Preliminary Prospectus Supplement Dated October 17, 1996
PROSPECTUS SUPPLEMENT
(To Prospectus dated October 17, 1996)
$
PRINCIPAL AMOUNT PLUS INTEREST
LIQUIDITY FACILITY
OF
FGIC SECURITIES PURCHASE, INC.
IN SUPPORT OF
CITY OF TAMPA, FLORIDA
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 from and including the date of issuance to and including October
24, 1996 (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 , 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 , 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 $ 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-__,
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,
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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 %.
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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
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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 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
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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
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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 Payment" with respect to the Variable Rate Bonds
shall mean all payments due from the City to the Rate Cap Provider pursuant
to the Rate Cap Agreement (including, without limitation, payments due from
the City to the Rate Cap Provider upon the early termination of the Rate Cap
Agreement).
"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 theBond 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 %. 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 %. 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 Daily 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
---------------------
registered 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.
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.
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 redemptionprice 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
---------------------------------------
timely 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 1,
2001, unless extended by FGIC -SPI for an additonal five years upon notice to
the Issuer two years prior to the scheduled expirate 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 17, 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 $
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 , 1996
The Standby Loan Agreement . . 6
Plan of Distribution . . . . . 6
Legal Matters . . . . . . . . . 6
Experts . . . . . . . . . . . . 6
- -------------------------------------- ----------------------------------
