|
MASTER SWAP AGREEMENT
This
MASTER SWAP AGREEMENT (this “Master Agreement”) is
entered into and dated as of this 1 st
day of January, 2008 (the “Effective Date”) and is
by and between APOLLO RESOURCES INTERNATIONAL, INC., a
Delaware corporation (“Apollo”) and Arizona LNG,
LLC, a Nevada limited liability company
(“Counterparty”) have entered and/or anticipate
entering into one or more swap transactions (each a
“Transaction”) that are or will be governed by
this Master Agreement, which includes the schedule dated of
even date herewith (the “Schedule”), and the
documents and other confirming evidence (each a
“Confirmation”) exchanged between the parties
confirming those Transactions.
Accordingly,
for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
agree as follows:
|
(a)
|
Definitions . The terms defined in Section 16 and in the
Schedule will have the meanings specified therein 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. The Schedule is
incorporated into this Master Agreement by reference as if fully
stated herein. In the event of any inconsistency between the
provisions of any Confirmation and this 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 Agreement (including the Schedule)
and all Confirmations form a single agreement between the parties
(collectively referred to as this “Agreement”). Unless
and until this Agreement is terminated according to the terms
hereof, all Transactions entered into among the parties are subject
to the terms hereof, except by the parties express written
agreement with respect to each Transaction that shall not be
governed by this Agreement.
|
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
Representation
|
(i)
|
Status . It is duly organized and validly existing under the
laws of the jurisdiction of its organization or incorporation and,
if relevant under such laws, in good standing;
|
|
|
(ii)
|
Powers . It (1) has the power to execute and deliver this
Agreement and any other documentation relating to this Agreement to
which it is a party, (2) to deliver this Agreement and any other
documentation relating to this Agreement that it is required by
this Agreement to deliver, (3) to perform its obligations under
this Agreement, and (4) has taken all necessary action to authorize
such execution, delivery and performance;
|
|
|
(iii)
|
No Violation or Conflict . Such execution, delivery and
performance do not violate or conflict with any applicable law, any
provision of its constitutional documents, any order or judgment of
any court or other applicable agency of government, or any of its
assets or any contractual restriction binding on or affecting it or
any of its assets;
|
|
|
(iv)
|
Consents . All governmental and other consents that are
required to have been obtained by it with respect to this Agreement
have been obtained and are in full force and effect and all
conditions of any such consents have been fulfilled;
|
|
|
(v)
|
Obligations Binding . Its obligations under this Agreement
constitute its legal, valid and binding obligations, enforceable in
accordance with their respective terms (subject to applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors’ rights generally and subject, as to
enforceability, to equitable principles of general application
– regardless of whether enforcement is sought in a proceeding
in equity or at law);
|
|
(vi)
|
United States Person . It is a United States
person (as such term is defined in Section 7701 of the Internal
Revenue Code);
|
|
(vii)
|
No Withholding Tax . During the term of this
Agreement, it will not be doing business in any jurisdiction that
imposes any withholding tax or similar levy on any payment made or
received by it under this Agreement;
|
|
(viii)
|
Eligible Swap Participant . (1) It constitutes an
“eligible swap participant” as such term is defined in
17 C.F.R. Section 35.1(b)(2), and (2) this Agreement and any
Transaction entered into hereunder constitutes a “swap
agreement” within the meaning of 17 C.F.R. Section
35.1(b)(1);
|
|
(ix)
|
Line of Business . (1) It is entering into this
Agreement in conjunction with its line of business (including
financial intermediation services) or the financing of its
business, and (2) solely with respect to options, it is a producer,
processor, commercial user of, or merchant handling, the commodity
subject to a Transaction or the products or byproducts thereof, and
it has entered or will enter into Transactions solely for purposes
related to its business as such; and
|
No Reliance on Other Party . (1) The other party
to this Agreement (A) is not acting as a fiduciary or financial,
investment or commodity trading advisor for it, and (B) has not
given to it (directly or indirectly through any other person) any
assurance, guaranty, or representation whatsoever as to the merits
(either legal, regulatory, tax, financial, accounting or otherwise)
of This Agreement or any Transaction or the expected performance or
result of this Agreement or any Transaction, and (2) in connection
with the negotiation and execution of this Agreement (A) it is
acting as a principal (and not as an agent or in any other
capacity, fiduciary or otherwise), (B) it is not relying upon any
advice, counsel, or representations (whether written or oral) of
the other party other than the representations expressly set forth
in this Agreement, (C) it has made and will make its own decisions
regarding the entering into of this Agreement and any Transactions
hereunder based upon its own judgment and upon the advice from such
professional advisors as it deemed, or will deem, necessary to
consult, and (D) it has a full understanding of all the terms,
conditions, and risks (economic and otherwise) of this Agreement,
and it is capable of assuming and willing to assume (financially
and otherwise) those risks.
|
(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 will occur as a result of its entering into
or performing its obligations under this Agreement.
|
|
(c)
|
Absence of Litigation . There is not pending, nor
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 its ability to
perform its obligations under this Agreement.
|
|
(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 2(d) in the Schedule is, as of the date of the information,
true, accurate and complete in every material respect.
|
|
3.
|
Term of this Agreement
|
The
term of this Agreement shall extend for a period of one (1)
year from the Effective Date and month-to-month thereafter
until terminated on thirty (30) days advance written notice by
either Party; provided, however, that the provisions hereof
shall survive termination of this Agreement and continue to
apply to any Transactions entered into between Apollo and
Counterparty prior to the date of termination of this
Agreement until such time as any and all such Transactions are
completed or terminated. Notwithstanding the foregoing, the
representations, warranties, and indemnities set forth in this
Agreement will survive termination of this
Agreement.
Transactions and Obligations
|
a.
|
Transactions. Formation
. Should the parties come to an understanding regarding
a particular Transaction, the Transaction will be formed and
effectuated by either (1) a written paper-based letter executed by
the parties (including by either facsimile and/or original
counterparts) substantially in the form of Exhibit A attached
hereto and incorporated herein by reference or a different form
agreed to by the parties (the “Confirmation Letter”),
(2) by an exchange of e-mails (which together shall constitute the
Confirming Electronic Message) between the parties with
substantially the same content as set out on Exhibit A, and such
e-mail must conform exactly as to each term marked on Exhibit
“A” with an * (the Confirmation Letter and/or
Confirming Electronic Message may also be interchangeably or
collectively referred to as a
“Confirmation”). Each party may stipulate by
prior notice (oral or written) to the other party that any
particular contemplated Transaction may be effectuated and formed
only by means of procedure (1) above. The parties shall
be legally bound by each Transaction from the time they agree to
its terms in accordance with this Section 4(a) and acknowledge that
each party will rely thereon in doing business related to the
Transaction. The Confirming Electronic Message is
adopted by the parties as means by which a Transaction is reduced
to tangible form, and the parties to a Transaction are identified
and authenticate a Transaction. Any Transaction formed
and effectuated pursuant to the foregoing shall be considered a
“writing” or “in writing” and to have been
“signed” and any Confirming Electronic Message shall be
deemed to constitute an “original” document evidencing
the Transaction. Each party consents to the recording of
its employees’ telephone conversations without any further
notice.
|
|
(i)
|
Payment Obligations .
|
|
(1)
|
Each
party shall make each payment as specified for such party in each
Confirmation, subject to the other provisions of this
Agreement.
|
|
(2)
|
Payments
under this Agreement will be made on the due date for value by wire
or other electronic transfer into 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 United States dollars.
|
|
(3)
|
Each
obligation of each party under Section 4(b)(i)(1) is subject to (A)
the condition precedent that no Event of Default or Potential Event
of Default with respect to the other party has occurred and is
continuing, (B) the condition precedent that no Early Termination
Date in respect of the relevant Transaction has occurred or
been
|
|
(4)
|
effectively
designated, and (C) each other applicable condition precedent
specified in this Agreement.
|
|
(ii)
|
Change of Account . Either party may change its
account for receiving a payment by giving written notice to the
other party at least five (5) Business Days prior to the scheduled
date for the payment to which such change applies unless such other
party gives timely notice of a reasonable objection to such
change.
|
|
(iii)
|
Netting of Payments . If on any payment date
amounts would otherwise be payable 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 pay
|
|