EXHIBIT 10.2
FORM OF SWAP TRANSACTION AGREEMENT
[Bank of America Logo]
TO: LTC Properties, Incorporated ("Counterparty")
Attn: Xxxxxxx Xxxxxx
Rapidfax: 000-000-0000
FROM: Bank of America National Trust and Savings Association ("BofA")
000 Xxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Derivative Products Operations
Phone No.: 000-000-0000
Rapidfax: 000-000-0000
DATE: August 12, 1997
RE: USD 65,000,000.00 Swap Transaction
Our Confirmation Reference: 1210 / 70808S3A
Dear Sir/Madam:
The purpose of this letter agreement is to confirm the terms and
conditions of the Transaction entered into between us on the Trade Date
specified below (the "Swap Transaction"). This letter agreement constitutes a
"Confirmation" as referred to in the Agreement specified below.
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.
1. The parties agree that the Swap Transaction described in this
Confirmation constitutes their binding obligations. Except as set forth in this
Confirmation, the Swap Transaction shall be subject to all the terms and
conditions of the form of the master agreement entitled "Master Agreement"
("Multicurrency-Cross Boarder" version) as published in 1992 by the
International Swaps and Derivatives Association, Inc., (and herein called the
"ISDA Agreement"), excluding the "Schedule" thereto. Counterparty and BofA
shall negotiate a Schedule and upon agreement shall sign the ISDA Agreement
whereupon this Confirmation shall be deemed automatically, without further
action of any party, to be a Confirmation under the Agreement; provided however,
that unless and until Counterparty of BofA agree upon and sign the Agreement,
the preceding sentence shall have full force and effect.
THIS FACSIMILE TRANSACTION WILL BE THE ONLY WRITTEN COMMUNICATION
REGARDING THIS SWAP TRANSACTION. Pursuant to ISDA guidelines, this facsimile
transmission will be sufficient for all purposes to evidence a binding
supplement to the Agreement. However, should you have an internal requirement
for confirmations with an original signature, we request that you sign and
return this Confirmation by facsimile, whereupon, we will add an original
signature to the fully executed Confirmation, and forward it to you by mail.
2. The terms of the particular Swap Transaction, which is a Treasury
Lock, to which this Confirmation relates are as follows:
Notional Amount: USD 65,000,000.00
Trade Date: August 8, 1997
Termination Date: December 15, 1997, 2:00 P.M. New York time
Fixed Rate Payer: Counterparty
Fixed Rate: 6.3875%
Floating Rate Payer: BofA
Floating Rate: The Settlement Yield
Reference Security: Interpolated Seven-Year United States Government Treasury
Security based on (i) the most recently auctioned Five-Year
United States Government Treasury Security as of the
Termination Date (the "Five-Year Treasury") and (ii) the
most recently auctioned Ten-Year United States Government
Treasury Security as of the Termination Date (the "Ten-Year
Treasury"). For purposes of the interpolation, 60% of the
Five-Year Treasury will be used and 40% of the Ten-Year
Treasury will be used.
Settlement Yield: 60% of the yield to maturity of the Five-Year Treasury plus
40% of the yield to maturity of the Ten-Year Treasury on
the Termination Date.
Settlement Cash Flow: On the Termination Date, the Settlement Cash Flow shall
mean the amount calculated as the product of
(i) the difference, in basis points (i.e., .0001 = 1 basis
point) between the Settlement Yield and the Fixed Rate,
(ii) the Dollar Value of One Reference Security Basis
Point, as of Termination Date, and (iii) the Notional
Amount (expressed in units of $1MM).
Dollar Value of One Reference 60% of the price change, expressed in Dollars, which would
Security Basis Point: occur on one million face amount of (i ) the Five-Year
Treasury if the yield to maturity moves one basis point
away from the Settlement Yield.
If Settlement Yield is Greater than BofA Settlement Cash Flow to Counterparty
Fixed Rate:
If Settlement yield is Less than Counter party pays Settlement Cash Flow to BofA
Fixed Rate:
Payment Date: December 17, 1997
Rounding: To the nearest 1/1000 of the rate stated as a percent
Governing Law: New York
Settlement Yield and Settlement Cash BofA
Flow Determination Agent:
3. Account Details
Payments to BofA: FED FUNDS TO BANK OF AMERICA NT AND SA SAN FRANCISCO
ABA NO. 0000-0000-0 BISD ACCT NO. 33006-83980 ATTN:
INTERST RATE SWAP OPERATIONS
Payments to Counterparty: FED FUNDS TO SANWA BANK OF CALIFORNIA, ABA NO.
0000-0000-0, ACCT. LTC PROPERTIES, INCORPORATED,
ACCT NO. 0496-17539
4. Offices:
Office of BofA: The Xxx Xxxxxxxxx Xxxx Xxxxxx
Xxxxxx xx Xxxxxxxxxxxx: Xxxxxx, XX
Other Provisions Applicable to BofA
-----------------------------------
Specified Entities of BofA: None
Credit Support Document(s) Relating
to BofA: None
Credit Support Provider Relating to
BofA: None
Agreements of BofA: As per Section 4 of the ISDA Agreement.
Representations of BofA: As per Section 3 of the ISDA Agreement.
Other Provisions Applicable to
------------------------------
Counterparty
------------
Specified Entities of Counterparty: As may be indicated in the Agreement, if at all.
Credit Support Document(s) Relating
to Counterparty: As may be indicated in the Agreement, if at all.
Credit Support Provider Relating to
Counterparty: As may be indicated in the Agreement, if at all.
Agreements of Counterparty: As per Section 4 of the ISDA Agreement.
Representations of Counterparty: As per Section 3 of the ISDA Agreement.
Other Provisions (General)
-------------------------
(A) Other Agreements: Corporate Resolution, Specimen Signature Certificate and
other documentation xxx indicated in the Agreement, if at
all.
(B) Events of Default: As per Section 5 of the ISDA Agreement and Cross Default as
indicated in the Agreement, if at all.
(C) Termination Events: All the Termination Events specified in Section 5(b) of the
ISDA Agreement will apply (including Credit Event Upon
Merger).
(D) Early Termination: As per Section 6 of the ISDA Agreement, it being the
parties' intent that Section 6 apply to all outstanding Swap
Transactions before (as well as after) execution of the
Agreement.
(E) Tax Representations: Counterparty and BofA make the Payer Representations
contained in Part 2 of the Schedule to the ISDA Agreement.
Payee Representations may be indicated in Part 3 of the
Schedule to the Agreement, if applicable.
(F) Tax Agreements of BofA and
Counterparty: As may be indicated in the Agreement if at all.
(G) Variations to the ISDA Agreement: BofA has made certain amendments to the ISDA Agreement which
it believes are of a noncontentious nature. These
amendments will be specified in the draft Agreement to be
sent by BofA to Counterparty.
(H) Documentation: This Confirmation will constitute a binding agreement with
respect to the Swap Transaction described herein. Without
prejudice to the preceding sentence, Counterparty and BofA
will negotiate in good faith to enter into the Agreement as
soon as practicable after the date of this Confirmation.
Please confirm your agreement to be bound by the terms stated herein by
executing the copy of this Confirmation enclosed for that purpose and returning
it to us or by sending to us a telex or letter, within 24 hours of receipt of
this Confirmation to Bank of America NT & SA San Francisco Telex No. 249839
Answer Back OPRST UP or Rapidfax No. 000-000-0000 Attention: Derivative Products
Operations, substantially in the form below:
Quote
We acknowledge receipt of your rapidfax dated August 12, 1997 with respect to
the Swap Transaction entered into on August 8, 1997 between LTC Properties
Incorporated and Bank of America National Trust and Savings Association with a
Notional Amount of USD 65,000,000.00 and a Termination Date of December 15,
1997, and confirm our agreement to be bound by the terms specified in such
rapidfax.
Unquote
