EXHIBIT NO. 150
EQUITY SUBSCRIPTION AGREEMENT
among
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
and
RDC OF NEPAL
and
WILMINGTON TRUST COMPANY
Dated as of the Closing Date
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
ARTICLE 2
SUBSCRIPTION
Section 2.1. Issuance and Sale of Shares; Payment 2
Section 2.2. Method of Payment 3
ARTICLE 3
COVENANTS
Section 3.1. RDC of Nepal Covenants 3
Section 3.2. Indemnification 4
Section 3.3. Obligations Absolute 4
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations And Warranties 5
Section 4.2. Further Assurances 6
ARTICLE 5
MISCELLANEOUS
Section 5.1.Governing Law; Consent to Jurisdiction
and Venue; Sovereign Immunity 6
Section 5.2. Notices 7
Section 5.3. Benefit of Agreement 8
Section 5.4. No Waiver; Remedies Cumulative 9
Section 5.5. Severability 9
Section 5.6. Documents 9
Section 5.7. Counterparts 9
Section 5.8. Headings Descriptive 9
Section 5.9. Amendment or Waiver 9
Section 5.10 Limitation of Liability 9
EQUITY SUBSCRIPTION AGREEMENT
EQUITY SUBSCRIPTION AGREEMENT, dated as of the Closing Date
(this "Agreement"), among BHOTE KOSHI POWER COMPANY PRIVATE
LIMITED, a private limited liability company registered under the
Nepalese Company ▇▇▇ ▇▇▇▇ (the "Company"), RDC OF NEPAL, an
exempted company with limited liability organized and existing
under the laws of the Cayman Islands ("RDC of Nepal") and
WILMINGTON TRUST COMPANY, a Delaware banking corporation (the
"Trustee"), on behalf of and for the benefit of IFC.
PRELIMINARY STATEMENTS
The Company was granted the right to build, own and operate
a 36 MW (nominal net) hydroelectric power plant in the
Sindhupalchok District in Nepal.
IFC is willing to provide financing for the power plant,
pursuant to that certain IFC Investment Agreement between the
Company and IFC (the "IFC Investment Agreement"), but only if RDC
of Nepal enters into this Agreement to provide for the
subscription for shares of the Company as set forth herein.
DEG is willing to provide financing for the power plant,
pursuant to that certain DEG Investment Agreement between the
Company and DEG (the "DEG Investment Agreement," and together
with the IFC Investment Agreement, the "Investment Agreement"),
but only if RDC of Nepal enters into this Agreement to provide
for the subscription for shares of the Company as set forth
herein. (IFC and DEG are hereinafter referred to collectively as
the "Lenders" and individually as a "Lender").
The Company, IFC and DEG have entered into that certain
Investment Agreement General Conditions dated as of the Closing
Date (the "General Conditions").
It is a condition precedent to the obligations of each of
IFC and DEG under the Investment Agreement that this Agreement
shall have been entered into.
RDC of Nepal will benefit from the making of the aforesaid
loans by IFC and DEG.
NOW, THEREFORE, IT IS AGREED:
ARTICLE 1
DEFINITIONS
For all purposes of this Agreement, (i) capitalized terms
not otherwise defined herein shall have the meanings set forth in
Schedule A to the General Conditions, and (ii) the principles of
construction set forth in Schedule A to the General Conditions
shall apply.
ARTICLE 2
SUBSCRIPTION
Section 2.1. Issuance and Sale of Shares; Payment.
(a) (i) As of the Financial Closing Date, RDC of
Nepal's total equity commitment to the Project is
one million four hundred seventy-four thousand
seven hundred fifty Dollars ($1,474,750). As of
the date hereof, RDC of Nepal is the legal and
beneficial owner of zero (0) shares of the share
capital of the Company, par value Rs. 100 per
share.
(ii) The Company agrees to issue and sell to
RDC of Nepal, and RDC of Nepal agrees to purchase,
thirty-eight thousand three hundred thirty-three
(38,333) shares of the share capital of the
Company, par value Rs. 100 per share, for a total
purchase price of three hundred eighty-three
thousand three hundred twenty-eight Dollars
($383,328) (the "Initial Share Amount"). RDC of
Nepal shall pay such Initial Share Amount in full
prior to the initial Disbursements under the
Investment Agreement and prior to the initial
subscription and disbursement under the IFC
Subscription.
(iii) RDC of Nepal represents and
warrants that, by the Financial Closing Date
thirty eight thousand three hundred thirty three
(38,333) shares for a total purchase price of
three hundred eighty three thousand three hundred
twenty eight Dollars ($383,328) of the Initial
Share Amount shall be paid to the Company.
(iv) The Company further agrees to issue and
sell to RDC of Nepal, and RDC of Nepal further
agrees to purchase one hundred nine thousand one
hundred forty two (109,142) additional shares of
the share capital of the Company, par value
Rs. 100 per share, for an additional purchase
price of one million ninety one thousand four
hundred twenty two Dollars ($1,091,422). Such
amount shall be paid in installments (each, a
"Subscription Amount Payment"), pro rata to the
proceeds of the Loans prior to the receipt by the
Company of such proceeds of the Loans.
(v) The Company shall deliver to RDC of
Nepal certificates representing the Subscribed
Shares in a manner and at such times, dates, and
places to be agreed upon by the parties hereto.
(b) If and to the extent that a Project Funds Shortfall
exists at any time, RDC of Nepal shall pay to the Company, on
such date or dates as the Company, the Trustee or either of the
Lenders specify in a written notice or written notices to RDC of
Nepal, such additional subscription amounts as are required
pursuant to the Share Retention and Project Funds Agreement (but
in the event of any conflict between a notice given by the
Company and a notice given by either of the Lenders or the
Trustee, the notice given by such Lender or the Trustee shall
prevail).
(c) Notwithstanding paragraphs (a) and (b), at the option
of the Trustee or the Lenders following the occurrence and during
the continuation of an Event of Default, RDC of Nepal shall pay
to the Company the amount by which the Subscription Amount
Payments theretofore made by RDC of Nepal is less than one
million four hundred seventy four thousand seven hundred fifty
Dollars ($1,474,750), and such payment shall be made by RDC of
Nepal on such date as the Company, either of the Lenders or the
Trustee shall specify in a written notice to RDC of Nepal (but in
the event of any conflict between a notice given by the Company
and a notice given by any such Lender or the Trustee, the notice
given by such Lender or the Trustee shall prevail).
(d) RDC of Nepal will deliver on or prior to the Financial
Closing Date an Equity Letter of Credit issued in favor of the
Trustee, and in an amount equal to one million ninety one
thousand four hundred twenty two Dollars ($1,091,422) (such
Dollar amount to equal the Subscription Amount minus the Initial
Share Amount). The stated amount of the Equity Letter of Credit
shall be reduced by the amount of each Subscription Amount
Payment made in accordance with Section 2.1(a)(iv) hereof. The
Equity Letter of Credit shall remain outstanding, and in full
force and effect, until the Trustee or the Lenders have notified
in writing the issuing bank that RDC of Nepal has made
Subscription Amount Payments equal to one million four hundred
seventy four thousand seven hundred fifty Dollars ($1,474,750) or
that RDC of Nepal's obligations under this Article 2 have
expired. In the event RDC of Nepal fails to make any
Subscription Amount Payment or other payment as and when required
hereunder, the Trustee or either of the Lenders shall be entitled
to demand payment under the Equity Letter of Credit of an amount
equal to such payment. Additionally, if the Trustee or the
Lenders have received a notice from the issuing bank that the
Equity Letter of Credit will be terminated or will not be renewed
or extended, then either of the Lenders or the Trustee may, at
any time after receiving the aforesaid notice, draw upon the
Equity Letter of Credit in an amount equal to the full amount of
the Equity Letter of Credit.
Section 2.2. Method of Payment. RDC of Nepal shall pay
the Subscription Amount Payments no later than 11:00 a.m.
(Wilmington, Delaware time) in U.S. Dollars in immediately
available funds to the Trustee, for deposit in the Construction
Sub-Account (in the case of the Subscription Amount Payments made
under Section 2.1(a) hereof), or, if so directed by the Trustee,
in the Debt Payment Sub-Account (in the case of payments made
under Section 2.1(b) hereof), or to such other person or address
or account as the Trustee may from time to time specify in
writing to RDC of Nepal, without offset, abatement, withholding
or reduction of any kind. All such payments shall be applied in
the manner required under the Investment Agreement and the Trust
and Retention Agreement.
ARTICLE 3
COVENANTS
Section 3.1. RDC of Nepal Covenants.
(a) RDC of Nepal hereby covenants and agrees that, for so
long as it shall have any obligations hereunder and except as
permitted under Section 3.1(b) hereof, it shall at all times
preserve and maintain in full force and effect its existence as a
company under the laws of the Cayman Islands; and
(b) it shall not merge into or consolidate with any other
Person, change its form of organization or the scope or nature of
its business, or liquidate or dissolve itself (or suffer any such
liquidation or dissolution), or sell, lease, transfer or
otherwise dispose of all or any substantial portion of its
assets; provided, however, that nothing herein shall prevent RDC
of Nepal from encumbering, or transferring an interest in, its
Shares pursuant to its Share Pledge Agreement or otherwise to the
extent such encumbrance or transfer does not result in a Default
or an Event of Default under any Loan Document.
Section 3.2. Indemnification. RDC of Nepal shall defend,
indemnify and hold harmless the Company, the Trustee and each of
the Lenders from and against any and all costs, expenses,
liabilities, losses, damages, injunctions, suits, actions, fines,
penalties, claims and demands, of every kind or nature, including
attorney's fees and court costs, which are occasioned by or
result from any failure by RDC of Nepal to timely perform any of
the terms, agreements or covenants to be performed hereunder.
Section 3.3. Obligations Absolute.
(a) No compromise, alteration, amendment, modification,
extension, renewal, release or other change of, or waiver,
consent or other action in respect of any liability or obligation
under or in respect of, or of any of the terms, covenants or
conditions of, the Investment Agreement or any other Principal
Document, or any Security, shall in any way alter or affect any
of the obligations hereunder of the Company or RDC of Nepal.
(b) (i) The obligations of RDC of Nepal under
this Agreement are absolute and unconditional and
shall not be affected by (x) any default by the
Company in the performance or observance of any of
its agreements or covenants in any Loan Document,
this Agreement or any other Principal Document,
(y) the bankruptcy, insolvency, winding up or
other similar proceeding of the Company, RDC of
Nepal or any other Person, or (z) any other
circumstance, happening, condition or event
whatsoever, whether or not similar to any of the
foregoing. The obligations of RDC of Nepal under
this Agreement shall not be subject to any
abatement, reduction, limitation, impairment,
termination, set-off, defense, counterclaim or
recoupment whatsoever or any right to any thereof,
and shall not be released, discharged or in any
way affected by any reorganization, arrangement,
compromise, composition or plan affecting the
Company or by any lack of validity or
enforceability of the Investment Agreement or any
document executed in connection therewith, whether
or not RDC of Nepal or the Company shall have
notice or knowledge of any of the foregoing.
(ii) If the obligations of RDC of Nepal
hereunder are unenforceable by reason of the
insolvency, bankruptcy or reorganization of the
Company or any other Person, RDC of Nepal shall
nonetheless pay any amounts due hereunder directly
to the Trustee.
(c) Notwithstanding paragraphs (a) and (b) above, receipt
of an amount drawn on the Equity Letter of Credit shall
constitute satisfaction of RDC of Nepal's obligation to pay a
Subscription Amount Payment, to the extent of the amount so
received.
(d) Each of RDC of Nepal and the Company hereby irrevocably
waives, to the extent that it may do so under applicable law, any
defense based on the adequacy of a remedy at law which may be
asserted as a bar to the remedy of specific performance in any
action brought against it.
(e) RDC of Nepal hereby irrevocably waives, to the extent
it may do so under applicable law, any protection to which it may
be entitled under bankruptcy, insolvency or similar laws of any
jurisdiction in the event of a Company Bankruptcy. In the event
a trustee in bankruptcy or the debtor-in-possession takes any
action (including, without limitation, the institution of any
action, suit or other proceeding) in a Company Bankruptcy for the
purpose of enforcing the obligations of RDC of Nepal under this
Agreement, RDC of Nepal hereby agrees, to the extent that it may
do so under applicable law, that it will not assert any defense,
claim or counterclaim denying liability thereunder on the basis
that this Agreement is an executory contract that cannot be
assumed, assigned or enforced. If a Company Bankruptcy shall
occur, RDC of Nepal, to the extent it may do so under applicable
law, shall reconfirm its pre-petition waiver of any protection to
which it may be entitled to under any such laws and, to give
effect to such waiver, RDC of Nepal consents to the assumption
and enforcement of each provision of this Agreement by the debtor-
in-possession or the Company's trustee in bankruptcy, as the case
may be.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations And Warranties.
(a) RDC of Nepal and Company Representations and
Warranties. RDC of Nepal hereby represents and warrants, and the
Company hereby represents and warrants, solely as to itself, that
as of the date hereof:
(i) this Agreement has been duly authorized,
executed and delivered by it and constitutes its
valid and legally binding obligation;
(ii) the execution, delivery and performance
of this Agreement will not conflict with or result
in a breach of any of the terms, conditions or
provisions of, or constitute a default or require
any consent under, any indenture, mortgage,
agreement or other instrument or arrangement to
which it is a party or by which it is bound, or
violate any of the terms or provisions of its
articles of incorporation, by-laws or other
governing documents, or any judgment, decree or
order or any law, statute, rule or regulation
applicable to it; and
(iii) it has obtained all consents,
licenses and authorizations of all governmental
authorities required under applicable laws,
regulations, decrees or orders of or in any
applicable jurisdiction (which may legally be
obtained as of the date hereof) in connection with
the execution, delivery, performance, validity or
enforceability of this Agreement or the making of
any other payments to the Company in accordance
with this Agreement, and that such consents,
licenses and authorizations are in full force and
effect.
(b) Company Representations and Warranties. The Company
hereby represents and warrants that as of the date hereof:
(i) it is a company duly organized, validly
existing and in good standing under the laws of
the jurisdiction of its organization;
(ii) after giving effect to the terms of this
Agreement and the other Subscription Agreements
(A) seven hundred forty-one thousand five hundred
eighty-seven (741,587) shares of the Company will
be issued and outstanding on the Financial Closing
Date, (B) all shares of the Company will have been
duly authorized and validly issued, (C) no
subscription, warrant, option, convertible
security or other right (contingent or otherwise)
to purchase or acquire any shares of the share
capital of the Company will be authorized or
outstanding, other than pursuant to the Loan
Documents, (D) there will not exist any commitment
of the Company to issue any subscription, warrant,
option, convertible security or other such right
or to issue or distribute to holders of shares of
the Company any evidence of indebtedness or assets
of the Company, (E) the Company will have no
obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any shares of the
Company or any interest therein or to pay any
dividend or make any other distribution in respect
thereof other than pursuant to the Loan Documents,
and (F) all shares of the Company are and will be
identical in respect of rights and priorities.
Section 4.2. Further Assurances. In the event that any
additional consents, licenses or authorizations may be required
in connection with the execution, delivery, performance, validity
or enforceability of this Agreement or the making of any payment
in relation hereto, RDC of Nepal and the Company shall obtain all
such consents, licenses or authorizations and shall take such
action as shall be required of it in order to comply with the
terms hereof.
ARTICLE 5
MISCELLANEOUS
Section 5.1. Governing Law; Consent to
Jurisdiction and Venue; Sovereign Immunity.
(a) This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and be
governed by the laws of the State of New York without regard to
the conflicts of laws provisions thereof (other than Sections 5-
1401 and 5-1402 of the General Obligations Law of the State of
New York). Any legal action or proceeding against the Company or
RDC of Nepal with respect to this Agreement may be brought in the
courts of the State of New York in the Borough of Manhattan or of
the United States for the Southern District of New York and, by
execution and delivery of this Agreement, each of the Company and
RDC of Nepal hereby irrevocably accepts for itself and in respect
of its property, generally and unconditionally, the jurisdiction
of the aforesaid courts. Each of the Company and RDC of Nepal
agrees that a judgment in any such action or proceeding shall be
conclusive and binding upon it, and may be enforced in any other
jurisdiction, including without limitation in Nepal, by a suit
upon such judgment, a certified copy of which shall be conclusive
evidence of the judgment. Each of the Company and RDC of Nepal
hereby irrevocably designates, appoints and empowers CT
Corporation System, with offices on the date hereof at ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as its designee, appointee
and agent to receive, accept and acknowledge for and on its
behalf, and in respect of its property, service of any and all
legal process, summons, notices and documents which may be served
in any such action or proceeding. If for any reason such
designee, appointee and agent shall cease to be available to act
as such, each of the Company and RDC of Nepal agrees to designate
a new designee, appointee and agent in New York City. Each of
the Company and RDC of Nepal further irrevocably consents to the
service of process out of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to it, at its
address set forth below, such service to become effective ten
(10) days after such mailing. Nothing herein shall affect the
right of any party to serve process in any other manner permitted
by law or to commence legal proceedings or otherwise proceed
against the Company or RDC of Nepal in Nepal or in any other
jurisdiction.
(b) Each of the Company and RDC of Nepal hereby irrevocably
waives any objection which it may now or hereafter have to the
laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Agreement or any other
Principal Document to which the Company or RDC of Nepal is a
party brought in the courts referred to in paragraph (a) above
and hereby further irrevocably waives and agrees not to plead or
claim in any such court that any action or proceeding brought in
any such court has been brought in an inconvenient forum.
(c) RDC of Nepal acknowledges and agrees that the
activities contemplated by this Agreement are commercial in
nature rather than governmental or public, and therefore
acknowledges and agrees that the right of immunity does not and
will not arise with respect to such activities or in any legal
action or proceeding arising out of or relating to this Agreement
in respect of itself and its properties.
Section 5.2. Notices. All notices, demands, requests and
other communications provided for hereunder shall be in writing
and shall be deemed to have been given (a) when presented
personally, (b) when transmitted by facsimile to the number
specified below, upon acknowledgement of receipt by the
recipient, or (c) when sent by overnight courier service, the
Business Day following the date of delivery to such courier
service, or such later day as demonstrated by a bona fide receipt
therefor. Any party may from time to time designate by written
notice to the other parties another address to which notices are
to be sent.
For the Company: Panda Energy International, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
Bhote Koshi Power Company Private Limited
KHA ▇-▇▇▇
▇▇▇▇▇▇▇▇, Tahachal
Kathmandu, Nepal
Attention: Project Manager
Facsimile: 977-1-27-0027
For RDC of Nepal:
Address: ▇/▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ Church Street
Grand Cayman
Cayman Islands, R.W.I.
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
c/o Harza Engineering Company International ▇.▇.
▇▇▇▇▇ Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
For Wilmington Trust Company:
Address: ▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇
Attention: Corporate Trust Administration
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Section 5.3. Benefit of Agreement. This Agreement shall
be binding upon and inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto;
provided, however, that none of the parties may assign or
transfer any of its rights or obligations hereunder without the
prior written consent of the Lenders.
Section 5.4. No Waiver; Remedies Cumulative. No failure
or delay on the part of the Company in exercising any right,
power on privilege hereunder, and no course of dealing between
the Company and RDC of Nepal, shall impair any such right, power
or privilege or operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege hereunder. The rights,
powers and remedies herein are cumulative and not exclusive of
any rights, powers or remedies which the Company would otherwise
have. No notice to or demand on RDC of Nepal in any case shall
entitle RDC of Nepal to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the
rights of the Company to any other or further action in any
circumstances without notice or demand.
Section 5.5. Severability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability but that shall
not invalidate the remaining provisions of this Agreement or
affect such provision in any other jurisdiction.
Section 5.6. Documents. All documents to be furnished or
communications to be given or made under this Agreement shall be
in the English language or, if in another language, shall be
accompanied by a translation into English certified by a
representative of the Company or RDC of Nepal, as the case may
be, which translation shall be the governing version between the
Company and RDC of Nepal.
Section 5.7. Counterparts. This Agreement may be executed
in any number of counterparts and by the different parties hereto
on separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument.
Section 5.8. Headings Descriptive. The headings of the
Articles of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any
provision of this Agreement.
Section 5.9. Amendment or Waiver. Neither this Agreement
nor any of the terms hereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination
is in writing signed by each of the parties hereto.
Section 5.10. Limitation of Liability. Wilmington Trust
Company in acting hereunder is acting not in its individual
capacity but solely as Trustee and shall be entitled to the
rights, protections and immunities, if any, of the Trustee under
the Trust and Retention Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed and delivered by their proper and duly
authorized officers of the day and year first written above.
BHOTE KOSHI POWER COMPANY PRIVATE LIMITED
By:
Name:
Title:
RDC OF NEPAL
By:
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Trustee
By:
Name:
Title:
ANNEX A
International Swap Dealers Association, Inc.
May 1989 Addendum to Schedule to
Interest Rate and Currency Exchange Agreement
Interest Rate Caps, Collars and Floors
(1) As used in this Agreement or in a Confirmation (i)
"Rate Protection Transaction" will mean any Swap Transaction that
is identified in the related Confirmation as a Rate Protection
Transaction, Rate Cap Transaction, Rate Floor Transaction or Rate
Collar Transaction and (ii) "Specified Swap" means,
notwithstanding Section 14 of this Agreement but subject to Part
1 of this Schedule, any rate swap, rate cap, rate floor, rate
collar, currency exchange transaction, forward rate agreement or
other exchange or rate protection transaction, or any combination
of such transactions or agreements or any option with respect to
any such transaction now existing or hereafter entered into
between one party to this Agreement (or any applicable Specified
Entity) and the other party to this Agreement (or any applicable
Specified Entity).
(2) Notwithstanding anything to the contrary in this
Agreement or in any Interest Rate and Currency Exchange
Definitions published by the International Swap Dealers
Association, Inc. and incorporated in any Confirmation, the
following provisions will apply with respect to a Rate Protection
Transaction:
(a) the Floating Rate applicable to any Calculation Period will
be (i) with respect to a Floating Rate Payer for which a Cap Rate
is specified, the excess, if any, of the Floating Rate calculated
as provided in this Agreement (without reference to this
paragraph 2(a)) over the Cap Rate and (ii) with respect to a
Floating Rate Payer for which a Floor Rate is specified, the
excess, if any, of the Floor Rate over the Floating Rate
calculated as provided in this Agreement (without reference to
this paragraph 2(a)):
(b) "Cap Rate" means, in respect of any Calculation Period, the
per annum rate specified as such for that Calculation Period, and
(c) "Floor Rate" means, in respect of any Calculation Period,
the per annum rate specified as such for that Calculation Period.
(3) For purposes of the determination of a Market Quotation
for a Terminated Transaction in respect of which a party ("X")
had, immediately prior to the designation or occurrence of the
relevant Early Termination Date, no future payment obligation,
whether absolute or contingent, under Section 2(a)(i) of this
Agreement with respect to the Terminated transaction, (i) the
quotations obtained from Reference Market-makers shall be such as
to preserve the economic equivalent of the payment obligations of
the party ("Y") that had, immediately prior to the designation or
occurrence of the relevant Early Termination Date, future payment
obligations, whether absolute or contingent, under Section
2(a)(i) of this Agreement with respect to the Terminated
Transaction and (ii) if X is making the determination such
amounts shall be expressed as positive amounts and if Y is making
the determination such amounts shall be expressed as negative
amounts.
(4) Notwithstanding the terms of Sections 5 and 6 of this
Agreement, if at any time and so long as one of the parties to
this Agreement ("X") shall have satisfied in full all its payment
obligations under Section 2(a)(i) of this Agreement and shall at
the time have no future payment obligations, whether absolute or
contingent, under such Section, then unless the other party ("Y")
is required pursuant to appropriate proceedings to return to X or
otherwise returns to X upon demand of X any portion of any such
payment, (a) the occurrence of an event described in Section 5(a)
of this Agreement with respect to X or any Specified Entity of X
shall not constitute an Event of Default or a Potential Event of
Default with respect to X as the Defaulting Party and (b) Y shall
be entitled to designate an Early Termination Date pursuant to
Section 6 of this Agreement only as a result of the occurrence of
a Termination Event set forth in (i) either Section 5(b)(i) or
5(b)(ii) of this Agreement with respect to Y as the Affected
Party or (ii) Section 5(b)(iii) of this Agreement with respect to
Y as the Burdened Party.
ANNEX B
International Swap Dealers Association, Inc.
July 1990 Addendum to Schedule to
Interest Rate Swap Agreement
Options
(1) As used in this Agreement or in any Confirmation. "Option"
means any Rate Swap Transaction that is identified in the related
Confirmation as an Option and provides for the grant by Seller to
Buyer of (i) the right to cause an underlying Rate Swap
Transaction, the terms of which are identified in that
Confirmation (an "Underlying Rate Swap Transaction"), to become
effective, (ii) the right to cause Seller to pay Buyer pursuant
to Section 2(a) of this Agreement the Cash Settlement Amount, if
any, in respect of the Underlying Rate Swap Transaction on the
Cash Settlement Payment Date, (iii) the right to cause the
Optional Termination Date to become the Termination Date of the
related Rate Swap Transaction that is identified in that
Confirmation (a "Related Rate Swap Transaction") or (iv) any of
the right or rights specified in the related Confirmation. An
Option may provide for the grant of one or more of the foregoing
rights, all of which can be identified in a single Confirmation.
(2) The following capitalized terms, if used in relation to an
Option, have the respective meanings specified in or pursuant to
the related Confirmation (or elsewhere in this Agreement):
"Buyer", "Seller", "Option Premium", "Option Premium Payment
Date", "Cash Settlement Payment Date", "Cash Settlement Amount",
"Optional Termination Date", "Exercise Terms" and "Option
Exercise Period".
(3) The following provisions will apply with respect to an Option:
(a) Buyer will pay Seller pursuant to Section 2(a) of this
Agreement the Option Premium, if any, on the Option Premium
Payment Date or Dates.
(b) On the terms set forth in this Agreement (including the
related Confirmation), Seller grants to Buyer pursuant to the
Option, (I) if "Physical Settlement" is specified to be
applicable to the Option, the right to cause the Underlying Rate
Swap Transaction to become effective, (ii) if "Cash Settlement"
is specified to be applicable to the Option, the right to cause
Seller to pay Buyer pursuant to Section 2(a) of this Agreement
the Cash Settlement Amount, if any, in respect of the Underlying
Rate Swap Transaction on the Cash Settlement Payment Date or
(iii) if "Optional Termination" is specified to be applicable to
the Option, the right to cause the Optional Termination Date to
become the Termination Date of the Related Rate Swap Transaction.
The Underlying Rate Swap Transaction, if any, shall not become
effective unless (i) "Physical Settlement" is specified to be
applicable to the Option and (ii) the right to cause that
Underlying Rate Swap Transaction to become effective has been
exercised.
(c) Buyer may exercise the right or rights granted pursuant to
the Option only by delivering irrevocable notice (a "Notice of
Exercise") to Seller (which, notwithstanding any other provision
of this Agreement or the Code, may be delivered orally (including
by telephone)). The Notice of Exercise must become effective
during the Option Exercise Period and must include the Exercise
Terms, if any.
(d) Buyer will, if "Written Confirmation" is specified to be
applicable to the Option or upon demand from Seller (which
notwithstanding any other provision of this Agreement or the
Code, may be delivered orally (including by telephone)), (i)
execute a written confirmation confirming the substance of the
Notice of Exercise and deliver the same to Seller or (ii) issue a
telex to Seller setting forth the substance of the Notice of
Exercise. Buyer shall cause such executed written confirmation
or telex to be received by Seller within one Local Banking Day
following the date that the Notice of Exercise or Seller's
demand, as the case may be, becomes effective. If not received
within such time, Buyer will be deemed to have satisfied its
obligations under the immediately preceding sentence at the time
that such executed written confirmation or telex becomes
effective.
(e) Any notice or communication given, and permitted to be
given, orally (including by telephone) in connection with the
Option will be effective when actually received by the recipient.
(4) For purposes of the determination of a Market Quotation
for a Terminated Transaction that is identified as an Option, the
quotations obtained from Reference Market-makers shall take into
account, as of the relevant Early Termination Date, the economic
equivalent of the right or rights granted pursuant to that Option
which are or may become exercisable.
(5) Notwithstanding the terms of Sections 5 and 6 of this
Agreement and Section 11.6 of the Code, if at any time and so
long as the parties to this Agreement ("X") shall have satisfied
in full all its payment obligations under Section 2(a) of this
Agreement and shall at the time have no future payment
obligations, whether absolute or contingent, under such Section,
then unless the other party ("Y") is required pursuant to
appropriate proceedings to return to X or otherwise returns to X
upon demand of X any portion of any such payment, (a) the
occurrence of an event described in Section 5(a) of this
Agreement with respect to X or any Specified Entity of X shall
not constitute an Event of Default or Potential Event of Default
with respect to X as the Defaulting Party and (b) Y shall be
entitled to designate an Early Termination Date pursuant in (I)
either Section 5(b)(i) or 5(b)(ii) of this Agreement with respect
to Y as the Affected Party or (ii) Section 5(b)(iii) of this
Agreement with respect to Y as the Burdened Party. For purposes
of this Agreement. "Potential Event of Default" means an event
that with the giving of notice or lapse of time (or both) would
become an Event of Default.