Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Resolution No. 9529
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO. 9529 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING AND ADOPTING A FORM ISDA MASTER AGREEMENT, US MUNICIPAL COUNTERPARTY SCHEDULE AND PARAGRAPH 13 TO THE CREDIT SUPPORT ANNEX WITH CUSTOMERS FOR POWER TRANSACTIONS WHEREAS, the City of Vernon (the "City") is a municipal corporation and a chartered city of the State of California organized and existing under its Charter and the Constitution of the State of California; and WHEREAS, the City desires to adopt a form International Swap Dealers Association ("ISDA") Master Agreement, US Municipal Counterparty Schedule to the Master Agreement and Paragraph 13 to the Credit Support Annex to the Schedule to the ISDA Master Agreement setting forth the terms and conditions under which the City will enter into certain transactions with one party or any credit support provider of such party in order to integrate such transactions into the City's overall debt and investment management efforts. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS.FOLLOWS: SECTION 1: The City Council of the City hereby finds and determines that the recitals contained hereinabove are true and. correct. SECTION 2: The City Council of the City hereby approves and adopts the form ISDA Master Agreement, form US Municipal Counterparty Schedule to the Master Agreement and Paragraph 13 to the Credit Support Annex to the Schedule to the 1992 ISDA Master Agreement attached hereto as Exhibit A and incorporated by reference for use by 1 2 3 4 5 6 7 8 9. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the City and specified entities with the intent that the same shall be ja binding contract between the City and the entity upon acceptance by the City Administrator, or his designee. SECTION 3: The City Council of the City hereby authorizes or empowers the City Administrator, or his designee, to execute individual copies of the form ISDA Master Agreement, US Municipal Counterparty Schedule to the Master Agreement and Paragraph 13 to the Credit Support Annex to the Schedule to the 1992 ISDA Master Agreement Ion an as -needed basis and to make whatever nonsubstantive and administrative changes, upon approval of the City Attorney, to the form Agreements and any and all documents as shall be required to complete the transactions as is necessary to carry out the intent of this Resolution and the terms.of the form Agreements. Such additions, deletions and other changes therein as the City Administrator or his designee executing the Agreements may approve, is conclusively evidenced by the execution and delivery of the Agreements. SECTION 4: The City Clerk of the City of Vernon shall certify to the passage of this resolution, and thereupon and thereafter the same shall be in full force and effect. APPROVED AND ADOPTED this 22nd day of January, 2008. AT ST: MANUELA GIRON, dity Clerk Name: Leonis C. Malburg Title: Mayor / - 2 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) I, MANUELA GIRON, City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. 9529, was duly adopted by the City Council of the City of Vernon at a regular meeting of the City Council duly held on Tuesday, January 22, 2008, and thereafter was duly signed by the Mayor or Mayor Pro -Tern of the City of Vernon. MANUELA GIRON,.City Clerk I (SEAL) - 3 - EXHIBIT A (Local Currency —Single Jurisdiction) ISDAa International Swap Dealers Association, Inc. MASTER AGREEMENT dated as of ................................. ...................................................................... and.................................................................. have entered and/or anticipate entering into one or more transactions (each a "Transaction") that are or will be governed by this Master Agreement, which includes the schedule (the "Schedule"), and the documents and other confirming evidence (each a "Confirmation") exchanged between the parties confirming those Transactions. Accordingly, the parties agree as follows: — 1. Interpretation (a) Definitions. The terms defined in Section 12 and in the Schedule will have the meanings therein specified for the purpose of this Master Agreement. (b) Inconsistency. In the event of any inconsistency between the provisions of the Schedule and the other provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency between the provisions of any Confirmation and this Master Agreement (including the Schedule), such Confirmation will prevail for the purpose of the relevant Transaction. (c) Single Agreement. All Transactions are entered into in reliance on the fact that this Master Agreement and all Confirmations form a single agreement between the parties (collectively referred to as this "Agreement"), and the parties would not otherwise enter into any Transactions. 2. Obligations (a) General Conditions. (i) Each party will make each payment or delivery specified in each Confirmation to be made by it, subject to the other provisions of this Agreement. (ii) Payments under this Agreement will be made on the due date for value on that date in the place of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in freely transferable funds and in the manner customary for payments in the required currency. Where settlement is by delivery (that is, other than by payment), such delivery will be made for receipt on the due date in the manner customary for the relevant obligation unless otherwise specified in the relevant Confirmation or elsewhere in this Agreement. (iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition precedent that no Event of Default or Potential Event of Default with respect to the other party has occurred and is continuing, (2) the condition precedent that no Early Termination Date in respect of the relevant Transaction has occurred or been effectively designated and (3) each other applicable condition precedent specified in this Agreement. Copyright ©1992 by International Swap Dealers Association, Inc. Second Printing (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 branches or offices through which the parties make and receive payments or deliveries. (d) 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) that: — (a) Basic Representations. (i) Status. It is duly organised and validly existing under the laws of the jurisdiction of its organisation or incorporation and, if relevant under such laws, in good standing; (ii) Powers. It has the power to execute this Agreement and any other documentation relating to this Agreement to which it is a party, to deliver this Agreement and any other documentation relating to this Agreement that it is required by this Agreement to deliver and to perform its obligations under this Agreement and any obligations it has under any Credit Support Document to which it is a party and has taken all necessary action to authorise such execution, delivery and performance; (iii) No Violation or Conflict. Such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets; ISDA®1992 Second Printing (iv) Consents. All governmental and other consents that are required to have been obtained by it with respect to this Agreement or any Credit Support Document to which it is a party have been obtained and are in full force and effect and all conditions of any such consents have been complied with; and (v) Obligations Binding. Its obligations under this Agreement and any Credit Support Document to which it is a party constitute its legal, valid and binding obligations, enforceable in accordance with. their respective terms (subject to applicable bankruptcy, reorganisation, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)). (b) Absence of Certain Events. No Event of Default or Potential Event of Default or, to its knowledge, Termination Event with respect to it has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement or any Credit Support Document to which it is a party. (c) Absence of Litigation. There is not pending or, to its knowledge, threatened against it or any of its Affiliates any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Agreement or any Credit Support Document to which it is a party or its ability to perform its obligations under this Agreement or such Credit Support Document. (d) Accuracy of Specified information. All applicable information that is furnished in writing by or on behalf of it to the other party and is identified for the purpose of this Section 3(d) in the Schedule is, as of the date of the information, true, accurate and complete in every material respect. 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 any forms, documents or certificates specified in the Schedule or any Confirmation by the date specified in the Schedule or such Confirmation or, if none is specified, as soon as reasonably practicable. (b) Maintain Authorisations. It will use all reasonable efforts to maintain in full force and effect all consents of any governmental or other authority that are required to be obtained by it with respect to this Agreement or any Credit Support Document to which it is a party and will use all reasonable efforts to obtain any that may become necessary in the future. (c) Comply with Laws. It will comply in all material respects with all applicable laws and orders to which it may be subject if failure so to comply would materially impair its ability to perform its obligations under this Agreement or any Credit Support Document to which it is a party. 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(d) 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(d) or to give notice of a Termination Event) to be complied with or performed ISDA®1992 Second Printing 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 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 4 ISDA®1992 Second Printing 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, and, if specified to be applicable, a Credit Event Upon Merger if the event is specified pursuant to (ii) below or an Additional Termination Event if the event is specified pursuant to (iii) 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) 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 ISDA®1992 Second Printing (iii)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) Two Affected Parties. If an Illegality under Section 5(b)(i)(1) 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. (iii) Right to Terminate. If: (1) an agreement under Section 6(b)(ii) 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 other than that referred to in Section 6(b)(ii), a Credit Event Upon Merger or an Additional Termination Event occurs, either party in the case of an Illegality, any Affected Party in the case of 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. 6 ISDA©1992 Second Printing (ii) Upon the occurrence or effective designation of an Early Termination Date, no further payments or deliveries under Section 2(a)(i) or 2(d) 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), 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 Unpaid Amounts owing to the Non -defaulting Party over (B) 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 Unpaid Amounts owing to the Non -defaulting Party less (B) 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 7 ISDA®1992 Second Printing 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 Unpaid Amounts owing to X less (II) 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 b e c au s e "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. Transfer 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 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 ISDA®1992 Second Printing 8. 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. 9. 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, 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. 10. 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; ISDA®1992 Second Printing (iii) if sent by facsimile transmission, on the date that transmission is received by a responsible employee of the recipient in legible form (it being agreed that the burden of proving receipt will be on the sender and will not be met by a transmission report generated by the sender's facsimile machine); (iv) if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested), on the date that mail is delivered or its delivery is attempted; or (v) if sent by electronic messaging system, on the date that electronic message is received, unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Local Business Day or that communication is delivered (or attempted) or received, as applicable, after the close of business on a Local Business Day, in which case that communication shall be deemed given and effective on the first following day that is a Local Business Day. (b) Change of Addresses. Either party may by notice to the other change the address, telex or facsimile number or electronic messaging system details at which notices or other communications are to be given to it. 11. 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) 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. 12. 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). 10 ISDA®1992 Second Printing "Affected Transactions" means (a) with respect to any Termination Event consisting of an Illegality, 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. "consent" includes a consent, approval, action, authorisation, exemption, notice, filing, registration or exchange control consent. "Credit Event Upon Merger" has the meaning specified in Section 5(b). "Credit Support Document" means any agreement or instrument that is specified as such in this Agreement. "Credit Support Provider" has the meaning specified in the Schedule. "Default Rate" means a rate per annum equal to the cost (without proof or evidence of any actual cost) to the relevant payee (as certified by it) if it were to fund or of funding the relevant amount plus 1% per annum. "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)(iii). "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). "law" includes any treaty, law, rule or regulation 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, (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, 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 11 ISDA®1992 Second Printing 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 9. A party will determine its Loss as of the relevant Early Termination Date, or, if that is not reasonably practicable, as of the earliest date thereafter as is reasonably practicable. A party may (but need not) determine its Loss by reference to quotations of relevant rates or prices from one or more leading dealers in the relevant markets. "Market Quotation" means, with respect to one or more Terminated Transactions and a party making the determination, an amount determined on the basis of quotations from Reference Market -makers. Each quotation will be for an amount, if any, that would be paid to such party (expressed as a negative number) or by such party (expressed as a positive number) in consideration of an agreement between such party (taking into account any existing Credit Support Document with respect to the obligations of such party) and the quoting Reference Market -maker to enter into a transaction (the "Replacement Transaction") that would have the effect of preserving for such party the economic equivalent of any payment or delivery (whether the underlying obligation was absolute or contingent and assuming the satisfaction of each applicable condition precedent) by the parties under Section 2(a)(i) in respect of such Terminated Transaction or group of Terminated Transactions that would, but for the occurrence of the relevant Early Termination Date, have been required after that date. For this purpose, Unpaid Amounts in respect of the Terminated Transaction or group of Terminated Transactions are to be excluded but, without limitation, any payment or delivery that would, but for the relevant Early Termination Date, have been required (assuming satisfaction of each applicable condition precedent) after that Early Termination Date is to be included. The Replacement Transaction would be subject to such documentation as such party and the Reference Market -maker may, in good faith, agree. The party making the determination (or its agent) will request each Reference Market -maker to provide its quotation to the extent reasonably practicable as of the same day and time (without regard to different time zones) on or as soon as reasonably practicable after the relevant Early Termination Date. The day and time as of which those quotations are to be obtained will be selected in good faith by the party obliged to make a determination under Section 6(e), and, if each party is so obliged, after consultation with the other. If more than three quotations are provided, the Market Quotation will be the arithmetic mean of the quotations, without regard to the quotations having the highest and lowest values. If exactly three such quotations are provided, the Market Quotation will be the quotation remaining after disregarding the highest and lowest quotations. For this purpose, if more than onequotation 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). "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 sane city. "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 12 ISDA®1992 Second Printing 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 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. "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 Event" means an Illegality 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 13 ISDAo1992 Second Printing 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 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. ............................................................ (Name of Party) By: .......................................................... Name: Title: Date: ....................................................... (Name of Party) By: ................................................... Name: Title: Date: 14 ISDA®1992 Second Printing (Local Currency — Single Jurisdiction) ISDA@ International Swap Dealers Association, Inc. SCHEDULE to the Master Agreement datedas of .......................................................... between ........................................ ("Party A") .and ................................... ................... ("Party B„) Part 1. Termination Provisions. (a) "Specified Entity" means in relation to Party A for the purpose of. — Section5(a)(v).............................................................................................. ............ Section5(a)(vi).............................................................................................. .......... Section5(a)(vii)............................................................................................................ Section5(b)(ii)............................................................................................................. and in relation to Party B for the purpose of: — Section5(a)(v)......................................................................................... .................... Section 5(a)(vi)..................................................................................... ........................ Section 5(a)(vii).................................................................................. .......................... Section5(b)(ii)............................................................................................................. (b) "Specified Transaction" will have the meaning specified in Section 12 of this Agreement unless another meaning is specified here...................................................................................... (c) The "Cross Default" provisions of Section 5(a)(vi) will/will not * apply to Party A will/will not * apply to Party B if such provisions apply:— " -Specified Indebtedness" will have the meaning specified in Section 12 of this Agreement unless another meaning is specified here...................................................................................... * Delete as applicable. 15 ISDA®1992 Second Printing "Threshold Amount" means................................................................................................ (d) The "Credit Event Upon Merger" provisions of Section 5(b)(ii) will/will not * apply to Party A will/will not * apply to Party B (e) The "Automatic Early Termination" provision of Section 6(a) will/will not * apply to Party A will/will not * apply to Party B (f') Payments on Early Termination. For the purpose of Section 6(c) of this Agreement:— (i) Market Quotation/Loss * will apply. (ii) The First Method/The Second Method * will apply. (g) Additional Termination Event will/will not apply*. The following shall constitute an Additional TerminationEvent:—......................................................................................................... .................................................................................................................................... .................................................................................................................................... For the purpose of the foregoing Termination Event, the Affected Party or Affected Parties shall be:— .. .................................................................................................................................... Part 2. Agreement to Deliver Documents. For the purpose of Section 4(a) of this Agreement, each party agrees to deliver the following documents, as applicable: — Party required to deliver document Form/Document/ Date by which Covered by Certificate to be delivered Section 3(d) Representation .............................................................................................. Yes/No* .............................................................................................. Yes/No* .............................................................................................. Yes/No* .............................................................................................. Yes/No* ......................:....................................................................... Yes/No* Delete as applicable. 16 ISDA®1992 Second'Printing Part 3. Miscellaneous. (a) Addresses for Notices. For the purpose of Section 10(a) of this Agreement: — Address for notices or communications to Party A: — Address:................................................................................................................ Attention: ................................................................................................................ Telex No.: ...................................................... Answerback :...................................... Facsimile No.:.......................................... ......... Telephone No.: ...................................... Electronic Messaging System Details: ................................................................................. Address for notices or communications to Party B:— Address:.......................................................................................... . ....................... Attention: ................................................................................................................ . Telex No.: ...................................................... Answerback : ..................................... Facsimile No.: ................................................... Telephone No.:..................................... Electronic Messaging System Details: ................................................................................ (b) Calculation Agent. The Calculation Agent is .................................................. unless otherwise specified in a Confirmation in relation to the relevant Transaction. (c) Credit Support Document. Details of any Credit Support Document:— ........................................ (d) Credit Support Provider. Credit Support Provider means in relation to Party A . ............................... ............................................................................................................................... Credit Support Provider means in relation to Party B............................................................... ............................................................................................................................... (e) Governing Law. This Agreement will be governed by and construed in accordance with English law/the laws of the State of New York (without reference to choice of law doctrine)*. (f) Netting of Payments. Subparagraph (ii) of Section 2(c) of this Agreement will not apply to the following Transactions or groups of Transactions (in each case starting from the date of this Agreement/in each case starting from ....................................... *)..................................... * Delete as applicable. 17 ISDA®1992 Second Printing (g) "Affiliate" will have the meaning specified in Section 12 of this Agreement unless another meaning is specifiedhere.............................................................................................................. Part 4. Other Provisions. 18 ISDA®1992 Second Printing (Bilateral Form) (ISDA Agreements Subject to New York Law Only) ISDAO International Snaps and Derivatives Association, Inc. CREDIT SUPPORT ANNEX to the Schedule to the ISDA MASTER AGREEMENT dated as of between and ("Party A") (`Party B") This Annex supplements, forms part of, and is subject to, the above -referenced Agreement, is part of its Schedule and is a Credit Support Document under this Agreement with respect to each party. Accordingly, the parties agree as follows: Paragraph 1. Interpretation (a) Definitions and Inconsistency. Capitalized terms not otherwise defined herein or elsewhere in this Agreement have the meanings specified pursuant to Paragraph 12. and all references in this Annex to Paragraphs are to paragraphs of this Annex. In the event of any inconsistency between this Annex and the other provisions of this Schedule, this Annex will prevail, and in the event of any inconsistency between Paragraph 13 and the other provisions of this Annex, Paragraph 13 will prevail. (b) Secured Party and Pledgor. All references in this Annex to the "Secured Party" will be to either party when acting in that capacity and all corresponding references to the "Pledgor" will be to the other party when acting in that capacity; provided, however, that if Other Posted Support is held by a party to this Annex, all references herein to that party as the Secured Party with respect to that Other Posted Support will be to that party as the beneficiary thereof and will not subject that support or that party as the beneficiary thereof to provisions of law generally relating to security interests and secured parties. Paragraph 2. Security Interest Each party, as the Pledgor, hereby pledges to the other party, as the Secured Party, as security for its Obligations, and grants to the Secured Party a first priority continuing security interest in, lien on and right of Set-off against all Posted Collateral Transferred to or received by the Secured Party hereunder. Upon the Transfer by the Secured Party to the Pledgor of Posted Collateral, the security interest and lien granted hereunder on that Posted Collateral will be released immediately and, to the extent possible, without any further action by either party. Copyright © 1994 by International Scraps and Derivatives Association, Inc. ISDA 09 1994 Paragraph 3. Credit Support Obligations (a) Delivery Amount. Subject to Paragraphs 4 and 5, upon a demand made by the Secured Party on or promptly following a Valuation Date, if the Delivery Amount for that Valuation Date equals or exceeds the Pledgor's Minimum Transfer Amount, then the Pledgor will Transfer to the Secured Party Eligible Credit Support having a Value as of the date of Transfer as least equal to the applicable Delivery Amount (rounded pursuant to Paragraph 13). Unless otherwise specified in Paragraph 13, the "Delivejtp Amount" applicable to the Pledgor for any Valuation Date will equal the amount by which: (i) the Credit Support Amount exceeds (ii) the Value as of that Valuation Date of all Posted Credit Support held by the Secured Party. (b) Return Amount. Subject to Paragraphs 4 and 5, upon a demand made by the Pledgor on or promptly following a Valuation Date, if the Return Amount for that Valuation Date equals or exceeds the Secured Party's Minimum Transfer Amount, then the Secured Party will Transfer to the Pledgor Posted Credit Support specified by the Pledgor in that demand having a Value as of the date of Transfer as close as practicable to the applicable Return Amount (rounded pursuant to Paragraph 13). Unless otherwise specified in Paragraph 13, the "Return Amount" applicable to the Secured Party for any Valuation Date will equal the amount by which: (i) the Value as of that Valuation Date of all Posted Credit Support held by the Secured Party exceeds (ii) the Credit Support Amount. "Credit Support Amount" means, unless otherwise specified in Paragraph 13, for any Valuation Date (i) the Secured Party's Exposure for that Valuation Date plus (ii) the aggregate of all Independent Amounts applicable to the Pledgor, if any, minus (iii) all Independent Amounts applicable to the Secured Party, if any, minus (iv) the Pled-or's Threshold; provided, however, that the Credit Support Amount will be deemed to be zero whenever the calculation of Credit Support Amount yields a number less than zero.. Paragraph 4. Conditions Precedent, Transfer Timing, Calculations and Substitutions (a) Condilions Precedent. Each Transfer obligation of the Pledgor under Paragraphs 3 and 5 and of the Secured Party under Paragraphs 3, 4(d)(ii), 5 and 6(d) is subject to the conditions precedent that: (i) no Event of Default, Potential Event of Default or Specified Condition has occurred and is continuing with respect to the other party; and (ii) no Early Termination Date for which any unsatisfied payment obligations exist has occurred or has been designated as the result of an Event of Default or Specified Condition with respect to the other party. (b) Transfer Tinting. Subject to Paragraphs 4(a) and 5 and unless otherwise specified, if a demand for'the Transfer of Eligible Credit Support or Posted Credit Support is made by the Notification Time, then the:Televant Transfer will be made not later than the close of business on the next Local Business Day; if a demand is made after the Notification Time, then the relevant Transfer will be made not later that the close of _business on the second Local Business Day thereafter. (c) Calculations. All calculations of Value and Exposure for purposes of Paragraphs 3 and 6(d) will be made by the Valuation Agent as of the Valuation Time. The Valuation Agent will notify each party (or the other party, if the Valuation Agent is a party) of its calculations not later that the Notification Time on the Local Business Day following the applicable Valuation Date (or in the case of Paragraph 6(d), following the date of calculation). ISDA (& 1994 (d) Substitutions (i) Unless otherwise specified in Paragraph 13, upon notice to the Secured Party specifying the items of Posted Credit Support to be exchanged, the Pledgor may, on any Local Business Day, Transfer to the Secured Party substitute Eligible Credit Support (the "Substitute Credit Support"); and (ii) subject to Paragraph 4(a), the Secured Party will Transfer to the Pledgor the items of Posted Credit Support specified by the Pledgor in its notice not later than the Local Business Day following the date on which the Secured Party receives the Substitute Credit Support, unless otherwise specified in Paragraph 13 (the "Substitution Date"); provided that the Secured Party will only be obligated to Transfer Posted Credit Support with a Value as of the date of Transfer of that Posted Credit Support equal to the Value as of that date of the Substitute Credit Support. Paragraph S. Dispute Resolution If a party (a "Disputing Party") disputes (1) the Valuation Agent's calculation of a Delivery Amount or a Return Amount or (11) the Value of any Transfer of Eligible Credit Support or Posted Credit Support, then (I) the Disputing Party will notify the other party and the Valuation Agent (if the ValuatiomAgent is not the other party) not later than the close of business on the Local Business Day following (X) the date that the demand is made under Paragraph 3 in the case of (1) above or (Y) the date of Transfer in the case of (I1) above, (2) subject to Paragraph 4(a), the appropriate party will Transfer the undisputed amount to the other party not later than the close of business on the Local Business Day following (X) the date that the demand is made under Paragraph 3 in the case of (1) above or (Y) the date of Transfer in the case of (I1) above, (3) the parties will consult with each other in an attempt to resolve the dispute and (4) if they fail to resolve the dispute by the Resolution Time, then: (i) In the case of a dispute involving a Delivery Amount or Return Amount, unless otherwise specified in Paragraph 13, the Valuation Agent will recalculate the Exposure and the Value as of the Recalculation Date by: (A) utilizing any calculations of Exposure for the Transactions (or Swap Transactions) that the parties have agreed are not in dispute; (B) calculating the Exposure for the Transaction (or Swap Transactions) in dispute by seeking four actual quotations at mid -market from Reference Market -makers for purposes of calculating Market Quotation, and taking the arithmetic average of those obtained: provided that if four quotations are not available for a particular Transaction (or Swap Transaction), then fewer than four quotations may be used for that Transaction (or Swap Transaction); and if no quotations are available for a particular Transaction (or Swap Transaction), then the Valuation Agent's original calculations will be used for that Transaction (or Swap Transaction); and (C) utilizing the procedures specified in Paragraph 13 for calculating the Value, if disputed, of Posted Credit Support. (ii) In the case of a dispute involving the Value of any Transfer of Eligible Credit Support or Posted Credit Support, the Valuation Agent will recalculate the Value as of the date of Transfer pursuant to Paragraph 13. Following a recalculation pursuant to this Paragraph, the Valuation Agent will notify each party (or the other party, if the Valuation Agent is a party) not later than the Notification Time on the Local Business Day following the Resolution Time. The appropriate party will, upon demand following that notice by the Valuation Agent or a resolution pursuant to (3) above and subject to Paragraphs 4(a) and 4(b), make the appropriate Transfer. ISDA Qti 1994 Paragraph 6. Holding and Using Posted Collateral (a) Care of Posted Collateral. Without limiting the Secured Party's rights under Paragraph 6(c), the Secured Party will exercise reasonable care to assure the safe custody of all Posted Collateral to the extent required by applicable law, and in any event the Secured Party will be deemed to have exercised reasonable care if it exercises at least the same degree of care as it would exercise with respect to its own property. Except as specified in the preceding sentence, the Secured Party will have no duty with respect to Posted Collateral, including, without limitation, any duty to collect any Distributions, or enforce or preserve any rights pertaining thereto. (b) Eligibility to Hotel Posted Collateral; Custodians. (i) Getrerat. Subject to the satisfaction of any conditions specified in Paragraph 13 for holding. Posted Collateral, the Secured Party will be entitled to hold Posted Collateral or to appoint an agent (a "Custodian") to hold Posted Collateral for the Secured Party. Upon notice by the Secured Party to the Pledgor of the appointment of a Custodian, the Pledgor's obligations to make any Transfer will be discharged by making the Transfer to that Custodian. The holding of Posted Collateral by a Custodian will be deemed to be the holding of that Posted Collateral by the Secured Party for which the Custodian is acting. (ii) Failure to Satisfy Cottditiotrs. If the Secured Party or its Custodian fails to satisfy any conditions for holding Posted Collateral, then upon a demand made by the Pledgor, the Secured Party will, not later than five Local Business Days after the demand, Transfer or cause its Custodian to Transfer all Posted Collateral held by it to a Custodian that satisfies those conditions or to the Secured Party if it satisfies those conditions. (iii) Liability. The Secured Party will be liable for the acts or omissions of its Custodian to the same extent that the Secured Party would be liable hereunder for its own acts or omissions. (c) Use of Posted Collateral. Unless otherwise specified in Paragraph 13 and without limiting the rights and obligations of the parties under Paragraphs 3, 4(d)(ii), 5, 6(d) and 8, if the Secured Party is not a Defaulting party or an Affected Party with respect to a Specified Condition and no Early Termination Date has occurred or been designated as the result of an Event of Default or Specified Condition with respect to the Secured Party, then the Secured Party will, notwithstanding Section 9-207 of the New York Uniform Commercial Code, have the right to: (i) sell, pledge, rehypothecate, assign, invest, use, commingle or otherwise dispose of, or otherwise use in its business any Posted Collateral it holds, free from any claim or right of any nature whatsoever of the Pledgor, including any equity or right of redemption by the Pledgor; and (ii) register any Posted Collateral in the name of the Secured Party, its Custodian or a nominee for either. For purposes of the obligation to Transfer Eligible Credit Support or Posted Credit Support pursuant to Paragraphs 3 and 5 and any rights or remedies authorized under this Agreement, the Secured Party will be deemed to continue to hold all Posted Collateral and to receive Distributions made thereon, regardless of' whether the Secured Party has exercised any rights with respect to any Posted Collateral pursuant to (i) or (ii) above. (d) - Distributions and luterest Atuouut. (i) Distributiots. Subject to Paragraph 4(a), if the Secured Party receives or is deemed to receive Distributions on a Local Business Day, it will Transfer to the Pledgor not later than the following Local Business Day any Distributions it receives or is deemed to receive to the extent that a Delivery Amount would not be created or increased by that Transfer, as calculated by the Valuation Agent (and the date of calculation will be deemed to be a Valuation Date for this purpose). (ii) Interest Amount. Unless otherwise specified in Paragraph 13 and subject to Paragraph 4(a), in lieu of any interest, dividends or other amounts paid or deemed to have been paid with respect to Posted Collateral in the form of Cash (all of which may be retained by the Secured Party), the Secured Party will Transfer to the Pledgor at the times specified in Paragraph 13 the Interest Amount to the extent that abelivery Amount would not be created or increased by that Transfer, as calculated by the Valuation Agent (and the date of calculation will be deemed to be a Valuation Date for this purpose). The Interest Amount or portion thereof not Transferred pursuant to this Paragraph will constitute Posted Collateral in the form of Cash and will be subject to the security interest granted under Paragraph 2. Paragraph 7. Events of Default For purposes of Section 5(a)(iii)( I) of this Agreement, an Event of Default will exist with respect to a party iE (i) that party fails (or fails to cause its Custodian) to make, when due, any Transfer of Eligible Collateral, Posted Collateral or the Interest Amount, as applicable, required to be made by it and that failure continues for two Local Business Days after notice of that failure is given to that party; (ii) that party fails to comply with any restriction or prohibition specified in this Annex with respect to any of the rights specified in Paragraph 6(c) and that failure continues for five Local Business Days after notice of that failure is given to that party; or (iii) that party fails to comply with or perform any agreement or obligation other than those specified in Paragraphs 7(i) and 7(ii) and that failure continues for 30 days after notice of that failure is given to that party. Paragraph 8. Certain Rights and Remedies (a) Securer/ Party's Rights uud Remedies. If at any time (1) an Event of Default or Specified Condition with respect to the Pledgor has occurred and is continuing or (2) an Early Termination Date has occurred or been designated as the result of an Event of Default or Specified Condition with respect to the Pledgor, then, unless the Pledgor has paid in full all of its Obligations that are then due, the Secured Party may exercise one or more of the following rights and remedies: (i) all rights and remedies available to a secured party under applicable law with respect to Posted Collateral held by the Secured Party; (ii) any other rights and remedies available to the Secured Party under the terms of Other Posted Support, if any; (iii) the right to Set-off any amounts payable by the Pledgor with respect to any Obligations against any Posted Collateral or the Cash equivalent of any Posted Collateral held by the Secured Party (or any obligation of the Secured Party to Transfer that Posted Collateral); and (iv) the right to liquidate any Posted Collateral held by the Secured Party through one or more public or private sales or other dispositions with such notice, if any, as may be zrequired under applicable law, free from any claim or right of any nature whatsoever of the Pledgor, including any equity or right of redemption by the Pledgor (with the Secured Party having the right to purchase any or all of the Posted Collateral to be sold) and to apply the proceeds (or the Cash equivalent thereof) from the liquidation of the Posted Collateral to any amounts payable by the Pledgor with respect to any Obligations in that order as the Secured Party may elect. Each party acknowledges and agrees that Posted Collateral in the form of securities may decline speedily in value and is of a type customarily sold on a recognized market, and, accordingly, the Pledgor is not entitled to prior notice of any sale of that Posted Collateral by the Secured Party, except any notice that is required under applicable law and cannot be waived. ISDA 0 1994 (b) P/edgor's Rights and Remedies. If at any time an Early Termination Date has occurred or been designated as the result of an Event of Default or Specified Condition with respect to the Secured Party, then (except in the case of an Early Termination Date relating to less than all Transactions (or Swap Transactions) where the Secured Party has paid in full all of its obligations that are then due under Section 6(e) of this Agreement): (i) the Pledgor may exercise all rights and remedies available to a pledgor under applicable law with respect to Posted Collateral held by the Secured Party; (ii) the Pledgor may exercise any other rights and remedies available to the Pledgor under the terms of Other Posted Support, if any; (iii) the Secured Party will be obligated immediately to Transfer all Posted Collateral and the Interest Amount to the Pledgor; and (iv) to the extent that Posted Collateral or the Interest Amount is not so Transferred pursuant to (iii) above, the Pledgor may: (A) Set-off any amounts payable by the Pledgor with respect to any Obligations against any Posted Collateral or the Cash equivalent of any Posted Collateral held by the Secured Party (or any obligation of the Secured Party to Transfer that Posted Collateral); and (B) to the extent that the Pledgor does not Set-off under (iv)(A) above, withhold payment of any remaining amounts payable by the Pledgor with respect to any Obligations, up to the Value of any remaining Posted Collateral held by the Secured Party, until that Posted Collateral is Transferred to the Pledgor. (c) Deficiencies and Excess Proceeds. The Secured Party will Transfer to the Pledgor any proceeds and Posted Credit Support remaining after liquidation, Set-off and/or application under Paragraphs 8(a) and 8(b) after satisfaction in full of all amounts payable by the Pledgor with respect to any Obligations; the Pledgor in all events will remain liable for any amounts remaining unpaid after any liquidation, Set-off and/or application under Paragraphs 8(a) and 8(b). (d) Final Rerurnrs. When no amounts are or thereafter may become payable by the Pledgor with respect to any Obligations (except for any potential liability under Section 2(d) of this Agreement), the Secured Party will Transfer to the Pledgor all Posted Credit Support and the Interest Amount, ifany. Paragraph 9. Representations Each party represents to the other party (which representations will be deemed to be repeated as of each date on which it, as the Pledgor, Transfers Eligible Collateral) that: (i) it has the power to grant a security interest in and lien on any Eligible Collateral it Transfers as the Pledgor and has taken all necessary actions to authorize the granting of that security interest and lien: (ii) it is the sole owner of or otherwise has the right to Transfer all eligible Collateral it Transfers to the Secured Party hereunder, free and clear of any security interest, lien, encumbrance or other restrictions other than the security interest and lien granted under Paragraph 2; (iii) upon the Transfer of any Eligible Collateral to the Secured Party under the terms of this Annex, the Secured Party will have a valid and perfected first priority security interest therein (assuming that any central clearing corporation or any third -party financial intermediary or other entity not within the control of the Pledgor involved' in the Transfer of that Eligible Collateral gives the notices and takes the action required of it under applicable law for perfection of that interest); and ISD/\ W 1994 (iv) the performance by it of its obligations under this Annex will not result in the creation of any security interest, lien or other encumbrance on any Posted Collateral other than the security interest and lien granted under Paragraph 2. Paragraph 10. Expenses (a) General. Except as otherwise provided in paragraphs 10(b) and 10(c), each party will pay its own costs and expenses in connection with performing its obligations under this Annex and neither party will be liable for any costs and expenses incurred by the other party in connection herewith. (b) Posted Credit Support. The Pledgor will promptly pay when due all taxes, assessments or charges of any nature that are imposed with respect to Posted Credit Support held by the Secured Party upon becoming aware of the same, regardless of whether any portion of that Posted Credit Support is subsequently disposed of under Paragraph 6(c), except for those taxes, assessments and charges that result from the exercise of the Secured Party's rights under Paragraph 6(c). (c) Liquidation/Application of Posted Credit Support. All reasonable costs and expenses incurred by or on behalf of the Secured Party or the Pledgor in connection with the liquidation and/or application of any Posted Credit Support under Paragraph 8 will be payable, on demand and pursuant to the Expenses Section of this Agreement, by the Defaulting Party or, if there is no Defaulting Party, equally by the parties. Paragraph 11. Miscellaneous (a) Default Interest. A Secured Party that fails to make, when due, any Transfer of Posted Collateral or the Interest Amount will be obligated to pay the Pledgor (to the extent permitted under applicable law) an amount'equal to interest at the Default Rate multiplied by the Value of the items of property that were required to be Transferred, from (and including) the date that Posted Collateral or Interest Amount was required to be Transferred to (but excluding) the date of Transfer of that Posted Collateral or Interest Amount. This interest will be calculated on the basis of daily compounding and the actual number of days elapsed. (b) Further Assurances. Promptly following a demand made by a patty, the other party will execute, deliver, file and record any financing statement, specific assignment or other document and take any other action that may be necessary or desirable and reasonably requested by that party to create, preserve, perfect or validate any security interest or lien granted under Paragraph 2, to enable that party to exercise or enforce its rights under this Annex with respect to Posted Credit Support or an Interest Amount or to effect or document a release of a security interest on Posted Collateral or an Interest Amount- (c) Further Protection. The Pledgor will promptly give notice to the Secured Party of, and defend against, any suit, action, proceeding or lien that involves Posted Credit Support Transferred by the Pledgor or that could adversely affect the security interest and lien granted by it under Paragraph 2, unless that suit, action, proceeding or lien results from the exercise of the Secured Party's rights under Paragraph 6(c). (d) Good Faith and Commercially Reasonable Manner. Performance of all obligations under this Annex, including, but not limited to, all calculations, valuations and determinations made by either party, will be made in good faith and in a commercially reasonable manner. (e) Demands and Notices. All demands and notices made by a party under this Annex will be made as specified in the Notices Section of this Agreement, except as otherwise provided in Paragraph 13. (0 Specifications of Certain Matters. Anything referred to in this Annex as being specified in Paragraph 13 also may be specified in one or more Confirmations or other documents and this Annex will be -construed accordingly. ISUA 4, , 199-1 Paragraph 12. Definitions As used in this Annex: - "Cash" means the lawful currency of the United States of America. "Credit Support Amount" has the meaning specified in Paragraph 3. "Custodian " has the meaning specified in Paragraphs 6(b)(i) and 13. "Delivery Amount has the meaning specified in Paragraph 3(a). "Disputing Party" has the meaning specified in Paragraph 5. "Distributions" means with respect to Posted Collateral other than Cash, all principal, interest and other payments and distributions of cash or other property with respect thereto, regardless of whether the Secured Party has disposed of that Posted Collateral under Paragraph 6(c). Distributions will not include any item of property acquired by the Secured Party upon any disposition or liquidation of Posted Collateral or, with respect to any Posted Collateral in the form of Cash, any distributions on that collateral, unless otherwise specified herein. "Eligible Collateral" means, with respect to a party, the items, if any, specified as such for that party in Paragraph 13. "Eligible Credit Support" means Eligible Collateral and Other Eligible Support. "E.posure" means for any Valuation Date or other date for which Exposure is calculated and subject to Paragraph 5 in the case of a dispute, the amount, if any, that would be payable to a party that is the Secured Party by the other party (expressed as a positive number) or by a party that is the Secured Party to the other party (expressed as a negative number) pursuant to Section 6(e)(ii)(2)(A) of this Agreement as if all Transactions (or Swap Transactions) were being terminated as of the relevant Valuation Time; provided that Market Quotation will be determined by the Valuation Agent using its estimates at mid -market of the amounts that would be paid for Replacement Transactions (as that term is defined in the definition of "Market Quotation"). "Independent Amount" means, with respect to a party, the amount specified as such for that party in Paragraph 13; if no amount is specified, zero- "liderest Amount" means, with respect to an Interest Period, the aggregate sum of the amounts of interest calculated for each day in that Interest Period on the principal amount of Posted Collateral in the form of Cash held by the Secured Party on that day, determined by the Secured Party for each such day as follows: (x) the amount of that Cash on that day; multiplied by (y) the Interest Rate in effect for that day; divided by (z) 360. "Iiiterest Period" means the period from (and including) the last Local Business Day on which an Interest Amount was Transferred (or, if no Interest Amount has yet been Transferred, the Local Business Day on which Posted Collateral in the form of Cash was Transferred to or received by the Secured Party). to (but excluding) the Local Business Day on which the current Interest Amount is to be Transferred. "Interest Rate" means the rate specified in Paragraph 13. "Local Business Day", unless otherwise specified in Paragraph 13, has the meaning specified in the Definitions Section of this Agreement, except that references to a payment in clause (b) thereof will be deemed to include a Transfer under this Annex. "A4ininrun Transfer Amount" means, with respect to a party, the amount specified as such for that party in Paragraph 13; if no amount is specified, zero. "Notification Time" has the meaning specified in Paragraph 13. "Ohligafions" means, with respect to a party, all present and future obligations of that party under this Agreement and any additional obligations specified for that party in Paragraph 13. "Outer Eligible Support" means, with respect to a party, the items, if any, specified as such for that party in Paragraph 13. "Other Posted Support" means all Other Eligible Support Transferred to the Secured Party that remains in effect for the benefit of that Secured Party. "Pledgor" means either party, when that party (i) receives a demand for or is required to Transfer Eligible Credit Support under Paragraph 3(a) or (ii) has Transferred Eligible Credit Support under Paragraph 3(a). "Posted Collateral" means all Eligible Collateral, other property, Distributions, and all proceeds thereof that have been Transferred to or received by the Secured Party under this Annex and not Transferred to the Pledgor pursuant to paragraph 3(b), 4(d)(ii) or 6(d)(i) or released by the Secured Party under Paragraph 8. Any Interest Amount or portion thereof not Transferred pursuant to Paragraph 6(d)(ii) will constitute Posted Collateral in the form of Cash. "Posted Credit Support" means Posted Collateral and Other Posted Support. "Recadculatiar Date" means the Valuation Date that gives rise to the dispute under Paragraph 5; provided, however, that if a subsequent Valuation Date occurs under Paragraph 3 prior to the resolution of the dispute, then the "Recalculation Date" means the most recent Valuation Date under Paragraph 3. "Resolution Time" has the meaning specified in Paragraph 13. "Return Amount" has the meaning specified in Paragraph 3(b). ".Securer( Purtp" means either party, when that party (i) makes a demand for or is entitled to receive Eligible Credit Support under Paragraph 3(a) or (ii) holds or is deemed to hold Posted Credit Support. ".Specifred Condition" means, with respect to a party, any event specified as such for that party in Paragraph 13. "Substitute Credit Supporl" has the meaning specified in Paragraph 4(d)(i). "Substitution Dale" has the meaning specified in Paragraph 4(d)(ii). "Threshold" means, with respect to a party, the amount specified as such for that party in Paragraph 13; if no amount is specified, zero. "Transfer" means, with respect to any Eligible Credit Support, Posted Credit Support or Interest Amount, alld in accordance with the instructions of the Secured Party, Pledgor or Custodian, as applicable: (i) in the case of Cash, payment or delivery by wire transfer into one or more bank accounts specified by the recipient; (ii) in the case of certificated securities that cannot be paid or delivered by book -entry, payment or delivery in appropriate physical form to the recipient or its account accompanied by any duly executed instruments of transfer, assignments in blank, transfer tax stamps and any other documents necessary to constitute a legally valid transfer to the recipient; ISDA (�) 1994 (iii) in the case of securities that can be paid or delivered by book -entry, the giving of written instructions to the relevant depository institution or other entity specified by the recipient, together with a written copy thereof to the recipient, sufficient if complied with to result in a legally effective transfer of the relevant interest to the recipient; and (iv) in the case of Other Eligible Support or Other Posted Support, as specified in Paragraph 13. "Valuation Agent" has the meaning specified in Paragraph 13. "Valuation Date" means each date specified in or otherwise determined pursuant to Paragraph 13. "Valuation Percentage" means, for any item of Eligible Collateral, the percentage specified in Paragraph 13. "Valuation Time" has the meaning specified in Paragraph 13. "Value" means for any Valuation Date or other date for which Value is calculated and subject to Paragraph 5 in the case of a dispute, with respect to: (i) Eligible Collateral or Posted Collateral that is: (A) Cash, the amount thereof, and (B) a security, the bid price obtained by the Valuation Agent multiplied by the applicable Valuation Percentage, if any; (ii) Posted Collateral that consists of items that are not specified as Eligible Collateral, zero; and (iii) Other Eligible Support and Other Posted Support, as specified in Paragraph 13. I 15uA tv 1994 (Local Currency -Single Jurisdiction) ISDA 1992 Master Agreement ement (includes commodity swaps) US MUNICIPAL COUNTERPARTY SCHEDULE to the Master Agreement dated as of , 2007 between BP Corporation North America Inc., City of Vernon a corporation organized and existing under the and a municipality organized and existing under the laws of the State of Indiana laws of the State of California ("Party A°) ("Party B°) Part 1. Termination Provisions. (a) "Specified Entity" means in relation to Party A for the purpose of: Section 5(a)(v): Not Applicable Section 5(a)(vi): Not Applicable Section 5(a)(vii): Not Applicable Section 5(b)(ii): Not Applicable and in relation to Party B for the purpose of: Section 5(a)(v): Not Applicable Section 5(a)(vi): Not Applicable - Section 5(a)(vii): Not Applicable Section 5(b)(ii): Not Applicable (b) "Specified Transaction " will have the meaning specified in Section 12 of this Agreement. (c) The "Cross Default" provisions of Section 5(a)(vi) will not apply to Party A and will not apply to Party B. (d) The "Automatic Early Termination" provision 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 and subject to the provisions of Part 4 of this Schedule: (i) Loss will apply. (4) The Second Method will apply. W "Termination Currency" means United States Dollars. 3/1/06 1 (g) Events of Default: (i) Bankruptcy. Clause (6) of Section 5(a)(vii) of this Agreement is hereby amended to read in its entirety as follows: "(6)(A) 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 or (B) in the case of a Government Entity, any Credit Support Provider of such Government Entity or any applicable Specified Entity of such Government Entity, (I) there shall be appointed or designated with respect to it pursuant to applicable law, an entity such as an organization, board, commission, authority, agency or body (a "Financial Oversight Board") to monitor, review, oversee, recommend or declare a financial emergency or similar state of financial distress with respect to it and (II) such Financial Oversight Board lawfully assumes control of Party B or Party B's financial affairs and approves or otherwise takes any official action with respect to it which is analogous to any of the actions or events listed in clauses (1) through (5) and (7) of this paragraph;" (ii) Merger Without Assumption. Section 5(a)(viii) of this Agreement is hereby amended to read in its entirety as follows: "(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 (or, without limiting the foregoing, if such party is a Government Entity, an entity such as an organization, board, commission, authority, agency, or body succeeds to the principal functions of, or powers and duties granted to, such party or any Credit Support Provider of such party) and, at the time of such consolidation, amalgamation, merger, transfer or succession: (1) the resulting, surviving, transferee, or successor 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; (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, transferee or successor entity of its obligations under this Agreement; or (3) in the case of Party B, the revenues are no longer available for the satisfaction of such resulting, surviving, transferee or successor.entity's obligations to the other party hereto." (h) Termination Events. Section 5(b)(ii) of this Agreement is hereby amended to read in its entirety as follows: "(ii) 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 (or, in the case of Party B, all or substantially all of the System) to another entity (or, without limiting the foregoing, with respect to Party B, an entity such as an organization, board, commission, authority, agency or body succeeds to the principal functions of, or powers and duties granted to, Party B or any Credit Support Provider of Party B or any applicable Specified Entity of Party B generally) and such action does not constitute an event described in Section 5(a)(viii) but the creditworthiness of X, such Credit Support Provider, or such Specified Entity or any resulting, surviving or transferee entity, as the case may be, is materially weaker than that of X, such Credit Support Provider or such Specified Entity, as the case may be (taking into account, with respect to Party A, Party A's position as a secured creditor under the 3/l/06 Covered Indenture), immediately prior to such action (and, in such event, X or its successor or transferee, as appropriate, will be the Affected Party); of Part 2. Agreement to Deliver Documents. For the purpose of Sections 4(a) of this Agreement, each party agrees to deliver the following documents, as applicable: (a) Other documents to be delivered: Party Form/Document/ Date by Which Covered by Section Required to Certificate to be Delivered 3(d) Representation Deliver Document Party A and A certified copy of the resolution of the Upon the execution of Yes Party B Board of Directors of Party A or Party B, as this Agreement. the case may be, or of its relevant committee, authorizing such party to enter into this Agreement and each Transaction, and an incumbency certificate. Party A and A copy of the Form 10- Upon written request, Yes Party B K or the annual report for such party, or the unless publicly available Credit Support Provider of Party B, [if through EDGAR or some relevant] containing audited financial other source. statements for the most recently ended financial year. Party B An executed copy of the Covered Indenture Prior to the execution of No this Agreement and upon request Party A and Such other information and documents as the Upon request. Yes Party B other party may reasonably request. Part 3. Miscellaneous. (a) Address for Notices. For the purpose of Section 10(a) of this Agreement: Address for Confirmations to Party A: Address: BP Corporation North America Inc. 501 WestLake Park Blvd. Houston, Texas 77079 Attention: Confirmation Department Facsimile No.: 281-366-4934 Telephone No.: 281-366-0879 Address for other notices or communications to Party A (other than Confirmations): Address: BP Corporation North America Inc. 501 WestLake Park Blvd. Houston, Texas 77079 3/1/06 3 Attention: Contract Services Attn: BPCNA Contracts Dept Gas & Power - North America Facsimile No.: 281-366-0203 Telephone No.: 281-366-7970 Address for Invoices to Party A: Address: BP Corporation North America Inc. 501 WestLake Park Blvd. Houston, Texas 77079 Attention: Risk Accounting Gas & Power - North America Facsimile No.: 281-366-5935 Telephone No.: 281-366-4919 Wire Payment Instructions: BP Corporation North America Inc. JP Morgan Chase Bank, NY ABA: 021-000021 Acct No.: 910-2-548097 New York, NY 10081-6000 Address for Confirmations to Party B: Address: Attention: Facsimile No.: Telephone No.: Address for notices or communications to Party B: Address: Attention: Facsimile No.: Telephone No.: Address for Invoices to Party B: Address: 3/1/06 4 Attention: Wire Payment Instructions: Bank: ABA: Acet No.: City/State/Zip (b) Process Agent With respect to Party A: Not Applicable. With respect to Party B: Not Applicable. (c) Calculation Agent The Calculation Agent is Party A unless an Event of Default in respect of Party A has occurred and is then continuing in which case the Calculation Agent shall be Party B or a recognized dealer designated in good faith by Party B to be the Calculation Agent. (d) Credit Support Document With respect to Party A and Party B, the Credit Support Annex as modified by Paragraph 13, the terms and conditions of which are incorporated into, and constitute an integral part of, this Agreement. (e) Credit Support Provider. Credit Support Provider means in relation to.Party A: Not Applicable Credit Support Provider means in relation to Party B: (f) GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED, INTERPRETED, AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD OR REFERENCE TO THE CHOICE OF LAW DOCTRINE OF ANY JURISDICTION. (g) Jurisdiction. Section 11(b) of the Agreement is hereby amended by (i) deleting the word "non-exclusive" appearing in paragraph (i) thereof and substituting therefor the word "exclusive" and (ii) deleting the last sentence of Section 11(b) and substituting therefor the following sentence: "Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction if (A) the courts of the State of New York or the United States District Court located in the Borough of Manhattan in New York City lacks jurisdiction over the parties or the subject matter of the Proceedings or declines to accept the Proceedings on the grounds of lacking such jurisdiction; (B) the Proceedings are commenced by a _party for the purpose of enforcing against the other party's property, assets or estate any decision or judgment rendered by any court in which Proceedings may be brought as provided hereunder; (C) the Proceedings are commenced to appeal any such court's decision or judgment to any higher court with competent appellate jurisdiction over that court's decisions or judgments if that higher court is located outside the State of New York or Borough of Manhattan, such as a federal court of appeals or the U.S. Supreme Court; or (D) any suit, action or proceeding has been commenced in another jurisdiction by or against the other party or against its property, assets or estate (including, without limitation, any suit, action or proceeding described in Section 5(a)(vii)(4) of this Agreement), and, in order to exercise or protect its rights, interests or remedies under this Agreement, the party (1) joins, files a claim, or takes any other action, in any such suit, action or proceeding, or (2) otherwise commences any Proceeding in that other jurisdiction as the result of that other suit, action or proceeding having commenced in that other jurisdiction. 3/l/06 (h) Netting of Payments Subparagraph (ii) of Section 2(c) of this Agreement will not apply to all Transactions. (i) "Affiliate 'I will have the meaning specified in Section 12 of this Agreement. (j) "Covered Indenture" means Ordinance , enacted by Party B on 1999, as the same has been supplemented and amended prior to the date hereof in accordance with the terms thereof and as the same has been supplemented and amended following the date hereof in accordance with the terms thereof or, with respect to the Incorporated Provisions, in accordance with the terms hereof and thereof. (k) "Covered Indenture Incorporation Date" means the date of this Agreement. (1) "Government Entty" means Party B. (m) "Illegality': Subparagraph (i) of Section 5(b) of this Agreement shall be deleted in its entirety and the following shall be substituted in lieu thereof: (i) Illegality. After giving effect to any applicable provision, disruption fallback or remedy specified in, or pursuant to, the relevant Confirmation or elsewhere in this Agreement, due to an event or circumstance (other than any action taken by a party or, if applicable, any Credit Support Provider of such party) occurring after a Transaction is entered into, it becomes unlawful under any applicable law (including without limitation the laws of any country in which payment, delivery or compliance is required by either party or any Credit Support Provider, as the case may be), on any day, or it would be unlawful if the relevant payment, delivery or compliance were required on that day (in each case, other than as a result of a breach by the party of Section 4(b)):— (1) for the Office through which such party (which will be the Affected Party) makes and receives payments or deliveries with respect to such Transaction to perform any absolute or contingent obligation to make a payment or delivery in respect of such Transaction, 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) for such party or any Credit Support Provider of such party (which will be the Affected Party) to perform any absolute or contingent obligation to make a payment or delivery which such party or Credit Support Provider has under any Credit Support Document relating to such Transaction, to receive a payment or delivery under such Credit Support Document or to comply with any other material provision of such Credit Support Document; Part 4. Other Provisions. (a) Obligations. Section 2(a)(iii) of this Agreement is hereby amended to read in its entirety as follows: "(iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition precedent that no Event of Default, Potential Event of Default or Incipient Illegality; 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." "Incipient Illegality" means (a) the enactment by any legislative body with competent jurisdiction over a Government Entity of legislation which, if adopted as law, would render unlawful the performance by such Government Entity of any absolute or contingent obligation to make a payment or delivery or to receive a payment or delivery in respect of a Transaction or the compliance by such Government Entity with any other material provision of this Agreement relating to such Transaction, (b) any duly authorized action by a Government Entity in respect of such Government Entity to the effect that performance under this 3/1/06 . 6 Agreement or similar agreements is unlawful or (c) the occurrence with respect to a Government Entity of any event that constitutes an Illegality. (b) Representations. (i) The introductory clause of Section 3 of this Agreement is hereby amended to read in its entirety as follows: - "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(a) and 3(e), at all times until the termination of this Agreement) that:" (ii) Section 3(a)(ii) of this Agreement is hereby amended to read in its entirety as follows: "(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 and made all necessary determinations and findings to authorize such execution, delivery and performance;". (iii) Section 3 of this Agreement is hereby amended by adding the following subsection "(e)" thereto, which subsection shall only apply to the Government Entity: "(e) Non -Speculation. This Agreement has been, and each Transaction hereunder will be (and, if applicable, has been), entered into for purposes of managing its borrowings or the costs of fuel and other utility system inputs and not for purposes of speculation." (iv) Section 3 of this Agreement is hereby amended by adding the following subsection "(f)" thereto, which subsection shall only apply to the Government Entity: "(f) Nature of Obligations. The obligations of Party B to make payments to Party A under this Agreement and each Transaction (a) are not subject to appropriation or similar action and (b) do not (1) constitute any kind of indebtedness of Party B or (2) create any kind of lien on or security interest in any property or revenues of Party B which, in either case (1) or (2), is proscribed by any constitution, charter, law, rule, regulation, government code, constituent or governing instrument, resolution, guideline, ordinance, order, writ, judgment, decree, charge, or ruling to which Party B (or any of its officials in their respective capacities as such) or its property is subject." (v) Section 3 of this Agreement is hereby amended by adding the following subsections (g) through (p) thereto: (g) No Immunity. Section 11(c) (Waiver of Immunities) is, with respect to Party B, hereby intentionally deleted from this Agreement. In lieu thereof, Party B represents that law does not provide for immunity, on the grounds of sovereignty or other similar grounds, against suits, actions or proceedings brought against it to enforce its obligations under this Agreement or any Transaction hereunder or against the enforcement and collection of such contractual obligations from Revenues, and Party B hereby agrees that in the event of a change in applicable law during the term of this Agreement and to the extent permitted under such law it shall not assert any such immunity in respect of its obligations hereunder. Notwithstanding the foregoing, Party A acknowledges that the collection of any judgment against Party B shall be limited to available Revenues pursuant to the provisions of the Covered Indenture. 3/1/06 7 (h) Eligible Commercial Entity/Eligible Contract Participant. (1) It constitutes an "eligible commercial entity" as such term is defined in the Commodity Futures Modernization Act of 2000 (7 U.S.C.A. Section Ia(11) (West Supp. 2001)), and (2) it constitutes an "eligible contract participant" as such term is defined in the Commodity Futures Modernization Act of 2000 (7 U.S.C.A. Section la(12) (West Supp. 2001)). (i) Non -Reliance. It is acting for its own account, and it has made its own independent decisions to enter into that Transaction and as to whether that Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into that Transaction; it being understood that information and explanations related to the terms and conditions of a Transaction shall not be considered investment advice or a recommendation to enter into that Transaction. No communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected results of that Transaction. 0) Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of that Transaction. It is also capable of assuming, and assumes, the risks of that Transaction. (k) Status of Parties. The other party is not acting as a fiduciary for or an adviser to it in respect of that Transaction. (1) Bankruptcy Code. It intends that this Agreement (and each Transaction hereunder) shall constitute a "swap agreement" and/or a "forward contract" for purposes of both 11 U.S.C. § 101(25) and (5313), as such provisions of law may be renumbered from time to time. (m) The execution and delivery of this Agreement by Party B and the consummation of the transactions contemplated thereby have been duly authorized by all necessary governmental action on behalf of Party B, and Party B is not subject to any charter, bylaw, lien or encumbrance, agreement, instrument, order or decree of any court or governmental body which would prevent the consummation of the transactions contemplated by this Agreement. The execution, delivery and performance of this Agreement by Party B does not and will not violate any material statute, ordinance or governmental rule or regulation applicable to Party B, or result in a breach or constitute a default under any indenture or agreement to which it is a Party or by which it or its property may be bound. This Agreement has been duly executed and delivered by Party B, and this Agreement does, and such documents and instruments executed as the result thereof shall, constitute legal, valid and binding obligations of Party B enforceable in accordance with their terms, subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium and similar laws from time to time in effect relating to the rights and remedies of creditors, as well as to general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law). (n) Party B has not employed any investment banker, broker or finder in connection with the transactions contemplated by this Agreement nor has it taken any action which would give rise to a valid claim against Party A for a brokerage commission, finder's fee or other like payment. (o) Party B has not declared a Financial Emergency as that term is used and there are no facts or circumstances present that would cause it to do so at this time. (p) Party B further agrees that Party A is not a "utility" as such term is used in 11 U.S.C. Section 366, and Party B agrees to waive and not to assert the applicability of the provisions of 11 U.S.C. Section 366 in any bankruptcy proceeding involving Party B and this Agreement." 3/1/06 (c) Agreements. (i) The introductory clause of Section 4 of this Agreement is hereby amended to read in its entirety as follows: "Each party agrees with the other (or, in the case of Section 4(d), (e) and (f), the Government Entity agrees with the other party) 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:". (ii) Section 4 of this Agreement is hereby amended by adding the following subsection "(d)", "(e)", and "(f)" thereto:- "(d) Compliance with Covered Indenture. The Government Entity will observe, perform and fulfill each affirmative and negative covenant set forth in Articles of the Covered Indenture applicable to the Government Entity (collectively, the "Incorporated Provisions") in effect on the Covered Indenture Incorporation Date, as any of those provisions may be amended, supplemented or modified for purposes of this Agreement. In the event that the Covered Indenture ceases to be in effect prior to the termination of this Agreement, the Incorporated Provisions (other than those provisions requiring payments in respect of bonds, notes, warrants or other similar instruments issued under the Covered Indenture) will remain in full force and effect for purposes of this Agreement as though set forth herein until such date on which all of the obligations of the Government Entity under this Agreement and any obligations of the Government Entity or any Credit Support Provider of the Government Entity under a Credit Support Document have been fully satisfied. The Incorporated Provisions are hereby incorporated by reference and made a part of this Agreement to the same extent as if such provisions were set forth herein. For purposes of this Agreement, the Incorporated Provisions shall be construed as though (i) all references therein to any party making loans, extensions of credit or financial accommodations thereunder or commitments therefore (the "Financings") were to the other party hereto and (ii) to the extent that such Incorporated Provisions are conditioned on or relate to the existence of such Financings or the Government Entity having any obligations in connection therewith, all references to such Financings or obligations were to the obligations of the Government Entity under this Agreement. Any amendment, supplement, modification or waiver of any of the Incorporated Provisions made or entered into without the prior written consent of the other party hereto, which consent will not be unreasonably delayed or withheld, shall have no force and effect with respect to this Agreement; provided that, the Government Entity shall not be required to obtain the consent of Party A to any amendment, supplement, modification or waiver of the Incorporated Provisions that does not materially adversely affect the rights or obligations of Party A under this Agreement. Any. amendment, supplement, modification or waiver for which such consent is obtained shall be part of the Incorporated Provisions for purposes of this Agreement. The Government Entity shall provide Party A with at least ten (10) Business Days prior written notice of any proposed amendment, supplement, modification or waiver of the Incorporated Provisions whether or not the proposed amendment, supplement, modification or waiver will materially adversely affect the rights or obligations of Party A under this Agreement. If the Government Entity fails to comply with any Incorporated Provision, the Government Entity shall provide written notice of such failure to Party A within three (3) Business Days of its becoming aware of such non-compliance. (e) Notice of Incipient Illegality. If an Incipient Illegality occurs, the Government Entity will, promptly upon becoming aware of it, notify the other party, specifying the nature of that Incipient Illegality and will also give such other information about that Incipient Illegality as the other party may reasonably require. (f) Security and Source of Payment of Party Bs Obligations. The obligations of Party B to make regular and termination payments to Party A under this Agreement and each Transaction 3/1/06 9 hereunder (including, without limiting the foregoing, payments to be made by Party B pursuant to Sections 2, 6 and 9) constitutes a under the Covered Indenture that is secured by (d) Form of ISDA Master Agreement. The parties hereto agree that the text of the body of this Agreement (to which this Schedule is attached) is intended to be the 1992 ISDA Master Agreement (Local Currency — Single Jurisdiction) as published and copyrighted by the International Swaps and Derivatives Association, Inc. (formerly known as the International Swap Dealers Association, Inc.). The purpose of this paragraph is to make clear that, while Party A or Party B may have transcribed the 1992 ISDA Master Agreement (Local Currency — Single Jurisdiction), or any portion thereof, onto its computer system for its convenience, the parties do not intend that the text of the body of this Agreement deviate from the 1992 ISDA Master Agreement (Local Currency — Single Jurisdiction) in the event of any error or mistake in such transcription (e) LIMITATION OF LIABILITY. NOTWITHSTANDING THE DEFINITION OF "LOSS," NO PARTY SHALL BE REQUIRED TO PAY OR BE LIABLE FOR PUNITIVE, EXEMPLARY, CONSEQUENTIAL, SPECIAL, INCIDENTAL OR INDIRECT DAMAGES (WHETHER OR NOT ARISING FROM ITS NEGLIGENCE OR STRICT LIABILITY) TO ANY OTHER PARTY; PROVIDED, HOWEVER, THAT NOTHING IN THIS PROVISION SHALL AFFECT THE ENFORCEABILITY OF SECTION 6(e) OF THIS AGREEMENT OR THE OBLIGATION TO PAY ANY AMOUNT REQUIRED PURSUANT TO SECTION 6(e) OF THIS AGREEMENT. IF AND TO THE EXTENT ANY PAYMENT REQUIRED TO BE MADE PURSUANT TO THIS AGREEMENT IS DEEMED TO CONSTITUTE LIQUIDATED DAMAGES, THE PARTIES ACKNOWLEDGE AND AGREE THAT SUCH DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE AND THAT SUCH PAYMENT IS INTENDED TO BE A REASONABLE APPROXIMATION OF THE AMOUNT OF SUCH DAMAGES AND NOT A PENALTY. (f) Consent to Telephone Recording, Confirmation of a Transaction, (i) Transactions Entered Into Orally. Should the parties come to an understanding regarding a particular Transaction, the Transaction will be formed and effectuated between the parties by an oral offer and oral acceptance. The parties shall be legally bound by each Transaction from the time they agree to its terms and acknowledge that each party will rely thereon in doing business related to the Transaction. Any Transaction formed and effectuated pursuant to the foregoing shall be considered a "writing" or "in writing" and to have been "signed" by each party. (ii) Taping of Transactions. Each party hereby agrees that the other party or its agents may electronically record all telephone conversations between officers or employees of the consenting party and the officers or employees of the other party who quote on, agree to, or otherwise discuss terms of Transactions or potential Transactions on behalf of the party. Each party may, at each parry's respective expense, maintain equipment necessary to record Transactions on audiotapes and/or digital recording media ("Transaction Tapes") and retain Transaction Tapes and the electronic evidence of Transactions on such Transaction Tapes in such manner and for so long as each party deems necessary in its sole respective discretion, but is not obligated to do so; provided that NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY MALFUNCTION OF SUCH EQUIPMENT OR THE OPERATION THEREOF IN RESPECT OF ANY TRANSACTION WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING, WITHOUT LIMITATION, THE SOLE, JOINT, CONCURRENT, CONTRIBUTORY, AND/OR COMPARATIVE NEGLIGENCE (WHETHER GROSS OR SIMPLE, OR ACTIVE OR PASSIVE), STRICT LIABILITY; OR OTHER FAULT OF ANY PARTY. No Transaction shall be invalidated should a Transaction Tape be erased for any reason or a malfunction occur in equipment utilized for recording Transactions or retaining Transaction Tapes or the operation thereof. 3/l/06 10 (iii) Waiver of Statute of Frauds. THE PARTIES HEREBY WAIVE ALL PROVISIONS OF ANY APPLICABLE STATUTE OF FRAUDS WITH RESPECT TO ANY TRANSACTIONS SUBJECT TO THIS AGREEMENT; PROVIDED, HOWEVER, AMENDMENTS TO THE TERMS AND PROVISIONS OF THIS AGREEMENT MUST BE IN WRITING AND SIGNED BY THE PARTIES. The parties agree not to contest or assert a defense to the validity or enforceability of Transactions entered into orally under laws relating to whether certain agreements are to be in writing or signed by the party to be thereby bound. (iv) Confirmation of a Transaction. (1) With respect to each Transaction entered into pursuant to this Agreement, Party A will promptly send a Confirmation to Party B by any reasonable means, including, without limitation, by facsimile, hand delivery, courier, or certified United States mail (return receipt requested). Failure by Party A to send, or Party B to return, a Confirmation shall not invalidate any Transaction. Party A adopts its confirming letterhead, or the like, as its signature on any Confirmation as its identification and authentication. (2) If Party A's Confirmation is materially different from Party B's understanding of the terms of a Transaction, Party B shall notify Party A of any such material differences in writing by the Confirm Deadline. "Conform Deadline" shall mean 5:00 p.m. in Party B's time zone on the fifth New York Business Day following the New York Business Day a Confirmation is received by Party B; provided, if the Confirmation is received after 5:00 p.m. in Party B's time zone, it shall be deemed received at the opening of the next New York Business Day. "New York Business Day" shall mean any day except for a Saturday, Sunday or a day on which the Federal Reserve Bank of New York is closed. (3) The failure of Party B to so notify Party A of any such material differences in writing by the Confirm Deadline constitutes Party B's acceptance of the description of the terms of the Transaction in Party A's Confirmation. If Party B has timely objected in writing to the terms of Party A's Confirmation, such Transaction remains valid and the parties remain legally bound thereby; however, both parties shall .in good faith attempt to resolve such differences. Once such material differences are resolved, Party A may transmit a written Confirmation to Party B, and such written Confirmation shall be accepted (or disputed) pursuant to the provisions of Part 4(f)(iv). The provisions of Part 4(f)(iv) may be repeated as many times as necessary to produce a written Confirmation that is accepted or deemed accepted by the receiving party. (4) Notwithstanding the provisions of Section 10(a)(iii) of the Agreement, a written Confirmation and any other writing related to or in response to a written Confirmation shall be deemed delivered to the receiving party (i) when actually received by the receiving party or (ii) with respect to a written Confirmation and other writing delivered by facsimile, when the sending party's facsimile machine indicates by an electronic or written facsimile log that the receiving parry's facsimile machine received such written Confirmation. (5) Party A shall not be required to maintain or retain a paper -based version of the written Confirmation delivered to Party B. In addition to a paper -based version of the written Confirmation delivered to Party B, the following shall constitute a "written Confirmation" for all purposes of this Agreement: (i) an electronic image of a paper -based version of the written Confirmation, and (ii) data in Party A's computer system. (6) In the absence of a written Confirmation that the parties have signed or deemed to have accepted, any evidence may be used to establish the terms of a Transaction, including, without limitation, a Transaction Tape, oral testimony, data in a computer system, trade tickets, and/or notes. If a written Confirmation exists which the parties have executed or deemed to have accepted, in the event of conflict between the terms of the written Confirmation and any other evidence of the terms of a Transaction (including, without 3/l /06 11 limitation, a Transaction Tape, oral testimony, data in a computer system, trade tickets, and/or notes), the terms of the written Confirmation shall control to the extent of any such conflict. (v) Confirmations Do Not Amend Certain Terms. Confirmations shall not amend the terms of this Agreement unless a Confirmation is in writing and signed by both parties. (g) Applicable Rate. The definition of "Applicable Rate" set forth in Section 12 is hereby amended by adding to the end of Section (b) of the definition after the word "Rate" the following provision: "; provided, however, that if the payee is a Defaulting Party for purposes of Section 6(e), then the rate shall be the Non - default Rate." (h) Limitation of Rate. Notwithstanding any provision to the contrary contained in this Agreement, in no event shall the Default Rate, Non -default Rate, or Termination Rate exceed the maximum non -usurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged, or received on the subject indebtedness under the law applicable to such party. (i) Set-off. Without affecting or prejudicing the provisions of this Agreement requiring the calculation and payment of certain net payment amounts on Scheduled Payment Dates, all payments will be made without Set-off or counterclaim; provided, however, that upon the designation or deemed designation of an Early Termination Date, in addition to and not in limitation of any other right or remedy (including any right to Set-off, counterclaim, or otherwise withhold payment) under applicable law or this Agreement, the Non - defaulting Party or the non -Affected Party (in either case, "X") may, at its option and in its discretion, Set- off, against any amounts owed to the Defaulting Party or Affected Party (in either case, "Y") in Dollars or any other currency by X or any Affiliate of X under this Agreement or otherwise, any amounts owed in Dollars or any other currency by Yto X or any Affiliate of X under this Agreement or otherwise. The obligations of Y and X under this Agreement in respect of such amounts shall be deemed satisfied and discharged to the extent of any such Set-off. For this purpose, the amounts subject to the Set-off may be converted at the applicable prevailing exchange rate into the Termination Currency by X. If the amount of an obligation has not been ascertained, X may, in good faith, estimate that obligation and Set-off in respect of the estimate, subject to X or Y, as the case may be, accounting to the other party when the obligation is ascertained. X will give Y notice of any Set-off effected under this section provided that failure to give such notice shall not affect the validity of the Set-off. Nothing in this paragraph shall be deemed to create a charge or other security interest. The rights provided by this paragraph are in addition to and not in limitation of any other right or remedy (including any right to Set-off, counterclaim, or otherwise withhold payment) to which a party may be entitled (whether by operation of law, contract or otherwise). 0) Definitions and Inconsistency. This Agreement, each Confirmation, and each Transaction are subject to the 2006 ISDA Definitions (the "Swap Definitions"), the 2005 ISDA Commodity Definitions, (the "Commodity Definitions") each as published by the International Swaps and Derivatives Association, Inc. (collectively the "ISDA Definitions"). The ISDA Definitions are incorporated by reference herein, and made part of, this Agreement and each Confirmation as if set forth in full in this Agreement and such Confirmations. Unless otherwise specified in a Confirmation, any capitalized terms zused herein and not otherwise defined herein shall have the respective meanings ascribed to them in the Swap Definitions, and the Commodity Definitions (except that references to "Swap Transactions" in the definitions will be deemed to be references to "Transactions"). In the event of any inconsistency between the provisions of the Swap Definitions and the Commodity Definitions, the Commodity Definitions will prevail. In the event of any inconsistency between the provisions of this Agreement and the ISDA Definitions, this Agreement will prevail. In the event of any inconsistency between the provisions of the Credit Support Documents, if any, and the ISDA Definitions, the Credit Support Documents will prevail. Subject to Section 1(b) of this Agreement, in the event of any inconsistency between the provisions of any Confirmation and this Agreement or the ISDA Definitions, the Confirmation will prevail for the purpose of the relevant Transaction; provided however, a Confirmation may not amend or conflict with any provisions of this Agreement regarding Events of Default, or Termination Events. 3/l/06 12 (k) Termination Payments by Non -Defaulting Party. Notwithstanding the provisions of Sections 6(d) and 6(e) of the Agreement, if there is a Defaulting Party, the obligations of the Non -defaulting Party to pay to the Defaulting Party any amount under Section 6(e) shall not arise until, and shall be subject to the conditions precedent that, the Non -defaulting Party shall have received confirmation satisfactory to it in its sole discretion that (A) all Transactions are terminated in accordance with Section 6(c), and (B) all obligations (contingent or absolute, matured or unmatured) of the Defaulting Party and any Affiliate of the Defaulting Party to make any payment to the Non -defaulting Party or any Affiliate of the Non -defaulting Party shall have been fully and finally performed, and (C) if the Defaulting Party is subject to the jurisdiction of a bankruptcy court, an order of such bankruptcy court (in form reasonably acceptable to the Non -defaulting Party) shall be final and non -appealable and shall approve such payment by the Non - defaulting Party; and provide d, further, that if under the foregoing provisions it is determined that the Non - defaulting Party is to make a payment to the Defaulting Party, there shall be deducted from the amount of such payment all amounts which the Defaulting Party may be obligated to pay under Section 9. (1) Waiver of Right to Trial by Jury. Each of the parties hereby irrevocably waives any and all right to a trial by jury with respect to any legal proceeding arising out of or relating to this Agreement or any Transaction. (m) Agreement Not Construed Against Drafter. This Agreement (including this Schedule, Credit Support Annex, Paragraph 13 to the Credit Support Annex, any Confirmation, or any other amendment hereto) shall not be construed against the drafter thereof, and the rule of contract construction requiring a contract to be construed against the drafter thereof is expressly waived by both parties. (n) Prior Transactions Subject to this Agreement. Any transaction entered into between the parties, now existing or hereafter 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), any combination of these transactions or any other transaction identified as a Transaction in this Agreement or the relevant confirmation whether before, on or after the effective date of this Agreement; is incorporated into this Agreement by reference, shall be a Transaction hereunder and shall be subject to the terms herein. (o) Reference Market -Makers. The definition of "Reference Market -makers" in Section 12 of this Agreement is hereby amended by: (i) deleting "(a)" from the second line thereof, (ii) deleting in the fourth line thereof after the word "credit" the words "and (b) to the extent practicable, from among such dealers having an office in the same city" and (iii) replacing such words with the words "or to enter into transactions similar in nature to Transactions." (p) Confidentiality. The contents of this Agreement and all other documents relating to this Agreement, and any information made available by one party or its Credit Support Provider to the other party or its Credit Support Provider with respect to this Agreement is confidential and shall not be disclosed to any third party (nor shall any public announcement relating to this Agreement be made by either party), except for such information (i) as may become generally available to the public, (ii) as may be required or appropriate in response to any summons, subpoena, or otherwise in connection with any litigation or to comply with any applicable law, order, regulation, ruling, or accounting disclosure rule or standard, (iii) as may be obtained from a non -confidential source that disclosed such information in a manner that did not violate its obligations to the non -disclosing party or its Credit Support Provider in making such disclosure, or (iv) as may be furnished to the disclosing party's Affiliates, and to each of such person's auditors, attorneys, advisors or lenders which are required to keep the information that is disclosed in confidence. With respect to information provided with respect to a Transaction, this obligation shall survive for a period of one (1) year following the expiration or termination of such Transaction. With respect to information provided with respect to this Agreement, this obligation shall survive for a period of one (1) year following the expiration or termination of this Agreement. 3/1/06 13 EXECUTED on the dates specified below but effective as of the date first written above. PARTY A: BP CORPORATION NORTH AMERICA INC. By: DRAFT Title: Date: PARTY B: By: DRAFT Date: 3/l/06 14 ISDA® International Swap Dealers Association, Inc. PARAGRAPH 13 to the CREDIT SUPPORT ANNEX to the Schedule to the 1992 ISDA Master Agreement dated as of between BP CORPORATION NORTH AMERICA INC. ("Party A") and City of Vernon("Party B") Paragraph 13. Elections and Variables (a) Security Interest for "Obligations". The term "Obligations" as used in this Annex includes the following additional obligations: With respect to Party A: Not Applicable With respect to Party B: Not Applicable (b) Credit Support Obligations. (i) Delivery Amount, Return Amount and Credit Support Amount. (A) "Delivery Amount" has the meaning specified in Paragraph 3(a), unless otherwise specified here: NO CHANGE (B) "Return Amount" has the meaning specified in Paragraph 3(b), unless otherwise specified here: NO CHANGE (C) "Credit Support Amount" has the meaning specified in Paragraph 3, unless otherwise specified here: NO CHANGE (ii) Eligible Collateral. The following item will qualify as "Eligible Collateral" for Party A and for Party B: Cash, with a Valuation Percentage of 100%. (iii) Other Eligible Support. The following item will qualify as "Other Eligible Support" for Party A and for Party B: an Eligible Letter of Credit, as defined herein. The Valuation Percentage of an Eligible Letter of Credit shall be 100% of the available balance thereof, unless an Eligible Letter of Credit Default shall occur and be continuing with respect to such Eligible Letter of Credit, in which case, the Valuation Percentage shall be zero. (iv) Thresholds. (A) "Independent Amount" means: Not Applicable. (8-3-05) 11 (B) "Threshold" means with respect to Party A and Party B on any day the amount set forth below opposite the Credit Rating assigned by S&P on such day to Party A; and with respect to Party B TBD. Credit Rating Threshold "AA-" to "AAA" $60 Million "A" to "A+" $20 Million "BBB+" to "A-" $10 Million "BBB" or below Zero No Rating Zero provided, however, that the Threshold for a party shall be zero upon the occurrence and during the continuance of an Event of Default, Potential Event of Default, or Specified Condition with respect to such party. (C) "Minimum Transfer Amount" means with respect to Party A and Party B: (i) $250,000 or (ii) if an Event of Default, Potential Event of Default, or Specified Condition has occurred and is continuing with respect to a party, then in respect of such party the Minimum Transfer Amount shall be zero. (D) Rounding. The Delivery Amount will be rounded up to the nearest integral multiple of $100,000, and the Return Amount will be rounded down to the nearest integral multiple of $100,000, unless the Return Amount is less than $100,000, in which case, the Return Amount will not be rounded. (c) Valuation and Timing (i) "Valuation Agent" means, for purposes of Paragraph 3, the party making. the demand under Paragraph 3, and, for purposes- of Paragraph 6(d), the Secured Party receiving or deemed to receive the Distributions or the Interest Amounts as applicable. In addition, the Secured Party will be the Valuation Agent for purposes of calculating Value in connection with substitutions pursuant to Paragraph 4(d). Notwithstanding the foregoing, if an Event of Default or Potential Event of Default has occurred and is continuing with respect to a party, the Valuation Agent shall be the other party. (ii) "Valuation Date" means: each Local Business Day (iii) "Valuation Time" means: the close of business on the Valuation Date or date of calculation, as applicable; provided that the calculations of Value and Exposure will be made as of approximately the same time on the same date. (iv) "Notification Time" means 10:00 a.m., New York time, on a Local Business Day. (d) Conditions Precedent and Secured Party's Rights and Remedies. The following Termination Event(s) will be a "Specified Condition" for the party specified (that party being the Affected Party if the Termination Event occurs with respect to that party): (e) Party A Party B Illegality X X Credit Event Upon Merger X X Additional Termination Event Substitution. (8-3-05) 12 (i) "Substitution Date" has the meaning specified in Paragraph 4(d)(ii), unless otherwise specified here: The second Local Business Day following the date on which the Secured Party receives the Substitute Credit Support. (ii) Consent. If specified here as applicable, then the Pledgor must obtain the Secured Party's consent for any substitution pursuant to Paragraph 4(d): Not Applicable (iii) Notice. For purposes of Paragraph 4(d)(i), the phrase "upon notice" shall be amended to read "upon two Local Business Days' prior written notice". (t) Dispute Resolution. The provisions of Paragraph 5 will not apply, and if a dispute as to a Delivery Amount, Return Amount or Value arises, the Secured Party's calculation, made in good faith and in a commercially reasonable manner, shall be controlling. (g) Holding and Using Posted Collateral. (i) Eligibility to Hold Posted Collateral; Custodians. Party A and its Custodian will be entitled to hold Posted Collateral pursuant to Paragraph 6(b), subject to the following conditions: (1) Posted Collateral may be held only in one or more accounts in any jurisdiction in the United States. (2) If Posted Collateral is held by a Custodian, the Custodian shall be a Qualified Institution. (3) If Posted Collateral is held by Party A, Party A's Credit Rating by S&P shall be no less than BBB+ and Party A shall not be a Defaulting Party. Party B and its Custodian will be entitled to hold Posted Collateral pursuant to Paragraph 6(b), subject to the following conditions: (1) Posted Collateral may be held only in one or more accounts in any jurisdiction in the United States. (2) If Posted Collateral is held by a Custodian, the Custodian shall be a Qualified Institution. (3) If Posted Collateral is held by Party B, Party B's (or Party B's Credit Support Provider's, if applicable) Credit Rating by S&P shall be no less than BBB+ and Party B shall not be a Defaulting Party. Initially, the Custodian for Party A and Party B is: To be designated by Party A or Party B, as appropriate, in the first demand, which shall be in writing, for Eligible Credit Support hereunder. (ii) Use of Posted Collateral. The provisions of Paragraph 6(c) will apply to the parties; provided, however, if a party is a Defaulting Party, the, provisions of Paragraph 6(c) shall not apply to such party and all Posted Collateral in such parry's possession shall be delivered to a Custodian (that is a Qualified Institution) within 2 Business Days of such party becoming a Defaulting Party. (h) Distributions and Interest Amount. (i) Interest Rate. The "Interest Rate" will be: (i) with respect to Cash held by a party, for any day, the "Federal Funds (Effective)" rate in effect for such day, as published in the most recent weekly (8-3-05) 13 statistical release designated as H.15(519), or any successor publication, published by the Board of Governors of the Federal Reserve System, and (ii) with respect to Cash held by the Custodian of a party, the Interest Rate will not apply but the provisions of Paragraph 13(h)(iii) shall apply. (ii) Transfer of Interest Amount. The Transfer of the Interest Amount will be made on or before three Local Business Days after the last Local Business Day of each calendar month and on any Local Business Day that Posted Collateral in the form of Cash is Transferred to the Pledgor pursuant to Paragraph 3(b). (iii) Alternative to Interest Amount. The provisions of Paragraph 6(d)(ii) will apply; provided, however, that with respect to Cash held by the Custodian of a party, the "Interest Amount" shall mean the earnings, from time to time, of the investment and reinvestment of Eligible Collateral constituting Cash by the Custodian of a party in an interest -bearing account selected by the Secured Party and consented to by the Pledgor, such consent not to be unreasonably withheld, conditioned, or delayed. (i) Additional Representation(s). None. 0) Other Eligible Support and Other Posted Support. (i) "Value" with respect to Other Eligible Support and Other. Posted Support means: In respect of an Eligible Letter of Credit on a date, the maximum stated amount remaining available for payment to the beneficiary thereunder on such date multiplied by the Valuation Percentage. (ii) "Transfer" with respect to Other Eligible Support and Other Posted Support means: (1) For purposes of Paragraph 3(a), delivery of an Eligible Letter of Credit by the Pledgor or issuer of the Eligible Letter of Credit to the Secured Party at the address of the Secured Party specified in the Notices Section of this Agreement, or delivery of an executed amendment to such Eligible Letter of Credit (extending the term or increasing the amount available to the Secured Party thereunder) by the Pledgor or the issuer of the Eligible Letter of Credit to the Secured Party at the address of the Secured Party specified in the Notices Section of this Agreement; and (2) For purposes of Paragraph 3(b), by the return of an outstanding Eligible Letter of Credit by the Secured Party to the Pledgor, at the address of the Pledgor specified in the Notices Section of this Agreement, or delivery of an executed amendment to the Eligible Letter of Credit in form and substance satisfactory to the Pledgor (reducing the amount available to the Secured Party thereunder) by the Pledgor or the issuer of the Eligible Letter of Credit to the Secured Party at the Secured Party's address specified in the Notices Section of this Agreement. If a Transfer is to be effected by a reduction in the amount of an outstanding Eligible Letter of Credit previously issued for the benefit of the Secured Party, the Secured Party shall not unreasonably withhold its consent to a commensurate reduction in the amount of such Eligible Letter of Credit and shall take such action as is reasonably necessary to effectuate such reduction. (iii) "Eligible Letter of Credit Provisions". Other Eligible Support and Other Posted Support in the form of an Eligible Letter of Credit shall be subject to the following provisions: (1) Unless otherwise agreed in writing by the parties, each Eligible Letter of Credit shall be Transferred in accordance with the provisions of this Annex, and the Secured Party shall be the named beneficiary under each Eligible Letter of Credit. The Pledgor shall (i) cause (8-3-05) 14 the renewal of each Transferred Eligible Letter of Credit on a timely basis as provided in the relevant Eligible Letter of Credit in order to maintain the then -applicable Credit Support Amount requirements, (ii) if the issuer of an Eligible Letter of Credit previously Transferred to the Secured Party has indicated its intent not to renew such Eligible Letter of Credit, Transfer a substitute Eligible Letter of Credit, and (iii) if the issuer of an Eligible Letter of Credit shall commit an Eligible Letter of Credit Default of the type specified in clause (ii) or (iii) of the definition thereof (including but not limited to such issuer's failure to honor the Secured Party's properly documented request to draw thereon), Transfer for the benefit of the Secured Party Eligible Credit Support within one (1) Local Business Day after the Pledgor receives notice of such dishonor, provided that, at the time the Pledgor is required to perform in accordance with (i), (ii), or (iii) immediately above, the Delivery Amount applicable to the Pledgor equals or exceeds the Pledgor's Minimum Transfer Amount. (2) The Pledgor may, at its option, Transfer an Eligible Letter of Credit by (A) causing the issuing bank to execute an amendment increasing the outstanding amount available for drawing under a previously Transferred Eligible Letter of Credit or (B) establishing one or more additional Eligible Letters of Credit. If (i) the Pledgor shall fail to cause the issuing bank to renew, substitute, or sufficiently increase the amount of a Transferred Eligible Letter of Credit, Transfer one or more additional Eligible Letters of Credit, or otherwise Transfer sufficient Eligible Credit Support as required by this Agreement (including this Annex), and (ii) the Delivery Amount applicable to the Pledgor equals or exceeds the Pledgor's Minimum Transfer Amount as a result of such failure, then the Secured Party may draw on the entire available balance of any Transferred Eligible Letter of Credit in accordance with the stated requirements of the Eligible Letter of Credit. The Pledgor shall remain liable for any amounts due and owing to the Secured Party and remaining unpaid after the application of the amounts so drawn by the Secured Party. (3) Upon the occurrence of an Eligible Letter of Credit Default solely of the type specified in clause (i) of the definition thereof, the Pledgor agrees to deliver a substitute Eligible Letter of Credit or other Eligible Credit Support to the Secured Party in an amount at least equal to that of the Eligible Letter of Credit to be substituted on or before the first (1st) Business Day after written demand by the Secured Party. In the case of an Eligible Letter of Credit Default of the types specified in clauses (iv) and (v) of the definition. thereof, the Pledgor shall deliver any such substitute Eligible Letter of Credit or other Eligible Credit Support within three (3) Business Days after written demand by the Secured Party. Notwithstanding any provision in this Agreement or this Annex, the issuer of an Eligible Letter of Credit shall not be relieved of any liability it may have to any party resulting from the occurrence of an Eligible Letter of Credit Default with respect to it. (iv) "Certain Rights and Remedies". (1) Secured Party's Rights and Remedies. For purposes of Paragraph 8(a)(ii), the Secured Party may draw on any Transferred Eligible Letter of Credit in an aggregate amount equal to any amounts payable by the Pledgor with respect to any Obligations. (2) Pledgor's Rights and Remedies. For purposes of Paragraph 8(b)(ii), (i) the Secured Party will be obligated immediately to Transfer any Eligible Letter of Credit to the Pledgor and (ii) the Pledgor may, to the extent that any such Eligible Letter of Credit is not Transferred to the Pledgor as required pursuant to (i) immediately above, Set-off any amounts payable by the Pledgor with respect to any Obligations against any such Eligible Letter of Credit up to the full amount drawable thereunder and to the extent its rights to Set-off are not exercised, withhold payment of any remaining amounts payable by the Pledgor with respect to any Obligations, up to the sum of the Value of any remaining (8-3-05) 15 Posted Collateral and Eligible Letters of Credit held by the Secured Party, until any such Posted Collateral and Eligible Letters of Credit are Transferred to the Pledgor. (k) Demands and Notices. All demands, specifications and notices under this Annex will be made pursuant to the Notices Section of this Agreement, unless otherwise specified here: Party A: Not Applicable Party B: Not Applicable (1) Addresses for Transfers. Party A: Attention: Collateral Department Ph: 281/366-3372 Party B: Such address as Party B shall notify Party A, in writing. (m) Other Provisions. (i) Duty of the Secured Party to Preserve Collateral. Without limiting the generality of the final sentence of Paragraph 6(a), the Secured Party will have no responsibility (A) to inquire or give the Pledgor notice about any decline in the value of, or default under or in respect of, any item of Posted Collateral, or to give the Pledgor notice that any right with respect to any such item may expire or (B) to take any action to seek to sell, to collect payments due under or to enforce or preserve rights relating to any item of Posted Collateral, including conversion, exchange and similar rights that, if not exercised, may expire or adversely affect the value of the item of Posted Collateral. (ii) Costs. Without limiting any other provision of the Agreement, the Pledgor shall pay all costs involved in obtaining and maintaining in effect any Eligible Letter of Credit. The Pledgor shall be responsible for, and shall reimburse the Secured Party for, all transfer taxes and other costs involved in the transfer of Eligible Collateral from the Pledgor to the Secured Party or any agent for safekeeping of the Secured Party. If the Secured Party shall incur any loss by reason of the Pledgor's failure to pay any such taxes and costs, the Secured Party shall have the right, in accordance with Paragraph 8(a) hereof, to draw under any Eligible Letter of Credit or liquidate any Posted Collateral and apply the proceeds thereof to satisfy its claim against the Pledgor for such taxes and costs. (iii) Rights and Remedies Under Paragraph 8(a). The Secured Party will be entitled to exercise the rights and remedies provided for in Paragraph 8(a) if the Pledgor fails to pay when due any amount payable by it under Section 6 of this Agreement in connection with a Termination Event, even if the Pledgor is not the Affected Party. (iv) Events of Default. Delete and replace Paragraph 7(i) with the following: "(i) that party fails (or fails to cause its Custodian) to make, when due, any Transfer of Eligible Credit Support, Posted Credit Support or the Interest Amount, as applicable, required to be made by it and that failure continues for two Local Business Days after notice of that failure is given to that party•" (v) Additional Definitions. Paragraph 12 is hereby amended by adding the following: "Credit Rating" means, with respect to a party (or its Credit Support Provider, as the case may be) or entity on any date of determination, the respective rating then assigned by S&P or Moody's, (8-3-05) 16 as the case may be, to the lower of either the issuer rating or the unsecured, senior long-term debt obligations, as the case may be (in either case, not supported by third -party credit enhancement). "Eligible Letter of Credit" shall mean a standby, transferable, irrevocable letter of credit, in a form substantially similar to Schedule 1 attached hereto and incorporated herein by reference, issued in favor of the Secured Party by a Qualified Institution (other than a party hereto or any of its Affiliates); provided, however, that at such time as there shall be an Eligible Letter of Credit Default, any Eligible Letter of Credit affected by such Eligible Letter of Credit Default shall cease to constitute an Eligible Letter of Credit and Eligible Credit Support for purposes of satisfying the Pledgor's obligations hereunder. G°Eligible Letter of Credit Default" shall mean with respect to an outstanding Eligible Letter of Credit, the occurrence of any of the following events: (i) the issuer of such Eligible Letter of Credit shall cease to be a Qualified Institution; (ii) the issuer of the Eligible Letter of Credit shall fail to comply with or perform its obligations under such Eligible Letter of Credit if such failure shall be continuing after the lapse of any applicable grace period; (iii) the issuer of such Eligible Letter of Credit shall disaffirm, disclaim, repudiate or reject, in whole or in part, or challenge the validity of, such Eligible Letter of Credit; (iv) such Eligible Letter of Credit shall expire or terminate, or there shall be 30 or less days remaining until the expiration of such Eligible Letter of Credit, or such Eligible Letter of Credit shall fail or cease to be in full force and effect at any time during the term of the Agreement; or (v) any event analogous to an event specified in Section 5(a)(vii) of this Agreement shall occur with respect to the issuer of such Eligible Letter of Credit provide d, however, that no Eligible Letter of Credit Default shall occur in any event with respect to an Eligible Letter of Credit after the time such Eligible Letter of Credit is required to be canceled or returned to the Pledgor in accordance with the terms of this Annex. "Moody's" means Moody's Investors Service (or any successor thereto). "Qualified Institution" shall mean the United States office of a commercial bank or trust company organized under the laws of the United States of America or a political subdivision thereof or a foreign bank with a branch office located in the United States and, in either case, having a Credit Rating of "A-" or higher by S&P or "AY or higher by Moody's. "S&P" means Standard & Poor's, a division of The McGraw-Hill Companies, Inc. or any successor thereto. EXECUTED on the dates specified below but effective as of the date first written above. Party A: BP CORPORATION NORTH AMERICA INC. By: = DRAFT Name: Date: Party B: CITY OF VERNON By: DRAFT (8-3-05) 17 Name: Title: Date: (8-3-05) 18 SCHEDULE 1 TO CREDIT SUPPORT ANNEX IRREVOCABLE TRANSFERABLE STANDBY LETTER OF CREDIT FORMAT DATE OF ISSUANCE: [Address] Re: Credit No. We (the "Issuing Bank") hereby establish our Irrevocable Transferable Standby Letter of Credit (this "Letter of Credit) in your favor for the account of (the "Account Party"), for the aggregate amount not exceeding United States Dollars ($ ), available to you at sight upon demand at our counters at (Location) on or before the expiration hereof against presentation to us of one or more of the following statements, dated and signed by [Party A] [Party B]: 1. "Either (i) an Event of Default (as defined in the ISDA Master Agreement dated as of among , as the same may be amended (the "Master Agreement")) or (ii) a Specified Condition (as defined in the Master Agreement) with respect to the Account Party has occurred and is continuing; and the Account Party has not paid in full all of its Obligations (as defined in the Master Agreement) "that are due as of the date of this statement. Wherefore, the undersigned does hereby demand payment of [the entire available balance] [or] [$ of the Letter of Credit"; and/or 2. "An Early Termination Date (as defined in the Master Agreement) has occurred or been designated as the result of an Event of Default or Specified Condition with respect to the Account Party; and the Account Party has not paid in full all of its Obligations (as defined in the Master Agreement) that are due as of the date of this statement. Wherefore, the undersigned does hereby demand payment of [the entire available balance] [or] [$ ] of the Letter of Credit"; and/or 3. "An Eligible Letter of Credit Default (as defined in the Master Agreement) has occurred and is continuing with respect to this Letter of Credit. Wherefore, the undersigned does hereby demand payment of [the entire available balance] [or] [$ ] of the Letter of Credit"; and/or 4. "The Account Party has failed to cause the issuing bank to renew, substitute, or sufficiently increase the amount of a Transferred (as defined in the Master Agreement) Eligible Letter of Credit, Transfer (as defined in the Master Agreement) one or more additional Eligible Letters of Credit, or otherwise Transfer sufficient Eligible Credit Support (as defined in the Master Agreement) as required by the Master Agreement; and the Delivery Amount (as defined in the Master Agreement) applicable to the Account Party equals or exceeds the Account Parry's Minimum Transfer Amount (as defined in the Master Agreement) as a result of such failure. Wherefore, the undersigned does hereby demand payment of [the entire available balance] [or] [$ of the Letter of Credit." Terms defined in the Master Agreement shall have the same meanings when used in this Letter of Credit. The amount which may be drawn by you under this Letter of Credit shall be automatically reduced by the amount of -Any drawings paid through the Issuing Bank referencing this Letter of Credit No. Partial and multiple drawings are permitted hereunder. We hereby agree with you that documents drawn under and in compliance with the terms of this Letter of Credit shall be duly honored upon presentation as specified. If monies duly paid by us under this Letter of Credit are not immediately applied against amounts that are due and payable by the Account Party under the Master Agreement, but are instead retained by you as collateral in accordance with the Master Agreement, such monies shall be segregated from any other Posted Collateral or Other Posted Support transferred by the Account Party or by any other party for the Obligations of the Account Party, and (8-3-05) any Return Amounts involving such monies that arise on any subsequent Valuation Dates shall be promptly repaid by you to us. This Letter of Credit shall be governed by the Uniform Customs and Practice for Documentary Credits, 1993 Revision, International Chamber of Commerce Publication No. 500 (the "UCP"), except to the extent that the terms hereof are inconsistent with the provisions of the UCP, including but not limited to Articles 13(b) and 17 of the UCP, in which case the terms of this Letter of Credit shall govern. With respect to Article 13(b) of the UCP, the Issuing Bank shall have a reasonable amount of time, not to exceed three (3) banking days following the date of its receipt of documents from the beneficiary, to examine the documents and determine whether to take up or refuse the documents and to inform the beneficiary accordingly. In the event of an Act of God, riot, civil commotion, insurrection, war or any other cause beyond our control that interrupts our business (collectively, an "Interruption Event") and causes the place for presentation of this Letter of Credit to be closed for business on the last day for presentation, the expiry date of this Letter of Credit will be automatically extended without amendment to a date thirty (30) calendar days after,the place for presentation reopens for business. This Letter of Credit is transferable, and we hereby consent to such transfer, but otherwise may not be amended, changed or modified without the express written consent of the beneficiary, the Issuing Bank and the Account Party. [BANK SIGNATURE] (8-3-05) 2 AGREEMENT NOT RECEIVED - THE LEGAL DEPARTMENT DOES NOT HAVE A COPY OF THE AGREEMENT Page 1 of 2 Romero, Debbie From: Lehr, Judy Sent: Tuesday, September 23, 2008 10:53 AM To: Romero, Debbie; Enomoto, Kristen Subject: RE: Agreement Inquiry Debbie, we didn't have anything in the file. I'm waiting for Jeff to respond to my e-mail about status. Judy Lehr City Attorney Dept., City of Vernon 4305 Santa Fe Avenue Vernon, CA 90058 Work: (323) 583-8811 x 368 Fax: (323) 826-1438 CONFIDENTIALITY NOTICE: This e-mail transmission, and any documents, files or previous e- mail messages attached to it may contain confidential information that is legally privileged. If you are not the intended recipient, or a person responsible for delivering it to the intended recipient, you are hereby notified that any disclosure, copying, distribution or use of any of the information contained in or attached to this transmission is STRICTLY PROHIBITED. If you have received this transmission in error, please immediately notify the sender. Please destroy the original transmission and its attachments without reading or saving in any manner. From: Romero, Debbie Sent: Wednesday, September 17, 2008 3:41 PM To: Enomoto, Kristen; Lehr, Judy Subject: FW: Agreement Inquiry Thanks Kristen. Judy, please let me know if you have these. Thank you. From: Enomoto, Kristen Sent: Wednesday, September 17, 2008 3:39 PM To: Romero, Debbie Subject: Agreement Inquiry No dice, Chino. You might want to check with Judy too, if you haven't already. Sometimes they have signed copies of stuff that never makes it to us. Kristen From: Romero, Debbie Sent: Wednesday, September 17, 2008 8:26 AM To: Enomoto, Kristen 9/23/2008 Page 2 of 2 Subject: Agreement Inquiry Hi Kristen. When you get a chance, please check your files to see if you have the signed agreements for the following; Amended & Restated Bond Remarketing Agreement — Authority Revenue Bonds approved by Res. No. VNGFA- 0009 01 /22/08 ISDA Master Agreement— U.S. Municipal Counterparty Schedule approved by Res. No. 9529 01/22/08 Thank you. 9/23/2008