PROSPECTUS SUPPLEMENT
(To Prospectus dated October 23, 1996)
$53,300,000
PRINCIPAL AMOUNT PLUS INTEREST
LIQUIDITY FACILITY
OF
FGIC SECURITIES PURCHASE, INC.
IN SUPPORT OF
CITY OF TAMPA, FLORIDA
OCCUPATIONAL LICENSE TAX BONDS
SERIES 1996A
Occupational License Tax Bonds
Series 1996A
Date of Variable Rate Bonds: Date of Issuance Due: May 1, 2027
The Variable Rate Bonds will initially bear interest at an initial
Weekly Rate for the first weekly period of (the "First Interest Period");
thereafter, until adjustment to a different type of rate period as the Issuer
shall determine, all Variable Rate Bonds shall continue to bear interest at a
Weekly Rate. The Variable Rate Bonds are subject to mandatory and optional
tender and to redemption prior to maturity, as described herein. Payment of
the purchase price equal to the principal of and up to 35 days' accrued
interest at a maximum rate of 12% per annum on the Variable Rate Bonds
tendered for purchase while in the Weekly Mode as described herein will be
made pursuant and subject to the terms of the Liquidity Facility described
herein provided by
FGIC SECURITIES PURCHASE, INC.
The Liquidity Facility will expire on October 24, 2001 unless extended
by FGIC Securities Purchase, Inc. for an additional five years upon notice to
the Issuer two years prior to the scheduled expiration date, or sooner
terminated in accordance with the terms thereof.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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The obligations of FGIC Securities Purchase, Inc. under the Liquidity
Facility (the "Obligations") are not being sold separately from the Variable
Rate Bonds, which are being offered pursuant to a separate Official
Statement. The Obligations are not severable from the Variable Rate Bonds
and may not be separately traded. This Prospectus Supplement and the
accompanying Prospectus, appropriately supplemented, may also be delivered in
connection with any remarketing of Variable Rate Bonds purchased by FGIC
Securities Purchase, Inc.
--------------------------------------------
MERRILL LYNCH & CO
SMITH BARNEY, INC. RAYMOND JAMES & ASSOCIATES,
INC.
DOUGLAS JAMES SECURITIES, INC.
The date of this Prospectus Supplement is October 23, 1996.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
SECURITIES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
DOCUMENTS INCORPORATED BY REFERENCE
There is hereby incorporated herein by reference the Annual Report
on Form 10-K for the year ended December 31, 1995 and the Quarterly
Reports on Form 10-Q for the fiscal quarters ended March 30, 1996 and June
29, 1996 and the current report on Form 8-K dated June 28, 1996 of General
Electric Capital Corporation ("GE Capital"), all heretofore filed with
the Securities and Exchange Commission (the "Commission") pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"), to which
reference is hereby made.
INTRODUCTION
This Prospectus Supplement is provided to furnish information
on the obligations of FGIC Securities Purchase, Inc. ("FGIC-SPI" or the
"Liquidity Provider") under the liquidity facility in support of
$53,300,000 aggregate principal amount of Occupational License Tax Bonds,
Series 1996 to be issued by the City of Tampa, Florida (the "Issuer" or
the "City"), on or about October 24, 1996 (the "Variable Rate Bonds")
pursuant Resolution No. 96-1902 adopted on October 17, 1996 by the City
Counsel of the Issuer (the "Bond Resolution"). FGIC-SPI will enter into
a Standby Bond Purchase Agreement (the "Liquidity Facility") with Bank
of New York Trust Company, N.A. (the "Paying Agent"), pursuant to which
FGIC-SPI will be obligated under certain circumstances to purchase
unremarketed Variable Rate Bonds from the Holders thereof optionally or
mandatorily tendering their Variable Rate Bonds for purchase. In order
to obtain funds to purchase the Variable Rate Bonds, FGIC-SPI will enter
into a Standby Loan Agreement with General Electric Capital Corporation
("GE Capital") under which GE Capital will be irrevocably obligated to lend
funds as needed by FGIC-SPI to purchase Variable Rate Bonds. The
obligations of FGIC-SPI under the Liquidity Facility will expire on October
24, 2001 unless extended by FGIC Securities Purchase, Inc. for an
additional five years upon notice to the Issuer two years prior to
the scheduled expiration date, or sooner terminated in accordance with its
terms.
DESCRIPTION OF THE VARIABLE RATE BONDS
GENERAL
The Variable Rate Bonds will be issued originally solely in
book-entry form to The Depository Trust Company ("DTC") or its nominee,
Cede & Co., to be held in DTC's book-entry only system. So long as the
Variable Rate Bonds are held in the book-entry only system, DTC (or
a successor securities depositary) or its nominee will be the
registered owner or holder of the Variable Rate Bonds for all purposes
of the Bond Resolution, the Variable Rate Bonds and this Official
Statement. See "Book-Entry Only System" below. Except as described under
"Book Entry Only System" below, Beneficial Owners (as defined below) of
the Variable Rate Bonds will not receive or have the right to receive
physical delivery of certificates representing their ownership
interests in the Variable Rate Bonds. For so long as any purchaser is the
Beneficial Owner of a Variable Rate Bond, such purchaser must maintain an
account with a broker or dealer who is, or acts through, a DTC Participant
(as defined below) to receive payment of the principal or redemption
price and purchase price of and interest on such Variable Rate Bond. The
laws of some states may require that certain purchasers of securities
take physical delivery of such securities in definitive form.
The Variable Rate Bonds are issuable as fully registered bonds in
Authorized Denominations of (i) $100,000 or any integral multiple of
$5,000 in excess thereof with respect to any Variable Rate Bond in the Unit
Pricing Mode; (ii) $100,000 or any integral multiple thereof with respect
to any Variable Rate Bond in Daily Mode or the Weekly Mode; and (iii)
$5,000 or any integral multiple thereof with respect to any Variable Rate
Bond in the Term Rate Mode or Fixed Rate Mode.
Each Variable Rate Bond shall be dated the date of authentication
thereof and shall bear interest, at the rate determined as described
below, from the Interest Payment Date next preceding the date of
authentication, unless such date of authentication is prior to the first
Interest Payment Date, in which event such Variable Rate Bond shall bear
interest from date of original authentication and delivery of the
Variable Rate Bonds until the entire principal amount of such Variable
Rate Bond is paid; provided, that if, at the time of authentication of
any Variable Rate Bond, interest is in default or overdue thereon, such
Variable Rate Bond shall bear interest from the date to which interest has
previously been paid in full or made available for payment in full.
The term "Record Date" is defined in the Bond Resolution to mean with
respect to Variable Rate Bonds (i) in the Unit Pricing Mode and the Weekly
Mode, the day (whether or not a Business Day, next preceding each
Interest Payment Date; (ii) in the Daily Rate Mode, the last day of each
month (whether or not a Business Day) and (iii) in the Term Rate Mode or
Fixed Rate Mode, the fifteenth (15th) day (whether or not a Business
Day) of the calendar month next preceding each Interest Payment Date. The
term "Business Day" as used herein is defined in the Bond Resolution as a
day on which any Paying Agent, the Remarketing Agent, the Liquidity
Provider, the Rate Cap Provider or banks or trust companies in New York,
New York, are not authorized or required to remain closed and on which the
New York Stock Exchange is not closed.
Interest on Variable Rate Bonds in the Unit Pricing Mode, Daily
Mode or Weekly Mode will be calculated on the basis of a 365/366 day
year for the actual number of days elapsed. Interest on Variable Rate
Bonds in the Term Rate Mode or Fixed Rate Mode will be calculated on the
basis of a 360-day year composed of twelve 30-day months. The interest
rates for Variable Rate Bonds contained in the records of the Paying Agent
shall be conclusive and binding upon the City, the Remarketing Agent, the
Liquidity Provider and the Beneficial Owners of the Variable Rate Bonds.
No Variable Rate Bonds may bear interest at an interest rate higher than
the Maximum Rate, which is either (i) twelve percent (12%) per annum or
(ii) as to Variable Rate Bonds for which a Liquidity Facility is in effect,
the per annum interest rate used to calculate Liquidity Facility Interest
Amount, which shall initially be 3.5%.
Interest on each Variable Rate Bond shall be paid on each Interest
Payment Date, defined as (i) with respect to a Unit Pricing Bond (a)
having an Interest Period of 180 days or less, the Purchase Date, and
(b) having an Interest Period of 181 days or more, the first Business Day of
each April and October during the Interest Period and the Purchase Date;
(ii) with respect to the Weekly Mode, the first Wednesday of each calendar
month; (iii) with respect to Variable Rate Bonds in the Term Rate Mode,
the first Business Day of each April and October prior to the Purchase
Date; (iv) with respect to the Daily Mode, the fifth (5th) Business Day of
each month; (v) with respect to Variable Rate Bonds in the Fixed Rate Mode,
each April and October; (vi) with respect to Variable Rate Bonds owned
by the Liquidity Provider, the dates required under the Liquidity
Facility; (vii) any Mode Change Date; and (viii) the Maturity Date.
So long as the Variable Rate Bonds are held in the book-entry only
system, the principal or redemption price of and interest on the Variable
Rate Bonds will be paid through the facilities of DTC (or a
successor securities depository). Otherwise, the principal or redemption
price of the Variable Rate Bonds is payable at the corporate trust office
of the Paying Agent; and interest on the Variable Rate Bonds is payable by
check mailed by first class mail, postage prepaid, to the owner of record;
provided that if the Mode for the Variable Rate Bonds is the Daily Mode
or the Weekly Mode, interest payable on the Variable Rate Bonds shall, at
the written request of any owner of the Variable Rate Bonds of $1,000,000
or more in aggregate principal amount received by the Bank of New
York Trust Company, N.A., as bond registrar (the "Bond Registrar"), at
its corporate trust office at least one Business Day (as defined herein)
prior to any Record Date, be payable in immediately available funds by
wire transfer within the United States or by deposit in an account
maintained with the Paying Agent.
Notwithstanding the provisions of the Bond Resolution and the
Variable Rate Bonds described herein, Variable Rate Bonds purchased by
the Liquidity Provider pursuant to a draw on the Liquidity Facility
("Liquidity Provider Bonds"), if any, will bear interest at the Liquidity
Facility Interest Rate, as defined in the Bond Resolution, for any period
during which such Liquidity Provider Bonds are held by or on behalf of the
Liquidity Provider pursuant to the Liquidity Facility.
Merrill Lynch, Pierce, Fenner & Smith Incorporated will act
as the Remarketing Agent with respect to the Variable Rate Bonds. The
Remarketing Agent may be removed by the City and may resign in
accordance with the Remarketing Agreement dated as of October 1, 1996,
between the Remarketing Agent and the City (the "Remarketing Agreement").
BOOK ENTRY ONLY SYSTEM
The Depository Trust Company ("DTC"), New York, New York, will
act as securities depository for the Variable Rate Bonds. The Variable
Rate Bonds will be issued as fully-registered bonds registered in the name
of Cede & Co. (DTC's partnership nominee). One fully-registered
Variable Rate Bond certificate will be issued for the Variable Rate
Bonds in the aggregate principal amount of the Variable Rate Bonds and will
be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Securities Exchange Act of 1934. DTC holds
securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of securities
certificates. Direct Participants ("Direct Participants") include
securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a number
of its Direct Participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to
others such as securities brokers and dealers, banks and trust companies
that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants").
The Rules applicable to DTC and its Participants are on file with the
Securities and Exchange Commission.
Purchases of Variable Rate Bonds under the DTC system must be made
by or through a Direct Participant, which will receive a credit for the
Variable Rate Bonds on DTC's records. The ownership interest of each actual
purchaser of each Variable Rate Bond ("Beneficial Owner") is in turn to be
recorded on the Direct and Indirect Participants' records. Beneficial
Owners will not receive written confirmation from DTC of their
purchases, but Beneficial Owners are expected to receive written
confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the Direct or Indirect Participants
through which the Beneficial Owners entered into the transactions.
Transfers of ownership interests in the Variable Rate Bonds are to be
accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Variable Rate
Bonds, except in the event that use of the book-entry system for the
Variable Rate Bonds is discontinued.
To facilitate subsequent transfers, all Variable Rate Bonds
deposited by Participants with DTC are registered in the name of
DTC's partnership nominee, Cede & Co. The deposit of Variable Rate
Bonds with DTC and their registration in the name of Cede & Co. effect
no change in beneficial ownership. DTC has no knowledge of the
Beneficial Owners of the Variable Rate Bonds; DTC's records reflect
only the identity of the Direct Participants to whose accounts the
Variable Rate Bonds are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners
will be governed by arrangements among them, subject to any statutory
or regulatory requirements as may be in effect from time to time.
Redemption notices shall be sent by the Paying Agent to Cede & Co.
If less than all of the Variable Rate Bonds are being redeemed, DTC's
practice is to determine by lot the amount of the interest of each Direct
Participant in the Variable Rate Bonds to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the
Variable Rate Bonds. Under its usual procedure, DTC mails an Omnibus
Proxy to the City as soon as possible after the record date with respect
to any request for consent or vote. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose
account the Variable Rate Bonds are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Variable Rate Bonds will be
made to DTC. DTC's practice is to credit Direct Participants' accounts
on each payable date in accordance with their respective holdings shown
on DTC's records, unless DTC has reason to believe that it will not receive
payment on such payable date. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices,
as is the case with securities held for the accounts of customers
in bearer form or registered in "street name", and will be the
responsibility of such Participants and not of DTC, the Paying Agent or
the City, subject to any statutory or regulatory requirements as may be
in effect from time to time. Payment of principal and interest to DTC is
the responsibility of the City or the Paying Agent; disbursement of such
payments to Direct Participants is the responsibility of DTC; and
disbursement of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities
depository with respect to the Variable Rate Bonds at any time by giving
reasonable notice to the City or the Paying Agent. Under such
circumstances, in the event that a successor securities depository is
not obtained, Variable Rate Bond certificates are required to be
printed and delivered.
The City may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that
event, Variable Rate Bond certificates are required to be printed and
delivered.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the City believes to be
reliable, including DTC, but neither the Paying Agent nor the City
take any responsibility for the accuracy thereof.
The Paying Agent and the City may treat DTC or its nominee as the
sole and exclusive owner of the Variable Rate Bonds registered in its
name for the purposes of payment of the principal of, premium, if any,
purchase price, or interest on the Variable Rate Bonds, selecting the
Variable Rate Bonds or portions thereof to be redeemed, giving any notice
permitted or required to be given to Bondholders under the Bond
Resolution, registering the transfer of Variable Rate Bonds, obtaining any
consent or other action to be taken by Bondholders and for all other
purposes whatsoever; neither the Paying Agent nor the City shall be
affected by any notice to the contrary. The Paying Agent and the City
shall not have any responsibility or obligation to any Participant, any
person claiming a beneficial ownership interest in the Variable Rate
Bonds under or through DTC or any Participant, or any other person which
is not shown on the registration books of the Paying Agent as being a
Bondholder with respect to (i) the Variable Rate Bonds; (ii) the
accuracy of any records maintained by DTC, any Direct Participant or
any Indirect Participant; (iii) the payment by DTC or any Participant
to any beneficial owner of any amount in respect of the principal of,
premium, if any, purchase price or interest on the Variable Rate Bonds; (iv)
the delivery to any Direct Participant or any Indirect Participant or any
Beneficial Owner of any notice which is permitted or required to be given to
Bondholders under the Bond Resolution; (v) the selection by DTC, any Direct
Participant or any Indirect Participant of any person to receive payment
in the event of a partial redemption of the Variable Rate Bonds; or (vi)
any consent given or other action taken by DTC as Bondholder.
CERTAIN DEFINITIONS
As used herein, each of the following terms shall have the meaning
indicated:
"Alternate Liquidity Facility" means a standby bond purchase
agreement, letter of credit and any related reimbursement agreement or other
security or liquidity facility or device issued in accordance with the
Resolution which shall have a terms of not less than one year, shall have
the same material terms as the Liquidity Facility and shall be acceptable
to the Bond Insurer.
"Alternate Rate" means, on any Rate Determination Date, the rate per
annum specified in the index (the "Index") published by the Indexing Agent
and in effect on such Rate Determination Date. The Index shall be based
upon yield evaluations at par of bonds, the interest on which is excluded
from gross income for purposes of Federal income taxation, of not less
than five "high grade" component issuers selected by the Indexing Agent
which shall include, without limitation, issuers of general obligation
bonds. The specified issuers included among the component issuers may be
changed from time to time by the Indexing Agent in its discretion. The
bonds on which the Index is based shall not include any bonds the
interest on which is subject to a "minimum tax" or similar tax under the
Code, unless all tax-exempt bonds are subject to such tax. When Variable
Rate Bonds are in the Daily Mode, the Weekly Mode or a Unit Pricing Mode
with an Interest Period of 30 days or less, the yield evaluation period
for the Index shall be 30-day yield evaluations . When Variable Rate
Bonds are in a Unit Pricing Mode with an Interest Period of greater than
30 days but less than or equal to 180 days, the yield evaluation period
for the Index shall be 180-day yield evaluations. When the Variable Rate
Bonds are in the Term Rate Mode or a Unit Pricing Mode with an Interest
Period greater than 180 days, the yield evaluation period for the Index
shall be one-year yield evaluations.
If no Indexing Agent publishes an Index satisfying the requirements
of the preceding paragraph, the Alternate Rate for an Interest Period
shall be the rate per annum specified in the most recently published
Index for a comparable Interest Period.
"Authorized Denominations" means (i) with respect to Variable Rate
Bonds in a Unit Pricing Mode, $ 100,000 and any integral multiple of
$5,000 in excess thereof, (ii) with respect to Variable Rate Bonds in a
Daily Mode or Weekly Mode, $100,000 and any integral multiple thereof, and
(iii) with respect to Variable Rate Bonds in a Term Rate Mode or a Fixed
Rate Mode, $5,000 and any integral multiple thereof.
"Current Mode" shall have the meaning specified in the Bond Resolution.
"Daily Mode" means the Mode during which the Variable Rate Bonds
bear interest at the Daily Rate.
"Daily Rate" means the per annum interest rate on any Variable Rate
Bond in the Daily Mode determined pursuant to the Bond Resolution.
"Electronic Means" means telecopy, telegraph, telex, facsimile
transmission or other similar electronic means of communication, including
a telephonic communication confirmed by writing or written transmission.
"Expiration Date" means the stated expiration date of the Liquidity
Facility, or such stated expiration date as it may be extended from time
to time as provided in the Liquidity Facility, or any earlier date
on which the Liquidity Facility shall terminate, expire or be canceled.
"Expiration Tender Date" means the day five Business Days prior
to the Expiration Date.
"Favorable Opinion of Bond Counsel" means, with respect to any
action the occurrence of which requires such an opinion, an unqualified
Opinion of Counsel, which shall be a Bond Counsel, to the effect that
such action is permitted under the Act and the Bond Resolution and will
not impair the exclusion of interest on the Variable Rate Bonds from
gross income for purposes of Federal income taxation [or the exemption
of interest on the Variable Rate Bonds from personal income taxation
under the laws of the State] (subject to the inclusion of any exceptions
contained in the opinion delivered upon original issuance of the Variable
Rate Bonds).
"Fixed Rate" means the per annum interest rate(s) on any Variable
Rate Bond in the Fixed Rate Mode determined pursuant to the Bond Resolution.
"Fixed Rate Bonds" means the Variable Rate Bonds during the Fixed Rate
Mode.
"Fixed Rate Mode" means the Mode during which the Variable Rate
Bonds bear interest at a Fixed Rate(s).
"Indexing Agent" means Kenny Information Systems, a corporation
duly organized and existing under the laws of the State of New York,
and its successors and assigns, except that if such corporation shall be
dissolved or liquidated or shall no longer publish the indices
referred to in the definition of Alternate Rate, then the term "Indexing
Agent" shall be deemed to refer to any other entity selected by the City
publishing similar indices and approved by the Liquidity Provider and the
Remarketing Agent (neither of whom shall be under any liability by reasons
of such approval).
"Interest Accrual Period" means the period during which the
Variable Rate Bonds accrue interest payable on any Interest Payment Date.
With respect to the Variable Rate Bonds in the Daily Mode, the Interest
Accrual Period shall commence on the first day of each month and shall
extend through the last day of such month; provided, that if such month
is the month in which the Variable Rate Bonds were authenticated and
delivered, or if the Variable Rate Bonds were changed to the Daily Mode
during such month, the Interest Accrual Period shall commence on the
date of authentication and delivery of the Variable Rate Bonds or the
Mode Change Date, as the case may be; provided, further, that if no
interest has been paid on the Variable Rate Bonds in the Daily Mode,
interest shall accrue from the date of original authentication and
delivery of the Variable Rate Bonds or the Mode Change Date, as
appropriate. With respect to the Variable Rate Bonds in all Modes other
than the Daily Mode, the Interest Accrual Period shall commence on
the last Interest Payment Date to which interest has been paid (or, if no
interest has been paid in such Mode, from the date of original
authentication and delivery of the Variable Rate Bonds, or the Mode Change
Date, as the case may be) to, but not including, the Interest Payment Date
on which interest is to be paid.
Interest Payment Date means (i) with respect to a Unit Pricing Bond
(a) with an Interest Period of 180 days or less, the Purchase Date, and
(b) with an Interest Period of 181 days or more, the first Business Day of
each April and October and the Purchase Date; (ii) with respect to the
Weekly Mode, the first Wednesday of each month; (iii) with respect to the
Term Rate Mode, the first Business Day of each April and October prior to
the Purchase Date; (iv) with respect to the Daily Mode, the fifth (5th)
Business Day of each month; (v) with respect to the Fixed Rate Mode each
April 1 and October 1; (iv) with respect to Liquidity Provider Owned
Bonds, the dates required under the Liquidity Facility; (vii) any Mode
Change Date; and (viii) the Maturity Date.
"Interest Period" means the period of time that an interest rate
remains in effect, which period:
(i) with respect to each Variable Rate Bond in a Unit Pricing Mode, shall
be established by the Remarketing Agent pursuant to the Bond Resolution;
and
(ii) with respect to each Variable Rate Bond in the Term Rate Mode, initially,
shall be from and including the Mode Change Date to, but not including,
the Purchase Date established for such Variable Rate Bond pursuant to
the Bond Resolution and thereafter shall be from and including such
Purchase Date to but not including the next Purchase Date.
"Liquidity Facility" means the Payment Agreement between the City
and the Liquidity Provider relating to the Standby Bond Purchase Agreement
executed and delivered by the City and the Liquidity Provider
contemporaneously with the original delivery of the Variable Rate Bonds
providing for the purchase of tendered Variable Rate Bonds in accordance
with the Bond Resolution, except that upon the issuance of an
Alternate Liquidity Facility in accordance with the Bond Resolution
such term shall mean such Alternate Liquidity Facility.
"Liquidity Facility Interest Amount" means the amount of the interest
portion of the Liquidity Facility, which (i) for Outstanding Bonds in the
Daily Mode shall be an amount equal to 39 days' interest calculated at the
Maximum Rate on the basis of a 365/366 day year for the actual number of
days elapsed, (ii) for Outstanding Bonds in the Weekly Mode shall be an
amount equal to 35 days' interest calculated at the Maximum Rate on the
basis of a 365/366 day year for the actual number of days elapsed,
(iii) for Outstanding Unit Pricing Bonds with a Maturity Date of 180
days or less shall be an amount equal to 180 days' interest calculated at
the Maximum Rate on the basis of a 365/366 day year for the actual number of
days elapsed, (iv) for Outstanding Unit Pricing Bonds with a Maturity Date
of 180 days shall be an amount equal to 183 days' interest calculated at
the Maximum Rate on the basis of a 365/366 day year for the actual
number of days elapsed and (v) for Outstanding Bonds in the Term Rate
Mode shall be an amount equal to 205 days' interest calculated at the
Maximum Rate on the basis of a 360 day year composed of twelve 30-day
months.
"Liquidity Provider" means initially FGIC Securities Purchase,
Inc., the liquidity purchaser of the Variable Rate Bonds as provided in
the initial Liquidity Facility or any subsequent provider of any
Alternate Liquidity Facility.
"Long-Term Mode" means the Term Rate Mode and the Unit Pricing Mode
when an Interest Period of more than one year is established.
"Mandatory Purchase Date" means (i) any Purchase Date for Variable Rate
Bonds in the Unit Pricing Mode or the Term Rate Mode, (ii) any Mode
Change Date involving a change from the Daily Mode or the Weekly Mode
and (iii) the Substitution Tender Date.
"Maturity Date" means May 1, 2027 and, upon a change to the Fixed Rate
Mode, any Serial Maturity Date established pursuant to the Bond Resolution.
"Mode" means, as the context may require, the Unit Pricing Mode, the
Daily Mode, the Weekly Mode, the Term Rate Mode or the Fixed Rate Mode.
"Mode Change Date" means with respect to any Variable Rate Bond,
the date following the last day of one Mode on which another Mode begins.
"Mode Change Notice" means the notice from the City to the other
Notice Parties of the City's intention to change Mode.
"Moody's" means Moody's Investors Service, a corporation duly
organized and existing under and by virtue of the laws of the State of
Delaware, and its successors and assigns, except that if such corporation
shall be dissolved or liquidated or shall no longer perform the functions
of a securities rating agency, then the term "Moody's" shall be deemed
to refer to any other nationally recognized securities rating agency
selected by the City and approved by the Liquidity Provider (which shall
not be under any liability by reason of such approval).
"Notice Parties" means the City, the Remarketing Agent, the Paying
Agent and the Liquidity Provider.
"Principal Payment Date" means any date upon which the principal
amount of the Variable Rate Bonds is due, including the Maturity Date,
any Serial Maturity Date, any Redemption Date, or the date the maturity of
any Variable Rate Bond is accelerated pursuant to the terms of the Bond
Resolution or otherwise.
"Purchase Date" means (i) during the Unit Pricing Mode or the Term Rate
Mode, the date determined by the Remarketing Agent on the most
recent Rate Determination Date as the date on which such Variable Rate
Bonds shall be subject to purchase and (ii) during the Daily Mode or the
Weekly Mode, any Business Day.
"Purchase Price" means (i) an amount equal to the principal amount
of any Variable Rate Bonds purchased on any Purchase Date, plus, in the
case of any purchase of Variable Rate Bonds in the Daily Mode or the Weekly
Mode, accrued interest, if any, to the Purchase Date, or (ii) an amount
equal to the principal amount of any Variable Rate Bonds purchased on a
Mandatory Purchase Date, plus, in the case of any Variable Rate Bonds
purchased on the Substitution Tender Date, accrued interest, if any, to
the Mandatory Purchase Date.
"Qualified Rate Cap Agreement" means a Rate Cap Agreement with a
Rate Cap Provider which is rated at least A-/A3 or better by S&P and Moody
s.
"Qualified Rate Cap Payment" with respect to the Variable Rate Bonds
shall mean payments of interest due from the City to the Rate Cap Provider
pursuant to the Rate Cap Agreement exclusive of fees, any payments due from
the City to the Rate Cap Provider upon the early termination of the
Rate Cap Agreement, or any other payments to the Rate Cap Provider under
the Rate Cap Agreement, and with respect to any other series of Bonds
issued under the Bond Resolution, shall mean a payment obligation
created by a Rate Cap Agreement, such as an interest rate swap, collar,
cap, floor or other rate cap device, such payment being equal to interest
on a notional amount, based upon a fixed rate or a variable index or formula.
"Rate Cap Agreement" with respect to the Variable Rate Bonds, shall
mean the certain Master Interest Exchange Agreement entered into by and
between the City and the Rate Cap Provider, dated as of April 1, 1988
including all amendments, schedules and confirmations relating thereto
which, by their terms, are identified by the parties thereto as having
been entered into in connection with the Bond Resolution or the
Bonds, including without limitation, the Initial Rate Cap Transaction,
and any agreement terminating, off-setting, replacing or substituting any
such amendments, schedules or confirmations.
"Rate Cap Provider" with respect to the Variable Rate Bonds, shall
mean Merrill Lynch Capital Services, Inc. and any successors or assignees
thereof.
"Rate Determination Date" means the date on which the interest rate(s)
on the Variable Rate Bonds shall be determined, which, (i) in the case of
the Unit Pricing Mode, shall be the first day of an Interest Period; (ii)
in the case of the Daily Mode, shall be each Business Day commencing with
the first day the Variable Rate Bonds become subject to the Daily Mode;
(iii) in the case of the initial conversion to the Weekly Mode, shall be
no later than the Business Day prior to the Mode Change Date, and
thereafter, shall be each Tuesday or, if Tuesday is not a Business Day,
the next succeeding day or, if such day is not a Business Day, then the
Business Day next preceding such Tuesday; (iv) in the case of the Term
Rate Mode, shall be a Business Day no earlier than thirty (30) Business
Days and no later than the Business Day next preceding the first day of
an Interest Period; and (v) in the case of the Fixed Rate Mode, shall be
a date determined by the Remarketing Agent which shall be at least one
Business Day prior to the Mode Change Date.
"Rating Confirmation Notice" means a notice from Moody's or S&P, if
Moody's is then rating the Variable Rate Bonds and S&P, if S&P is then
rating the Variable Rate Bonds confirming that the rating on the
Variable Rate Bonds will not be lowered or withdrawn (other than a
withdrawal of a short term rating upon a change to a Long-Term Mode) as a
result of the action proposed to be taken.
"Redemption Date" means the date fixed for redemption of Variable Rate
Bonds subject to redemption in any notice of redemption given in
accordance with the terms of the Bond Resolution.
"Redemption Price" means an amount equal to the principal of and
premium, if any, and accrued interest, if any, on the Variable Rate Bonds
to be paid on the Redemption Date.
"Remarketing Agent" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated, or any other investment banking firm which may at any time be
substituted in its place as provided in the Bond Resolution.
"Renewal Date" means the forty-fifth (45th) day prior to the Expiration
Date.
"Short-Term Mode" means a Daily Mode, a Weekly Mode or the Unit
Pricing Mode when an Interest Period of one year or less is determined by
the Remarketing Agent.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill, duly organized and existing under and by virtue of the laws
of the State of New York, and its successors and assigns, except that if
such corporation shall be dissolved or liquidated or shall no longer
perform the functions of a securities rating agency, then the term "S&P"
shall be deemed to refer to any other nationally recognized securities
rating agency selected by the Issuer and approved by the Liquidity
Provider (which shall not be under any liability by reason of such
approval).
"Substitution Date" means the date on which an Alternate Liquidity
Facility is to be substituted for the Liquidity Facility.
"Substitution Tender Date" means the date five Business Days prior
to the Substitution Date.
"Term Rate" means the per annum interest rate for any Variable Rate
Bond in the Term Rate Mode determined pursuant to the Bond Resolution.
"Term Rate Mode" means the Mode during which Variable Rate Bonds
bear interest at the Term Rate.
"Unit Pricing Bond" means any Variable Rate Bond while in a Unit
Pricing Mode.
"Unit Pricing Mode" means the Mode during which Variable Rate Bonds
bear interest at the Unit Pricing Rate.
"Unit Pricing Rate" means the per annum interest rate on any
Variable Rate Bond in the Unit Pricing Mode determined pursuant to the Bond
Resolution.
"Weekly Mode" means the Mode during which Variable Rate Bonds bear
interest at the Weekly Rate.
"Weekly Rate" means the per annum interest rate on any Variable Rate
Bond in the Weekly Mode determined pursuant to the Bond Resolution.
DETERMINATION OF INTEREST RATES
The Variable Rate Bonds will be issued initially in a Weekly Mode,
and each Variable Rate Bond will initially bear interest at 3.5 %. The City
will enter into a Rate Cap Agreement with respect to the Variable Rate
Bonds, capping the interest on the Variable Rate Bonds at 6.25% for seven
years. Any Mode, other than a Fixed Rate Mode, may be changed to any
other Mode at the times and in the manner provided in the Bond Resolution,
as described herein, and after such change such Variable Rate Bonds will
bear interest at the rate applicable to such other Mode. Each date
following the last day of a Mode on which another Mode (a New Mode )
begins is referred to as a Mode Change Date. Any Variable Rate Bond
converted to a Long-Term Mode may be changed to another mode.
In the absence of manifest error, the determination of the interest
rates and Interest Periods by the Remarketing Agent shall be conclusive
and binding, upon the Remarketing Agent, the Paying Agent, the Liquidity
Provider, the City and the Beneficial Owners of the Variable Rate Bonds.
Daily Mode. During the Daily Mode, the Remarketing Agent shall establish
----------
the Daily Rate by 10:00 a.m. on each Rate Determination Date for the Daily
Mode (each Business Day commencing the first day the Variable Rate Bonds
become subject to the Daily Mode). The interest rate for any Variable Rate
Bond in the Daily Mode shall be the rate of interest per annum
determined by the Remarketing Agent on and as of the Rate Determination
Date as the minimum rate of interest that, in the opinion of the
Remarketing Agent, would, under then existing market conditions, result in
the sale of the Variable Rate Bonds in the Daily Mode on the Rate
Determination Date at a price equal to the principal amount thereof, plus
accrued interest, if any. Each such Daily Rate shall be in effect for the
interest period beginning on a Business Day and ending on the same Business
Day (unless the next succeeding day is not a Business Day, in which case
such Daily Rate shall be in effect until the day prior to the next Business
Day). The Remarketing Agent shall make the Daily Rate available by
telephone to any Beneficial Owner requesting such rate.
Weekly Mode. During the Weekly Mode, the Remarketing Agent shall
-----------
establish the Weekly Rate by 4:00 p.m. on each Rate Determination Date for
the Weekly Mode (initially, the Business Day immediately preceding any Mode
Change Date and, thereafter, each Tuesday or, if any Tuesday is not a
Business Day, the next succeeding day or, if such day is not a Business
Day, the Business Day next preceding such Tuesday). The interest rate for
any Variable Rate Bond in the Weekly Mode shall be the rate of interest
per annum determined by the Remarketing Agent on and as of the Rate
Determination Date as the minimum rate of interest that, in the opinion
of the Remarketing Agent, under then existing market conditions, would
result in the sale of the Variable Rate Bonds in the Weekly Mode on the
Rate Determination Date at a price equal to the principal amount thereof,
plus accrued interest, if any. Each such Weekly Rate shall be in
effect for the interest period beginning on a Wednesday and ending on
the following Tuesday. The Remarketing Agent shall make the rate
available after 4:00 p.m. on the Rate Determination Date by telephone to
any Beneficial Owner requesting such rate.
Unit Pricing Mode. During the Unit Pricing Mode, the Remarketing Agent
-----------------
shall determine Interest Periods of such duration, of at least one day,
ending on a day next preceding a Business Day or the Maturity Date,
on each Rate Determination Date for the Unit Pricing Mode (the first day
of each Interest Period). In making such determinations, the Remarketing
Agent shall select for each Variable Rate Bond then subject to such
adjustment the Interest Period which, if implemented on such Rate
Determination Date, would result in the Remarketing Agent being able to
remarket such Variable Rate Bond at par in the secondary market at the
lowest interest rate then available and for the longest Interest Period
available at such rate; provided, however, that if on any Rate
Determination Date the Remarketing Agent determines that current or
anticipated future market conditions or anticipated future events are such
that a different Interest Period would result in a lower average
interest cost on such Variable Rate Bond, then the Remarketing Agent
shall select the Interest Period which, in the judgment of the Remarketing
Agent, would permit such Variable Rate Bond to achieve such lower average
interest cost; provided, further, that if the Remarketing Agent has
received notice from the City that any Variable Rate Bond which is in the
Unit Pricing Mode (a "Unit Pricing Bond") is to be changed from the Unit
Pricing Mode to any other Mode or if it is to be purchased upon expiration
or substitution of the Liquidity Facility, the Remarketing Agent shall,
with respect to such Variable Rate Bond, select Interest Periods which
do not extend beyond the Mandatory Purchase Date.
At or after 4:00 p.m. on the Business Day next preceding the
Rate Determination Date for any Unit Pricing Bonds, any Beneficial Owner
of such Unit Pricing Bonds may telephone the Remarketing Agent and receive
notice of the anticipated next Interest Period(s) and the anticipated
interest rate(s) for such Interest Periods.
By 12:30 p.m. on each Rate Determination Date, the Remarketing
Agent, with respect to each Unit Pricing Bond that is subject to adjustment
on such date, shall determine an interest rate for the Interest Period
then selected for such Variable Rate Bond.
By acceptance of any Unit Pricing Bond, the Beneficial Owner thereof
shall be deemed to have agreed, during each Interest Period, to the
interest rate (including the Alternate Rate, if applicable), Interest
Period and Purchase Date then applicable thereto and to have further
agreed to tender such Variable Rate Bond to the Paying Agent for
purchase on the next succeeding Purchase Date at the Purchase Price.
Such Beneficial Owner further acknowledges that if funds for such
purchase are on deposit with the Paying Agent on such Purchase Date, such
Beneficial Owner shall have no rights under the Bond Resolution other than
to receive the payment of such Purchase Price and that interest shall cease
to accrue to such owner on such Purchase Date.
Term Rate Mode. During the Term Rate Mode, the Remarketing Agent
---------------
shall determine the Term Rate on a Business Day not later than 4:00 p.m.
on the Rate Determination Date for the Term Rate Mode (the Business
Day next preceding the first day of an Interest Period). The Term Rate
shall be the minimum rate that, in the sole judgment of the Remarketing
Agent, would result in a sale of the Variable Rate Bonds at a price equal
to the principal amount thereof on the Rate Determination Date. The
length of the Interest Periods shall be determined by the City in
consultation with the Remarketing Agent; provided, that in the event the
City does not indicate, prior to the end of an Interest Period, the
desired duration of the next Interest Period, the next Interest Period
shall be of the same length as the Interest Period then ending. Except as
described below, once Variable Rate Bonds are changed to the Term Rate
Mode, such Variable Rate Bonds shall continue in the Term Rate Mode until
changed to a different Mode.
If, for any reason, a new Term Rate cannot be established for any
of the Variable Rate Bonds on any Purchase Date, such Variable Rate Bonds
will be changed automatically to the Unit Pricing Mode on the Purchase
Date for Interest Period(s) determined by the Remarketing Agent on such
Purchase Date.
Fixed Rate Mode. The Remarketing Agent shall determine the Fixed Rate(s)
---------------
not later than 4:00 p.m. on the Rate Determination Date for the Fixed Rate
Mode, which shall be at least one Business Day prior to the Mode Change
Date, the Remarketing Agent shall determine the actual Fixed Rate(s) or,
if Serial Bonds are created as permitted by the Bond Resolution, Fixed
Rates for the Variable Rate Bonds. The Fixed Rate(s) shall be the minimum
rate(s) that, in the sole judgment of the Remarketing Agent, will result
in a sale of the Variable Rate Bonds at a price equal to the principal
amount thereof, plus accrued interest, if any, on the Rate Determination
Date. The Fixed Rate(s) shall be effective for the remaining term of the
Variable Rate Bonds.
Alternate Rate. In the event (i) the Remarketing Agent fails or is
--------------
unable to determine the interest rate(s) or Interest Periods with
respect to any Variable Rate Bonds, or (ii) the method of determining the
interest rate(s) or Interest Periods with respect to any Variable Rate
Bonds shall be held to be unenforceable by a court of law of competent
jurisdiction, such Variable Rate Bonds shall thereupon, until such time as
the Remarketing Agent again makes such determination or until there is
delivered a favorable opinion of counsel to the effect that the
method of determining such rate is enforceable, bear interest from the
last date on which interest was legally paid, at the Alternate Rate for
the Mode in effect; provided, that, if either of the circumstances in (i)
or (ii) occurs on a Rate Determination Date for the Unit Pricing Mode, the
relevant Interest Period from such day to but not including the next
Business Day.
Changes In Mode. To effect a change in Mode, the City must give
----------------
written notice to the Remarketing Agent and the Paying Agent of its
intention to effect such a change no later that the forty-fifth (45th) day
preceding any Mode Change Date. On or before the thirtieth (30th) day
preceding any Mode Change Date relating to a change to the Fixed Rate Mode,
the Paying Agent is required to mail to the Beneficial Owners of the
Variable Rate Bonds to be changed to the Fixed Rate Mode a notice of the
proposed change in Mode, the proposed Mode Change Date and the other
matters prescribed by the Bond Resolution.
Each Mode Change Date must be a Business Day. Additionally, any Mode
Change Date from the Unit Pricing Mode must be the last Purchase Date for
the Unit Pricing Bonds with respect to which a change is to be made and
any Mode Change Date from a Term Rate Mode must be the Purchase Date of
the current Interest Period.
Except for a change to a Fixed Rate Mode as discussed below, a Mode
change will not become effective unless all conditions precedent thereto
have been met and the following items shall have been delivered to the
Paying Agent and the Remarketing Agent on the Mode Change Dates (i) in
the case of a change from a Mode with an Interest Period of one year or less
(a "Short-Term Mode") to a Mode with an Interest Period of more than one
year (a "Long-Term Mode") or from a Long-Term Mode to a Short-Term Mode,
a favorable opinion of Bond Counsel dated the Mode Change Date (except in
the case of certain automatic Mode changes upon failure to satisfy
conditions to Mode changes; (ii) a notice confirming the rating on the
affected Variable Rate Bonds; (iii) a Liquidity Facility in an
available amount equal to or greater than the amount, if any,
required for the applicable Mode; and (iv) except as described below,
if the New Mode is the Unit Pricing Mode, evidence that the applicable
Interest Account has been funded in an amount equal to or greater than the
requirement for such Interest Account.
In the event the foregoing conditions have not been satisfied by the Mode
Change Date, the New Mode shall not take effect and the affected Variable
Rate Bonds will remain in or be converted to the Unit Pricing Mode with
Interest Period(s) to be determined by the Remarketing Agent on the Mode
Change Date; provided, that if the change is from a Term Rate Mode, the
Variable Rate Bonds will remain in the Term Rate Mode for an Interest Period
equivalent to that then ended.
OPTIONAL TENDER AND MANDATORY TENDER OF VARIABLE RATE BONDS
Book-Entry Procedures. For so long as the Variable Rate Bonds are regis-
---------------------
tered in the name of DTC or any nominee thereof, all notices required or
permitted to be given by the Beneficial Owners thereof and the delivery
of Variable Rate Bonds shall be effected in accordance with the standard
DTC practices. In addition, to exercise any optional tender, a Beneficial
Owner must notify its DTC Participant (if such DTC Participant is not the
Remarketing Agent) of such decision.
Optional Tender of Variable Rate Bonds in the Daily Mode or the Weekly
-----------------------------------------------------------------------
Mode. The Beneficial Owners of Variable Rate Bonds in a Daily Mode or a
- ----
Weekly Mode may elect to have their Variable Rate Bonds (or portions of
such Variable Rate Bonds in amounts equal to an Authorized Denomination)
purchased at a price equal to the principal amount thereof plus accrued
interest, if any, to the Purchase Date (the "Purchase Price") (i) in the
case of Variable Rate Bonds in the Daily Mode, upon delivery of an
irrevocable telephonic notice of tender to the Remarketing Agent not later
than 10:30 a.m. on the Purchase Date specified by the Beneficial Owner;
and (ii) in the case of Variable Rate Bonds in the Weekly Mode, upon
delivery of an irrevocable written notice of tender or irrevocable
telephonic notice of tender to the Remarketing Agent, promptly confirmed in
writing, to the Remarketing Agent and the Paying Agent, not later than 4:00
p.m. on a Business Day not less than seven (7) days before the
Purchase Date specified by the Beneficial Owner. Such notice shall
state (i) the number and the principal amount of such Variable Rate
Bonds and (ii) that such Variable Rate Bonds shall be purchased on
the Purchase Date. A Beneficial Owner who gives the notice as set forth
above may repurchase the Variable Rate Bonds so tendered on such Purchase
Date if the Remarketing Agent agrees to sell the Variable Rate Bond so
tendered to such Beneficial Owner. If such Beneficial Owner decides to
repurchase such Variable Rate Bonds and the Remarketing Agent agrees to
sell the specified Variable Rate Bonds to such Beneficial Owner, the
delivery requirements set forth above shall be waived.
Mandatory Purchase at End of Unit Pricing Mode Interest Periods.
---------------------------------------------------------------------
Each Variable Rate Bond in the Unit Pricing Mode shall be subject to
mandatory purchase at the Purchase Price on its Purchase Date. No
notice of such mandatory purchase shall be given to the Beneficial Owners.
Mandatory Purchase on Mode Change Date. The Variable Rate Bonds
-----------------------------------------
to be changed from one Mode to another Mode are subject to mandatory
purchase on the Mode Change Date at the Purchase Price. The Paying
Agent will give thirty (30) days' notice of the mandatory purchase by mail
to the Beneficial Owners of the Variable Rate Bonds to be purchased. The
Variable Rate Bonds to be changed to the Fixed Rate Mode are subject to
mandatory purchase on the Mode Change Date at the Purchase Price. The
Paying Agent is required to give notice of the mandatory tender in
connection with a change to the Fixed Rate Mode to the Beneficial Owners of
the affected Variable Rate Bonds as part of the notice of change in Mode
described above.
Mandatory Purchase Under Liquidity Facility. If the Paying Agent
--------------------------------------------
receives timely written notice of the Liquidity Provider, as provided in
the Bond Resolution, that an Event of Default, as defined in the
Liquidity Facility, has occurred and is continuing and the Liquidity
Provider has exercised its option to terminate the Liquidity Facility,
Variable Rate Bonds secured by the Liquidity Facility will be subject to
mandatory redemption on a date not more than ten (10) nor less than five
(5) days before the Liquidity Facility is to be terminated. The
redemption price shall be qual to the principal amount thereof, plus
accrued interest.
Mandatory Purchase Upon Expiration of Liquidity Facility. The Variable
---------------------------------------------------------
Rate Bonds secured by the Liquidity Facility shall be subject to
mandatory redemption at a redemption price equal to the principal amount
thereof, plus accrued interest, if any, on the fifth (5th) Business Day
next preceding the Expiration Date, if by the Renewal Date (i) an
extension of the Liquidity Provider has not been obtained by the City or an
Alternate Liquidity Facility has not been delivered to the Paying Agent
and (ii) the City has not delivered a Mode Change Notice with respect
to a change to a Mode for which no Liquidity Facility is to be required,
which change is to take place no later than the fifth (5th) Business Day
prior to the Expiration Date. The Paying Agent shall give notice to
the Beneficial Owners, the City, the Remarketing Agent and the
Liquidity Provider of such mandatory redemption fifteen days prior
thereto.
Mandatory Purchase Upon Substitution of Alternate Liquidity Facility.
--------------------------------------------------------------------
In the event that on or prior to the forty-fifth (45th) Business Day next
preceding the date on which an Alternate Liquidity Facility is
substituted for the Liquidity Facility then in effect (the "Substitution
Date"), the City has failed to deliver to the Paying Agent a notice
confirming that the rating on the affected Variable Rate Bonds will not be
lowered or withdrawn (other than a withdrawal of short term rating upon a
change to a Long Term Mode) as a result of the delivery of an Alternate
Liquidity Facility, the Paying Agent, no later than the thirtieth (30th)
day next preceding the Substitution Date, shall give notice by mail to the
Beneficial Owners of the affected Variable Rate Bonds of the Mandatory
Purchase Date, the Purchase Price and that interest on such Variable
Rate Bonds will cease to accrue from and after the Mandatory Purchase
Date. The Paying Agent shall give notice to the Beneficial Owners,
the City, the Remarketing Agent and the Liquidity Provider of such mandatory
redemption fifteen days prior thereto.
Purchase of Variable Rate Bonds. The Variable Rate Bonds to be purchased
--------------------------------
as described above must be delivered (with all necessary endorsements)
at or before 12:00 noon on the Purchase Date or the Mandatory Purchase Date,
as the case may be, at the office of the Paying Agent; provided,
however, that payment of the Purchase Price of any Variable Rate Bond
purchased pursuant to optional tender shall be made only if the Variable
Rate Bond so delivered to the Paying Agent conforms in all respects to the
description thereof in the notice of tender.
On or before the close of business on the Purchase Date or the
Mandatory Purchase Date, as the case may be, the Paying Agent shall
purchase Variable Rate Bonds from the Beneficial Owners thereof at the
Purchase Price. The Purchase Price of any Variable Rate Bonds shall be
an amount equal to the principal amount thereof plus, in the case of any
purchase of Variable Rate Bonds in the Daily Mode or Weekly Mode, or upon
substitution of the Liquidity Facility, accrued interest, if any, to the
Purchase Date or the Mandatory Purchase Date, as the case may be. Payment
of the Purchase Price shall be made by the Paying Agent by wire transfer
in immediately available funds.
Funds for the payment of such Purchase Price shall be derived solely
from the following sources in the order of priority indicated, and neither
the Paying Agent nor the Remarketing Agent shall be obligated to provide
funds from any other source; (i) immediately available funds derived from
the remarketing of such Variable Rate Bonds; and (ii) immediately available
funds derived from a drawing on the Liquidity Facility. The Variable
Rate Bonds sold by the Remarketing Agent shall be delivered by the
Remarketing Agent to the purchasers of those Variable Rate Bonds by 3:00
p.m. on the Purchase Date or the Mandatory Purchase Date, as the case may
be. The Variable Rate Bonds purchased by the Paying Agent with moneys
derived from a drawing on the Liquidity Facility shall be immediately
registered in the name of the Liquidity Provider or its nominee on or
before the close of business on the Purchase Date or the Mandatory Purchase
Date, as the case may be.
If any Variable Rate Bonds to be purchased are not delivered to the
Paying Agent by 12:00 noon on the Purchase Date or the Mandatory Purchase
Date, as the case may be, the Paying Agent is required to hold any funds
received for the purchase of such Variable Rate Bonds in trust in a
separate account to pay such funds to the former owners of such
Variable Rate Bonds upon presentation thereof. Any such undelivered
Variable Rate Bonds will be deemed tendered and will cease to accrue
interest on the Mandatory Purchase Date or Purchase Date, as the case may
be. Any funds held by the Paying Agent for Payment of any
undelivered Variable Rate Bond which remain unclaimed by the former
Beneficial Owner of such Variable Rate Bond for a period of _ years
after delivery of such funds to the Paying Agent, in accordance with
the provisions of the Bond Resolution, will be paid to the City, and
thereafter such former Beneficial Owner may look only to the City for
payment thereof.
No Remarketing Upon the Occurrence of Certain Events of
Defaults. Notwithstanding the foregoing, if there shall have occurred and be
continuing (i) a default in the due and punctual payment of interest on
any Variable Rate Bond, whether on an Interest Payment Date thereof, or
upon proceedings for redemption or upon purchase thereof; or (ii) a
default in the due and punctual payment of the principal of or premium, if
any, on any Variable Rate Bond, whether at the stated maturity thereof,
or upon proceedings for redemption thereof, or upon purchase; the
Remarketing Agent shall not remarket Variable Rate Bonds pursuant to
the Bond Resolution. The Paying Agent shall promptly notify the
Beneficial Owners and the Liquidity Provider by mail of any such default.
REDEMPTION OF VARIABLE RATE BONDS
Optional Redemption.
Any Variable Rate Bonds in a Unit Pricing Mode or a Term Rate Mode
shall be subject to redemption, in whole or in part, on their respective
individual Purchase Dates, and Variable Rate Bonds in a Daily Mode or a
Weekly Mode shall be subject to redemption, in whole or in part, on any
Interest Payment Date, in each case at the option of the City and at a
redemption price equal to 100% of the principal amount of the Variable
Rate Bonds being redeemed, plus, in the case of Variable Rate Bonds in the
Daily Mode, accrued interest, if any, from the end of the last Interest
Accrual Period to the Redemption Date.
Mandatory Redemption.
On Default Under the Liquidity Facility. If the Paying Agent receives time-
----------------------------------------
ly written notice to the Liquidity Provider, as provided in the Bond Resolution,
either (i) that the interest portion of the Liquidity Facility will not be
reinstated as provided in the Liquidity Facility or (ii) that an Event of
Default, as defined in the Liquidity Facility, has occurred and is continuing
and the Liquidity Provider has exercised its option to terminate the
Liquidity Facility, Variable Rate Bonds secured by the Liquidity Facility
will be subject to mandatory redemption on a date not more than ten (10) nor
less than five (5) days before the Liquidity Facility is to be terminated.
The redemption price shall be equal to the amount thereof, plus accrued
interest.
Upon Expiration of the Liquidity Facility. The Variable Rate Bonds
------------------------------------------
secured by the Liquidity Facility shall be subject to mandatory
redemption at a redemption price equal to the principal amount
thereof, plus accrued interest, if any, on the fifth (5th) Business
Day next preceding the Expiration Date, if by the Renewal Date (i) an
extension of the Liquidity Provider has not been obtained by the City or an
Alternate Liquidity Facility has not been delivered to the Paying Agent
and (ii) the City has not delivered a Mode Change Notice with respect
to a change to a Mode for which no Liquidity Facility is to be required,
which change is to take place no later than the fifth (5th) Business Day
prior to the Expiration Date.
THE LIQUIDITY FACILITY
The Obligations will rank equally with all other general unsecured and
unsubordinated obligations of FGIC-SPI. The Obligations are not issued
pursuant to an indenture. As of the date hereof FGIC-SPI has approximately
$2.797 billion obligations currently outstanding without giving effect to the
Obligations offered hereby.
Owners of the Variable Rate Bonds to which the Obligations relate will be
entitled to the benefits and subject to the terms of the Liquidity Facility.
Pursuant to the Liquidity Facility, FGIC-SPI agrees to make available to a
specified intermediary, upon receipt of an appropriate demand for payment,
the Purchase Price for such Variable Rate Bonds. Initially, the obligation
of FGIC-SPI under the Liquidity Facility will be sufficient to pay a Purchase
Price equal to the principal of and up to 35 days' interest on the Variable
Rate Bonds (while in the Weekly Mode) at an assumed rate of 12% per annum.
TERMINATION EVENTS
The scheduled expiration date of the Liquidity Facility is October 24, 2001,
unless extended by FGIC-SPI for an additional five years upon notice to the
Issuer two years prior to the scheduled expiration date, or sooner terminated
in accordance with the terms thereof. Mandatory purchase of Variable Rate
Bonds by FGIC-SPI shall occur under the circumstances specified in the
Resolution. Under certain circumstances, the obligation of FGIC-SPI to
purchase Variable Rate Bonds tendered for purchase pursuant to an optional or
mandatory tender, which have not been remarketed, may be terminated. The
following events constitute "Termination Events" under the Liquidity
Facility:
(a) (i) any portion of the commitment fee shall not be paid when due
on the quarterly payment date as set forth in the Standby Bond Purchase
Agreement and related payment agreement (the Payment Agreement"), (ii)
the State of Florida shall take any action which would impair the power of
the Issuer to comply with the covenants and obligations of the Issuer
under the Resolution or any right or remedy of FGIC-SPI or any Beneficial
Owner from time to time to enforce such covenants and obligations, or (iii)
any other amount payable thereunder shall not be paid when due and any such
failure shall continue for three (3) Business Days after notice thereof to
the Issuer; (b)(i) the Issuer shall fail to observe or perform any covenant
or agreement contained in the Resolution and, if such failure is a result
of a covenant breach which is capable of being remedied, such failure
continues for sixty (60) days following written notice thereof to the
Issuer from FGIC-SPI, or (ii) there shall not be, at all times a
Remarketing Agent performing the duties thereof contemplated by the
Resolution; (c) any representation, warranty, certification or
statement made by the Issuer (or incorporated by reference) in any related
document or in any certificate, financial statement or other document
delivered pursuant thereto or any related document shall prove to have
been incorrect in any material respect when made; (d) any default by the
Issuer shall have occurred and be continuing in the payment of principal
of or premium, if any, or interest on any bond, note or other evidence
of indebtedness issued, assumed or guaranteed by the Issuer the
obligation and security for which under the Resolution or under any
related document is senior to, or on parity with, the Variable Rate Bonds;
(e) the Issuer files a petition in voluntary bankruptcy, for the
composition of its affairs or for its corporate reorganization under any
state or federal bankruptcy or insolvency law, or makes an assignment
for the benefit of creditors, or admits in writing to its insolvency or
inability to pay debts as they mature, or consents in writing to the
appointment of a trustee or receiver for itself; (f) a court of
competent jurisdiction shall enter an order, judgment or decree declaring
the Issuer insolvent, or adjudging it bankrupt, or appointing a trustee
or receiver of the Issuer, or approving a petition filed against the
Issuer seeking a reorganization of the Issuer under any applicable
law or statute of the United States of America or any state thereof,
and such order, judgment or decree shall not be vacated or set aside or
stayed within sixty (60) days from the date of the entry thereof; (g)
under the provisions of any other law for the relief or aid of debtors,
any count of competent jurisdiction shall assume custody or control of
the Issuer, and such custody or control shall not be terminated within
sixty (60) days from the date of assumption of such custody or control; (h)
any material provision of the Standby Bond Purchase Agreement, the
Resolution, any related document, the Variable Rate Bonds or the Variable
Rate Bonds purchased by FGIC-SPI shall cease for any reason whatsoever
to be a valid and binding agreement of the Issuer or the Issuer
shall contest the validity or enforceability thereof; or (i) failure
to pay when due any amount payable under the Variable Rate Bonds or
the Purchased Bonds (regardless of any waiver thereof by the Holders of
the Variable Rate Bonds).
Upon the occurrence of a Termination Event, FGIC-SPI may deliver
notice to the Paying Agent, the City and the Remarketing Agent regarding
its intention to terminate the Liquidity Facility. The Liquidity Facility
would terminate, effective at the close of business on the 30th day
following the date of such notice, or if such date is not a Business Day,
the next Business Day. Prior to the effectiveness of such termination,
all Variable Rate Bonds in a Variable Mode are subject to mandatory
tender for purchase from the proceeds of a drawing under the Liquidity
Facility. The termination of the Liquidity Facility, however, does not
result in an automatic acceleration of the Variable Rate Bonds.
The obligations of the Issuer with respect to the Variable Rate Bonds
are as described in the Official Statement relating to the Variable Rate
Bonds.
THE STANDBY LOAN AGREEMENT; GE CAPITAL
In order to obtain funds to fulfill its obligations under the
Liquidity Facility, FGIC-SPI will enter into a standby loan agreement with
GE Capital (the "Standby Loan Agreement") under which GE Capital will be
irrevocably obligated to lend funds to FGIC-SPI as needed to purchase such
Variable Rate Bonds. Each loan under the Standby Loan Agreement will be in
an amount not exceeding the purchase price for tendered Variable
Rate Bonds which represents the outstanding principal amount of such
tendered Variable Rate Bonds together with accrued interest thereon to
but excluding the date a borrowing is made and will mature on the date
which is five years from the effective date of the Standby Loan
Agreement. The proceeds of each loan shall be used only for the purpose
of paying the purchase price for tendered Variable Rate Bonds. When
FGIC-SPI desires to make a borrowing under the Standby Loan Agreement, it
must give GE Capital prior written notice of such borrowing by at least
11:45 a.m., New York City time, on the proposed borrowing date. No
later than 2:15 p.m., New York City time, on each borrowing date (if
the related notice of borrowing has been received by 11:45 a.m. on such
date), GE Capital will make available the amount of the borrowing
requested.
The Standby Loan Agreement will expressly provide that it is not a
guarantee by GE Capital of the Variable Rate Bonds or of FGIC-SPI's
obligations under the Liquidity Facility. GE Capital will not have any
responsibility for, or incur any liability in respect of, any act, or
any failure to act, by FGIC-SPI which results in the failure of FGIC-SPI
to effect the purchase for the account of FGIC-SPI of tendered Variable
Rate Bonds with the funds provided pursuant to the Standby Loan Agreement.
GE Capital is subject to the informational requirements of the 1934
Act and in accordance therewith files reports and other information
with the Commission. Such reports and other information can be inspected
and copied at Room 1024 at the Office of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as at the Regional Offices
of the Commission at 500 W. Madison, 14th Floor, Chicago, Illinois
60661-2511, and 7 World Trade Center, New York, New York 10048 and copies
can be obtained by mail from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Reports and other information concerning GE Capital
can also be inspected at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005 on which certain of GE Capital's
securities are listed.
The following table sets forth the consolidated ratio of earnings to
fixed charges of GE Capital for the periods indicated:
<TABLE>
<CAPTION>
Six Months
Ended
Year Ended December 31, June 29, 1996
------------------------------------------------------------ -------------
<S> <C> <C> <C> <C> <C>
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
1.34 1.44 1.62 1.63 1.51 1.52
</TABLE>
For purposes of computing the consolidated ratio of earnings to fixed
charges, earnings consist of net earnings adjusted for the provision for
income taxes, minority interest and fixed charges. Fixed charges consist of
interest and discount on all indebtedness and one-third of rentals, which the
Company believes is a reasonable approximation of the interest factor of such
rentals.
EXPERTS
The financial statements and schedule of General Electric Capital
Corporation and consolidated affiliates as of December 31, 1995 and 1994, and
for each of the years in the three year period ended December 31, 1995,
appearing in GE Capital's Annual Report on Form 10-K for the year ended
December 31, 1995, incorporated by reference herein, have been incorporated
herein by reference in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
APPENDIX A
TENDER TIMELINE
TENDERS FOR VARIABLE RATE BONDS
PURCHASE DATE
(New York City time)
- ---------------------------------------------------------------------------
| | | |
| | | |
| | | |
| | | |
| | | |
- ---------- --------------- --------------- ----------
11:30 a.m. 11:45 a.m. 2:15 p.m. 2:30 p.m.
(1) (2) (3) (4)
1. Paying Agent shall give immediate telephonic notice, in any event not
later than 11:30 a.m. on the Purchase Date, to FGIC-SPI specifying the
aggregate principal amount of Variable Rate Bonds to be purchased by
FGIC-SPI on such Purchase Date.
2. FGIC-SPI must give GE Capital prior written notice of a borrowing under
the Standby Loan Agreement by 11:45 a.m. on the date of the proposed
borrowing.
3. No later than 2:15 p.m. on each Optional Tender Date, GE Capital will
make available the amount of borrowing requested.
4. FGIC-SPI purchases Variable Rate Bonds, for which remarketing proceeds
are unavailable, by 2:30 p.m. on the Purchase Date.
$1,000,000,000
PRINCIPAL AMOUNT PLUS INTEREST
LIQUIDITY FACILITY OBLIGATIONS
OF
FGIC SECURITIES PURCHASE, INC.
FGIC Securities Purchase, Inc. ("FGIC-SPI" or the "Company") intends to
offer from time to time, in connection with the issuance by municipal
authorities or other issuers of adjustable or floating rate debt securities
(the "Securities"), its obligations (the "Obligations") under one or more
liquidity facilities (the "Liquidity Facilities"). The Obligations will not
be sold separately from the Securities, which will be offered pursuant to a
separate prospectus or offering statement. The Obligations will not be
severable from the Securities and may not be separately traded. This
Prospectus, appropriately supplemented, may also be delivered in connection
with any remarketing of Securities purchased by FGIC Securities Purchase,
Inc. or its affiliates.
Unless otherwise specified in a prospectus supplement to the Prospectus
(a "Prospectus Supplement"), the Obligations will be issued from time to
time to provide liquidity for certain adjustable or floating rate Securities
issued by municipal authorities or other issuers. The specific terms of the
Obligations and the Securities to which they relate will be set forth in a
Prospectus Supplement. Each issue of Obligations may vary, where applicable,
depending upon the terms of the Securities to which the issuance of
Obligations relates.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURI-
TIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- ---------------------
The date of this Prospectus is October 23, 1996.
The information contained in this Prospectus has been obtained from FGIC
Securities Purchase, Inc. This Prospectus is submitted in connection with
the future sale of securities as referred to herein, and may not be
reproduced or used, in whole or in part, for any other purposes.
No dealer, salesman or any other person has been authorized by FGIC-SPI
to give any information or to make any representation, other than as
contained in this Prospectus or a Prospectus Supplement, in connection with
the offering described herein, and if given or made, such other information
or representation must not be relied upon as having been authorized by any of
the foregoing. This Prospectus does not constitute an offer of any
securities other than those described herein or a solicitation of an offer to
buy in any jurisdiction in which it is unlawful for such person to make such
offer, solicitation or sale.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "1934 Act") and in accordance therewith
files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information can be
inspected and copied at Room 1024 at the Office of the Commission, 450 Fifth
Street N.W., Washington, D.C. 20549, as well as at the Regional Offices of
the Commission at 500 W. Madison, 14th Floor, Chicago, Illinois 60661-2511,
and 7 World Trade Center, New York, New York 10048 and copies can be obtained
by mail from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. FGIC-SPI does not
intend to deliver to holders of its obligations offered hereby an annual
report or other report containing financial information.
This Prospectus and the applicable Prospectus Supplement constitute a
prospectus with respect to the Obligations of FGIC-SPI under the Liquidity
Facilities to be issued from time to time by FGIC-SPI in support of the
Securities. It is not anticipated that registration statements with respect
to the Securities issued by municipal authorities or other issuers will be
filed under the Securities Act of 1933, as amended, in reliance on an
exemption therefrom.
-----------
DOCUMENTS INCORPORATED BY REFERENCE
There are hereby incorporated in this Prospectus by reference the
Company's Annual Report on Form 10-K for the year ended December 31, 1995 and
the Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996 and
June 30, 1996 all heretofore filed with the Commission pursuant to Section 13
of the 1934 Act, to which reference is hereby made.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the 1934 Act after the date of this Prospectus and prior to the
termination of the offering of the Obligations and the Securities shall be
deemed to be incorporated in this Prospectus by reference and to be a part
hereof from the date of filing of such documents. Any statement contained in
a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus
to the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person
to whom a copy of this Prospectus has been delivered, on the written or oral
request of such person, a copy of any or all of the documents referred to
above which have been or may be incorporated in this Prospectus by reference,
other than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents. Requests for such copies
should be directed to Corporate Communications Department, FGIC Corporation,
115 Broadway, New York, New York 10006, Telephone No. (212) 312-3000.
SUMMARY
The proposed structure will be utilized to provide liquidity through a
"put" mechanism for floating or adjustable rate securities and other
derivative debt securities issued by municipal authorities or other issuers.
Such securities typically include a tender feature that permits
broker-dealers to establish interest rates on a periodic basis which would
enable the securities to be remarketed at par and that provides a secondary
market liquidity mechanism for holders desiring to sell their securities.
Such securities will be remarketed pursuant to an agreement under which the
broker-dealers will be obligated to use "best efforts" to remarket the
securities. In the event that they cannot be remarketed, FGIC-SPI will be
obligated, pursuant to a standby purchase agreement or similar contractual
arrangement with the issuer, remarketing agent, tender agent or trustee of
the securities, to purchase unremarketed securities, from the holders
desiring to tender their securities (the "put option") or upon certain other
events. This facility will assure the holders of liquidity for their
securities even when market conditions preclude successful remarketing.
The proposed structure may also be used in connection with concurrent
offerings of variable rate demand securities ("VRDNs") and convertible
inverse floating rate securities ("INFLOs"). VRDNs and INFLOs are municipal
derivative securities pursuant to which (i) the interest rate on the VRDNs is
a variable interest rate which is re-set by the remarketing agent from time
to time (not to exceed a stated maximum rate) (the "VRDN Rate") and (ii) the
interest rate on the INFLOs is concurrently re-set at a rate equal to twice a
specified Linked Rate minus the fee charged by FGIC-SPI for the Liquidity
Facility. The owners of VRDNs have the optional right to tender their VRDNs
to the issuer for purchase and, in the event the remarketing agent does not
successfully remarket the tendered VRDNs, FGIC-SPI is obligated to pay the
purchase price therefor pursuant to the terms of its liquidity facility.
If an owner of INFLOs desires a fixed rate of interest not subject to
fluctuation based on the inverse floating rate equation described above, he
may elect to purchase from VRDN holders an amount of VRDNs equal to the
principal amount of INFLOs for which such holder desires a fixed rate of
interest. The net effect of such purchase is to "link" an equal principal
amount of VRDNs and INFLOs and thereby set a fixed interest rate on the
combined securities. If the owner of such combined securities so elects, he
may "de-link" his VRDNs and INFLOs. The remarketing agent will then remarket
the VRDNs at a re-set interest rate and the INFLOs retained by the de-linking
owner will again continue to vary and to be re-set whenever the interest rate
of the VRDNs are re-set. An INFLOs owner may also elect to permanently link
his INFLOs with an equal principal amount of VRDNs and thereby permanently
fix the interest rate on the combined securities to their stated maturity;
once permanent linkage is effected, no subsequent de-linkage is permitted.
Until such time as VRDNs are permanently linked to INFLOs, the VRDNs
will remain subject to remarketing in the manner noted above and FGIC-SPI
will remain obligated to purchase unremarketed VRDNs in connection with the
optional right of holders to tender their VRDNs for purchase.
The fees for providing the liquidity mechanism will be paid by the
issuer or other entity specified in the applicable Prospectus Supplement,
typically over the life of the liquidity agreement or, in the case of VRDNs,
until such time as a VRDN is permanently linked with an INFLO. Except as
otherwise provided in a Prospectus Supplement, in order to obtain funds to
purchase unremarketed securities, FGIC-SPI will enter into standby loan
agreements with one or more financial institutions (the "Standby Lenders")
under which the Standby Lenders will be irrevocably obligated to lend funds
to FGIC-SPI as needed to purchase Securities for which the put option has
been exercised. Except as otherwise provided in a Prospectus Supplement, the
standby purchase agreement or similar contractual agreement between FGIC-SPI
and the trustee, issuer or other specified entity will provide that, without
the consent of the issuer and the trustee for the security holders, FGIC-SPI
will not agree or consent to any amendment, supplement or modification of the
related standby loan agreement, nor waive any provision thereof, if such
amendment, supplement, modification or waiver would materially adversely
affect the issuer or other specified entity, or the security holders. Except
as otherwise provided in a Prospectus Supplement, the obligations of FGIC-SPI
under the standby purchase agreement or similar contractual agreement may
only be terminated upon the occurrence of certain events of non-payment,
default or insolvency on the part of the issuer or other specified entity.
In the event of a termination of the obligations of FGIC-SPI under the
standby purchase agreement or similar contractual agreement, the securities
will be subject to a mandatory tender. Prior to such time, security holders
will have the option to tender their securities, all as set forth in the
applicable Prospectus Supplement.
The above structure is intended to receive the highest ratings from the
rating agencies and to provide public issuers with the lowest cost of
financing. There can be no assurances, however, that such ratings will be
maintained.
THE COMPANY
FGIC-SPI was incorporated in 1990 in the State of Delaware. All
outstanding capital stock of FGIC-SPI is owned by FGIC Holdings, Inc., a
Delaware corporation.
Unless otherwise specified in a Prospectus Supplement, the business of
FGIC-SPI consists and will consist of providing liquidity for certain
adjustable and floating rate Securities issued by municipal authorities or
other issuers through "liquidity facilities". The securities are typically
remarketed by registered broker-dealers at par on a periodic basis to
establish the applicable interest rate for the next interest period and to
provide a secondary market liquidity mechanism for security holders desiring
to sell their securities. Pursuant to standby purchase agreements or similar
contractual agreements with issuers of the securities, FGIC-SPI will be
obligated to purchase unremarketed securities from the holders thereof who
voluntarily or mandatorily tender their Securities for purchase. In order to
obtain funds to purchase the Securities, FGIC-SPI will enter into one or more
standby loan agreements with Standby Lenders under which the Standby Lenders
will be irrevocably obligated to lend funds as needed to FGIC-SPI to purchase
Securities as required.
FGIC-SPI's principal executive offices are located at 115 Broadway, New
York, New York 10006, Telephone No. (212) 312-3000.
THE LIQUIDITY FACILITIES
The Obligations will rank equally with all other general unsecured and
unsubordinated obligations of FGIC-SPI. The Obligations are not issued
pursuant to an indenture.
Registered owners of the Securities will be entitled to the benefits and
subject to the terms of the applicable Liquidity Facility as specified in the
Prospectus Supplement. Pursuant to the Liquidity Facilities, FGIC-SPI will
agree to make available to a specified intermediary, upon receipt of an
appropriate demand for payment, the purchase price for the Securities to
which such Liquidity Facility relates. The obligation of FGIC-SPI under each
Liquidity Facility will be sufficient to pay a purchase price equal to the
principal of the Security to which such facility relates and up to a
specified amount of interest at a specified rate set forth in the applicable
Prospectus Supplement.
THE STANDBY LOAN AGREEMENT
In order to obtain funds to fulfill its obligations under the Liquidity
Facilities, FGIC-SPI will enter into one or more Standby Loan Agreements with
one or more Standby Lenders under which the Standby Lenders will be
irrevocably obligated to lend funds to FGIC-SPI as needed to purchase the
Securities to which the applicable Liquidity Facility relates. Each Standby
Loan Agreement will have the terms set forth in the applicable Prospectus
Supplement. It is anticipated that each loan under a Standby Loan Agreement
will be in an amount not exceeding the purchase price for the Securities
tendered by the holders which will represent the outstanding principal amount
of such securities, premium, if any, and accrued interest thereon for a
specified period. The proceeds of each loan shall be used only for the
purpose of paying the purchase price for tendered Securities. It is not
anticipated that a Standby Lender will guarantee the Securities to which its
Standby Loan Agreement relates or FGIC-SPI's obligation under any Standby
Purchase Agreement. Standby Lenders will be identified in the appropriate
Prospectus Supplement.
PLAN OF DISTRIBUTION
The Obligations will not be sold separately from the Securities, which
will be offered pursuant to a separate prospectus, official statement or
offering circular. In the event that Kidder, Peabody & Co., Incorporated, an
affiliate to FGIC-SPI and FGIC Corporation, participates in the distribution
of the Obligations and related Securities, such distribution will conform to
the requirements set forth in the applicable sections of Schedule E to the
By-Laws of the National Association of Securities Dealers, Inc.
LEGAL MATTERS
The legality of the Obligations has been passed upon for FGIC-SPI by
Brown & Wood, One World Trade Center, New York, New York 10048.
EXPERTS
The financial statements of FGIC Securities Purchase, Inc. at December
31, 1995 and 1994, and for each of the years in the three-year period ended
December 31, 1995 appearing in FGIC Securities Purchase, Inc.'s Annual Report
(Form 10-K) for the year ended December 31, 1995 incorporated by reference
herein, have been incorporated by reference herein in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
- -------------------------------------- ----------------------------------
No dealer, salesman or any other
individual has been authorized to
give any information or to make any
representations other than those
contained in this Prospectus in
connection with the offer made by
this Prospectus, and, if given or
made, such information or $53,300,000
representations must not be relied
upon as having been authorized by principal amount
FGIC-SPI. This Prospectus does not plus interest and premium,
constitute an offer or solicitation if any
by anyone in any jurisdiction in
which an offer or solicitation is
not authorized or in which the
person making such offer or LIQUIDITY FACILITY OBLIGATIONS
solicitation is not qualified to do
so or to anyone to whom it is
unlawful to make such offer or
solicitation.
issued by
--------------
FGIC Securities
TABLE OF CONTENTS Purchase, Inc.
PAGE
in support of
PROSPECTUS SUPPLEMENT
Documents Incorporated By
Reference . . . . . . . . . S-2 City of Tampa, Florida
Introduction . . . . . . . . S-2 Occupational License Tax Bonds
Description of the Variable Series 1996
Rate Bonds. . . . . . . . . S-2
The Liquidity Facility . . . S-15
The Standby Loan Agreement;
GE Capital . . . . . . . . S-17
Experts . . . . . . . . . . . S-18 ----------------
PROSPECTUS
Available Information . . . . . 2 PROSPECTUS SUPPLEMENT
Documents Incorporated By
Reference. . . . . . . . . . 3
Summary . . . . . . . . . . . . 4 ----------------
The Company . . . . . . . . . . 5
The Liquidity Facilities . . . 5 October 23, 1996
The Standby Loan Agreement . . 6
Plan of Distribution . . . . . 6
Legal Matters . . . . . . . . . 6
Experts . . . . . . . . . . . . 6
- -------------------------------------- ----------------------------------
