in any
way the rights of any Member,  or of any Affiliate of any Member, to conduct any
business or activity whatsoever, and the Members shall not be accountable to the
Company or to any other Member with respect to such other  business or activity.
There shall be no  obligation on the part of the Members to offer to the Company
business  or  other  opportunities  outside  the  scope  of the  Company's  Core
Business.  Generon's obligation  respecting business or opportunities within the
scope  of  the  Company's  Core  Business  shall  be  governed   solely  by  the
Non-Competition  Agreement.  The  formation  of the  Company  shall  be  without
prejudice to the Members'  respective  rights (or the rights of their respective
Affiliates)  to  maintain,   expand,  or  diversify  such  other  interests  and
activities  and to receive and enjoy  profits or  compensation  therefrom.  Each
Member waives any rights the Member might otherwise have to share or participate
in such  other  interest  or  activities  of any other  Member  or the  Member's
Affiliates.

                  10.3  MEMBERS  FREE  TO  DEAL  WITH  COMPANY.  Subject  to the
approval  of the  Members  Management  Committee,  any Member may lend money to,
borrow  money from,  act as a surety,  guarantor or endorser  for,  guarantee or
assume one or more  obligations  of, provide  collateral for, and transact other
business  with the  Company,  and each  Member  shall  have the same  rights and
obligations with respect to any such matter as a Person that is not a Member.

                                   ARTICLE XI
              BOOKS AND RECORDS, FISCAL YEAR, METHOD OF ACCOUNTING,
        TAX INFORMATION, ANNUAL REPORTS, AUDITS, AND TAX ELECTION REPORTS

                  11. 1 BOOKS AND RECORDS, FISCAL YEAR AND METHOD OF ACCOUNTING.
The Company shall maintain at its principal place of business  separate books of
account for the Company which shall show a true and accurate record of all costs
and expenses incurred,  all charges made, all credits made and received, and all
income  derived in connection  with the conduct of the Company and the operation
of its business,  in accordance with generally  accepted  accounting  principals
consistently applied, and, to the extent inconsistent  therewith,  in accordance
with this LLC  Agreement.  Except as  otherwise  required by the IRC, the Fiscal
Year of the  Company  shall be the  calendar  year and the books of the  Company
shall be kept in  accordance  with the  accrual  method of  accounting.  Monthly
financials   will  be   provided   summarizing   expenses,   revenues,   capital
expenditures, etc.

                                       13
<PAGE>

                  11.2 TAX INFORMATION. Within ninety (90) days after the end of
each Fiscal  Year,  the  Manager  shall  supply to each  Member all  information
necessary and appropriate to be included in each Member's income tax returns for
that year.

                  11.3 REPORTS.

                    (a) Within  ninety  (90) days  after the end of each  Fiscal
Year, the Manager shall cause to be prepared,  and each Member  furnished  with,
audited  financial  statements  prepared in accordance with GAAP,  including the
following:

                    (ii)                A balance sheet of the Company as of the
                                        last day of such Fiscal Year;

                    (ii)                A  statement  of  income or loss for the
                                        Company for such Fiscal Year; and

                    (iii)               A  statement  of  the  Members'  Capital
                                        Accounts  and  changes  thereto for such
                                        Fiscal Year.

                    (b) Within forty-five (45) days after the end of each fiscal
quarter  and ten (10) days after the end of each  calendar  month,  the  Manager
shall cause to be prepared, and each Member furnished with, the following:

                    (i)                 A balance sheet of the Company as of the
                                        last day of such  quarter  or month,  as
                                        appropriate,  together  with  the  prior
                                        year's   figures   for  the   comparable
                                        period;

                    (ii)                A  statement  of  income or loss for the
                                        Company  for such  quarter or month,  as
                                        appropriate,  together  with  the  prior
                                        year's   figures   for  the   comparable
                                        period; and

                    (iii)               A  statement  of  the  Members'  Capital
                                        Accounts  and  charges  thereto for such
                                        quarter   or  month,   as   appropriate,
                                        together  with the prior year's  figures
                                        for the comparable period.

                  11.4  OTHER  INFORMATION.  Each  Member  shall have the right,
subject to any  reasonable  standards  imposed by agreement  of the Members,  to
obtain from the Company such other  information  as  described in the Act,  upon
written demand stating the purpose for such demand. The Company is authorized to
maintain  its records in other than a written  form,  if such form is capable of
conversion into written form within a reasonable time.

                  11.5 TAX AUDITS/SPECIAL ASSESSMENTS. If the federal tax return
of the Company  (or an  individual  Member  with  respect to an item or items of
Company income,  loss, or deduction  potentially  affecting the tax liability of

                                       14
<PAGE>

the Members  generally) is subject to an audit by the Internal  Revenue Service,
the Manager may, in the exercise of its business judgment,  determine that it is
necessary to contest  proposed  adjustments  to such return or items.  If such a
determination  is made,  the costs and  expenses of the contest of the  proposed
adjustments shall be paid by the Company.

                  11.6  TAX  ELECTIONS.  The  Company  will  elect  to  amortize
organizational  costs.  In the event of the  transfer  by sale or  exchange of a
Member's Membership  Interest,  or in the event of the distribution of property,
the Company may file an election,  in accordance  with the  applicable  Treasury
Regulations,  to cause the basis of the  Company's  property to be adjusted  for
federal  income tax  purposes as provided  by IRC  ss.734,  IRC ss.743,  and IRC
ss.754.  The  determination  whether to make and file any such election shall be
made by the Manager in its sole discretion.

                                   ARTICLE XII
                               ADDITIONAL MEMBERS

                  12.1 ADMISSION TO  MEMBERSHIP.  After the date of formation of
the Company,  any Person acceptable to the Members () may become a Member of the
Company,  upon the  issuance by the Company of a  Membership  Interest  for such
consideration  as  the  Members  shall  determine,  subject  to  the  terms  and
conditions  of  this  LLC  Agreement.  A new  Member  shall  be  allocated  such
Percentage  Interest and  Distribution  Interest as the Members shall determine,
which Percentage Interest and Distribution Interest shall be subtracted from the
Percentage Interests and Distribution Interests of existing Members, as they may
agree in writing.  A new Member shall  execute,  acknowledge  and deliver to the
existing Members such representations and documents, and perform such other acts
as the existing Members deem necessary or desirable to:

                    (a)  Confirm  that the Person to be admitted as a Member has
accepted,  assumed  and  agreed  to be  subject  and  bound  by all  the  terms,
obligations  and  conditions  of this LLC  Agreement  as the same may have  been
further amended; and

                    (b) Assure  compliance with the Act and any other applicable
state and federal laws, including securities laws and regulations.

                  12.2 FINANCIAL ADJUSTMENTS. No new Member shall be entitled to
any retroactive  allocation of losses, income, or expense deductions incurred by
the Company.  The Manager may, at its option,  at the time a Member is admitted,
close the Company books (as though the Company's tax year had ended) or make pro
rata  allocations of loss,  income,  and expense  deductions to a new Member for
that  portion  of the  Company's  tax  year in which a Member  was  admitted  in
accordance  with the  provisions of IRC  ss.706(d) and the Treasury  Regulations
promulgated thereunder.

                                       15
<PAGE>

                                  ARTICLE XIII
                           DISSOLUTION AND TERMINATION

                  13.1 DISSOLUTION.

                    (a) The Company  shall be dissolved  upon the  occurrence of
any of the following events:

                    (i)                 When the period  fixed for the  duration
                                        of the Company shall expire  pursuant to
                                        Section 1.6 above; or

                    (ii)                By  the  affirmative   vote  of  Members
                                        holding more than ninty percent (90%) of
                                        the Percentage Interests.

                  13.2 EFFECT OF FILING OF  CERTIFICATE  OF  CANCELLATION.  Upon
dissolution, the Company shall cease to carry on its business, except insofar as
may be necessary for the winding up of its business.

                  13.3 WINDING UP, LIQUIDATION,  AND DISTRIBUTION OF ASSETS. The
Manager shall immediately  proceed to wind up the affairs of the Company. If the
Company is dissolved and its affairs are to be wound up, the Manager shall:

                  (a) Sell or otherwise liquidate all of the Company's assets as
promptly  as  practicable  (except to the extent the Manager  may  determine  to
distribute any assets to the Members in kind);

                  (b) Allocate any Profit or Loss  resulting  from such sales to
the Members' Capital Accounts in accordance with Article VIII above;

                  (c)  Discharge  all  liabilities  of  the  Company,  including
liabilities to Members who are creditors,  to the extent otherwise  permitted by
law,  other than  liabilities to Members for  distributions,  and establish such
reserves  as may  be  reasonably  necessary  to  provide  for  contingencies  or
liabilities of the Company (for purposes of determining the Capital  Accounts of
the Members,  the amounts of such  reserves  shall be deemed to be an expense of
the Company);

                  (d) Distribute the remaining assets in the following order:

                  (i)               If  any  assets  of  the  Company  are to be
                                    distributed  in kind,  the net  fair  market
                                    value  of  those  assets  as of the  date of
                                    dissolution   shall  be  determined  by  the
                                    Manager.  Those  assets  shall be  deemed to

                                       16
<PAGE>

                                    have been sold as of the date of dissolution
                                    for their fair market value, and the Capital
                                    Accounts  of the  Members  shall be adjusted
                                    pursuant  to this LLC  Agreement  to reflect
                                    such deemed sale.

                  (ii)              The  positive   balance  (if  any)  of  each
                                    Member's   Capital  Account  (as  determined
                                    after   taking  into   account  all  Capital
                                    Account   adjustments   for  the   Company's
                                    taxable  year during  which the  liquidation
                                    occurs) shall be  distributed to the Members
                                    in  accordance  with Section  7.3(b)  above,
                                    either in cash or in kind,  as determined by
                                    the  Manager   Management  with  any  assets
                                    distributed  in kind  being  valued for this
                                    purpose at their fair market value. Any such
                                    distributions  to the  Members in respect of
                                    their  Capital  Accounts  shall  be  made in
                                    accordance  with the time  requirements  set
                                    forth      in      Treasury      Regulations
                                    ss.1.7041(b)(2)(ii)(b)(2).

                  (e)  Notwithstanding  anything  to the  contrary  in this  LLC
Agreement,  upon a liquidation  within the meaning of Treasury  Regulations  ss.
1.704-1(b)(2)(ii)(g),  if any Member has a Deficit Capital Account (after giving
effect to all  contributions,  distributions,  allocations,  and  other  Capital
Account adjustments for all taxable years,  including the year during which such
liquidation  occurs),  the Member shall have no  obligation  to make any Capital
Contribution, and the negative balance of the Member's Capital Account shall not
be  considered  a debt owed by the Member to the Company or to any other  Person
for any purpose whatsoever.

                  (f)  Upon  completion  of the  winding  up,  liquidation,  and
distribution of the assets, the Company shall be deemed terminated.

                  (g)  The  Manager  shall  comply  with  the   requirements  of
applicable  law  pertaining  to the winding up of the affairs of the Company and
the final distribution of its assets.

                  13.4 Certificate of Cancellation. When all debts, liabilities,
and obligations  have been paid and discharged or adequate  provisions have been
made therefor and all of the remaining property and assets have been distributed
to the Members,  a certificate of  cancellation  shall be filed in the Office of
the Secretary of State of the State of Delaware in accordance with the Act.

                  13.5  RETURN OF  CONTRIBUTION  NONRECOURSE  TO OTHER  MEMBERS.
Except as provided by law or as expressly  provided in this LLC Agreement,  upon
dissolution,  each Member shall look solely to the assets of the Company for the
return of such Member's Capital Contribution.  If the Company property remaining
after the payment or  discharge of the debts and  liabilities  of the Company is
insufficient  to return the Capital  Contributions  of one or more  Members,  no
Member shall have recourse against any other Member.

                                       17
<PAGE>

                                   ARTICLE XIV
                                   DEFINITIONS

                  14.1 DEFINITIONS. The following capitalized terms used in this
LLC Agreement shall the following meanings:

                  (a)  "Affiliate"  shall mean,  with  respect to any Person,  a
Person  that  directly,  or through  one or more  intermediaries,  controls,  is
controlled  by,  or is under  common  control  with  such  first  Person,  where
"control"  means the power to direct the  management or policies of such Person;
provided  that the  Company  shall not be deemed  to be an  Affiliate  of either
Member or any of their respective Affiliates.

                  (b) "Capital  Account" shall mean, with respect to any Member,
the  Account  maintained  for such  Member  in  accordance  with  the  following
provisions:

                  (i)               To each Member's Capital Account there shall
                                    be   credited    such    Member's    Capital
                                    Contributions,  such  Member's  distributive
                                    share of Profits and any items in the nature
                                    of  income  or  gain  which  are   specially
                                    allocated to such Member,  and the amount of
                                    any  Company  liabilities  assumed  by  such
                                    Member or which are secured by any  property
                                    distributed to such Member.

                  (ii)              To each Member's Capital Account there shall
                                    be debited  the amount of cash and the Gross
                                    Asset Value of any property  distributed  to
                                    such  Member  pursuant to any  provision  of
                                    this   LLC    Agreement,    such    Member's
                                    distributive  share of Losses  and any items
                                    in the nature of  expenses  or losses  which
                                    are  specially   allocated  to  such  Member
                                    pursuant  to Section  17.1 or  Section  17.2
                                    hereof and the amount of any  liabilities of
                                    such Member  assumed by the Company or which
                                    are secured by any property  contributed  by
                                    such Member to the Company.

                  (iii)             In  the  event  of a  transfer  of  all or a
                                    portion  of a  Membership  Interest  in  the
                                    Company in accordance with the terms of this
                                    LLC Agreement,  the transferee shall succeed
                                    to the Capital  Account of the transferor to
                                    the  extent it  relates  to the  transferred
                                    Membership Interest.

                  (iv)              In  determining  the amount of liability for
                                    purposes   of   Sections   14.1(b)(ii)   and
                                    14.1(b)(iii)  above,  there  shall  be taken
                                    into  account  IRC  ss.752(c)  and any other
                                    applicable   provisions   of  the   IRC  and
                                    Treasury Regulations.

                                       18
<PAGE>

The foregoing provisions and the other provisions of this LLC Agreement relating
to the  maintenance  of Capital  Accounts are  intended to comply with  Treasury
Regulation  ss.  1.704-1 (b), and shall be  interpreted  and applied in a manner
consistent with such Treasury Regulation.

                  (d)  "Capital  Contribution"  shall mean,  with respect to any
Member,  the amount of money and the initial  Gross Asset Value of any  property
(other than money)  contributed  to the Company  with respect to the interest in
the Company held by such Member.  "Initial Capital  Contribution" shall mean the
initial  contribution  to the  capital  of the  Company  pursuant  to  this  LLC
Agreement.

                  (e) "Company" shall mean the limited  liability company formed
hereby as defined in Section 1.2.

                  (f) "Company Minimum Gain" shall mean the minimum gain for the
Company as computed in accordance withss.1.  704-2(b )(2) andss.1.  704-2( d) of
the Treasury Regulations.

                  (g) "Deficit  Capital  Account" shall mean with respect to any
Member, the deficit balance,  if any, in such Member's Capital Account as of the
end  of  the  relevant  Fiscal  Year,  after  giving  effect  to  the  following
adjustments:

                  (i)               Credit to such  Capital  Account  any amount
                                    which such  Member is  obligated  to restore
                                    under Treasury Regulations ss.1.704-1(b) (2)
                                    (ii) (c),  as well as any  addition  thereto
                                    pursuant  to the  next to last  sentence  of
                                    Treasury  Regulations  ss.ss. 1. 704-2(g)(1)
                                    and (i)(5);

                  (ii)              Debit  to such  Capital  Account  the  items
                                    described             in            Treasury
                                    Regulationsss.ss.1.704-1   (b)(2)(ii)(d)(4),
                                    (5) and (6); and

                  (iii)             This  definition of Deficit  Capital Account
                                    is intended to comply with the provisions of
                                    Treasury    Regulations   ss.   ss.   1.7041
                                    (b)(2)(ii)(d)  and  1.704-2,  and  shall  be
                                    interpreted    consistently    with    those
                                    provisions.

                                       19
<PAGE>

                  (h)  "Depreciation"  shall mean, for each Fiscal Year or other
period,  an  amount  equal to the  depreciation,  amortization,  or  other  cost
recovery  deduction  allowable  with respect to, an asset for such year or other
period,  except  that if the  Gross  Asset  Value of an asset  differs  from its
adjusted  basis for federal income tax purposes at the beginning of such year or
other period, Depreciation shall be an amount which bears the same ratio to such
beginning   Gross  Asset  Value  as  the   federal   income  tax   depreciation,
amortization,  or other cost  recovery  deduction  for such year or other period
bears to such  beginning  adjusted  tax basis;  provided,  however,  that if the
federal income tax depreciation,  amortization, or other cost recovery deduction
for such year is zero,  Depreciation  shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by the Manager.

                  (i)  "Distribution  Interest"  shall mean, with respect to any
Member,  the  Distribution  Interest set forth  opposite  such  Member's name on
Exhibit A attached hereto.  In the event any Membership  Interest is transferred
in accordance with the provisions of this LLC Agreement,  the transferee of such
interest  shall succeed to the  Distribution  Interest of the  transferor to the
extent it relates to the transferred interest.

                  (j) "Economic  Interest" shall mean a Member's share of one or
more  of the  Company's  Net  Profits,  Net  Losses,  and  distributions  of the
Company's  assets  pursuant  to this LLC  Agreement  and the Act,  but shall not
include any right to  participate  in the  management or affairs of the Company,
including  the right to vote on,  consent to, or  otherwise  participate  in any
decision of the members of the Manager.

                  (k)  "Fiscal  Year"  shall  mean  the  Company's  fiscal  year
corresponding to a calendar year.

                  (l) "Gross Asset Value" shall mean, with respect to any asset,
the asset's adjusted basis for federal income tax purposes, except as follows:

                  (i)               The  initial  Gross Asset Value of any asset
                                    contributed by a Member to the Company shall
                                    be the  gross  fair  market  value  of  such
                                    asset, as determined by the Manger.

                  (ii)              The Gross Asset Value of all Company  assets
                                    shall be adjusted to equal their  respective
                                    gross fair market  values,  as determined by
                                    the Manger,  as of the following  times: (A)
                                    the acquisition of an additional interest in
                                    the Company by any new or existing Member in
                                    exchange for more than a de minimis  Capital
                                    Contribution;  (B) the  distribution  by the
                                    Company  to  a  Member  of  more  than  a de
                                    minimis amount of property as  consideration
                                    for an interest in the Company;  and (C) the

                                       20
<PAGE>

                                    liquidation   of  the  Company   within  the
                                    meaning             of              Treasury
                                    Regulationss.1.7041(b)(2)(ii)(g);  provided,
                                    however,   that   adjustments   pursuant  to
                                    clauses (A) and (B) above shall be made only
                                    if the Manager  reasonably  determines  that
                                    such    adjustments    are    necessary   or
                                    appropriate to reflect the relative Economic
                                    Interests of the Members in the Company.

                  (iii)             The   Gross   Asset   Value  of  any   asset
                                    distributed  to any Member shall be adjusted
                                    to equal the gross fair market value of such
                                    asset  on  the  date  of   distribution   as
                                    determined   by   the   Members   Management
                                    Committee.

                  (iv)              The Gross  Asset  Values of  Company  assets
                                    shall be increased (or decreased) to reflect
                                    any  adjustments  to the  adjusted  basis of
                                    such  assets  pursuant  to  IRCss.734(b)  or
                                    IRCss.7  43(b),  but only to the extent that
                                    such  adjustments  are taken into account in
                                    determining  Capital  Accounts  pursuant  to
                                    Treasury  Regulationsss.1,304-1(b)(2)(iv)(m)
                                    and Sections 16.1(w)(vi) and 17.1(h) hereof,
                                    provided,  however,  that Gross Asset Values
                                    shall not be  adjusted  pursuant  to Section
                                    16.1  (k)(ii)  to  the  extent  the  Manager
                                    determines  that an  adjustment  pursuant to
                                    Section 16.1 (k)(iii) hereof is necessary or
                                    appropriate in connection with a transaction
                                    that  would   otherwise   result  in  an  ad
                                    adjustment    pursuant   to   this   Section
                                    16.1(k)(iv).

If the Gross Asset Value of an asset has been determined or adjusted pursuant to
Section  16.1(k)(i),  Section 16.1 (k)(ii), or Section 16.1 (k)(iv) hereof, such
Gross Asset Value shall  thereafter be adjusted by the  Depreciation  taken into
account with respect to such asset for purposes of computing Profits and Losses.

                  (m) "IRC"  shall  mean the  Internal  Revenue  Code of 1986 or
corresponding provisions of subsequent superseding federal revenue laws.

                  (n) "Member  Nonrecourse Debt" shall mean the nonrecourse debt
of a Member computed in accordance with Treasury Regulationss.1.704-2(b)(4).

                  (o)  "Member  Nonrecourse  Debt  Minimum  Gain"  shall mean an
amount,  with  respect to each  Member  Nonrecourse  Debt,  equal to the Company

                                       21
<PAGE>

Minimum Gain that would result if such Member Nonrecourse Debt were treated as a
Nonrecourse Liability,  determined in accordance with Treasury Regulation ss. 1.
704-2(i)(3).

                  (p) "Member Nonrecourse Deductions" shall mean the nonrecourse
deductions computed in accordance with Treasury  Regulationsss.1.704-2(i)(1) and
ss.1.704-2(i)(2).

                  (q)  "Membership   Interest"  shall  mean  a  Member's  entire
interest in the Company  including the Member's  Economic Interest and the right
to  participate  in the  management  of the business and affairs of the Company,
including  the right to vote on,  consent to, or  otherwise  participate  in any
decision or action of or by the Members  granted  pursuant to this LLC Agreement
and the Act. The Membership Interest created hereunder shall be a single series,
without designation of separate classes or groups having relative rights, powers
or duties among the Members.

                  (r) "Net Cash Flow"  shall mean,  with  respect to any period,
the gross cash proceeds from Company  operations for such period less the sum of
(A)  all  Company  costs,   expenses,   debt  payments,   capital  improvements,
replacements,  and  contingencies  paid or  incurred  for such  period and (B) a
reserve  for  such  costs,  expenses,   debt  payments,   capital  improvements,
replacements,  and contingencies anticipated to become or be incurred during the
180 days next  succeeding  such period as determined  by the Manager.  "Net Cash
Flow"  shall  not  be  reduced  by  depreciation,  amortization,  cost  recovery
deductions,  or similar allowances,  but shall be increased by any reductions to
reserves  previously  established.  In the event  that the  Manager is unable to
approve the amount of said 180 days reserve, then on the first such occasion the
amount of the 180 day  reserve  shall be equal to the  average of the latest two
180 day  reserves  previously  approved.  With  respect  to the  second  and any
subsequent  occasions  on which  the  Manager  is  unable  to  approve a 180 day
reserve,  there shall be no further  quarterly  distributions  until the Manager
approves a 180 day reserve amount.

                  (s) "Nonrecourse Deductions" shall mean nonrecourse deductions
as defined in Treasury Regulationss.1. 704-2(b)(1).

                  (t) "Nonrecourse  Liability" shall mean nonrecourse  liability
as defined in Treasury Regulation ss. 1.704-2(b )(3).

                  (u)  "Percentage  Interest"  shall mean,  with  respect to any
Member, the Percentage Interest set forth opposite such Member's name on Exhibit
A attached  hereto.  In the event any  Membership  Interest  is  transferred  in
accordance  with the  provisions of this LLC  Agreement,  the transferee of such
interest  shall  succeed to the  Percentage  Interest of the  transferor  to the
extent it relates to the transferred interest.

                  (v)   "Person"   shall  mean  any   individual,   corporation,
partnership  (whether general or limited),  limited  liability  company,  trust,

                                       22
<PAGE>

estate,   association,   custodian  or  nominee,   and  the  heirs,   executors,
administrators,  legal representatives,  successors, and assigns of the "Person"
when the context so permits.

                  (w) "Profits" and "Losses"  shall mean,  for each Fiscal Year,
an amount equal to the  Company's  taxable  income or loss for such Fiscal Year,
determined in  accordance  with IRC  ss.703(a)  (for this purpose,  all items of
income, gain, loss or deduction required to be stated separately pursuant to IRC
ss.703(a)(1)  shall be  included in taxable  income or loss) with the  following
adjustments:

                  (i)               Any  income  of the  Company  that is exempt
                                    from  federal  income tax and not  otherwise
                                    taken into account in  computing  Profits or
                                    Losses  pursuant  to  this  Section  16.1(w)
                                    shall  be added to such  taxable  income  or
                                    loss;

                  (ii)              Any expenditures of the Company described in
                                    IRC   ss.705(a)(2)(B)   or  treated  as  IRC
                                    ss.705(a)(2)(B)   expenditures  pursuant  to
                                    Treasury    Regulation    ss.   1.704-1   (b
                                    )(2)(iv)(i),  and not  otherwise  taken into
                                    account  in  computing   Profits  or  Losses
                                    pursuant to this  Section  16.1(w)  shall be
                                    subtracted from such taxable income or loss;

                  (iii)             in the event the  Gross  Asset  Value of any
                                    Company   asset  is  adjusted   pursuant  to
                                    Section   16.1   (1)(ii)  or  Section   16.1
                                    (1)(iii)   hereof,   the   amount   of  such
                                    adjustment  shall be taken  into  account as
                                    gain or loss  from the  disposition  of such
                                    asset for purposes of  computing  Profits or
                                    Losses;

                  (iv)              Gain or loss resulting from any  disposition
                                    of  property  with  respect to which gain or
                                    loss is  recognized  for federal  income tax
                                    purposes  shall be computed by  reference to
                                    the  Gross  Asset  Value  of  the   property
                                    disposed   of,   notwithstanding   that  the
                                    adjusted tax basis of such property  differs
                                    from its Gross Asset Value;

                  (v)               In lieu of the  depreciation,  amortization,
                                    and other  cost  recovery  deductions  taken
                                    into  account  in  computing   such  taxable
                                    income or loss,  there  shall be taken  into
                                    account  Depreciation  for such Fiscal Year,
                                    computed in  accordance  with  Section 16. 1
                                    (h) hereof,

                                       23
<PAGE>

                  (vi)              To the extent an  adjustment to the adjusted
                                    tax basis of any Company  asset  pursuant to
                                    IRC  ss.734(b) or  IRCss.743(b)  is required
                                    pursuant     to     Treasury      Regulation
                                    ss.1.7041(b)(2)(iv)(m)(4)  to be taken  into
                                    account in determining Capital Accounts as a
                                    result  of  a  distribution  other  than  in
                                    complete liquidation of a Member's interest,
                                    the  amount  of  such  adjustment  shall  be
                                    treated   as  an  item   of  gain   (if  the
                                    adjustment increases the basis of the asset)
                                    or loss  (if the  adjustment  decreases  the
                                    basis of the asset) from the  disposition of
                                    the asset and  shall be taken  into  account
                                    for purposes of computing Profits or Losses;
                                    and

                  (vii)             Notwithstanding  any other provision of this
                                    Section  14(w),  a items which are specially
                                    allocated  pursuant  to Section  15.1 (other
                                    than  Section  15.1  (a))  or  Section  17.2
                                    hereof  shall not be taken  into  account in
                                    computing Profits or Losses.

The amounts of the items of Company income,  gain, loss, or deduction  available
to be  specially  allocated  pursuant to Sections  15.1 and 15.2 hereof shall be
determined by applying rules analogous to those set forth in Sections 14.1(w)(i)
through 14.1(w)(vii) above.

                  (x) "Treasury Regulations" shall mean the proposed, temporary,
and  final  regulations  promulgated  under  the IRC in effect as of the date of
filing the Company's Certificate of Formation, and the corresponding sections of
any regulations subsequently issued that amend or supersede those regulations.

                                   ARTICLE XV
                             SPECIAL TAX ALLOCATION

                  15.1 SPECIAL  ALLOCATIONS.  The following special  allocations
shall apply:

                  (a)  Limitation on Losses.  The Losses  allocated  pursuant to
Section 8.2 hereof shall not exceed the maximum  amount of Losses that can be so
allocated  without  causing any Member to have a Deficit  Capital Account at the
end of any Fiscal Year.  In the event some but not all of the Members would have
Deficit Capital Accounts as a consequence of an allocation of Losses pursuant to
Section  8.2  hereof,  the  limitation  set forth in this  Section  8.2 shall be
applied on a Member by Member  basis so as to allocate  the maximum  permissible
Losses to each Member under Treasury Regulation ss. 1.704-1 (b )(2)(ii)( d).

                                       24
<PAGE>

                  (b) Minimum Gain Chargeback.  Except as otherwise  provided in
Treasury  Regulationss.1.704-2(f),  notwithstanding  any other provision of this
LLC  Agreement,  if there is a net  decrease in Company  Minimum Gain during any
Fiscal Year,  each Member shall be specially  allocated  items of Company income
and gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an
amount equal to such Member's share of the net decrease in Company Minimum Gain,
determined in accordance with Treasury  Regulation ss.  1.704-2(g).  Allocations
pursuant to the previous  sentence shall be made in proportion to the respective
amounts required to be allocated to each Member pursuant  thereto.  The items to
be so allocated  shall be  determined in  accordance  with  Treasury  Regulation
ss.1.704-2(f)(6) and ss.1.704-20)(2). This Section 17.1(b) is intended to comply
with the minimum gain chargeback  requirement in ss.  1.704-2(f) of the Treasury
Regulation and shall be interpreted consistently therewith.

                  (c)  Member  Minimum  Gain  Chargeback.  Except  as  otherwise
provided in Treasury  Regulation ss.1.  704-2(i)( 4),  notwithstanding any other
provision  of  this  LLC  Agreement,  if  there  is a  net  decrease  in  Member
Nonrecourse Debt Minimum Gain  attributable to a Member  Nonrecourse Debt during
any Company Fiscal Year,  each Member who has a share of the Member  Nonrecourse
Debt Minimum Gain attributable to such Member  Nonrecourse  Debt,  determined in
accordance  with  Treasury  Regulation  ss. 1.  704-2(i)( 5), shall be specially
allocated  items of  Company  income  and gain for such  Fiscal  Year  (and,  if
necessary, subsequent Fiscal Years) in an amount equal to such Member's share of
the net decrease in Member  Nonrecourse  Debt Minimum Gain  attributable to such
Member   Nonrecourse   Debt,   determined  in  accordance  with  Regulation  ss.
1.7042(i)(4).  Allocations  pursuant to the previous  sentence  shall be made in
proportion  to the  respective  amounts  required to be allocated to each Member
pursuant thereto. The items to be so allocated shall be determined in accordance
with Treasury Regulation  ss.1.704-2(i)(4) and ss.1.704-20)(2).  This Section 17
..1 (c) is intended to comply with the minimum  gain  chargeback  requirement  in
Treasury  Regulation  ss. 1. 7042(i)( 4) and shall be  interpreted  consistently
therewith.

                  (d)  Qualified   Income  Offset.   In  the  event  any  Member
unexpectedly receives any adjustments, allocations or distributions described in
ss.   1.   704-1   (b)(2)(ii)(d)(4),   ss.   1.7041(b)(2)(ii)(d)(5),    or   ss.
1.704-1(b)(2)(ii)(d)(6) of the Treasury Regulation,  items of Company income and
gain shall be  specially  allocated  to each such Member in an amount and manner
sufficient to eliminate, to the extent required by the Treasury Regulation,  the
Deficit Capital Account of such Member as quickly as possible,  provided that an
allocation  pursuant to this  Section 17 .1 (d) shall be made only if and to the
extent that such Member  would have a Deficit  Capital  Account  after all other
allocations  provided for in this Article XVII have been  tentatively made as if
this Section 17.1(d) were not in this LLC Agreement.

                  (e) Gross  Income  Allocation.  In the event any  Member has a
Deficit Capital Account at the end of any Fiscal Year, each such Member shall be
specially  allocated  items of  Company  income  and gain in the  amount of such
deficit as quickly as possible,  provided  that an  allocation  pursuant to this
Section  17.1 (e) shall be made only if and to the extent that such Member would

                                       25
<PAGE>

have a Deficit Capital Account after all other allocations  provided for in this
LLC  Agreement  have been made as if Section  17 .1 (d) hereof and this  Section
17.1 (e) were not in this LLC Agreement.

                  (f)  Nonrecourse  Deductions.  Nonrecourse  Deductions for any
Fiscal Year shall be specially allocated to the Members in accordance with their
Percentage Interests determined as of the first day of such Fiscal Year.

                  (g) Member  Nonrecourse  Deductions.  Any  Member  Nonrecourse
Deductions  for any Fiscal Year shall be  specially  allocated to the Member who
bears the economic risk of loss with respect to the Member  Nonrecourse  Debt to
which such Member  Nonrecourse  Deductions are  attributable  in accordance with
Treasury Regulation ss.1.704-2(i)(1).

                  (h) IRCss.754  Adjustment.  To the extent an adjustment to the
adjusted  tax  basis of any  Company  asset  pursuant  to IRC  ss.734(b)  or IRC
ss.743(b)     is     required,      pursuant     to     Treasury      Regulation
ss.1.704-1(b)(2)(iv)(m)(2)  or  ss.1.704-1(b)(2)(iv)(m)(4),  to  be  taken  into
account in determining  Capital  Accounts as the result of a  distribution  to a
Member in complete  liquidation  of such Member's  interest in the Company,  the
amount of such adjustment to the Capital Accounts shall be treated as an item of
gain  (if the  adjustment  increases  the  basis of the  asset)  or loss (if the
adjustment  decreases  such  basis)  and such  gain or loss  shall be  specially
allocated to the Members in  accordance  with their  interests in the Company in
the event Treasury  Regulation ss. 1.7041 (b )(2)(iv)(m)(2)  applies,  or to the
Members to whom such distribution was made in the event Treasury  Regulation ss.
1.704-1(b)(2)(iv)(m)(4) applies.

                  (i)  Allocations  Relating  to  Taxable  Issuance  of  Company
Interests.  Any income, gain, loss or deduction realized as a direct or indirect
result of the issuance of an interest in the Company to a Member (the  "Issuance
Items") shall be allocated  among the Members so that,  to the extent  possible,
the net amount of such Issuance Items, together with all other allocations under
this LLC  Agreement to each Member,  shall be equal to the net amount that would
have been  allocated  to each such  Member  if the  Issuance  Items had not been
realized.

                  15.2  CURATIVE  ALLOCATIONS.  The  allocations  set  forth  in
Sections 15.1(b), 15.1(c), 15.1(d), 15.1(e), 15.1(f), 15.1(g) and 15.1(h) hereof
(the "Regulatory  Allocations") are intended to comply with certain requirements
of the Treasury Regulations. It is the intent of the Members that, to the extent
possible,   all  Regulatory  Allocations  shall  be  offset  either  with  other
Regulatory  Allocations  or with special  allocations  of other items of income,
gain, loss or deduction pursuant to this Section 15.2.

                  15.3     OTHER ALLOCATION RULES.

                  (a) For purposes of determining  the Profits,  Losses,  or any
other items allocable to any period within a Fiscal Year,  Profits,  Losses, and
any such other items shall be determined on a daily, monthly, or other basis, as

                                       26
<PAGE>

determined by the Manager using any permissible  method under IRC ss.706 and the
Treasury Regulations thereunder,  which takes into account the varying interests
of the Members during each Fiscal Year.

                  (b) All  allocations  to the  Members  pursuant  to  this  LLC
Agreement  shall,  except  as  otherwise  provided,  be  divided  among  them in
proportion to their Percentage Interests.

                  (c) The  Members are aware of the income tax  consequences  of
the  allocations  made by this LLC Agreement and hereby agree to be bound by the
provisions hereof in reporting their shares of Profits and Losses for income tax
purposes.

                  (d)   Solely   for   purposes   of   determining   a  Member's
proportionate  share of the "excess  nonrecourse  liabilities"  of the  Company,
within the  meaning of  Treasury  Regulation  ss.  1.752-3(a)(3),  the  Members'
interests in Profits are in accordance with their Percentage Interests.

                  (e)  To  the  extent  permitted  by  Treasury  Regulationss.1.
704-2(h)(3),  the Manager shall endeavor not to treat  distributions of Net Cash
Flow as having  been made from the  proceeds  of a  Nonrecourse  Liability  or a
Member  Nonrecourse Debt, but only to the extent that such  distributions  would
cause or increase a Deficit Capital Account for any Member.

                  15.4     PRE-CONTRIBUTION GAIN ALLOCATIONS IRC SS.704(C)

                  (a)  In  accordance  with  IRC  ss.704(c)(1)(A)  and  Treasury
Regulation  ss.  1.704-3,  if a Member  contributes  property with a fair market
value that differs from its adjusted basis at the time of contribution,  income,
gain, loss, and deductions for the property shall, solely for federal income tax
purposes,  be allocated among the Members so as to take account of any variation
between the  adjusted  basis of the  property to the Company and its fair market
value at the time of contribution.

                  (b)  Pursuant  to  IRC  ss.704(c)(1)(B),  if  any  contributed
property is  distributed  by the Company other than to the  contributing  Member
within seven (7) years of being contributed, then, except as provided in IRC ss.
704(c)(2), the contributing Member shall, solely for federal income tax purposes
and not for Capital  Account  purposes,  be treated as recognizing  gain or loss
from the sale of the  property in an amount equal to the gain or loss that would
have been allocated to the Member under IRC  ss.704(c)(1)(A) if the property had
been sold at its fair market value at the time of the distribution.

                  (c) In  the  case  of any  distribution  by the  Company  to a
Member,  the Member  shall,  solely for federal  income tax purposes and not for
Capital Account  purposes,  be treated as recognizing gain in an amount equal to
the lesser of

                  (i)               The excess, if any, of the fair market value
                                    of the property  (other than money) received

                                       27
<PAGE>

                                    in the distribution  over the adjusted basis
                                    of the Member's  Membership  Interest in the
                                    Company  immediately before the distribution
                                    reduced  (but not below  zero) by the amount
                                    of money received in the distribution; or

                  (ii)              The Net Pre-Contribution Gain (as defined in
                                    IRCss.737(b))   of  the   Member.   The  Net
                                    Pre-Contribution Gain means the net gain, if
                                    any, which would have been recognized by the
                                    distributee Member under  IRCss.704(c)(1)(B)
                                    if all property  which had been  contributed
                                    to the Company within seven (7) years of the
                                    distribution,  and is  held  by the  Company
                                    immediately  before  the  distribution,  had
                                    been  distributed  by the Company to another
                                    Member.  If  any  portion  of  the  property
                                    distributed  consists of property  which had
                                    been  contributed by the distributee  Member
                                    to the Company,  then the property shall not
                                    be taken into  account  under  this  Section
                                    17.4(c)(ii)  and  shall  not be  taken  into
                                    account in determining the amount of the Net
                                    Pre-Contribution   Gain.   If  the  property
                                    distributed  consists  of an  interest in an
                                    entity,  the  preceding  sentence  shall not
                                    apply to the  extent  that the  value of the
                                    interest  is  attributable  to the  property
                                    contributed   to  the   entity   after  such
                                    interest   had  been   contributed   to  the
                                    Company.

                  (d) In  connection  with a  Capital  Contribution  of money or
other property  (other than a de minimis  amount) by a new or existing Member or
as  consideration  for  an  Economic  Interest  or  Membership  Interest,  or in
connection  with the  liquidation of the Company or a  distribution  of money or
other  property  (other  than a de minimis  amount) by the Company to a retiring
Member as consideration  for an Economic  Interest or Membership  Interest,  the
Capital  Accounts of the Members shall be adjusted to reflect a  revaluation  of
Company  property  (including  intangible  assets) in  accordance  with Treasury
Regulation ss.1.704-1(b)(2)(iv)(f).  If under Treasury Regulation ss. 1.704-1 (b
)(2)(iv)(f),  Company  property that has been revalued is properly  reflected in
the  Capital  Accounts  and on the books of the  Company  at a book  value  that
differs  from  the  adjusted  tax  basis  of the  property,  then  depreciation,
depletion,  amortization and gain or loss with respect to such property shall be
shared among the Members in a manner that takes account of the variation between
the adjusted tax basis of such  property and its book value,  in the same manner
as  variations  between the adjusted tax basis and fair market value of property
contributed  to the Company are taken into account in  determining  the Members'
shares of tax items under IRC ss. 704( c).

                                       28
<PAGE>

                                   ARTICLE XVI
                            MISCELLANEOUS PROVISIONS

                  16.1 NOTICES. Any notice, demand, or communication required or
permitted to be given by any provision of this LLC Agreement  shall be deemed to
have been sufficiently given or served for all purposes if delivered  personally
to the Person or to an officer of the Person to whom the same is directed or, if
sent by registered or certified mail, postage and charges prepaid,  addressed to
the Member's and/or  Company's  address,  as appropriate,  which is set forth in
this LLC Agreement or in Exhibit A hereto.

                  16.2  APPLICATION  OF  DELAWARE  LAW;  ENFORCEMENT.  This  LLC
Agreement,  and the application or interpretation  hereof,  shall be governed by
the laws of the State of Delaware  without regard to Delaware  conflicts of laws
principles. The Members agree that any action to interpret, apply or enforce the
provisions of this LLC Agreement,  or the duties,  obligations or liabilities of
the Company to the Members,  or the duties,  obligations  or  liabilities  among
Members  and of  Members  to the  Company,  or  the  rights  or  powers  of,  or
restrictions  on,  the  Company or its  Members,  may be brought in the Court of
Chancery of the State of Delaware.

                  16.3 WAIVER OF ACTION FOR PARTITION.  Each Member  irrevocably
waives  during the Term  hereof any right to maintain  any action for  partition
with respect to the property of the Company.

                  18.4 AMENDMENTS.  This LLC Agreement may not be amended except
by the unanimous written agreement of the Members.

                  16.5 EXECUTION OF ADDITIONAL  INSTRUMENTS.  Each Member hereby
agrees to execute such other and further  statements  of interest and  holdings,
designations, powers of attorney, and other instruments necessary to comply with
any laws, rules, or regulations.

                  16.6  CONSTRUCTION.  Whenever the  singular  number is used in
this LLC Agreement and when required by the context,  the same shall include the
plural and vice versa,  and the masculine  gender shall include the feminine and
neuter genders and vice versa. The use herein of the words "include," "includes"
and "including"  shall be by way of  illustration  only, and such words are used
without limitation to matters enumerated or specified thereafter. The use of the
words  "hereto,"  "herein,"  "hereinafter,"  and  "hereunder"  refer to this LLC
Agreement in its entirety.

                  16.7  HEADINGS.  The  headings in this LLC  Agreement  are for
convenience only and are in no way intended to describe,  interpret,  define, or
limit  the  scope,  extent,  or  intent  of  this  LLC  Agreement  or any of its
provisions.

                                       29
<PAGE>

                  16.8  WAIVERS.  The  failure of any party to seek  redress for
violation  of or to  insist  upon the  strict  performance  of any  covenant  or
condition of this LLC Agreement  shall not prevent a subsequent  act, that would
have originally  constituted a violation,  from having the effect of an original
violation.

                  16.9 RIGHTS AND REMEDIES  CUMULATIVE.  The rights and remedies
provided by this LLC  Agreement  are  cumulative  and the use of anyone right or
remedy by any  party  shall  not  preclude  or waive the right to use any or all
other  remedies.  Said  rights and  remedies  are given in addition to any other
rights the parties may have by law, statute, ordinance, or otherwise.

                  16.10 SEVERABILITY.  If any provision of this LLC Agreement or
its  application to any person or  circumstance  shall be invalid,  illegal,  or
unenforceable  to any  extent,  the  remainder  of this  LLC  Agreement  and its
application shall not be affected and shall be enforceable to the fullest extent
permitted by law.

                  16.11 SUCCESSORS,  AND ASSIGNS. Each and all of the covenants,
terms,  provisions,  and  agreements  contained in this LLC  Agreement  shall be
binding  upon  and  inure to the  benefit  of the  Members  and,  to the  extent
permitted by this LLC Agreement, their respective successors, and assigns.

                  16.12 CREDITORS.  None of the provisions of this LLC Agreement
shall be for the benefit of or enforceable by any creditors of the Company.

                  16.13  COUNTERPARTS.  This LLC  Agreement  may be  executed in
counterparts,  each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.

                                       30
<PAGE>

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

                                        GENERON IGS, INC.

                                        By: ________________________________

                                        SUPERIOR ENERGY, LLC.

                                        By: ________________________________

                                       31
<PAGE>

                                    EXHIBIT A
                      PERCENTAGE AND DISTRIBUTION INTERESTS

                          INTERNATIONAL SUPERIOR ENERGY

Member Name       Capital Account      Percentage Interest Distribution Interest
----------------- -------------------- ------------------- ---------------------

Superior              $80                       80                  80

Generon               $20                       20                  20

<PAGE>

                                 Schedule 2.1(a)

None

<PAGE>

                                 Schedule 2.1(b)

None(Multicurrency—Cross Border)

ISDA®

International Swap Dealers Association, Inc.

 

MASTER AGREEMENT

 

dated as of December 19, 2006

 

 

	
             

BANK OF AMERICA, N.A.

(“Party A”)
 	
             

and
 	
             

BA CREDIT CARD TRUST

(“Party B”)
 

 

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:—
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
            (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:—

 

	
            (a)
 	
            Basic Representations.
 

 

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

 

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

 

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

 

(iv)     Consents.  All governmental and other consents that are required to have been obtained by it with respect to this Agreement or any Credit Support Document to which it is a party have been obtained and are in 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, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).

 

(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 aspect.

 

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

 

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

 

	
            4.
 	
            Agreements
 

 

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

 

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

 

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

 

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

 

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

 

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

 

(d)           Tax Agreement.  It will give notice of any failure of a representation made by it under Section 3(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, organized, managed and controlled, or considered to have its seat, or in which a branch or office through which it is acting for the purpose of this Agreement is located (“Stamp Tax Jurisdiction”) and will indemnify the other party against any Stamp Tax levied or imposed upon the other party or in respect of the other party's execution or performance of this Agreement by any such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the other party.

 

 

 

 

	
            5.
 	
            Events of Default and Termination Events
 

 

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

 

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

 

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

 

	
             
 	
            (iii)
 	
            Credit Support Default.
 

 

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

 

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

 

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

 

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

 

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

 

(vi)     Cross Default.  If “Cross Default” is specified in the Schedule as applying to the party, the occurrence or existence of (1) a default, event of default or other similar condition or event (however 

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

 

 

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

 

 

 

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

 

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

 

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

 

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

 

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

 

	
            6.
 	
            Early Termination
 

 

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

 

	
             
 	
            (b)
 	
            Right to Terminate Following Termination Event.
 

 

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

 

 

 

(ii)     Transfer to Avoid Termination Event.  If either an Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the Affected Party, the Affected Party will, as a condition to its right to designate an Early Termination Date under Section 6(b)(iv), use all reasonable efforts (which will not require such party to incur a loss, excluding immaterial, incidental expenses) to transfer within 20 days after it gives notice under Section 6(b)(i) all its rights and obligations under this Agreement in respect of the Affected Transactions to another of its Offices or Affiliates so that such Termination Event ceases to exist.

 

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

 

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

 

(iii)    Two Affected Parties.  If an Illegality under Section 5(b)(i)(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.

 

	
            (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 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.

 

	
            7.
 	
            Transfer
 

 

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

 

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

 

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

 

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

 

	
            8.
 	
            Contractual Currency
 

 

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

 

(b)           Judgments.  To the extent permitted by applicable law, if any judgment or order expressed in a currency other than the Contractual Currency is rendered (i) for the payment of any amount owing in respect of this Agreement, (ii) for the payment of any amount relating to any early termination in respect of this Agreement or (iii) in respect of a judgment or order of another court for the payment of any amount described in (i) or (ii) above, the party seeking recovery, after recovery in full of the aggregate amount to which such party is entitled pursuant to the judgment or order, will be entitled to receive immediately from the other party the amount of any shortfall of the Contractual 

 

 

 

Currency received by such party as a consequence of sums paid in such other currency and will refund promptly to the other party any excess of the Contractual Currency received by such party as a consequence of sums paid in such other currency if such shortfall or such excess arises or results from any variation between the rate of exchange at which the Contractual Currency is converted into the currency of the judgment or order for the purposes of such judgment or order and the rate of exchange at which such party is able, acting in a reasonable manner and in good faith in converting the currency received into the Contractual Currency, to purchase the Contractual Currency with the amount of the currency of the judgment or order actually received by such party.  The term “rate of exchange” includes, without limitation, any premiums and costs of exchange payable in connection with the purchase of
or conversion into the Contractual Currency.

 

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

 

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

 

	
            9.
 	
            Miscellaneous
 

 

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

 

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

 

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

 

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

 

	
            (e)
 	
            Counterparts and Confirmations.
 

 

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

 

(ii)    The parties intend that they are legally bound by the terms of each Transaction from the moment they agree to those terms (whether orally or otherwise).  A Confirmation shall 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 organization of such party, the obligations of such party are the same as if it had entered into the Transaction through its head or home office.  This representation will be deemed to be repeated by such party on each date on which a Transaction is entered into.

 

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

 

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

 

	
            11.
 	
            Expenses
 

 

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

 

	
            12.
 	
            Notices
 

 

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

 

	
             
 	
            (i)
 	
            if in writing and delivered in person or by courier, on the date it is delivered;
 
	
             
 	
             
 	
             
 
	
             
 	
            (ii)
 	
            if sent by telex, on the date the recipient's answerback is received;
 
	
             
 	
             
 	
             
 
	
             
 	
            (iii)
 	
            if sent by facsimile transmission, on the date that transmission is received by a responsible employee of the recipient in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by a transmission report generated by the sender's facimile 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 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.

 

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

 

	
            14.
 	
            Definitions
 

 

As used in this Agreement: —

 

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

 

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

 

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

 

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

 

“Applicable Rate” means: —

 

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

 

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

 

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

 

 

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“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 obligated to make a determination under Section 6(e), and, if each party is so obliged, after consultation with the other.  If more than three quotations are provided, the Market Quotation will be the arithmetic mean of the quotations, without regard to the quotations having the highest and lowest values.  If exactly three such quotations are provided, the Market Quotation will be the quotation remaining after disregarding the highest and lowest quotations.  For this purpose, if more than one quotation has the same highest value or lowest value, then one of such quotations shall be disregarded.  If fewer than three quotations are provided, it will be deemed that the Market Quotation in respect of such Terminated Transaction or group of Terminated Transactions cannot be
determined.

 

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

 

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

 

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

 

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

 

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

 

 

 

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

 

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

 

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

 

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

 

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

 

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

 

“Specified Entity” has the 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.

 

 

 

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.

 

	
             

BANK OF AMERICA, N.A.
 	
             
 	
             

BA CREDIT CARD TRUST

 
 
	
            By:
 	
            BA CREDIT CARD FUNDING, LLC, as 

beneficiary and not in its individual capacity 
 
	
            (Name of Party)
 	
             
 	
            (Name of Party)
 

 

 

 

	
            /s/ Roger Heintzelman
 	
             
 	
            /s/ Scott McCarthy
 
	
            By______________________________________
 	
             
 	
            By______________________________________
 
	
            Name: Roger Heintzelman
 	
             
 	
            Name:  Scott McCarthy
 
	
            Title: Senior Vice President
 	
             
 	
            Title:    Senior Vice President
 
	
            Date: December 19, 2006
 	
             
 	
            Date: December 19, 2006
 

 

 

 

 

 

EXECUTION COPY

SCHEDULE

to the

Master Agreement

dated as of December 19, 2006

between

BANK OF AMERICA, N.A. (“Party A”),

 

and

The BA CREDIT CARD TRUST (“Party B”), a statutory trust created pursuant to a trust agreement dated as of May 4, 2001, as amended and restated as of May 24, 2001, and as amended as of July 12, 2001, as of August 1, 2002, as of June 27, 2003 and as of January 27, 2006, and as amended and restated as of June 10, 2006 and as of October 20, 2006 (as amended, restated or otherwise modified from time to time,  the “Trust Agreement”).

Party B intends to issue BAseries Class A(2006-16) Notes (the “Class A Notes”) pursuant to the Second Amended and Restated Indenture dated as of October 20, 2006 (as amended from time to time, the “Base Indenture”) as supplemented by the Amended and Restated BAseries Indenture Supplement dated as of June 10, 2006 (as amended from time to time, the “Indenture Supplement”) and as further supplemented by the Class A(2006-16) Terms Document dated as of December 19, 2006 (the “Terms Document” and, collectively with the Base Indenture and the Indenture Supplement, the “Indenture”).

 

	
            Part 1.
 	
            Termination Provisions.
 

 

In this Agreement:

	
            (a)
 	
            “Specified Entity” shall not apply for purposes of this Agreement.
 

	
            (b)
 	
            “Specified Transaction” will have no meaning for the purpose of this Agreement.
 

	
            (c)
 	
            The “Breach of Agreement” provisions of Section 5(a)(ii), the “Misrepresentation” provisions of Section 5(a)(iv), the “Default under Specified Transaction” provisions of Section 5(a)(v), the “Cross Default” provisions of Section 5(a)(vi), the “Merger Without Assumption” provisions of Section 5(a)(viii), “Tax Event Upon Merger” provisions of Section 5(b)(iii), and the “Credit Event Upon Merger” provisions of Section 5(b)(iv) will not apply to Party A and will not apply to Party B.  Solely with respect to payments required to be made by Party A after the occurrence of an Early Redemption Event with respect to the Class A Notes, the word “the third” in the final line of Section 5(a)(i) shall be replaced
with “12:00 noon New York City time of the first (or such other time as may be mutually agreed to by Party A, Party B and the Note Rating Agencies)”.
 

 

1

 

 

	
            (d)
 	
            The “Automatic Early Termination” provisions of Section 6(a) will not apply to Party A and will not apply to Party B.
 

	
            (e)
 	
            Payments on Early Termination.  For the purpose of Section 6(e) of this Agreement, Market Quotation and the Second Method will apply; provided, however, that in the case of an Event of Default with respect to Party A as the Defaulting Party or a Termination Event with respect to Party A as the sole Affected Party, the related Settlement Amount, if negative, will be deemed to be zero if the Market Quotation (as such term is modified pursuant to Part 1(f) below) cannot be determined.
 

	
            (f)
 	
            Market Quotation.  Notwithstanding anything to the contrary in the definition of Market Quotation in Section 14, in the case of an Event of Default with respect to Party A as the Defaulting Party or a Termination Event with respect to Party A as the sole Affected Party, if each Market Quotation is negative, the Market Quotation will be deemed to be the negative quotation with the highest absolute value received from the Reference Market-makers.  To the extent that Party B, using its best efforts, is able to obtain only one Market Quotation from the Reference Market-makers, Party A and Party B agree that Party B shall enter into a Replacement Transaction with the Reference Market-maker providing such Market Quotation.  To the extent reasonably practicable, any agreement entered into with a Reference
Market-maker in connection with, and for the purpose of, creating a Replacement Transaction shall be on substantially similar terms as the terms of this Agreement.
 

	
            (g)
 	
            Settlement Amount.  Notwithstanding anything to the contrary in the definition of Settlement Amount in Section 14, in the case of an Event of Default with respect to Party A as the Defaulting Party or a Termination Event with respect to Party A as the sole Affected Party, the amount calculated pursuant to paragraph (b) of the definition of Settlement Amount in respect of Party A shall be deemed to be zero.
 

	
            (h)
 	
            “Reference Market-maker” will not have the meaning specified in Section 14, but will instead mean the following:
 

“Reference Market-maker” means five leading dealers in the relevant market selected by the party determining the Market Quotation in good faith (a) from among dealers which are rated not lower than investment grade by Standard & Poor’s Ratings Services (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”) which satisfy the criteria that such party applies generally at that time in deciding whether to offer or make an extension of credit and (b) to the extent practicable, from among dealers having an office in the same city.

	
            (i)
 	
            “Termination Currency” means United States Dollars (“USD”).
 

	
            (j)
 	
            Additional Termination Events.  The following events shall each constitute an Additional Termination Event hereunder:
 

	
             
 	
            (i)
 	
            A failure by Party A to provide the information or take the actions provided in Part 5(n) below.  For purposes of Section 6 of this Agreement, Party A shall be the sole Affected Party.
 

 

2

 

 

	
             
 	
            (ii)
 	
            An amendment and/or supplement to (A) the Second Amended and Restated Pooling and Servicing Agreement, dated as of October 20, 2006 (as amended, supplemented or otherwise modified from time to time, the “Pooling and Servicing Agreement”), between BA Credit Card Funding, LLC, as Transferor (the "Transferor"), FIA Card Services, National Association, as Servicer (“FIA”), and The Bank of New York, as Trustee (the “Trustee”) (other than the execution of a series supplement or an amendment, supplement or modification of a series supplement that is not the Series 2001-D Supplement (as defined below)), (B) the Second Amended and Restated Series 2001-D Supplement, dated as of October 20, 2006 (as amended, supplemented or otherwise modified from time to time, the “Series 2001-D Supplement” and, collectively with the Pooling and
Servicing Agreement and the Trust Agreement, the “Base Transaction Documents”), between the Transferor, FIA and the Trustee, (C) the Trust Agreement, or (D) the Indenture (other than the execution of a terms document or an amendment, supplement or modification of a terms document that is not the Terms Document), is made without the prior written consent of Party A (such consent not to be unreasonably withheld), if such amendment and/or supplement: (a) adversely affects any of Party A’s rights or obligations under this Agreement; or (b)  adversely modifies, or materially impairs the ability of Party B to fully perform, any of Party B’s obligations under this Agreement.  For purposes of Section 6 of this Agreement, Party B shall be the sole Affected Party.
 

 

	
            Part 2.
 	
            Tax Representations.
 

 

	
            (a)
 	
            Payer Tax Representations.  For the purpose of Section 3(e) of this Agreement, Party A and Party B will each make the following representation:
 

It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Sections 2(e), 6(d)(ii) and 6(e) of this Agreement) to be made by it to the other party under this Agreement.  In making this representation, it may rely on (i) the accuracy of any representation made by the other party pursuant to Section 3(f) of this Agreement, (ii) the satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) and 4(a)(iii) of this Agreement; and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of this Agreement, provided that it shall not be a breach of this representation where reliance is placed on clause (ii) and the other party does not deliver a form or document under Section 4(a)(iii) by reason of material prejudice to its legal or commercial position.

	
            (b)
 	
            Payee Representations.  For the purpose of Section 3(f) of this Agreement, Party A and Party B make the following representations:
 

	
             
 	
            (i)
 	
            The following representation will apply to Party B:
 

It is a US person for US federal income tax purposes.

 

3

 

 

	
             
 	
            (ii)
 	
            The following representation will apply to Party A:
 

It is a national banking association for US federal income tax purposes.

 

	
            Part 3.
 	
            Agreement to Deliver Documents.
 

 

For the purpose of Sections 3(d), 4(a)(i) and (ii) of this Agreement, each party agrees to deliver the following documents, as applicable:

	
            (a)
 	
            Tax forms, documents or certificates to be delivered are:
 

 

	
            Party required
 to deliver
 document
 	
            Form/Document/Certificate
 	
            Date by which 
 to be delivered
 	
            Covered by
 Section 3(d)
 Representation
 
	
            Party B
 	
            Any form or document that may be reasonably requested, and that Party B is eligible to provide, in order to allow the requesting party to make a payment without (or with reduced) withholding Tax.
 	
            Promptly upon reasonable demand by the other party.
 	
            No
 
	
            Party A
 	
            Any form or document that may be reasonably requested, and that Party A is eligible to provide, in order to allow the requesting party to make a payment without (or with reduced) withholding Tax.
 	
            Promptly upon reasonable demand by the other party.
 	
            No
 
	
            Party B
 	
            (i) Internal Revenue Service Form W-9 (or any successor form) of the Beneficiary and (ii) any other form or document that may be reasonably requested, and that Party B is eligible to provide, in order to allow the requesting party to make a payment without (or with reduced) withholding Tax.
 	
            (i) Upon execution of this Agreement, (ii) thereafter promptly upon reasonable demand by Party A and (iii) promptly upon learning that such form previously provided by Party B has become obsolete or incorrect.
 	
            No
 

 

 

4

 

 

	
            (b)
 	
            Other documents to be delivered are:
 

 

	
            Party required
 to deliver
 document
 	
            Form/Document/Certificate
 	
            Date by which 
 to be delivered
 	
            Covered by
 Section 3(d)
 
	
            Party A
 	
            An opinion of  counsel (which may be in-house counsel) for Party A in the form reasonably acceptable to Party B
 	
            Upon execution of this Agreement
 	
            Yes
 
	
            Party A
 	
            An incumbency certificate with respect to the signatory of this Agreement
 	
            Upon execution of this Agreement
 	
            Yes
 
	
            Party B
 	
            An opinion of counsel for Party B in the form reasonably acceptable to Party A
 	
            Upon execution of this Agreement
 	
            Yes
 
	
            Party B
 	
            An incumbency certificate with respect to the signatory of this Agreement
 	
            Upon execution of this Agreement
 	
            Yes
 
	
            Party B
 	
            Monthly Noteholders’ Statement (as defined in the Indenture)
 	
            Upon each Transfer Date (as defined in the Indenture)
 	
            No
 

 

	
            Part 4.
 	
            Micellaneous.
 

 

	
            (a)
 	
            Addresses for Notices.  For the purpose of Section 12(a):
 

Address for notices or communications to Party A:

 

	
            Address:
 	
            Bank of America, N.A.
 
	
             
 	
            Sears Tower
 
	
             
 	
            233 South Wacker Drive, Suite 2800
 
	
             
 	
            Chicago, IL 60606
 
	
             
 	
            Attention:  Swap Operations
 
	
             
 	
            Telephone No.:  (312) 234-2732
 
	
             
 	
            Facsimile No.:  (312) 234-3603
 
	
             
 	
             
 

 

 

5

 

 

 

	
             
 	
            with a copy to:
 
	
             
 	
             
 
	
             
 	
            Bank of America, N.A.
 
	
             
 	
            100 N. Tryon St., NC1-007-13-01
 
	
             
 	
            Charlotte, North Carolina  28255
 
	
             
 	
            Attention:  Capital Markets Documentation
 
	
             
 	
            Facsimile No.:  (704) 386-4113
 

 

For all purposes.

Address for notices or communications to Party B:

 

	
            Address:
 	
            BA Credit Card Trust
 
	
             
 	
            c/o BA Credit Card Funding, LLC, as Beneficiary
 
	
             
 	
            214 North Tryon Street

Suite #21-39

NC1-027-21-04

Charlotte, North Carolina 28255

Attention: Marcie Copson-Hall

 
 
	
             
 	
             
 
	
             
 	
            with a copy to:
 
	
             
 	
            Bank of America, National Association 
 
	
             
 	
            101 S. Tryon Street

Mail Code:  NC1-002-29-01 

Charlotte, North Carolina 28255
 
	
             
 	
            Attention:  Caroline Tsai
 

 

For all purposes.

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

Party A appoints as its Process Agent:  Not applicable.

Party B appoints as its Process Agent:  Not applicable.

	
            (c)
 	
            Offices.  The provisions of Section 10(a) will apply to this Agreement.
 

	
            (d)
 	
            Multibranch Party.  For the purpose of Section 10(c) of this Agreement:
 

Party A is a Multibranch Party and may act through its Charlotte, North Carolina, Chicago, Illinois, San Francisco, California, New York, New York or Boston, Massachusetts Office, or such other Office as may be agreed to by the parties in connection with a Transaction.

Party B is not a Multibranch Party.

 

6

 

 

	
            (e)
 	
            Calculation Agent.  The Calculation Agent is the Indenture Trustee, unless otherwise specified in a Confirmation in relation to the relevant Transaction.
 

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

In the case of Party A:  Not applicable.

In the case of Party B:  Not applicable.

	
            (g)
 	
            Credit Support Provider.
 

In relation to Party A:  Not applicable.

In relation to Party B:  Not applicable.

	
            (h)
 	
            Governing Law.  This Agreement will be governed by and construed in accordance with the laws of the State of New York (without reference to choice of law doctrine but without prejudice to the provisions of Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York).
 

	
            (i)
 	
            Netting of Payments.  Subparagraph (ii) of Section 2(c) of this Agreement will apply to any of the Transactions, except that it will not apply to payments by each Party to the other if Party B so notifies Party A at least ten (10) days in advance of the date such payments are due.
 

	
            (j)
 	
            “Affiliate” will have the meaning specified in Section 14 of this Agreement, except that with respect to Party B there shall be deemed to be no Affiliates.
 

	
            (k)
 	
            "Regulation AB" means Subpart 229.1100 – Asset Backed Securities (Regulation AB), 17 C.F.R. §§ 229.1100-229.1123, as such regulation may be amended from time to time and subject to such clarification and interpretation as have been provided by the Securities and Exchange Commission ("SEC") in the adopting release (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the SEC, or as may be provided in writing by the SEC or its staff.
 

 

	
            Part 5.
 	
            Other Provisions.
 

 

	
            (a)
 	
            Confirmation.  The Confirmation, dated the date hereof, between Party A and Party B supplements, forms part of, and will be read and construed as one with, this Agreement.  A form of Confirmation is set forth as Exhibit A hereto.  This document shall be construed to form a single agreement with one Confirmation.  Reference to this “Agreement” means, with respect to a Transaction, this document together with the Confirmation.
 

	
            (b)
 	
            Waiver of Trial By Jury.  Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to this Agreement or any Transaction contemplated hereby.  Each party (i) certifies that no representative, agent or attorney of the other party has 
 

 

7

 

 

represented, expressly or otherwise, that such other party would not, in the event of such a suit, action or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other party have been induced to enter this Agreement by, among other things, the mutual waivers and certifications in this Section.

	
            (c)
 	
            Non-Petition.  To the fullest extent permitted by applicable law, Party A hereby agrees that it will not commence or join in commencing any bankruptcy or other insolvency action against Party B prior to the date which is one year and one day after all Notes (as such term is defined in the Base Indenture) of Party B have been paid in full.  Nothing herein shall prevent Party A from participating in any such proceeding once commenced.
 

	
            (d)
 	
            Assignment.  In the event the long-term, senior unsecured debt rating of Party A is lowered to below the category of BBB- by S&P or Baa3 by Moody’s or such rating agencies’ then equivalent ratings, or such ratings are withdrawn by either S&P or Moody’s, Party B shall direct Party A to assign and delegate, and Party A shall assign and delegate, its rights and obligations under any Transaction to a replacement counterparty.
 

	
            (e)
 	
            Provision for Payments from Party B.  Notwithstanding anything contained in this Agreement to the contrary, any amount required to be paid by Party B pursuant to this Agreement will be payable only to the extent provided in, and from amounts on deposit in the Interest Funding sub-Account for the Class A(2006-16) Notes which are specifically available to be applied therefor pursuant to, Section 3.13(d) of the Indenture Supplement, as determined pursuant to Section 2.03(b) of the Terms Document and any amounts specifically available to be applied therefor pursuant to Section 2.12 of the Terms Document (as such terms are defined in the Confirmation).  Party A will be entitled to the benefit of the Collateral and the obligations of Party B under this Agreement will be secured obligations, in each case in
accordance with the terms of the Indenture.  Party A will be a third-party beneficiary of the Indenture.
 

	
            (f)
 	
            Relationship Between Parties.  Each party will be deemed to represent to the other party on the date on which it enters into this Agreement that (absent a written agreement between the parties that expressly imposes affirmative obligations to the contrary):
 

(i)           Non-Reliance.  It is acting for its own account, and it has made its own independent decisions to enter into this Agreement and as to whether this Agreement is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary.  It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into this Agreement; it being understood that information and explanations related to the terms and conditions of this Agreement shall not be considered investment advice or a recommendation to enter into this Agreement.  No communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected
results of this Agreement.

(ii)          Assessment and Understanding.  It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and 

 

8

 

 

understands and accepts, the terms, conditions and risks of this Agreement.  It is also capable of assuming, and assumes, the risks of this Agreement.

(iii)         Status of Parties.  The other party is not acting as a fiduciary for or as adviser to it in respect of this Agreement.

(iv)         It is entering into this Agreement, each Transaction and any other documentation relating to this Agreement or any Transaction as principal (and not as agent or in any other capacity, fiduciary or otherwise).

	
            (g)
 	
            Additional Representations.  
 

(i)           Each of Party A and Party B represents that (i) it is an “eligible contract participant” as defined in § 1a(12) of the Commodity Exchange Act, as amended by the Commodity Futures Modernization Act of 2000 (7 U.S.C. § 1a(12)) and (ii) the material terms of this Agreement and the Swap Transaction have been individually tailored and negotiated.

(ii)          Party B represents that: (i) it has the power to perform its obligations under the Indenture and has taken all necessary action to authorize such performance; (ii) all governmental and other consents that are required to have been obtained by it with respect to the Indenture have been obtained and are in full force and effect and all conditions of any such consents have been complied with; (iii) its obligations under the Indenture constitute its legal, valid and binding obligations, enforceable in accordance with their terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a
proceeding in equity or at law)); (iv) no Event of Default (as defined in the Indenture) or Early Redemption Event (as defined in the Indenture) with respect to any series, class or tranche of notes issued by it has occurred and is continuing and no such event or circumstance would occur as a result of Party B entering into or performing its obligations under the Indenture; and (v) there is not pending or, to its knowledge, threatened against it 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 the Indenture or its ability to perform its obligations under the Indenture.

	
            (h)
 	
            Negative Interest Rates.  Party A and Party B agree that:
 

if, with respect to a Calculation Period for a Transaction, a party (“X”) is obligated to pay a Floating Amount that is a negative number (either by reason of a negative Floating Rate or the subtraction of a Spread from the Floating Rate), the Floating Amount with respect to X for that Calculation Period will be deemed to be zero, and the other party (“Y”) will pay to X the absolute value of the negative Floating Amount, in addition to any amounts otherwise owed by Y to X, on the Payment Date such Floating Amount would have been payable if it had been a positive number.  Any amounts paid by Y to X pursuant to this provision will be paid to such account as X may designate (unless Y gives timely notice 

 

9

 

 

of a reasonable objection to such designation) in the currency in which that Floating Amount would have been paid if it had been a positive number (and without regard to the currency in which Y is otherwise obligated to make payments).

	
            (i)
 	
            Limited Recourse.  It is expressly understood and agreed by the parties hereto that (i) this Agreement and each Transaction entered into pursuant to this Agreement is entered into by BA Credit Card Trust (the “Trust”) in the exercise of the powers and authority conferred and vested in it and not by the Transferor individually or as Beneficiary, (ii) the representations, undertakings and agreements herein made on the part of the Trust are made and intended not as personal representations, undertakings and agreements by the Beneficiary but are made and intended for the purpose of binding only the Trust, (iii) nothing herein contained shall be construed as creating any liability on the part of the Beneficiary, individually or personally, to perform any covenant either expressed
or implied contained herein, all such liability, if any, being expressly waived by the parties who are signatories to this Agreement and by any Persons claiming by, through or under such parties; provided, however, that the Beneficiary shall be liable in its individual capacity for its own willful misconduct or gross negligence and (iv) notwithstanding the proviso to clause (iii) above, under no circumstances shall the Beneficiary be personally liable for the payment of any indebtedness or expenses of the Trust or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Trust under this Agreement.
 

	
            (j)
 	
            Condition Precedent.  It shall be a condition precedent to the effectiveness of this Agreement that the Trust shall credit the Required Derivative Reserve Amount to the Derivative Reserve Account on the Issuance Date.
 

	
            (k)
 	
            Notice to Note Rating Agencies.  Provided that Party B has actual knowledge of such event, Party B shall provide prompt written notice to the Note Rating Agencies of any amendment to, or any transfer or assignment of, this Agreement.
 

	
            (l)
 	
            USA PATRIOT Act Notice.  Party A hereby notifies Party B that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), Party A is required to obtain, verify and record information that identifies Party B, which information includes the name and address of Party B and other information that will allow Party A to identify Party B in accordance with the Patriot Act.
 

	
            (m)
 	
            Additional Acknowledgments and Agreements of the Parties.
 

	
             
 	
            (i)
 	
            Consent by Party A to Amendments to Certain Documents.  Before any amendment or supplement is made to any Base Transaction Document (other than the execution of a series supplement or an amendment, supplement or modification of a series supplement that is not the Series 2001-D Supplement) or the Indenture (other than the execution of a terms document or an amendment, supplement or modification of a terms document that is not the Terms Document) which would materially and adversely affect any of Party A’s rights or obligations under this Agreement, or materially and adversely modify, or materially impair 
 

 

10

 

 

the ability of Party B to fully perform, any of Party B’s obligations under this Agreement, Party B shall provide Party A with a copy of the proposed amendment or supplement and shall obtain the written consent of Party A (which consent shall not be unreasonably withheld) to such amendment or supplement prior to its adoption.  For the avoidance of doubt, any Base Transaction Document and the Indenture may be amended, supplemented or otherwise modified in accordance with the terms thereof without the consent of Party A to cure any typographical error or ambiguity, provided that such actions shall not materially and adversely affect in any respects the interests of Party A.

	
            (n)
 	
            Disclosure and Related Matters.
 

	
             
 	
            (i)
 	
            Derivative Counterparty Information: Name, Organizational Form, General Character of Business, Issued Ratings.  The parties hereto acknowledge and agree that the statements set forth in Exhibit B hereto (the “Derivative Counterparty Information”), which shall be set forth under the heading “Transaction Parties—Derivative Counterparty” in the prospectus supplement, subject to completion, related to the Class A Notes, dated December 4, 2006 (the “Preliminary Prospectus Supplement”), and the prospectus supplement, related to the Class A Notes, dated December 5, 2006 (the “Final Prospectus Supplement” and, collectively with the Preliminary Prospectus Supplement, the “Prospectus Supplement”) constitute the only information furnished to Party B, the
Beneficiary or FIA by or on behalf of Party A for inclusion in the Prospectus Supplement as of the date thereof.  Party A hereby represents and warrants that, as of the date of the Preliminary Prospectus Supplement, the Final Prospectus Supplement and this Agreement, the Derivative Counterparty Information is true and correct in all material respects and does not omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.  Notwithstanding anything to the contrary herein, Party A gives no assurance that any of the ratings described in the Derivative Counterparty Information will remain in effect for any given period of time or that such ratings will not be lowered or withdrawn.
 

	
             
 	
            (ii)
 	
            Additional Derivative Counterparty Information: Financial Information.
 

(A)         Aggregate Significance Percentage of 10%.  If at any time, in the sole discretion of the Beneficiary, the “aggregate significance percentage” (as provided in Item 1115(b)(1) of Regulation AB (as defined in Part 4(k)) of all derivative instruments provided by Party A and any of its affiliates to Party B is 10% or more:

	
             
 	
            (I)
 	
            Additional 1115(b)(1) Information.  Party A shall within five (5) Business Days following request therefor demonstrate to the satisfaction of the Beneficiary and Party B that Party A is able to provide the financial information required under Item 1115(b)(1) of Regulation AB for Party A (or for the group of affiliated 
 

 

11

 

 

entities, if applicable) in either EDGAR-compatible format or through the incorporation by reference of such information from SEC filings under the Securities Exchange Act of 1934, as amended (such information, “Additional 1115(b)(1) Information” and, together with the Additional 1115(b)(2) Information (hereinbelow defined), “Additional Information”).

	
             
 	
            (II)
 	
            Alternatives to Provision of Financial Information.  If Party A is unable to satisfy the Beneficiary and Party B as to its ability to provide such information, Party A shall, at its option, within ten (10) Business Days following request therefor:
 

	
             
 	
            (1)
 	
            Collateral.  At the sole expense of Party A, without any expense or liability to the Beneficiary, Party B or the Indenture Trustee, promptly post collateral satisfactory to the Beneficiary and Party B in an amount sufficient to reduce the aggregate significance percentage to 8% or less, pursuant to a Credit Support Annex or similar agreement reasonably satisfactory to the Beneficiary, Party B and the Indenture Trustee, or
 

	
             
 	
            (2)
 	
            Substitution.  At the sole expense of Party A, without any expense or liability to the Beneficiary, Party B or the Indenture Trustee, assign its rights and delegate its obligations under this Agreement to a substitute counterparty reasonably acceptable to the Beneficiary and Party B that enters into an agreement substantially similar in form to this Agreement, to the extent reasonably practicable.
 

(B)         Aggregate Significance Percentage of 20%.  If at any time, in the sole discretion of the Beneficiary, the “aggregate significance percentage” of all derivative instruments provided by Party A and any of its affiliates to Party B is 20% or more:

	
             
 	
            (I)
 	
            Additional 1115(b)(2) Information.  Party A shall within five (5) Business Days following request therefor demonstrate to the satisfaction of the Beneficiary and Party B that Party A is able to provide:
 

	
             
 	
            (1)
 	
            Financial Information.  The financial information required under Item 1115(b)(2) of Regulation AB for Party A (or for the group of affiliated entities, if applicable) in either EDGAR-compatible format or through the incorporation by reference of such information from SEC filings under the Securities Exchange Act of 1934, as amended (such 
 

 

12

 

 

information, “Additional 1115(b)(2) Information”), together with

	
             
 	
            (2)
 	
            Auditor’s Consents.  Any necessary auditor’s consent to filing or incorporation by reference of the Additional 1115(b)(2) Information.
 

	
             
 	
            (II)
 	
            Alternatives to Provision of Financial Information.  If Party A is unable to satisfy the Beneficiary and Party B as to its ability to provide such information and consents, Party A shall, at its option, within ten (10) Business Days following request therefor:
 

	
             
 	
            (1)
 	
            Collateral.  At the sole expense of Party A, without any expense or liability to the Beneficiary, Party B or the Indenture Trustee, promptly post collateral satisfactory to the Beneficiary and Party A in an amount sufficient to reduce the aggregate significance percentage to 16% or less, pursuant to a Credit Support Annex or similar agreement reasonably satisfactory to the Beneficiary, Party B and the Indenture Trustee, or
 

	
             
 	
            (2)
 	
            Substitution.  At the sole expense of Party A, without any expense or liability to the Beneficiary, Party B or the Indenture Trustee, assign its rights and delegate its obligations under this Agreement to a substitute counterparty reasonably acceptable to the Beneficiary and Party B that enters into an agreement substantially similar in form to this Agreement, to the extent reasonably practicable.
 

	
             
 	
            (iii)
 	
            Indemnification by Party A.  Party A hereby agrees to indemnify and hold harmless FIA, the Beneficiary, Party B and the Indenture Trustee, the respective present directors, officers, employees and agents of each of the foregoing and each person, if any, who controls FIA, the Beneficiary, Party B or the Indenture Trustee within the meaning of Section 15 of the Securities Act of 1933, as amended (the “Act”), or Section 20 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), from and against any and all losses, claims, liabilities, damages, penalties, fines, forfeitures, legal fees and expenses and related costs, judgments, and any other costs (including those in connection with investigation and defense), fees and expenses that any of them may sustain as and when
such losses, claims, liabilities, damages, penalties, fines, forfeitures, legal fees or expenses or related costs, judgments, or any other costs, fees or expenses are incurred, insofar as such losses, claims, liabilities, damages, penalties, fines, forfeitures, legal fees or expenses or related costs, judgments, or any other costs, fees or expenses (or actions in respect thereof) arise out of or are based upon:
 

 

13

 

 

	
             
 	
            (A)
 	
            any untrue statement or alleged untrue statement of any material fact contained in the Derivative Counterparty Information or the Additional Information, or any omission or an alleged omission to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and
 

	
             
 	
            (B)
 	
            any failure of Party A to provide the Additional Information or any required auditor’s consents to the Beneficiary and Party B pursuant to Part 5(n) hereof.
 

Party A shall reimburse FIA, the Beneficiary, Party B and the Indenture Trustee, the present respective officers, directors, employees and agents of each of the foregoing and any such controlling person for any legal or other expenses reasonably incurred by it or any of them in connection with investigating or defending any such losses, claims, liabilities, damages, penalties, fines, forfeitures, legal fees or expenses or related costs, judgments, or any other costs, fees or expenses, as and when incurred.

	
             
 	
            (iv)
 	
            Indemnification by FIA, the Beneficiary and Party B.  FIA, the Beneficiary and Party B, jointly and severally, hereby agree to indemnify and hold harmless Party A, its present directors, officers, employees and agents and each person, if any, who controls Party A within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, from and against any and all losses, claims, liabilities, damages, penalties, fines, forfeitures, legal fees and expenses and related costs, judgments, and any other costs (including those in connection with investigation and defense), fees and expenses that any of them may sustain as and when such losses, claims, liabilities, damages, penalties, fines, forfeitures, legal fees or expenses or related costs, judgments, or any other costs, fees or expenses are
incurred, insofar as such losses, claims, liabilities, damages, penalties, fines, forfeitures, legal fees or expenses or related costs, judgments, or any other costs, fees or expenses (or actions in respect thereof) arise out of or are based upon, any untrue statement or alleged untrue statement of any material fact contained in the Prospectus Supplement and the prospectus, dated December 4, 2006, accompanying the Prospectus Supplement (other than the Derivative Counterparty Information and the Additional Information), or any omission or an alleged omission to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (other than omissions or alleged omissions related to the Derivative Counterparty Information or the Additional Information).
 

FIA, the Beneficiary and Party B, jointly and severally, shall reimburse Party A, its present officers, directors, employees and agents and any such controlling person for any legal or other expenses reasonably incurred by it or any of them in connection with investigating or defending any such losses, claims, liabilities, damages, penalties, fines, forfeitures, legal fees or expenses or related costs, judgments, or any other costs, fees or expenses, as and when incurred.

 

14

 

 

The parties executing this Schedule have executed the Master Agreement and have agreed as to the contents of this Schedule.

 

	
             
 	
            BANK OF AMERICA, N.A.
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
            By:
 	
            /s/ Roger Heintzelman
 
	
             
 	
             
 	
            Name: Roger Heintzelman
 
	
             
 	
             
 	
            Title: Senior Vice President
 
	
             
 	
             
 
	
             
 	
             
 
	
             
 	
             
 
	
             
 	
             
 
	
             
 	
            BA CREDIT CARD TRUST
 
	
             
 	
            By: BA Credit Card Funding, LLC,
 
	
             
 	
            solely in its capacity as beneficiary and not in its
 
	
             
 	
            individual capacity
 
	
             
 	
            By:
 	
            /s/ Scott McCarthy
 
	
             
 	
             
 	
            Name: Scott McCarthy
 
	
             
 	
             
 	
            Title: Senior Vice President
 

 

 

Acknowledged and Accepted solely with

respect to Part 5(n) of this Schedule:

 

	
            FIA CARD SERVICES,
 	
             
 
	
            NATIONAL ASSOCIATION,
 	
             
 
	
            as Servicer
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
            By:
 	
            /s/ Scott McCarthy
 	
             
 
	
             
 	
            Name: Scott McCarthy
 	
             
 
	
             
 	
            Title: Senior Vice President
 	
             
 

 

 

	
             
 	
            [Signature Page to Interest Rate Swap Schedule]
 

 

 

Acknowledged and Accepted solely with

respect to Part 5(n) of this Schedule:

 

	
            BA CREDIT CARD FUNDING, LLC,
 	
             
 
	
            as Beneficiary
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
            By:
 	
            /s/ Scott McCarthy
 	
             
 
	
             
 	
            Name: Scott McCarthy
 	
             
 
	
             
 	
            Title: Senior Vice President
 	
             
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                [Signature Page to Interest Rate Swap Schedule]

 

 

 

EXHIBIT A to Schedule

 

	
            Date:
 	
            December 19, 2006
 
	
             
 	
             
 
	
            To:
 	
            BA Credit Card Trust
 
	
             
 	
             
 
	
            From:
 	
            Bank of America, N.A.
 
	
             
 	
             
 
	
            Subject:
 	
            Swap Transaction
 

 

The purpose of this communication is to set forth the terms and conditions of the swap transaction entered into on the Trade Date referred to below (the “Swap Transaction”), between the BA CREDIT CARD TRUST (“Party B”) and BANK OF AMERICA, N.A. (“Party A”), but only relates to the BAseries 4.72% Class A(2006-16) Notes (the “Class A Notes”) issued pursuant to the Second Amended and Restated Indenture dated as of October 20, 2006 (as amended from time to time, the “Base Indenture”) as supplemented by the Amended and Restated BAseries Indenture Supplement dated as of June 10, 2006 (as amended from time to time, the “Indenture Supplement”) and as further supplemented by the Class A(2006-16) Terms Document dated as of December 19, 2006 (the “Terms Document”).  This communication constitutes a “Confirmation” as referred
to in the Master Agreement specified below.

This Confirmation supplements, forms part of, and is subject to, the ISDA Master Agreement dated as of December 19, 2006 between Party A and Party B (the “Master Agreement”).  All provisions contained in, or incorporated by reference to, such Master Agreement shall govern this Confirmation except as expressly modified below.

This Confirmation and the Schedule to the Master Agreement (the “Schedule”) each incorporate the definitions and provisions contained in (i) the 2000 ISDA Definitions (as amended and supplemented through December 19, 2006) (as published by the International Swaps and Derivatives Association, Inc.) (the “Definitions”), without regard to any amendment or supplement to the Definitions subsequent to the date hereof, and (ii) the Terms Document, the Indenture Supplement and the Base Indenture.  In the event of any inconsistency between the definitions in the Terms Document and any of the Indenture Supplement, the Base Indenture, the Definitions, the Schedule or this Confirmation, the definitions in the Terms Document will govern; in the event of any inconsistency between the definitions in the Indenture Supplement and any of the Base Indenture, the Definitions, the
Schedule or this Confirmation, the definitions in the Indenture Supplement will govern; in the event of any inconsistency between the definitions in the Base Indenture and any of the Definitions, the Schedule or this Confirmation, the definitions in the Base Indenture will govern; in the event of any inconsistency between this Confirmation and either the Schedule or the Definitions, this Confirmation will govern; and in the event of any inconsistency between the Schedule and the Definitions, the Schedule will govern.

The Master Agreement will govern only the Swap Transaction evidenced by the Schedule and this Confirmation.

 

 

 

The terms of this particular Swap Transaction to which this Confirmation relates are as follows:

 

	
            Trade Date:
 	
            December 5, 2006
 
	
             
 	
             
 
	
            Effective Date:
 	
            December 19, 2006
 
	
             
 	
             
 
	
            Termination Date:
 	
            December 15, 2010; provided, however, that in the event of an Early Redemption Event described in Section 1201(c) of the Base Indenture or an Event of Default and acceleration under the Base Indenture with respect to the Class A Notes, the Termination Date will be the earlier of (i) the date on which the Notional Amount is zero and (ii) December 15, 2010.
 
	
             
 	
             
 
	
            Fixed Amounts:
 	
             
 
	
             
 	
             
 
	
            Fixed Rate Payer:
 	
            Party A
 
	
             
 	
             
 
	
            Fixed Rate:
 	
            4.72%
 
	
             
 	
             
 
	
            Fixed Amount for Initial Fixed Rate  Payer Payment Date:
 	
            $7,342,222.22
 
	
             
 	
             
 
	
            Fixed Amount:
 	
            For each Fixed Rate Payer Payment Date other than the initial Fixed Rate Payer Payment Date, an amount calculated on a formula basis for that Fixed Rate Payer Payment Date as follows:
 
	
             
 	
             
 
	
             
 	
            Fixed   =
 Amount
 	
            Fixed Rate Notional
 Amount
 	
            x
 	
            Fixed Rate
 
	
            12
 
	
            Fixed Rate Notional Amount:
 	
            For the initial Fixed Rate Payer Payment Date, $1,000,000,000 (the Initial Dollar Principal Amount of the Class A Notes), and for each Fixed Rate Payer Payment Date thereafter the Outstanding Dollar Principal Amount of the Class A Notes as of the Record Date immediately preceding such Fixed Rate Payer Payment Date
 
	
             
 	
             
 
	
            Fixed Rate Payer Payment Dates:
 	
            The Business Day immediately prior to each Interest Payment Date.
 
	
             
 	
             
 
	
            Floating Amounts:
 	
             
 
	
             
 	
             
 
	
            Floating Rate Payer:
 	
            Party B.
 
	
             
 	
             
 

 

 

 

 

	
            Calculation Periods:
 	
            For the initial Floating Rate Payer Payment Date, the period from and including the Effective Date through the day preceding the first Interest Payment Date; and for each Floating Rate Payer Payment Date thereafter, each Calculation Period will be the period from and including the previous Interest Payment Date through the day preceding the current Interest Payment Date.
 
	
             
 	
             
 
	
            Floating Rate Payer Payment Dates:
 	
            The Business Day immediately prior to each Interest Payment Date.
 
	
             
 	
             
 
	
            Floating Rate Option:
 	
            USD-LIBOR-BBA; provided, however, that the last sentence of the definition of  “USD-LIBOR-Reference Banks” is hereby amended to replace the penultimate use of “that Reset Date” with “the day that is two London Banking Days preceding that Reset Date.”
 
	
             
 	
             
 
	
            Reset Dates:
 	
            Means, with respect to the initial Floating Rate Payer Payment Date, the Effective Date, and with respect to each Floating Rate Payer Payment Date after the initial Floating Rate Payer Payment Date, the first day of the related Calculation Period for such Floating Rate Payer Payment Date.
 
	
             
 	
             
 
	
            Designated Maturity:
 	
            One month.
 
	
             
 	
             
 
	
            Floating Rate Spread:
 	
            Plus the “Floating Rate Spread,” as defined in Exhibit 1 to this Confirmation.  
 
	
             
 	
             
 
	
            Floating Amount for Initial Floating Rate Payer Payment Date:
 	
            The amount specified in Exhibit 1 to this Confirmation.
 
	
             
 	
             
 
	
            Floating Rate Notional Amount:
 	
            For the initial Floating Rate Payer Payment Date, $1,000,000,000 (the Initial Dollar Principal Amount of the Class A Notes), and for each Floating Rate Payer Payment Date thereafter the Outstanding Dollar Principal Amount of the Class A Notes as of the Record Date immediately preceding such Floating Rate Payer Payment Date.
 
	
             
 	
             
 
	
            Floating Rate Day Count Fraction:
 	
            Actual/360.
 
	
             
 	
             
 
	
            Compounding:
 	
            Not Applicable.
 
	
             
 	
             
 

	
            Calculation Agent:
 	
            Indenture Trustee.
 
	
             
 	
             
 
	
            Business Days:
 	
            New York and Newark, Delaware.
 

 

 

 

 

	
            Interest Payment Dates:
 	
            The fifteenth day of each month commencing February 15, 2007, or if such fifteenth day is not a Business Day, the next succeeding Business Day.
 
	
             
 	
             
 
	
            Credit Support Document:
 	
            Not applicable.
 
	
             
 	
             
 

	
            Other Provisions:
 	
            If at any time during the Term of the Swap Transaction (i) Party A’s short-term credit rating (or the then equivalent rating) from S&P is below A-1, or is withdrawn by S&P, or (ii) if Party A does not have a short-term credit rating from S&P, Party A’s long-term credit rating (or the then equivalent rating) from S&P is below A+, or is withdrawn by S&P, Party A shall, within thirty days of such rating or withdrawal, fund the interest reserve account established and maintained as described in the Terms Document (the “Interest Reserve Account”) in an amount equal to one-twelfth of the product of (a) the Fixed Rate, and (b) the Outstanding Dollar Principal Amount of the Class A Notes on the Record Date preceding such rating or withdrawal for reinvestment in accordance
with the Terms Document; provided, however, that the failure of Party A to adequately fund the Interest Reserve Account within thirty days of such rating or withdrawal shall not constitute an Event of Default pursuant to the provisions of subsection 5(a) or a Termination Event pursuant to the provisions of subsection 5(b).  Party A shall treat the amount on deposit in the Interest Reserve Account as its money for tax purposes.  After the funding of the Interest Reserve Account, in the event there shall occur an Early Termination Date as a result of an Event of Default with respect to Party A as the Defaulting Party or a Termination Event with respect to Party A as the Affected Party, the funds then contained in the Interest Reserve Account will be treated as BAseries Available Funds to the extent provided in the Terms Document and the Indenture Supplement.  Upon termination of the Interest
Reserve Account as provided in the Terms Document after payment of all amounts owing to the holders of the Class A Notes that are payable from such account, Party B will instruct the Indenture Trustee to release all 
 

 

 

 

 

	
             
 	
             
 
	
             
 	
            amounts on deposit therein to Party A.
 
	
             
 	
             
 
	
             
 	
            If Party B notifies Party A that netting of payments will not apply to any of the Transactions pursuant to Part 4(i) of the Schedule, each payment obligation of Party B under Section 2(a)(i) of the Master Agreement in respect of this Swap Transaction shall be subject to the condition precedent that in respect of each such payment obligation each amount payable by Party A with respect to this Swap Transaction shall be paid by Party A by 12:00 noon, New York City time, on the relevant Fixed Rate Payer Payment Date.
 
	
             
 	
             
 
	
            London Banking Day:
 	
            Banking Days in New York, New York and London, England.
 
	
             
 	
             
 
	
            Governing Law:
 	
            New York.
 
	
             
 	
             
 
	
            Offices:
 	
            Party A is a Multibranch Party.
 
	
             
 	
             
 
	
             
 	
            Party B is not a Multibranch Party.
 
	
             
 	
             
 
	
            Payment Instructions
 for Party A USD:
 	
            Bank of America, New York

ABA# 026-009-593

For: Bank of America Charlotte Global Derivative Settlements

Account # 6550219386

 
 
	
             
 	
             
 
	
            Payment Instructions
 for Party B in USD:
 	
            The Bank of New York; New York, NY

ABA# 021-000-018

GLA# 111-565

For Further Credit to: TAS A/C# 054640

Reference:  BA Credit Card Trust

Collection Account - BAseries Class A(2006-16)

Attn.: Catherine Cerilles 212-815-6258
 
	
             
 	
             
 

 

 

Please confirm that the foregoing correctly sets forth the terms of our agreement with respect to the Swap Transaction by signing in the space provided below and sending a copy of the executed Confirmation to us.

It has been a pleasure working with you on this transaction and we look forward to working with you again in the future.

 

	
             
 	
            Very truly yours,
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
            BANK OF AMERICA, N.A.
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
            By: /s/ Mary Beth Knight
 	
             
 
	
             
 	
            Name: Mary Beth Knight
 	
             
 
	
             
 	
            Title: Assistant Vice President
 	
             
 

 

 

Agreed and Accepted by:

BA CREDIT CARD TRUST

 

	
            By:
 	
            BA Credit Card Funding, LLC,
 	
             
 
	
                 solely in its capacity as beneficiary
 	
             
 
	
                   and not in its individual capacity
 	
             
 
	
             
 	
             
 
	
             
 	
             
 
	
            By: /s/ Scott McCarthy
 	
             
 
	
            Name: Scott McCarthy
 	
             
 
	
            Title: Senior Vice President
 	
             
 

 

	
             
 	
            [Signature Page to Interest Rate Swap Confirmation]
 

 

 

EXHIBIT 1 to Confirmation

[Floating Rate Spread Letter]

 

 

 

 

EXHIBIT B to Schedule

Bank of America, N.A. (referred to as the derivative counterparty) is a national banking association organized under the laws of the United States, with its principal executive offices located in Charlotte, North Carolina.  The derivative counterparty is a wholly-owned indirect subsidiary of Bank of America Corporation (the “Corporation”) and is engaged in a general consumer banking, commercial banking and trust business, offering a wide range of commercial, corporate, international, financial market, retail and fiduciary banking services.  As of September 30, 2006, the derivative counterparty had consolidated assets of $1,186 billion, consolidated deposits of $721 billion and stockholder’s equity of  $110 billion based on regulatory accounting principles.

 

The Corporation is a bank holding company and a financial holding company, with its principal executive offices located in Charlotte, North Carolina.  Additional information regarding the Corporation is set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 2005, together with any subsequent documents it filed with the Securities and Exchange Commission (the “SEC”) pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

Recent Developments:  On January 1, 2006, the Corporation completed its merger with MBNA Corporation.  

 

Additional information regarding the foregoing is available from the filings made by the Corporation with the SEC, which filings can be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549, United States, at prescribed rates.  In addition, the SEC maintains a website at http://www.sec.gov, which contains reports, proxy statements and other information regarding registrants that file such information electronically with the SEC.

 

The information concerning the Corporation, the derivative counterparty and the foregoing mergers contained herein is furnished solely to provide limited introductory information and does not purport to be comprehensive.  Such information is qualified in its entirety by the detailed information appearing in the documents and financial statements referenced herein.

 

Moody’s currently rates the derivative counterparty’s long-term debt as “Aa1” and short-term debt as “P-1.”  The outlook is Stable. Standard & Poor’s rates the derivative counterparty’s long-term debt as “AA” and its short-term debt as “A-1+.”  Ratings are on CreditWatch Positive.  Fitch rates long-term debt of the derivative counterparty as “AA-” and short-term debt as “F1+.”  The outlook is Positive.  Further information with respect to such ratings may be obtained from Moody’s, Standard & Poor’s and Fitch, respectively.  No assurances can be given that the current ratings of the derivative counterparty’s instruments will be maintained.  

 

The derivative counterparty will provide copies of the most recent Bank of America Corporation Annual Report on Form 10-K, any subsequent reports on Form 10-Q, and any required reports on Form 8-K (in each case as filed with the Commission pursuant to the Exchange Act), and the publicly available portions of the most recent quarterly Call Report of 

 

 

the derivative counterparty delivered to the Comptroller of the Currency, without charge, to each person to whom this document is delivered, on the written request of such person.  Written requests should be directed to:

 

Bank of America Corporate Communications

100 North Tryon Street, 18th Floor

Charlotte, North Carolina 28255

Attention: Corporate Communications

 

The delivery of this prospectus supplement shall not create any implication that there has been no change in the affairs of the Corporation or the derivative counterparty since the date hereof, or that the information with respect to the Corporation or the derivative counterparty contained or referred to herein is correct as of any time subsequent to the dates referred to herein.

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