[Federal Register Volume 68, Number 178 (Monday, September 15, 2003)]
[Rules and Regulations]
[Pages 53878-53880]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-23570]



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AGENCY FOR INTERNATIONAL DEVELOPMENT

22 CFR Part 230


Israel Loan Guarantees Issued Under the Emergency Wartime 
Supplemental Appropriations Act of 2003--Standard Terms and Conditions

AGENCY: Agency for International Development.

ACTION: Final rule.

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SUMMARY: This regulation prescribes the procedures and standard terms 
and conditions applicable to loan guarantees issued for the benefit of 
the Government of Israel on behalf of the State of Israel pursuant to 
the Emergency Wartime Supplemental Appropriations Act of 2003.

EFFECTIVE DATE: September 15, 2003.

FOR FURTHER INFORMATION CONTACT: Christopher F.D. Ryder, Office of 
General Counsel, U.S. Agency for International Development, Washington, 
DC 20523-6601; tel. 202-712-4775, fax 202-216-3055.

SUPPLEMENTARY INFORMATION: Pursuant to the Emergency Wartime 
Supplemental Appropriations Act of 2003 (Pub. L. 108-11), the United 
States of America, acting through the U.S. Agency for International 
Development, may issue loan guarantees applicable to sums borrowed by 
the Government of Israel on behalf of the State of Israel (the 
``Borrower'') from time to time between the date hereof and September 
30, 2006, not exceeding an aggregate total of $9 billion in principal 
amount. The loan guarantees shall insure the Borrower's repayment of 
100% of principal and interest due under such loans. The full faith and 
credit of the United States of America is pledged for the full payment 
and performance of such guarantee obligations.
    This rulemaking document is not subject to rulemaking under 5 
U.S.C. 553 or to regulatory review under Executive Order 12866 because 
it involves a foreign affairs function of the United States. The 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.) do 
not apply.

List of Subjects in 22 CFR Part 230

    Foreign aid, Foreign relations, Guaranteed loans.

Authority and Issuance

0
Accordingly, a new Part 230 is added to Title 22, Chapter II, of the 
Code of Federal Regulations, as follows:

PART 230--ISRAEL LOAN GUARANTEES ISSUED UNDER THE EMERGENCY WARTIME 
SUPPLEMENTAL APPROPRIATIONS ACT OF 2003, PUB. L. 108-11--STANDARD 
TERMS AND CONDITIONS

Sec.
230.01 Purpose.
230.02 Definitions.
230.03 The Guarantee.
230.04 Guarantee eligibility.
230.05 Non-impairment of the Guarantee.
230.06 Transferability of Guarantee; Note Register.
230.07 Fiscal Agent Obligations.
230.08 Event of Default; Application for Compensation; Payment.
230.09 No Acceleration of Eligible Notes.
230.10 Payment to USAID of Excess Amounts Received by a Noteholder.
230.11 Subrogation of USAID.
230.12 Prosecution of Claims.
230.13 Change in Agreements.
230.14 Arbitration.
230.15 Notice.
230.16 Governing Law.

    Authority: Emergency Wartime Supplemental Appropriations Act, 
2003, Pub. L. 108-11, chapter 5, title I, ``Loan Guarantees to 
Israel.''


Sec.  230.01  Purpose.

    The purpose of this regulation is to prescribe the procedures and 
standard terms and conditions applicable to loan guarantees issued for 
the benefit of the Government of Israel on behalf of the State of 
Israel (``Borrower''), pursuant to the Emergency Wartime Supplemental 
Appropriations Act of 2003, Pub. L. 108-11. The loan guarantees will 
apply to sums borrowed from time to time between the date hereof and 
September 30, 2006, not exceeding an aggregate total of nine billion 
United States Dollars ($9,000,000,000) in principal amount. The loan 
guarantees shall insure the Borrower's repayment of 100% of principal 
and interest due under such loans. The full faith and credit of the 
United States of America is pledged for the full payment and 
performance of such guarantee obligations. The loan guarantees will be 
issued pursuant to a Loan Guarantee Commitment Agreement between the 
Borrower and the United States Government dated August 18, 2003.


Sec.  230.02  Definitions.

    Wherever used in these standard terms and conditions:
    (a) USAID means the United States Agency for International 
Development or its successor.
    (b) Eligible Note(s) means [a] Note[s] meeting the eligibility 
criteria set out in Sec.  230.04 hereof.
    (c) Noteholder means the owner of an Eligible Note who is 
registered as such on the Note Register of Eligible Notes required to 
be maintained by the Fiscal Agent.
    (d) Borrower means the Government of Israel, on behalf of the State 
of Israel.
    (e) Defaulted Payment means, as of any date and in respect of any 
Eligible Note, any Interest Amount and/or Principal Amount not paid 
when due.
    (f) Further Guaranteed Payments means the amount of any loss 
suffered by a Noteholder by reason of the Borrower's failure to comply 
on a timely basis with any obligation it may have under an Eligible 
Note to indemnify and hold harmless a Noteholder from taxes or 
governmental charges or any expense arising out of taxes or any other 
governmental charges relating to the Eligible Note in the country of 
the Borrower.
    (g) Interest Amount means for any Eligible Note the amount of 
interest accrued on the Principal Amount of such Eligible Note at the 
applicable Interest Rate.
    (h) Principal Amount means the principal amount of any Eligible 
Notes issued by the Borrower. For purposes of determining the principal 
amount of any Eligible Notes issued by the Borrower, the principal 
amount of each Eligible Note shall be:
    (1) In the case of any Eligible Note issued having a notional 
amount, but no principal balance, the original issue price (excluding 
any transaction costs) thereof; and
    (2) In the case of any Eligible Note issued with a principal 
balance, the stated principal amount thereof.
    (i) Interest Rate means the interest rate borne by an Eligible 
Note.
    (j) Loss of Investment respecting any Eligible Note means an amount 
in Dollars equal to the total of the:
    (1) Defaulted Payment unpaid as of the Date of Application,
    (2) Further Guaranteed Payments unpaid as of the Date of 
Application, and
    (3) Interest accrued and unpaid at the Interest Rate(s) specified 
in the Eligible Note(s) on the Defaulted Payment and Further Guaranteed 
Payments, in each case from the date of default with respect to such 
payment to and including the date on which full payment thereof is made 
to the Noteholder.
    (k) Application for Compensation means an executed application in 
the form of Appendix A to this part which a Noteholder, or the Fiscal 
Agent on behalf of a Noteholder, files with USAID pursuant to Sec.  
230.08 of this part.
    (l) Applicant means a Noteholder who files an Application for 
Compensation with USAID, either directly or through

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the Fiscal Agent acting on behalf of a Noteholder.
    (m) Date of Application means the date on which an Application for 
Compensation is actually received by USAID pursuant to Sec.  230.15 of 
this part.
    (n) Business Day means any day other than a day on which banks in 
New York, NY are closed or authorized to be closed or a day which is 
observed as a federal holiday in Washington, DC, by the United States 
Government.
    (o) Guarantee means the guarantee of USAID pursuant to this part 
230 and the Emergency Wartime Supplemental Appropriations Act of 2003, 
Public Law 108-11.
    (p) Guarantee Payment Date means a Business Day not more than three 
(3) Business Days after the related Date of Application.
    (q) Person means any legal person, including any individual, 
corporation, partnership, joint venture, association, joint stock 
company, trust, unincorporated organization, or government or any 
agency or political subdivision thereof.
    (r) Note[s] means any debt securities issued by the Borrower.
    (s) Fiscal Agency Agreement means the agreement among USAID, the 
Borrower and the Fiscal Agent pursuant to which the Fiscal Agent agrees 
to provide fiscal agency services in respect of the Note[s], a copy of 
which Fiscal Agency Agreement shall be made available to Noteholders 
upon request to the Fiscal Agent.
    (t) Fiscal Agent means the bank or trust company or its duly 
appointed successor under the Fiscal Agency Agreement which has been 
appointed by the Borrower with the consent of USAID to perform certain 
fiscal agency services for specified Eligible Note[s] pursuant to the 
terms of the Fiscal Agency Agreement.


Sec.  230.03  The Guarantee.

    Subject to these terms and conditions, the United States of 
America, acting through USAID, guarantees to Noteholders the Borrower's 
repayment of 100 percent of principal and interest due on Eligible 
Notes. Under this Guarantee, USAID agrees to pay to any Noteholder 
compensation in Dollars equal to such Noteholder's Loss of Investment 
under its Eligible Note; provided, however, that no such payment shall 
be made to any Noteholder for any such loss arising out of fraud or 
misrepresentation for which such Noteholder is responsible or of which 
it had knowledge at the time it became such Noteholder. This Guarantee 
shall apply to each Eligible Note registered on the Note Register 
required to be maintained by the Fiscal Agent.


Sec.  230.04  Guarantee Eligibility.

    (a) Eligible Notes only are guaranteed hereunder. Notes in order to 
achieve Eligible Note status:
    (1) Must be signed on behalf of the Borrower, manually or in 
facsimile, by a duly authorized representative of the Borrower;
    (2) Must contain a certificate of authentication manually executed 
by a Fiscal Agent whose appointment by the Borrower is consented to by 
USAID in the Fiscal Agency Agreement; and
    (3) Shall be approved and authenticated by USAID by either:
    (i) The affixing by USAID on the Notes of a guarantee legend 
incorporating these Standard Terms and Conditions signed on behalf of 
USAID by either a manual signature or a facsimile signature of an 
authorized representative of USAID or
    (ii) the delivery by USAID to the Fiscal Agent of a guarantee 
certificate incorporating these Standard Terms and Conditions signed on 
behalf of USAID by either a manual signature or a facsimile signature 
of an authorized representative of USAID.
    (b) The authorized USAID representatives for purposes of this 
regulation whose signature(s) shall be binding on USAID shall include 
the USAID Chief and Deputy Chief Financial Officer, Assistant 
Administrator and Deputy, Bureau for Economic Growth, Agriculture and 
Trade, Director and Deputy Director, Office of Development Credit, and 
such other individual(s) designated in a certificate executed by an 
authorized USAID Representative and delivered to the Fiscal Agent. The 
certificate of authentication of the Fiscal Agent issued pursuant to 
the Fiscal Agency Agreement shall, when manually executed by the Fiscal 
Agent, be conclusive evidence binding on USAID that an Eligible Note 
has been duly executed on behalf of the Borrower and delivered.


Sec.  230.05  Non-impairment of the Guarantee.

    The full faith and credit of the United States of America is 
pledged to the performance of this Guarantee. The Guarantee shall be 
unconditional, and shall not be affected or impaired by:
    (a) Any defect in the authorization, execution, delivery or 
enforceability of any agreement or other document executed by a 
Noteholder, USAID, the Fiscal Agent or the Borrower in connection with 
the transactions contemplated by this Guarantee or
    (b) The suspension or termination of the program pursuant to which 
USAID is authorized to guarantee the Eligible Notes. This non-
impairment of the guarantee provision shall not, however, be operative 
with respect to any loss arising out of fraud or misrepresentation for 
which the claiming Noteholder is responsible or of which it had 
knowledge at the time it became a Noteholder.


Sec.  230.06  Transferability of Guarantee; Note Register.

    A Noteholder may assign, transfer or pledge an Eligible Note to any 
Person. Any such assignment, transfer or pledge shall be effective on 
the date that the name of the new Noteholder is entered on the Note 
Register required to be maintained by the Fiscal Agent pursuant to the 
Fiscal Agency Agreement. USAID shall be entitled to treat the Persons 
in whose names the Eligible Notes are registered as the owners thereof 
for all purposes of this Guarantee and USAID shall not be affected by 
notice to the contrary.


Sec.  230.07  Fiscal Agent Obligations.

    Failure of the Fiscal Agent to perform any of its obligations 
pursuant to the Fiscal Agency Agreement shall not impair any 
Noteholder's rights under this Guarantee, but may be the subject of 
action for damages against the Fiscal Agent by USAID as a result of 
such failure or neglect. A Noteholder may appoint the Fiscal Agent to 
make demand for payment on its behalf under this Guarantee.


Sec.  230.08  Event of Default; Application for Compensation; Payment.

    At any time after an Event of Default, as this term is defined in 
an Eligible Note, any Noteholder hereunder, or the Fiscal Agent on 
behalf of a Noteholder hereunder, may file with USAID an Application 
for Compensation in the form provided in Appendix A to this part. USAID 
shall pay or cause to be paid to any such Applicant any compensation 
specified in such Application for Compensation that is due to the 
Applicant pursuant to the Guarantee as a Loss of Investment not later 
than three (3) Business Days after the Date of Application. In the 
event that USAID receives any other notice of an Event of Default, 
USAID may pay any compensation that is due to any Noteholder pursuant 
to a Guarantee, whether or not such Noteholder has filed with USAID an 
Application for Compensation in respect of such amount.

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Sec.  230.09  No Acceleration of Eligible Notes.

    Eligible Notes shall not be subject to acceleration, in whole or in 
part, by USAID, the Noteholder or any other party. USAID shall not have 
the right to pay any amounts in respect of the Eligible Notes other 
than in accordance with the original payment terms of such Eligible 
Notes.


Sec.  230.10  Payment to USAID of Excess Amounts Received by a 
Noteholder.

    If a Noteholder shall, as a result of USAID paying compensation 
under this Guarantee, receive an excess payment, it shall refund the 
excess to USAID.


Sec.  230.11  Subrogation of USAID.

    In the event of payment by USAID to a Noteholder under this 
Guarantee, USAID shall be subrogated to the extent of such payment to 
all of the rights of such Noteholder against the Borrower under the 
related Note.


Sec.  230.12  Prosecution of Claims.

    After payment by USAID to an Applicant hereunder, USAID shall have 
exclusive power to prosecute all claims related to rights to receive 
payments under the Eligible Notes to which it is thereby subrogated. If 
a Noteholder continues to have an interest in the outstanding Eligible 
Notes, such a Noteholder and USAID shall consult with each other with 
respect to their respective interests in such Eligible Notes and the 
manner of and responsibility for prosecuting claims.


Sec.  230.13  Change in Agreements.

    No Noteholder will consent to any change or waiver of any provision 
of any document contemplated by this Guarantee without the prior 
written consent of USAID.


Sec.  230.14  Arbitration.

    Any controversy or claim between USAID and any noteholder arising 
out of this Guarantee shall be settled by arbitration to be held in 
Washington, DC in accordance with the then prevailing rules of the 
American Arbitration Association, and judgment on the award rendered by 
the arbitrators may be entered in any court of competent jurisdiction.


Sec.  230.15  Notice.

    Any communication to USAID pursuant to this Guarantee shall be in 
writing in the English language, shall refer to the Israel Loan 
Guarantee Number inscribed on the Eligible Note and shall be complete 
on the day it shall be actually received by USAID at the Office of 
Development Credit, Bureau for Economic Growth, Agriculture and Trade, 
United States Agency for International Development, Washington, DC 
20523-0030. Other addresses may be substituted for the above upon the 
giving of notice of such substitution to each Noteholder by first class 
mail at the address set forth in the Note Register.


Sec.  230.16  Governing Law.

    This Guarantee shall be governed by and construed in accordance 
with the laws of the United States of America governing contracts and 
commercial transactions of the United States Government.

Appendix A to Part 230--Application for Compensation

United States Agency for International Development

Washington, DC 20523

Ref: Guarantee dated as of ----------, 19 --:
Gentlemen:
    You are hereby advised that payment of $---------- (consisting 
of $---------- of principal, $---------- of interest and $---------- 
in Further Guaranteed Payments, as defined in Sec.  230.02(f) of the 
Standard Terms and Conditions of the above-mentioned Guarantee) was 
due on ----------, 20--, on $---------- principal amount of Notes 
held by the undersigned of the Government of Israel, on behalf of 
the State of Israel (the ``Borrower''). Of such amount $---------- 
was not received on such date and has not been received by the 
undersigned at the date hereof. In accordance with the terms and 
provisions of the above-mentioned Guarantee, the undersigned hereby 
applies, under Sec.  230.08 of said Guarantee, for payment of $----
----------------, representing $--------------------, the Principal 
Amount of the presently outstanding Note(s) of the Borrower held by 
the undersigned that was due and payable on ---------- and that 
remains unpaid, and $----------, the Interest Amount on such Note(s) 
that was due and payable by the Borrower on---------- and that 
remains unpaid, and $---------- in Further Guaranteed Payments,\1\ 
plus accrued and unpaid interest thereon from the date of default 
with respect to such payments to and including the date payment in 
full is made by you pursuant to said Guarantee, at the rate of ----
--% per annum, being the rate for such interest accrual specified in 
such Note. Such payment is to be made at [state payment instructions 
of Noteholder].
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    \1\ In the event the Application for Compensation relates to 
Further Guaranteed Payments, such Application must also contain a 
statement of the nature and circumstances of the related loss.
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    All capitalized terms herein that are not otherwise defined 
shall have the meanings assigned to such terms in the Standard Terms 
and Conditions of the above-mentioned Guarantee.

[Name of Applicant]

By:--------------------------------------------------------------------
 Name:
 Title:
 Dated:

    Dated: September 11, 2003.
Christopher F.D. Ryder,
Acting Assistant General Counsel.
[FR Doc. 03-23570 Filed 9-12-03; 8:45 am]
BILLING CODE 6116-01-P