EXHIBIT 10.26
[PNC BANK LOGO]
November 8, 1999
Xxxxxxx X. XxXxxxx
Chairman and Chief Executive Officer
Escalon Medical Corp.
000 X. Xxxxxxxxx Xxxx
Xxxxx, XX 00000
Fax: 000-000-0000
Phone: 000-000-0000
Subject: CONFIRMATION OF RATE CAP TRANSACTION DATED AS OF NOVEMBER 8, 1999
BETWEEN ESCALON MEDICAL CORP. ("ESCALON") AND PNC BANK, NATIONAL
ASSOCIATION ("PNC").
Dear Rich:
The purpose of this letter agreement is to confirm the terms and conditions of
the Rate Cap Transaction (the "Transaction") entered into between Escalon and
PNC on the Trade Date specified below. This letter constitutes a
"Confirmation" as referred to in the ISDA Master Agreement (the "Master
Agreement") specified below.
1. The definitions and provisions contained in the 1991 ISDA Definitions (as
published by the International Swaps and Derivatives Association, Inc.) are
incorporated into this Confirmation. In the event of any inconsistency between
those definitions and provisions and this Confirmation, this Confirmation will
govern.
2. If Escalon and PNC are parties to an ISDA Master Agreement that sets forth
the general terms and conditions applicable to transactions between Escalon and
PNC (a "Master Agreement"), this Confirmation supplements, forms a part of, and
is subject to, such Master Agreement. If Escalon and PNC are not yet parties to
a Master Agreement, this Confirmation will supplement, form a part of, and be
subject to, a Master Agreement upon its execution by Xxxxxxx and PNC. All
provisions contained or incorporated by reference in such Master Agreement
shall govern this Confirmation, except as modified expressly below. In
addition, if a Master Agreement has not been executed, this Confirmation will
itself evidence a complete binding agreement between Escalon and PNC as to the
terms and conditions of the Transaction to which this Confirmation relates.
3. Each party represents and warrants to agrees with the other party as
follows:
(a) Such party is fully informed of and capable of evaluating, and has
evaluated, the potential financial benefits and risks, the tax and
accounting implications, the appropriateness in light of its
November 8, 1999
Page 2
individual financial circumstances, business affairs, and risk management
capabilities, and the conformity to its policies and objectives, of this
Transaction.
(b) Such party has entered into this Transaction in reliance only upon its
own judgment. Neither party holds itself out as advising, or any of its
employees or agents as having the authority to advise, the other party as
to whether or not it should enter into this Transaction, and neither party
shall have any liability whatsoever in respect of any advice of such nature
given, or views expressed, by it or any such persons to the other party,
whether or not such advice is given or such views are expressed at the
request of the other party.
(c) Such party has entered into this Transaction for purposes of hedging
and not for the purpose of speculation.
4. The terms of the particular Transaction to which this Confirmation relates
are as follows:
Type of Transaction: Rate Cap Transaction
Notional Amount: Initially USD $7,000,000, then amortizing per the
attached amortization schedule
Trade Date: November 8, 1999
Effective Date: November 22, 1999
Termination Date: January 1, 2003, subject to adjustment in
accordance with the Modified Following Banking Day
Convention.
FIXED RATE PAYER: For purposes of this Rate Cap Transaction, there
shall be no Fixed Rate Payer.
FLOATING RATE PAYER: PNC
Cap Rate: 9.00% for the period 11/22/1999 to 1/1/2001
9.50% for the period 1/1/2001 to 1/1/2002
10.00% for the period 1/1/2002 to 1/1/2003
Floating Rate Option: USD-Prime-H.15
Designated Maturity: One (1) month
Floating Rate Day Count
Fraction: Actual/360
Floating Rate for
Initial Calculation Period: To be determined
November 8, 1999
Page 3
Reset Dates: Daily
Averaging: Weighted
Floating Rate Payer
Payment Dates: The 1st day of each month, commencing on
December 1, 1999, and ending on January 1,
2003, subject to adjustment in accordance
with the Modified Following Banking Day
convention.
Payment to PNC: Escalon will pay PNC a fee of USD $88,900.00
no later than November 10, 1999.
Payment Instructions to PNC: PNC Bank, Pittsburgh
ABA#: 000-000-000
Acct: Investment Operations
Acct #: 196030411
Attn: Derivative Products
Payments to Escalon shall be made in immediately available funds to:
[PLEASE ADVISE]
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation, returning a copy to Xxx Xxxxxxxxxxx
via fax (412/000-0000) and returning the original to Xxx Xxxxxxxxxxx at One PNC
Plaza - 9th Floor, 000 Xxxxx Xxxxxx, Xxxxxxxxxx, XX 00000 via Overnight
delivery. Xxx's phone number is (412/000-0000).
Yours sincerely, Accepted and agreed as of the
date first above written:
PNC BANK, NATIONAL ASSOCIATION ESCALON MEDICAL CORP.
By: /s/ Xxxxxxxxx X. XxXxxxxxxx By: /s/ Xxxxxxx X. XxXxxxx
--------------------------- ------------------------
Name: Xxxxxxxxx X. XxXxxxxxxx Name: Xxxxxxx X. XxXxxxx
Title: Senior Vice President Title: Chairman and Chief Executive
Officer
PNC BANK, N.A. CONFIDENTIAL
AMORTIZATION SCHEDULE
Payment Payment
Start Date* Due Date* Principal Amount Principal Prints
----------- --------- ---------------- ----------------
11/22/99 4/1/00 $7,000,000.00 $ 350,000.00
4/1/00 7/1/00 $6,650,000.00 $ 350,000.00
7/1/00 10/1/00 $6,300,000.00 $ 350,000.00
10/1/00 1/1/00 $5,850,000.00 $ 350,000.00
---------------------------------------------------------------------
1/1/01 4/1/01 $5,600,000.00 $ 350,000.00
4/1/01 7/1/01 $5,250,000.00 $ 350,000.00
7/1/01 10/1/01 $4,900,000.00 $ 350,000.00
10/1/01 1/1/02 $4,550,000.00 $ 350,000.00
---------------------------------------------------------------------
1/1/02 4/1/02 $4,200,000.00 $ 350,000.00
4/1/02 7/1/02 $3,850,000.00 $ 350,000.00
7/1/02 10/1/02 $3,500,000.00 $ 350,000.00
10/1/02 1/1/03 $3,150,000.00 $3,150,000.00
*Start and Payment Due Dates are subject to the Modified Following Business Day
convention.
