(a) The Lender may, from time to time, apply the proceeds of the Lender Zero-Coupon Bond (the “Subscription Proceeds”) to purchase bonds from Capital Source, provided that the terms and conditions of the latter bonds provide that:
(i) Capital Source will not enter into an arrangement pursuant to which the Subscription Proceeds are capable of being withdrawn by any third party from an account in Capital Source’s name or under its control without Capital Source’s consent or the process of law (other than to pay for bank charges and fees directly relating to the movement of the Subscription Proceeds, to transfer such funds to another account in Capital Source’s name or under its control, to transfer such funds to the Lender in repayment of the Capital Source Zero-Coupon Bond or otherwise as required by, or by operation of, law) except as required by the Capital Platform Contracts and subject to sub-paragraph (ii) below;
(ii) The Directors of Capital Source will conduct themselves in accordance with high corporate governance standards, in particular with regard to the protection of the Subscription Proceeds;
(iii) until being used to repay the Capital Sources Zero-Coupon Bond, the Subscription Proceeds shall at all times be held in a bank at an Eligible Institution under the authority and control of Capital Source; and
(iv) the Subscription Proceeds will only be used for the purposes of (i) entering into the Capital Platforms Contracts, (ii) repaying the Capital Sources Zero-Coupon Bond, and (iii) paying any necessary and reasonably incurred fees or expenses related to entering into and maintaining the Capital Platform Contracts, in each case subject to sub-paragraphs (i) to (iii) above.
(b) Prior to applying the Subscription Proceeds in accordance with paragraph (a) above:
(i) The Lender shall not enter into an arrangement pursuant to which the Subscription Proceeds are capable of being withdrawn from the Lender Account without Lender’s consent or by operation of law (other than to pay for bank transmission charges directly relating to the movement of such proceeds or to transfer such funds to another Lender Account);
(ii) no Security may be created over the Subscription Proceeds; and
(iii) the Subscription Proceeds shall be held in a bank account under the authority and control of the Lender at an Eligible Institution.
(c) So long as the Lender Zero-Coupon Bond remains outstanding, the Lender shall preserve, exercise and enforce its rights under any Bond it purchases from Capital Source.
e its rights under any Bond it purchases from Capital Source.