PROSPECTUS SUPPLEMENT
(To Prospectus dated December 21, 1998)
$198,895,000
principal amount plus interest
Liquidity Facility
of
FGIC Securities Purchase, Inc.
in support of
MASSACHUSETTS WATER RESOURCES AUTHORITY
Multi-Modal Subordinated General Revenue Refunding Bonds
1998 Series D
Date of Bonds: Date of Delivery Due: November 1, 2026
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Liquidity Facility: We are providing a liquidity facility for the
Bonds described below (the "Liquidity Facility"). The Liquidity Facility will
expire on December 22, 2003 unless it is extended or terminated sooner in
accordance with its terms.
Terms of the Bonds: The Bonds are limited obligations of the
Massachusetts Water Resources Authority, and will constitute subordinated
general obligations of the Authority and will be secured by a subordinated lien
on and pledge of certain revenues and other moneys of the Authority. The Bonds
will initially bear interest at a Weekly Rate through and including December
29, 1998, with interest to be payable on the first business day of each month,
commencing January 4, 1999. The Bonds are also subject to mandatory and
optional redemption prior to maturity and to optional and mandatory tender for
purchase, as described in this Prospectus Supplement.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
Our obligations under the Liquidity Facility (the "Obligations") are
not being sold separately from the Bonds. The Bonds are being remarketed under
a separate disclosure document. The Obligations may not be separately traded.
This prospectus supplement and the accompanying prospectus, appropriately
supplemented, may also be delivered in connection with any remarketing of Bonds
purchased by us.
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BEAR, STEARNS & CO. INC.
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The date of this Prospectus Supplement is December 21, 1998.
<PAGE>
TABLE OF CONTENTS
Page
INTRODUCTION ................................................S-2
DESCRIPTION OF THE BONDS ....................................S-2
THE LIQUIDITY FACILITY .....................................S-21
THE STANDBY LOAN AGREEMENT; GE CAPITAL .....................S-23
EXPERTS ....................................................S-25
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You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not, and the underwriters have not, authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted.
INTRODUCTION
We are providing you with this prospectus supplement to furnish
information regarding our obligations under a Liquidity Facility in support of
$198,895,000 aggregate principal amount of Multi-Modal Subordinated General
Revenue Refunding Bonds 1998 Series D which the Massachusetts Water Resources
Authority (the "Issuer") will issue on or about December 22, 1998 (the "Bonds"
or the "Series D Bonds"). We will enter into a Standby Bond Purchase Agreement
(the "Liquidity Facility") with State Street Bank and Trust Company, N.A. (the
"Trustee" or the "Tender Agent"), pursuant to which we will be obligated under
certain circumstances to purchase unremarketed Bonds from the holders
optionally or mandatorily tendering their Bonds for purchase. In order to
obtain funds to purchase the Bonds, we 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 to us as needed to purchase Bonds.
Our obligations under the Liquidity Facility will expire on December 22, 2003
unless the Liquidity Facility is extended or terminated sooner in accordance
with its terms.
DESCRIPTION OF THE BONDS
Terms not otherwise defined have the meaning set forth in Exhibit B.
General
The Series D Bonds will be issued in the aggregate principal amount of
$198,895,000. The Series D Bonds will be dated as of the date of initial
delivery and will mature on November 1, 2026. So long as the Series D Bonds are
in the Weekly Mode, interest will be payable on the first Business Day of each
month, commencing on January 4, 1999.
The Series D Bonds may be issued in any of four modes: the Daily Mode,
the Weekly Mode and the Commercial Paper Mode (sometimes referred to herein
collectively as the "Short-term Modes"), and the Term Rate Mode. Initially, the
Series D Bonds will be in the Weekly Mode. The initial interest rate for the
Series D Bonds will be effective from the date of delivery thereof through
Tuesday, December 29, 1998. The Liquidity Facility provided by FGIC-SPI applies
only to Series D Bonds in the Daily Mode and the Weekly Mode.
While in the Weekly Mode, the Series D Bonds will be offered in
Authorized Denominations of $100,000 and integral multiples thereof.
Weekly Interest Rates
The Series D Bonds will initially be issued in the Weekly Mode, and
will bear interest at the Weekly Rate. The Weekly Rate for the Series D Bonds
will be determined weekly by Bear, Stearns & Co. Inc., acting as remarketing
agent with respect to the Series D Bonds (together with any successor in such
capacity, the "Remarketing Agent") as the minimum rate of interest that would
under then existing market conditions result in the sale of the Series D Bonds
in the Weekly Mode at a price equal to the principal amount of such Series D
Bonds plus accrued interest, if any. The Remarketing Agent shall determine the
Weekly Rate for the Series D Bonds before 4:00 p.m., New York time, on each
Tuesday, or if such 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
(a "Rate Determination Date").
In the event the Remarketing Agent fails to determine an interest rate
for the Series D Bonds while they are in the Weekly Mode, the interest rate for
each Interest Period (the "Alternate Rate") shall be the most recently
published index for seven day variable rate demand bonds, as published by Kenny
Information Systems or its successor.
Interest on the Series D Bonds while in the Weekly Mode will be
calculated on the basis of a 365 or 366 day year, as appropriate, for the
actual number of days elapsed. The determination by the Remarketing Agent of
the interest rates for Series D Bonds shall be conclusive and binding, in the
absence of manifest error, upon the Authority, the Remarketing Agent, the
Tender Agent, the Trustee, the Credit Facility Issuer, the Liquidity Facility
Issuer, and the Owners of such Bonds. No Series D Bond (other than Bank Bonds)
may bear interest at an interest rate higher than the Maximum Rate, which is
12% per annum. The Maximum Rate may be increased above 12% to a rate not to
exceed 20% per annum at the option of the Authority, subject to the approval of
Bond Counsel and the Credit Facility Issuer, and, if necessary, the provision
of a new or increased Liquidity Facility. The Maximum Rate shall never exceed
the highest lawful rate as advised by counsel to the Authority.
Optional and Mandatory Tender of The Series D Bonds While in the Weekly Mode
Optional Tender. While a Series D Bond is in the Weekly Mode, an Owner
of a Series D Bond may elect to have such Bond (or portions thereof equal to an
Authorized Denomination) purchased, at a price equal to the Purchase Price
thereof and on the date specified by such Owner for such purchase (the
"Purchase Date"), upon delivery of an irrevocable written notice of tender, or
irrevocable telephonic notice of tender, promptly confirmed in writing, to the
Remarketing Agent and the Tender Agent not later than 4:00 p.m., New York time,
on a Business Day not less than seven days before the Purchase Date specified
by the Owner. The notice shall (i) state the principal amount of such Series D
Bond (or portion thereof) to be purchased, and (ii) state that such Series D
Bond shall be purchased on the Purchase Date.
The Purchase Price for any Series D Bond (or Authorized Denomination
thereof) optionally tendered or subject to mandatory tender for purchase as
described below shall be in the principal amount thereof plus accrued interest,
if any, to the date of the purchase of such Series D Bond.
Mandatory Purchase Upon Expiration of a Liquidity Facility. If the
then effective Liquidity Facility for the Series D Bonds is to expire or
terminate on any date (the "Expiration Date"), and no substitute Alternate
Liquidity Facility has been obtained, then all the Series D Bonds subject to
the expiring Liquidity Facility shall be subject to mandatory purchase at the
Purchase Price on the second Business Day preceding the Expiration Date. The
Trustee shall, at least 15 days before the mandatory purchase date, give notice
to the Owners of the applicable Series D Bonds of this mandatory purchase. The
notice shall state that the Liquidity Facility will expire on the Expiration
Date (specifying the date) and that the Series D Bonds are required to be
tendered for purchase (specifying the date of mandatory purchase).
Mandatory Purchase Upon Substitution of Alternate Liquidity Facility.
If, in connection with the obtaining of an Alternate Liquidity Facility, the
Authority fails to deliver to the Trustee a notice confirming that the
then-current long term credit ratings on the Series D Bonds will not be lowered
and that the then-current short term ratings will not be reduced or withdrawn
as a result of the delivery of such Alternate Liquidity Facility, then all
Series D Bonds shall be subject to mandatory tender for purchase on the date on
which such Alternate Liquidity Facility is to be substituted for such Liquidity
Facility (the "Substitution Date") at the applicable Purchase Price. The
Trustee, no later than fifteen days preceding the Substitution Date, shall give
notice to the Owners of the Series D Bonds stating (i) that the then effective
Liquidity Facility is being replaced by an Alternate Liquidity Facility, (ii)
that the Trustee has not received written confirmation from each of Standard &
Poor's, Moody's and Fitch (as hereafter defined) that, as a result of such
substitution, the then-current long term ratings on the Series D Bonds will not
be reduced or withdrawn and the then-current short term ratings will not be
reduced or withdrawn, and (iii) that such Series D Bonds are required to be
tendered for purchase on the Substitution Date unless any Owner of such Series
D Bonds directs that its Series D Bonds not be so purchased, and specifying the
procedures to be followed to exercise such Owner's right to retain such Series
D Bonds.
Mandatory Purchase Upon a Certain Termination Event. The Liquidity
Facility Issuer of a then effective Liquidity Facility may elect to terminate
such Facility upon at least 30 days' notice to the Trustee if the Authority
does not timely pay regularly scheduled commitment fees or other amounts (other
than the principal of or interest on any Bank Bonds discussed below) payable to
such Liquidity Facility Issuer, or if there shall occur any other event
specified in the Liquidity Facility as providing the Liquidity Facility Issuer
an option to terminate the Liquidity Facility. Upon receipt of notice from the
Liquidity Facility Issuer of such event, all Series D Bonds subject to such
Liquidity Facility shall be subject to mandatory purchase at the applicable
Purchase Price. At least seven days prior to the date for such purchase, the
Trustee shall give notice to the Owners of the affected Series D Bonds
specifying such date, which shall be the second Business Day prior to the
termination date.
Mandatory Purchase Upon Change in Mode. If the Authority determines to
change the Mode of the Series D Bonds to another Mode (see "Changes in Modes"
below), the Series D Bonds will be subject to mandatory tender for purchase on
the effective date of such change in Mode, subject to the rights of the owners
thereof to elect to retain such Series D Bonds. The Trustee shall provide at
least 15 days notice of such mandatory tender with respect to a change from any
Short-term Mode to any other Short-term Mode and at least 30 days notice of
such mandatory tender with respect to any other change in Mode.
Election To Retain
While in the Weekly Mode, the Owner of a Series D Bond subject to
mandatory purchase upon a change in Mode (unless the Mode is being changed to
the Term Rate Mode for a period extending to the maturity of the Series D
Bonds) or on a Substitution Date may elect to retain such Bond (or a portion
thereof in an Authorized Denomination) after the Mandatory Purchase Date by
giving an irrevocable written notice to the Tender Agent prior to the Election
Deadline (as described below), setting forth the matters prescribed by the
Supplemental Resolution for such notice.
The "Election Deadline" for Series D Bonds in the Weekly Mode means
4:00 p.m., New York time, on the fifth Business Day preceding the Mode Change
Date with respect to any change from a Short-term Mode to another Short-term
Mode, and otherwise on the tenth Business Day preceding the Mode Change Date or
the Substitution Date.
The notice of election for Series D Bonds in the Weekly Mode shall
specify that the person delivering the notice is an Owner and the numbers (if
applicable) and principal amount of the Series D Bonds to be retained, and
shall contain the additional information required by the Supplemental
Resolution acknowledging that the Owner has received notice of the Mode Change
Date, acknowledging that such Series D Bond will not be subject to purchase at
the option of the Owner if it is being converted to the Commercial Paper Mode
or Term Rate Mode, directing the Tender Agent not to purchase the Series D Bond
or portion thereof with respect to which the election is exercised, and
acknowledging that the ratings on such Series D Bond may be withdrawn or
lowered or otherwise modified after the Mode Change Date (if such is expected
to be the case).
Any notice of election to retain a Series D Bond delivered to the
Remarketing Agent or the Tender Agent shall be irrevocable and binding upon the
Owner delivering the notice and upon subsequent Owners of such Series D Bonds,
including any Series D Bond issued in exchange for any such Series D Bond or
upon transfer of any such Series D Bond. If an Owner of a Series D Bond subject
to mandatory purchase upon conversion from the Weekly Mode or on a Substitution
Date delivers a notice of election to retain such Series D Bond, such Series D
Bond shall not be subject to purchase upon optional tender during the period
from the date of delivery of such notice to the day succeeding the Mode Change
Date. The Series D Bond or portion retained shall be in an amount equal to an
Authorized Denomination for the Mode applicable to such Series D Bond after
such Mandatory Purchase Date.
Remarketing Of Series D Bonds
The Remarketing Agent for the Series D Bonds shall use its best
efforts to find purchasers for (i) all Series D Bonds tendered for purchase at
the election of the Owners, and (ii) all Series D Bonds required to be
purchased and not retained upon a Mode Change Date or Substitution Date, in
each case at the applicable Purchase Price.
The Remarketing Agent shall notify the Tender Agent of the amount of
Series D Bonds that were remarketed. The Tender Agent, on behalf of the
Trustee, shall request FGIC-SPI (or the issuer of any Alternate Liquidity
Facility) to purchase under the Standby Bond Purchase Agreement (or the then
applicable Alternate Liquidity Facility) on the Purchase Date or the Mandatory
Purchase Date, as the case may be, at the applicable Purchase Price thereof,
all such Series D Bonds tendered or deemed tendered and which the Remarketing
Agent has been unable to remarket in accordance with the terms of the
Supplemental Resolution.
Purchase Of Series D Bonds
Funds for the payment of the Purchase Price shall be derived solely
from the following sources in the following order of priority indicated: (a)
immediately available funds derived from the remarketing of such Series D
Bonds; (b) amounts paid by FGIC-SPI under the Standby Bond Purchase Agreement
(or paid by any other Liquidity Facility Issuer of an Alternate Liquidity
Facility) to purchase any such Series D Bonds which are unremarketed; and (c)
in case of change of Mode to a Term Rate Mode extending to the maturity of the
Series D Bonds, when the Series D Bonds are being remarketed at a discount to
their par value, immediately available funds of the Authority not exceeding the
amount of the discount. None of the Authority, the Trustee, the Tender Agent or
the Remarketing Agent shall be obligated to provide funds for the payment of
the Purchase Price from any other source.
While the book-entry only system is in effect, tenders and purchases
shall be made as described in "Book-Entry Only System" below and in the fourth
paragraph below. The following three paragraphs apply if such system is not in
effect.
The Series D Bonds to be purchased must be delivered (with all
necessary endorsements) at or before 12:00 noon, New York time, on the Purchase
Date or Mandatory Purchase Date, as the case may be, at the office of the
Tender Agent in New York, New York; provided, however, that payment of the
Purchase Price of any Series D Bonds purchased pursuant to optional tender
shall be made only if such Series D Bonds so delivered to the Tender Agent
conform in all respects to their description 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 Tender Agent shall purchase Series D Bonds from
the Owners at the Purchase Price. Payment of the Purchase Price shall be made
by the Tender Agent by wire transfer in immediately available funds, or by
check mailed to any Owner of such Series D Bonds to be purchased who has not
provided, or caused to be provided, wire transfer instructions.
Any Series D Bonds sold by the Remarketing Agent shall be delivered by
such Remarketing Agent to the purchasers of those Series D Bonds by 3:00 p.m.,
New York time, on the Purchase Date or the Mandatory Purchase Date, as the case
may be.
If any Series D Bond to be purchased is not delivered to the Tender
Agent by 12:00 noon, New York time, on the Purchase Date or Mandatory Purchase
Date, as the case may be, the Tender Agent is required to hold any funds
received for the purchase of such Series D Bonds in trust in a separate account
to pay such funds to the former Owners of such Series D Bonds upon
presentation. Any such undelivered Series D Bonds will be deemed tendered and
will cease to accrue interest on the Purchase Date or Mandatory Purchase Date,
as the case may be. Any funds held by the Tender Agent for payment of any
undelivered Series D Bond which remain unclaimed by the former Owner of such
Series D Bond for a period of five years after delivery of such funds to the
Tender Agent will, in accordance with the provisions of the Supplemental
Resolution, be paid to the Authority, and thereafter such former Owner may look
only to the Authority for payment.
During any period that the Series D Bonds are registered in the name
of DTC or a nominee thereof (i) any notice of optional tender delivered shall
also (A) provide evidence satisfactory to the Tender Agent that the party
delivering the notice is the beneficial owner or a custodian for the beneficial
owner of the Series D Bonds referred to in the notice, and (B) if the
beneficial owner is other than a Participant of DTC, identify the Participant
through whom the beneficial owner will direct transfer; (ii) on or before the
Purchase Date, the beneficial owner must direct (or if the beneficial owner is
not a Participant, cause its Participant to direct) the transfer of said Series
D Bonds on the records of DTC; and (iii) it shall not be necessary for Series D
Bonds to be physically delivered on the date specified for purchase thereof,
but such purchase shall be made as if such Series D Bonds had been so
delivered, and the Purchase Price thereof shall be paid to DTC. In accepting a
notice of tender, the Trustee and the Tender Agent may conclusively assume that
the person providing the notice of tender is the beneficial owner of the Series
D Bonds being tendered and therefore entitled to tender them. Neither the
Trustee nor the Tender Agent assumes any liability to anyone in accepting a
notice of tender from a person whom it reasonably believes to be such a
beneficial owner of the Series D Bonds or, in its discretion, rejecting such
tender, if it reasonably believes such person has not demonstrated its status
as such a beneficial owner.
Change In Modes
In addition to the Weekly Mode, the Supplemental Resolution provides
for the Series D Bonds to be changed to (i) a Commercial Paper Mode, in which
the Series D Bonds will have subsequent interest rate periods, each of a
duration of days (which shall be at least one day and no more than 270 days)
set by the Remarketing Agent, at the beginning of each such period, and during
which they will bear interest at the rate set by the Remarketing Agent at the
beginning of each such period, (ii) a Daily Mode, during which the Remarketing
Agent will set the rate of interest for the Series D Bonds on each Business
Day, and (iii) a Term Rate Mode of the period (which shall be not less than 271
days) set at the commencement of such Mode, during which the Series D Bonds
will bear interest at the rate set by the Remarketing Agent at the beginning of
such period.
The Supplemental Resolution provides the methods by which changes from
one Mode to another shall be made, which methods include the giving of notice
of such change to the Owners of the Series D Bonds, and describing in detail
the provisions of the Mode being changed to. In addition, upon a change in
Mode, each Owner of a Series D Bond subject to such change shall have such
Series D Bond purchased on the effective date of such new Mode, subject to such
owner's right to elect to retain such Series D Bonds in the new Mode.
The Series D Bonds may be changed from one Mode to another Mode as
often as determined by the Authority. However, once changed to the Term Rate
Mode, which extends to the maturity date thereof, the Series D Bonds shall
remain in such Mode and not be subsequently changed to another Mode.
Redemption
Optional. While in the Weekly Mode, the Series D Bonds shall be
subject to redemption prior to maturity, at the option of the Authority, in
whole or in part on any interest payment date (and if less than all of the
Series D Bonds are to be redeemed, the particular Series D Bonds to be redeemed
to be selected by lot), at a redemption price equal to the principal amount of
the Series D Bonds to be redeemed, together with the interest accrued on such
principal amount to the date fixed for redemption.
Sinking Fund. The Series D Bonds are subject to redemption in part by
lot on November 1 of the indicated years and in the indicated principal amounts
as mandatory sinking fund installments, at a redemption price equal to the
principal amount thereof plus accrued interest. Principal Year Amount
2008 $ 4,500,000
2009 5,700,000
2010 1,500,000
2011 6,000,000
2012 6,200,000
2013 6,400,000
2014 6,700,000
2015 7,000,000
2016 7,200,000
2017 25,000,000
2018 26,000,000
2019 27,000,000
2020 17,300,000
2021 7,900,000
2022 8,200,000
2023 8,500,000
2024 8,900,000
2025 9,200,000
2026 9,695,000
In the event that Series D Bonds shall be redeemed in part at the
option of the Authority, then the principal amount so redeemed shall be applied
to reduce the amount of mandatory sinking fund installments of the Series D
Bonds (including principal due on the final maturity date of the Series D
Bonds) as the Authority shall specify in writing to the Trustee and the
Remarketing Agent.
Notice of Redemption and Other Notices. So long as The Depository
Trust Company ("DTC"), New York, New York, or its nominee is the Bondholder,
the Authority and the Trustee will recognize DTC or its nominee as the
Bondholder for all purposes, including notices and voting. 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 and regulatory requirements as may be in effect from
time to time.
The Trustee shall give notice of redemption to the Series D
Bondholders, while the Series D Bonds are in the Weekly Mode, not less than
fifteen (15) days prior to the date fixed for redemption. Failure to mail
notice to a particular Series D Bondholder, or any defect in the notice to such
Series D Bondholder, shall not affect the redemption of any other Series D
Bond. So long as DTC or its nominee is the Series D Bondholder, any failure on
the part of DTC or failure on the part of a nominee of a Beneficial Owner
(having received notice from a Direct Participant or otherwise) to notify the
Beneficial Owner so affected, shall not affect the validity of the redemption.
Selection for Redemption. In the event that less than all of the
Series D Bonds of any one maturity are to be redeemed and for so long as the
book-entry system remains in effect for the Series D Bonds, the portion of any
Series D Bond of a particular maturity to be redeemed shall be selected by DTC
in such manner as DTC may determine. If the book-entry only system for the
Series D Bonds is no longer in effect, selection for redemption of less than
all the Series D Bonds of any one maturity will be made by the Trustee by lot
or in any other manner of selection the Trustee in its discretion shall deem
appropriate and fair. Notwithstanding the foregoing, Bank Bonds (if any) will
be redeemed prior to any other Series D Bonds.
Book-Entry Only System
Upon initial issuance, the Series D Bonds will be available only in
book-entry form, and so long as they are in the Weekly Mode, will be available
only in Authorized Denominations. DTC will act as securities depository for the
Series D Bonds and the ownership of one fully-registered bond for each series
of Series D Bonds in the principal amount of such series and will be registered
in the name of Cede & Co., as nominee for DTC, and 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 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 Series D Bonds under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Series D Bonds
on DTC's records. The ownership interest of each actual purchaser of each
Series D 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 purchase, but Beneficial Owners are expected to
receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Series D 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 the Series D Bonds, except in the event that use of the book-entry
system for the Series D Bonds is discontinued.
To facilitate subsequent transfers, all Series D Bonds deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Series D Bonds with DTC and their registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Series D Bonds; DTC's records
reflect only the identity of the Direct Participants to whose accounts such
Series D 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.
Neither DTC nor Cede & Co. will consent or vote with respect to the
Series D Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to the
Authority as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Series D Bonds are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Principal and interest payments on the Series D Bonds will be made to
DTC. DTC's practice is to credit Direct Participants' accounts on the 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 the 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 Participant and not of DTC, the Trustee, or
the Authority, 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 Authority or the Trustee, disbursement of such payments
to Direct Participants shall be the responsibility of DTC, and disbursement of
such payments to the Beneficial Owners shall be the responsibility of Direct
and Indirect Participants.
DTC may discontinue providing its services as securities depository
with respect to the Series D Bonds at any time by giving reasonable notice to
the Authority or the Trustee. Under such circumstances, in the event that a
successor securities depository is not obtained, Series D Bond certificates are
required to be printed and delivered.
The Authority may decide to discontinue use of the system of
book-entry transfers through DTC (or a successor securities depository). In
that event, Series D Bond certificates will be printed and delivered.
The information contained herein concerning DTC and DTC's book-entry
system has been obtained from sources that the Authority believes to be
reliable, but the Authority takes no responsibility for the accuracy thereof.
Neither the Trustee nor the Authority will have any responsibility or
obligation to such DTC Participants or the persons for whom they act as
nominees with respect to the payments to the DTC Participants, the Indirect
Participants or Beneficial Owners.
Exchange And Transfer
If for any reason the book-entry only system is discontinued, the
Series D Bonds will be exchangeable and transferable on the registration books
of the Authority at the principal corporate trust office of the Trustee in
Authorized Denominations. Upon presentation and surrender of any Series D Bond
for transfer or exchange, the Trustee will authenticate and deliver in the name
of the designated transferee or transferees or the registered owner, as
appropriate, one or more new fully registered Series D Bonds in any Authorized
Denomination or Denominations. For every exchange or transfer of Series D
Bonds, the Authority or the Trustee may make a charge sufficient to reimburse
it for any tax, fee or other governmental charge required to be paid with
respect to such exchange or transfer. The Authority shall not be obligated to
make any transfer or exchange of any Series D Bonds during the 15-day period
preceding an interest or principal payment date. Neither the Authority nor the
Trustee shall be required to transfer or exchange the Series D Bonds for a
period of 15 days next preceding the mailing of any notice of redemption or to
transfer or exchange any Series D Bond called for redemption.
Denominations, Medium, Method and Place of Payment of Principal and Interest
and Dating of Series D Bonds
The Series D Bonds shall be issued in the form of fully registered
Series D Bonds in Authorized Denominations. The principal of and premium, if
any, and interest on the Series D Bonds shall be payable in lawful money of the
United States of America. The interest on the Series D Bonds that are not Bank
Bonds shall be due on the Interest Payment Dates and payable (i) in the case of
Series D Bonds in a Short-Term Mode, by wire transfer of immediately available
funds to the account specified by the Owner or by the Remarketing Agent in a
written direction delivered to the Trustee (such direction to remain in effect
until revoked or revised by such Owner or the Remarketing Agent in a subsequent
written direction delivered to the Trustee) or, if no such account number is
furnished, by check mailed by the Trustee to the Owner at the address appearing
on the books required to be kept by the Trustee pursuant to the Resolution, and
(ii) in the case of Series D Bonds in the Term Rate Mode, by check mailed by
the Trustee to the respective Owners thereof at their addresses as they appear
on the Record Date in the registration books of the Authority kept at the
principal corporate trust office of the Trustee pursuant to the Resolution,
except that in the case of an Owner of $1,000,000 or more in aggregate
principal amount of Series D Bonds, upon the written request of such Owner to
the Trustee, received on or prior to a Record Date, specifying the account or
accounts to which such payment shall be made, payment of interest when due
shall be made by wire transfer of immediately available funds. Any such request
shall remain in effect until revoked or revised by such Owner by an instrument
in writing delivered to the Trustee. The principal of and premium, if any, on
each Series D Bond shall be payable on its Principal Payment Date, upon
surrender thereof at the principal corporate trust office of the Trustee.
Each Series D Bond shall be dated as of the Closing Date and shall
also show the date of authentication thereof and shall bear interest from the
Interest Payment Date next preceding the date of authentication, unless such
date of authentication is after a Record Date and on or before the next
succeeding Interest Payment Date, in which event such Series D Bond shall bear
interest from and including such Interest Payment Date, or unless such date of
authentication is prior to the Record Date with respect to the first Interest
Payment Date, in which event such Series D Bond shall bear interest from the
Closing Date, until the entire principal amount thereof is paid; provided if,
at the time of authentication of any Series D Bond, interest is in default or
overdue thereon, such Series D Bond shall bear interest from the Interest
Payment Date to which interest has previously been paid in full or made
available for payment in full.
Interest on Series D Bonds (other than Provider Bonds) in a Short-Term
Mode shall be calculated on the basis of a year of 365 or 366 days, as
appropriate, for the actual number of days elapsed to the Interest Payment
Date. Interest on Series D Bonds (other than Bank Bonds) in the Term Rate Mode
shall be calculated on the basis of a year of 360 days composed of twelve
30-day months.
The interest rates for Series D Bonds contained in the records of the
Trustee, absent manifest error, shall be conclusive and binding upon the
Authority, the Remarketing Agent, the Tender Agent, the Trustee, the Credit
Facility Issuer, the Liquidity Facility Provider and the Owners.
The Owner of a Series D Bond shall be paid (and, shall be obligated to
pay, as part of the price paid by such Owner in connection with the remarketing
to it of such Series D Bonds) interest thereon for an Interest Period only in
the amount that would have accrued thereon at the rate or rates established
pursuant to the Supplemental Resolution, regardless of whether such Series D
Bond was a Provider Bond during any portion of such Interest Period.
No Series D Bond other than a Provider Bond may bear interest at an
interest rate higher than the Maximum Rate.
Determination of Interest Rates and Interest Periods During Commercial Paper
Mode
Interest Periods in a Commercial Paper Mode shall be of such duration,
of at least one day and not more than 270 days, ending on a day next preceding
a Business Day or the Maturity Date, as the Remarketing Agent shall determine
in accordance with the provisions described herein. In making the
determinations with respect to Interest Periods, subject to limitations imposed
by the preceding sentence, the Remarketing Agent shall on each Rate
Determination Date select for each Series D 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 Series
D 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
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 Series D Bond, then the Remarketing Agent shall select
the Interest Period which in the judgment of the Remarketing Agent would permit
such Series D Bond to achieve such lower average interest cost; provided,
however, that if the Remarketing Agent has received notice from the Authority
that any Series D Bond is to be changed from the Commercial Paper Mode to any
other Mode or if it is to be purchased in connection with an Expiration Date, a
Termination Date or a Substitution Date, the Remarketing Agent shall, with
respect to such Series D Bond, select Interest Periods which do not extend
beyond the Mandatory Purchase Date. The determination by the Remarketing Agent
of each such interest rate and Interest Period shall be conclusive and binding,
in the absence of manifest error, upon the Remarketing Agent, the Tender Agent,
the Trustee, the Credit Facility Issuer, the Liquidity Facility Provider, the
Authority and the Owners. The Standby Bond Purchase Agreement with FGIC-SPI
does not currently provide support for Commercial Paper Rate Bonds.
At or after 4:00 p.m. on the Business Day next preceding the Rate
Determination Date for any Commercial Paper Rate Bonds, any Owner of such
Commercial Paper Rate 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 1:00 p.m. on each Rate Determination Date, the Remarketing Agent
shall, with respect to each Commercial Paper Rate Bond that is subject to
adjustment on such date, determine an interest rate for the Interest Period
then selected for such Series D Bond and, no later than 1:00 p.m., shall give
notice by Electronic Means to the Tender Agent of the applicable Interest
Period, Purchase Date and interest rate. The Tender Agent shall notify the
Trustee, by Electronic Means, by the close of business on the Rate
Determination Date, of the Interest Period, Purchase Date and interest rate.
By acceptance of any Commercial Paper Rate Bond, the 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
Series D Bond to the Tender Agent for purchase on the next succeeding Purchase
Date at the Purchase Price, unless the Owner duly elects to retain such Series
D Bond as provided below under "Election to Retain". Such Owner further
acknowledges that, unless it has so elected to retain such Series D Bond, if
funds for such purchase are on deposit with the Tender Agent on such Purchase
Date, such Owner shall have no rights under the 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.
Determination of Interest Rate During Daily Mode
The interest rate for any Series D Bond in the Daily Mode shall be the
rate of interest per annum determined by the Remarketing Agent on or before
9:30 a.m. on 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 Series D Bonds in the Daily Mode on the
Rate Determination Date at a price equal to the principal amount thereof, plus
accrued interest, if any. The Remarketing Agent shall make the rate available
by Electronic Means to the Trustee and to the Tender Agent by 10:30 a.m. on the
Rate Determination Date. With respect to any day that is not a Business Day,
the interest rate shall be the same rate as the interest rate established for
the immediately preceding Business Day. The determination by the Remarketing
Agent of each such interest rate shall be conclusive and binding, in the
absence of manifest error, upon the Remarketing Agent, the Tender Agent, the
Trustee, the Credit Facility Issuer, the Liquidity Facility Issuer, the
Authority and the Owners.
<PAGE>
Determination of Interest Rate During Weekly Mode
The interest rate for Series D Bonds for each Interest Period during
the Weekly Mode shall be the rate of interest per annum determined by the
Remarketing Agent on and as of the applicable 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 Series D Bonds
in the Weekly Mode on the Rate Determination Date at a price equal to the
principal amount thereof, plus accrued interest, if any. The Remarketing Agent
shall make the rate available by Electronic Means to the Trustee and to the
Tender Agent by 5:00 p.m. on the Rate Determination Date. The determination by
the Remarketing Agent of each such interest rate shall be conclusive and
binding, in the absence of manifest error, upon the Remarketing Agent, the
Tender Agent, the Trustee, the Credit Facility Issuer, the Liquidity Facility
Issuer, the Authority and the Owners.
Determination of Term Rate(s)
(a) Term Rates. The Term Rate to be effective for the Interest Period
commencing on any Mode Change Date after which the Series D Bonds will bear
interest at a Term Rate or any Purchase Date while the Series D Bonds are in
the Term Rate Mode, shall be determined by the Remarketing Agent. No later than
4:00 p.m. on the Business Day next preceding the Mode Change Date or the
Purchase Date, as the case may be, the Remarketing Agent shall determine the
Term Rate and shall make the Term Rate available by Electronic Means to the
Trustee and the Remarketing Agent. The Term Rate shall be the minimum rate
that, in the sole judgment of the Remarketing Agent, would result in a sale of
the Series D Bonds which (together with other available funds of the Authority,
if required) shall be equal to the principal amount thereof on the Rate
Determination Date taking into consideration the duration of the Interest
Period, which shall be established by the Authority.
(b) Failure to Establish Term Rate. If, for any reason, a new Term
Rate cannot be established on a Purchase Date, the Series D Bonds will be
changed automatically to the Weekly Mode on the Purchase Date.
Alternate Rate for Interest Calculation
In the event (i) the Remarketing Agent fails to determine the interest
rate(s) or Interest Periods with respect to the Series D Bonds, or (ii) the
method of determining the interest rate(s) or Interest Periods with respect to
the Series D Bonds shall be held to be invalid by a court of law of competent
jurisdiction, the Series D Bonds shall thereupon, until such time as the
Remarketing Agent again makes such determination or until there is delivered to
the Authority and the Trustee a Favorable Opinion of Bond Counsel to the effect
that the method of determining such rate is valid, bear interest at the
Alternate Rate for the Mode in effect and, in the case of Commercial Paper Rate
Bonds, for an Interest Period of 30 days.
Changes in Mode
(a) Authority Option to Change Modes. The Series D Bonds shall
initially be in the Weekly Mode. At the option of the Authority, any Mode,
other than a Term Rate Mode expiring on the day before the Maturity Date, may
be changed to any other Mode at the times and in the manner provided in the
Supplemental Resolution. Subsequent to such change in Mode, the Series D Bonds
may again be changed at the option of the Authority to a different Mode at the
times and in the manner provided in the Supplemental Resolution. Any Series D
Bonds converted to a Term Rate Mode fixed to the maturity thereof shall not be
changed to any other Mode.
(b) Notice of Intention to Change Mode. The option of the Authority to
change the Mode of the Series D Bonds shall be exercised by written notice from
the Authority to the Notice Parties stating the Authority's intention to effect
a change in the Mode from the Mode then prevailing (the "Current Mode") to
another Mode (the "New Mode") specified in such written notice, together with
the proposed Mode Change Date. Such written notice shall be given not later
than 20 days prior to the proposed Mode Change Date for any change from one
Short-Term Mode to another Short-Term Mode and not later than 45 days prior to
the proposed Mode Change Date for any change to or from a Term Rate Mode. Such
notice shall include, as applicable, the information described in subsections
(3), (4), (6), (8) and (9) of the following paragraph (c).
(c) Notice to Owners of Changes to Modes Other Than Term Rate Mode
Fixed to the Maturity of Any Series D Bonds. In the case of any change from one
Short-Term Mode to another Short-Term Mode on or before the 15th day preceding
the proposed Mode Change Date and in the case of any change to or from a Term
Rate Mode (other than to a Term Rate Mode having an Interest Period extending
to the maturity of the Series D Bonds) on or before the 30th day preceding the
proposed Mode Change Date, the Trustee shall mail to the Owners of the Series D
Bonds a notice of the proposed change in Mode stating:
(1) the New Mode to which the Series D Bonds are to be subject;
(2) the proposed Mode Change Date;
(3) the date on which the interest rate for the New Mode will be
determined, and, in the case of a change to a Term Rate Mode, the
Interest Period and the Interest Payment Dates for such Term Rate
Mode;
(4) in the case of a change to a Term Rate Mode, the Indicative
Rate, together with a statement to the effect that the actual
interest rate determined may be greater or less than the Indicative
Rate;
(5) except in the case of a change to the Commercial Paper Mode,
the Interest Payment Dates applicable to the New Mode;
(6) the redemption provisions and the terms of purchase to be
applicable to the Series D Bonds in the New Mode;
(7) that, subject to such Owner's right to elect to retain such
Owner's Series D Bonds, such Owner is required to tender such Owner's
Series D Bonds for purchase on the Mode Change Date (specifying the
date and the procedures to be followed by the Owner to exercise such
election including the Election Deadline);
(8) whether a Liquidity Facility will be in effect during the New
Mode and the anticipated ratings on such Series D Bonds if available;
(9) such of the other conditions to the effectiveness of the
change in Mode described in paragraph (d) below as are applicable;
(10) that if all conditions precedent to the effectiveness of the
New Mode are not met, the Series D Bonds that are the subject of the
Mode Change Notice will be changed on the Mode Change Date to (or, if
already in the Weekly Mode, will remain) Series D Bonds in the Weekly
Mode, and that all Owners shall be entitled to continue owning the
Series D Bonds in such Mode by giving telephonic notice to the
Remarketing Agent to such effect by 10:00 a.m. on the Mode Change
Date; and
(11) the telephone number of the Remarketing Agent to be called
by Owners who wish to learn if the conditions to the change of Mode
on the Mode Change Date have been satisfied or to exercise the right
to continue owning Series D Bonds if the conditions have not been
met.
(d) General Provisions Applying to Changes from One Mode to Another.
(1) The Mode Change Date must be a Business Day.
(2) Additionally, the Mode Change Date:
(i) from the Commercial Paper Mode shall be the last
Purchase Date for the Commercial Paper Rate Bonds; and
(ii) from a Term Rate Mode shall be the Purchase Date of
the current Interest Period.
(3) On or prior to the date the Authority provides the notice to
the Notice Parties described in paragraph (b) above, the Authority
shall deliver to the Trustee (i) a letter from Bond Counsel
acceptable to the Trustee and addressed to the Trustee (with a copy
to all other Notice Parties) to the effect that it expects to be able
to deliver a Favorable Opinion of Bond Counsel on the Mode Change
Date and (ii) if the Liquidity Facility is insufficient to satisfy
the Liquidity Requirement (if any) applicable to the New Mode, a
letter from the Liquidity Facility Issuer indicating the Liquidity
Facility Issuer's willingness to increase the amount of the Liquidity
Facility to the Liquidity Requirement (if any) to be applicable
during the New Mode, or a letter from a prospective Liquidity
Provider indicating its willingness to provide an Alternate Liquidity
Facility meeting such Liquidity Requirement.
(4) No change in Mode will become effective unless all
conditions precedent thereto have been met and the following items
shall have been delivered to the Trustee and the Remarketing Agent by
12:00 noon, or such later time as is acceptable to the Authority, the
Trustee and the Remarketing Agent, on the Mode Change Date:
(i) except in the case of a change in described in
paragraph (b) above and in paragraph (d)(6) above, a Favorable
Opinion of Bond Counsel dated the Mode Change Date; and
(ii) a Liquidity Facility meeting the Liquidity
Requirement, if any, for the applicable Mode.
(5) If all conditions to the change of Mode are met by the time
specified in paragraph (d)(4) above, the Interest Period(s) for the
New Mode shall commence on the Mode Change Date and the Interest
Rate(s) (together, in the case of a change to the Commercial Paper
Mode, with the Interest Period(s)) shall be determined by the
Remarketing Agent in the applicable manner provided in the
Supplemental Resolution.
(6) In the event the foregoing conditions have not been
satisfied by the Mode Change Date, the New Mode shall not take effect
and the Series D Bonds will be changed on the Mode Change Date to
(or, if already in the Weekly Mode, will remain) Series D Bonds in
the Weekly Mode.
(7) Any Mode Change shall be with effect to 100% of the Series D
Bonds (including without limitation of all Provider Bonds) then
outstanding.
(e) Serial Bonds. The Authority may, in the notice described in
paragraph (b) above in connection with any change to the Term Rate Mode,
provide that all or some of the Series D Bonds shall be Serial Bonds. The
principal amount of Serial Bonds due on any November 1 shall be equal to the
Sinking Fund Installment specified for such date in the Supplemental
Resolution, and the remaining Sinking Fund Installments shall continue to be
Sinking Fund Installments for the Series D Bonds due on the Maturity Date,
unless the Authority specifies otherwise in the notice. The interest rate for
the Serial Bonds maturing on a particular date may be different from the
interest rate or rates established for other Series D Bonds.
Registration and Authentication of Series D Bonds
(a) The Tender Agent shall be co-authenticating agent and co-registrar
for the purpose of authenticating and registering the transfer of Series D
Bonds required to be purchased pursuant to the Supplemental Resolution. The
Tender Agent shall have no responsibility to maintain a complete record of the
registered holders of the Series D Bonds. The Trustee will deliver to the
Tender Agent such records as it may request in order to enable it to perform
its duties as co-authenticating agent and co-registrar for the Series D Bonds
and shall mail to the Tender Agent copies of each communication sent to the
Owners of the Series D Bonds not later than the date such communication is
mailed to the Owners thereof. The Tender Agent shall promptly deliver to the
Trustee for cancellation all Series D Bonds surrendered to it for purchase
along with copies of transfer documents, including any written notice of
tender.
(b) The Tender Agent shall promptly notify the Trustee of the number,
principal amount, date of authentication and registered Owner(s) of all Series
D Bonds authenticated by the Tender Agent. All Series D Bonds authenticated by
the Tender Agent shall have the same force and effect as if authenticated by
the Trustee.
Optional Redemption
(a) Series D Bonds in the Commercial Paper Mode shall be subject to
optional redemption at the option of the Authority, in whole or in part, on
their respective Purchase Dates at a redemption price equal to the principal
amount thereof, plus accrued interest to the Redemption Date.
(b) Series D Bonds in the Daily Mode or Weekly Mode shall be subject
to optional redemption by the Authority, in whole or in part, on any Interest
Payment Date, at a redemption price equal to the principal amount thereof, plus
accrued interest to the Redemption Date.
(c) Series D Bonds in the Term Rate Mode shall be subject to
redemption, in whole or in part on their individual Purchase Dates, at the
option of the Authority at a redemption price equal to the principal amount
thereof, plus interest accrued to the Redemption Date.
(d) Series D Bonds in the Term Rate Mode also shall be subject to
redemption, in whole or in part, at the option of the Authority, on such dates
and at such redemption prices, plus accrued interest to the date of redemption,
as the Authority may specify on or before the Mode Change Date.
(e) The Authority may, in connection with a change to a Term Rate
Mode, or on any Purchase Date for the Series D Bonds bearing interest at Term
Rate, waive or otherwise alter its rights to redeem any Series D Bonds on and
after the Mode Change Date or Purchase Date, as the case may be; provided, that
notice describing the waiver or alteration shall be submitted to the Tender
Agent, the Trustee and the Remarketing Agent, together with a Favorable Opinion
of Bond Counsel addressed to them.
(f) Each notice by the Authority of any optional redemption of Series
D Bonds shall either (i) explicitly state that the proposed redemption is
conditional on there being on deposit in the applicable fund or account on the
redemption date sufficient money to pay the full redemption price of the Series
D Bonds to be redeemed, or (ii) be sent only if sufficient money to pay the
full redemption price of the Series D Bonds to be redeemed is on deposit in the
applicable fund or account.
Notice of Redemption
The Authority shall notify the Trustee of its election to optionally
redeem Series D Bonds as provided in the General Resolution and shall at the
same time send copies of such notice to the Tender Agent, the Remarketing
Agent, the Credit Facility Issuer and the Liquidity Facility Issuer. Notice of
the redemption of each Series D Bond shall be mailed by the Trustee during any
period the Series D Bonds are in a Short-Term Mode, at least once not less than
fifteen (15) calendar days prior to the date fixed for the redemption thereof,
by first class mail, postage prepaid, to the Owner of such Series D Bond at its
address as it appears on the books of registry kept pursuant to the General
Resolution as of the twentieth (20th) day (whether or not a Business Day) next
preceding the date fixed for the redemption thereof, and during other periods,
not less than thirty (30) calendar days nor not more than forty-five (45) days
prior to the dated fixed for the redemption thereof, by first class mail,
postage prepaid, to the Owner of such Series D Bond at its address as it
appears on such books of registry as of the forty-fifth (45th) day (whether or
not a Business Day) next preceding the redemption date. The failure of the
Owner of a Series D Bond to receive such notice by mail or any defect in such
notice will not affect the sufficiency of the proceedings for the redemption
thereof.
The Trustee shall also send notice of any redemption by first class
mail, postage prepaid, to the Information Services and the Securities
Depositories at the same time it sends notice of redemption to the Owners.
As used in the Supplemental Resolution, the term "Information
Services" means any of the following services: Financial Information, Inc.'s
"Daily Called Bond Service," 30 Montgomery Street, 10th Floor, Jersey City, New
Jersey 07302, Attention: Editor; Kenny Information Services "Called Bond
Service," 55 Broad Street, 28th Floor, New York, New York 10004; Moody's
"Municipal and Government," 99 Church Street, 8th Floor, New York, New York
10007, Attention: Municipal News Reports; and Standard and Poor's "Called Bond
Record," 25 Broadway, 3rd Floor, New York, New York 10004; or such other
services providing information with respect to called bonds as the Authority
may designate in a certificate delivered to the Trustee.
As used in the Supplemental Resolution, the term "Securities
Depositories" means any of the following registered securities depositories:
(i) The Depository Trust Company, 711 Stewart Avenue, Garden City, New York
11530, Fax - 516/227-4039 or 4190, (ii) Midwest Securities Trust Company,
Capital Structures-Call Notification, 440 South LaSalle Street, Chicago,
Illinois 60605, Fax - 312/663-2343, and (iii) Philadelphia Depository Trust
Company, Reorganization Division, 1900 Market Street, Philadelphia,
Pennsylvania 19103, Attention: Bond Department, Fax - 215/496-5058; or such
other securities depositories as the Authority may designate in a certificate
delivered to the Trustee.
Optional Tenders of Series D Bonds in Daily Mode and Weekly Mode
(a) Any Series D Bonds (or portions thereof in Authorized
Denominations) in the Daily Mode that are not Provider Bonds are subject to
purchase, on the demand of the Owner thereof, at a price equal to the Purchase
Price on any Business Day (such purchase to be made on the Business Day upon
which such demand is made), upon irrevocable telephonic notice to the Tender
Agent (promptly confirmed in writing by such Owner, delivered to the Tender
Agent by telecopier by 11:00 a.m. at its Principal Office) which states the
number and principal amount of such Series D Bond being tendered and the
Purchase Date. Not later than 11:30 a.m., on the date of receipt of any such
irrevocable notice, the Tender Agent shall give telephonic notice to the
Remarketing Agent specifying the contents of each such tender notice, and such
tender notice, once transmitted to the Tender Agent, shall be irrevocable with
respect to the tender for which such tender notice was delivered and such
tender shall occur on the Business Day specified in such Tender Notice. Upon
request of the Remarketing Agent, the Tender Agent shall, as soon as
practicable, provide by facsimile a summary of all such telephonic notices. The
Tender Agent shall also, as soon as practicable, notify the Authority, the
Trustee and the Liquidity Facility Issuer of the principal amount of Series D
Bonds being tendered. The contents of any such irrevocable telephonic tender
notice shall be conclusive and binding on all parties.
(b) The Owners of Series D Bonds in a Weekly Mode that are not
Provider Bonds may elect to have such Series D Bonds (or portions thereof in
Authorized Denominations) purchased at a price equal to the Purchase Price 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 Tender 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
Owner. Such notice shall (i) state the number and the principal amount of such
Series D Bond being tendered and (ii) state that such Series D Bond shall be
purchased on the Purchase Date so specified by the Owner. The Tender Agent
shall notify the Authority, the Remarketing Agent, the Trustee and the
Liquidity Facility Issuer by the close of business on the next succeeding
Business Day of the receipt of any notice pursuant to this paragraph.
(c) Notwithstanding anything in the Supplemental Resolution to the
contrary, during any period that the Series D Bonds are registered in the name
of DTC or a nominee thereof (i) any notice of tender delivered as described in
the preceding paragraphs (a) and (b) shall also (A) provide evidence
satisfactory to the Tender Agent that the party delivering the notice is the
beneficial owner or a custodian for the beneficial owner of the Series D Bonds
referred to in the notice, and (B) if the beneficial owner is other than a
Participant of DTC, identify the Participant through whom the beneficial owner
will direct transfer; (ii) on or before the Purchase Date, the beneficial owner
must direct (or if the beneficial owner is not a Participant, cause its
Participant to direct) the transfer of said Series D Bonds on the records of
DTC; and (iii) it shall not be necessary for Series D Bonds to be physically
delivered on the date specified for purchase thereof, but such purchase shall
be made as if such Series D Bonds had been so delivered, and the Purchase Price
thereof shall be paid to DTC. In accepting a notice of tender, the Trustee and
the Tender Agent may conclusively assume that the person providing the notice
of tender is the beneficial owner of the Series D Bonds being tendered and
therefore entitled to tender them. Neither the Trustee nor the Tender Agent
assumes any liability to anyone in accepting a notice of tender from a person
whom it reasonably believes to be such a beneficial owner of the Series D Bonds
or, in its discretion, rejecting such tender, if it reasonably believes such
person has not demonstrated its status as such a beneficial owner.
Mandatory Purchase at End of Commercial Paper Mode Interest Periods
Each Series D Bond in the Commercial Paper Mode shall be subject to
mandatory tender for purchase on its Purchase Date at the Purchase Price,
provided that the Owners of such Series D Bonds may elect to retain such Series
D Bonds as described below under "Election to Retain". No notice of such
mandatory purchase shall be given to the Owners.
Mandatory Purchase on Any Mode Change Date
Series D Bonds to be changed to any Mode from any other Mode are
subject to mandatory tender for purchase on the Mode Change Date at the
Purchase Price, provided that the Owners of such Series D Bonds may elect to
retain such Series D Bonds as described below under "Election to Retain",
unless such Series D Bonds are to be changed to Series D Bonds in a Term Rate
Mode extending to the maturity of such Series D Bonds.
Mandatory Purchase at End of Term Rate Period
Series D Bonds in the Term Rate Mode are subject to mandatory purchase
on each Purchase Date at the Purchase Price; provided that the Owner of a
Series D Bond may elect to retain such Series D Bond as described below under
"Election to Retain", unless the following Interest Period with respect to such
Series D Bond will extend to the maturity thereof.
Mandatory Purchase Upon Certain Other Events
Except for the Bank Bonds, the Series D Bonds shall be subject to
mandatory tender for purchase on:
(a) the second Business Day preceding the Expiration Date (unless an
Alternate Liquidity Facility will be in effect on the Expiration Date),
which Business Day is referred to as the "Expiration Tender Date";
(b) the second Business Day preceding the Termination Date (unless an
Alternate Liquidity Facility will be in effect on the Termination Date),
which Business Day is referred to as the "Termination Tender Date"; and
(c) the Substitution Date, if the Trustee has been required to give
notice as described below under paragraph (c) of "Notice of Mandatory
Tender for Purchase" and subject to the right of Owners of Series D Bonds
to retain such Series D Bonds as described below under "Election to
Retain".
Notice of Mandatory Tender for Purchase
(a) The Trustee shall, at least 15 days prior to the Expiration Tender
Date, give notice of mandatory tender of Series D Bonds on such Expiration
Tender Date if it has not thereto received confirmation that the Expiration
Date has been extended (including, without limitation, by the provision of an
Alternate Liquidity Facility).
(b) The Trustee shall, at least seven days prior to the Termination
Tender Date, give notice of the mandatory tender of Series D Bonds on such
Termination Tender Date if it has not theretofore received from the Liquidity
Facility Issuer a notice stating that the failure to pay commitment fees or
other amounts or other occurrence which resulted in the Liquidity Facility
Issuer's giving notice of the Termination Date has been cured or waived and
that the Liquidity Facility Issuer has rescinded its election to terminate the
Liquidity Facility. Such notice shall be given by Electronic Means capable of
creating a written notice. Any notice given substantially as described in this
paragraph (b) shall be conclusively presumed to have been duly given, whether
or not actually received by each Owner.
(c) At least 15 days prior to the Substitution Date, if it has not
theretofore received written confirmation from each of S&P, Moody's and Fitch
to the effect that such rating agency has reviewed the proposed Alternate
Liquidity Facility and that the substitution of the proposed Alternate
Liquidity Facility for the Liquidity Facility will not, by itself, result in a
reduction or withdrawal of the then-current long term rating or the
then-current short term rating assigned by such rating agency to the Series D
Bonds, the Trustee shall give notice of mandatory tender of the Series D Bonds
on the Substitution Date.
(d) At least 15 days prior to any Mode Change Date with respect to a
change in Mode from a Short-Term Mode to another Short-Term Mode and at least
30 days prior to any other Mode Change Date or any Purchase Date for Series D
Bonds in the Term Rate Mode, the Trustee shall give notice of the mandatory
tender for purchase of Series D Bonds on such Date.
(e) Except as described above under "Mandatory Purchase at End of
Commercial Paper Mode Interest Periods" and in paragraph (b) above, notice of
any mandatory tender of Series D Bonds shall state that such Series D Bonds are
to be purchased as described above under "Mandatory Purchase on Any Mode Change
Date", "Mandatory Purchase at End of Term Rate Period" or "Mandatory Purchase
Upon Certain Other Events", as applicable, shall be provided by the Trustee or
caused to be provided by the Trustee by mailing a copy of the notice of
mandatory tender by first-class mail to each Owner of Series D Bonds at the
respective addresses shown on the books of registry. Each notice of mandatory
tender for purchase shall identify the reason for the mandatory tender for
purchase, and specify the Purchase Date, the Purchase Price, the place and
manner of payment, the right, if any, of the Owner to retain such Series D
Bonds and the procedures to be followed to exercise such right and that no
further interest will accrue from and after the Mandatory Purchase Date to such
Owner unless the Owner shall have and exercises its right to retain such Series
D Bonds. Each notice of mandatory tender for purchase on the Substitution Date
also shall state that the Trustee has not received written confirmation from
each of S&P, Moody's and Fitch that the substitution of the proposed Alternate
Liquidity Facility for the Liquidity Facility then in effect will not, by
itself, result in a reduction or withdrawal of the then-current long term
rating or a reduction or withdrawal of the then-current short term rating,
assigned by such rating agency to the Series D Bonds. In the event a mandatory
tender of Series D Bonds shall occur at or prior to the same date on which an
optional tender for purchase is scheduled to occur, the terms and conditions of
the applicable mandatory tender for purchase shall control. The Trustee shall
give a copy of any notice of mandatory tender given by it to the other Notice
Parties. Any notice mailed as described in this paragraph shall be conclusively
presumed to have been duly given whether or not the Owner of any Series D Bond
receives the notice, and the failure of such Owner to receive any such notice
shall not affect the validity of the action described in such notice.
Election to Retain
The Owner of a Series D Bond subject to mandatory purchase as
described above (except on a Tender Termination Date or Expiration Tender Date)
may elect to retain such Series D Bond (or a portion thereof in an Authorized
Denomination) after the Mandatory Purchase Date (unless the Mode is being
changed to the Term Rate Mode for an Interest Period which will extend to the
maturity of the Series D Bonds) in the following manner:
(a) If such Series D Bond is in the Commercial Paper Mode and is
subject to purchase as described above under "Mandatory Purchase at End of
Commercial Paper Mode Interest Periods", the Owner may elect to retain such
Series D Bond (or portion thereof) for an additional Interest Period by giving
telephonic notice of such election to the Remarketing Agent by 4:00 p.m. on the
Business Day next preceding the Mandatory Purchase Date for such Series D Bond,
unless such Series D Bond is to be redeemed on such date or if such date is
also a Mode Change Date. Presentation of a Commercial Paper Rate Bond (unless
registered in the name of DTC or another securities depository or a nominee
thereof) shall be required if the Owner has elected to retain such Series D
Bond for the next Interest Period, in order to permit the Tender Agent to note
on such Series D Bond the next Interest Period, the applicable interest rate
and the applicable Purchase Date.
(b) If such Series D Bond is subject to mandatory purchase as
described above under "Mandatory Purchase on Any Mode Change Date" or
"Mandatory Purchase at End of Term Rate Period", the Owner of such Series D
Bond may elect to retain such Series D Bond (or portion thereof) by giving an
irrevocable written notice to the Tender Agent prior to the Election Deadline
which shall (i) state that the person delivering the notice is an Owner, (ii)
specify the numbers (if applicable) and denominations of such Series D Bonds
(or portions thereof) to be retained, (iii) acknowledge that such Owner has
received the Mode Change Notice or the notice of the Indicative Rate and the
new Interest Period for the Term Rate Mode, as appropriate, (iv) if such Series
D Bond is being converted from the Daily Mode or Weekly Mode to the Commercial
Paper Mode or the Term Rate Mode, acknowledge that such Series D Bond will not
be subject to purchase at the option of the Owner after such notice to retain
is given, (v) direct the Tender Agent not to purchase such Series D Bond (or
portion thereof) so specified and (vi) acknowledge that such Owner understands
that the ratings on the Series D Bonds may be withdrawn or lowered or otherwise
modified (if such is expected to be the case).
(c) If such Series D Bond is subject to mandatory purchase on a
Substitution Date, the Owner of such Series D Bond may elect to retain such
Series D Bond (or portion thereof) by giving an irrevocable written notice to
the Tender Agent prior to the Election Deadline which shall (i) state that the
person delivering the notice is an Owner, (ii) specify the numbers and
denominations of Series D Bonds (or portions thereof) to be retained, and (iii)
acknowledge that the Owner understands that the rating on the Series D Bonds
may be withdrawn or lowered.
(d) Any such notice delivered to the Remarketing Agent or to the
Tender Agent shall be irrevocable and binding upon the Owner delivering the
notice and upon subsequent Owners of such Series D Bond, including any Series D
Bond issued in exchange therefor or upon transfer thereof.
(e) If an Owner of a Series D Bond subject to mandatory purchase upon
conversion from a Daily Mode or Weekly Mode or upon a Substitution Date
delivers a notice of election to retain such Series D Bond, such Series D Bond
or any Series D Bond issued in exchange therefor shall not be subject to
purchase at the option of such Owner during the period from the date of
delivery of such notice to the day succeeding the Mode Change Date or the
Substitution Date, as the case may be.
(f) In the case of any election to retain a Series D Bond or portion
thereof described in paragraph (b) or (c) above, the Series D Bond or portion
thereof retained, and the portion thereof to be purchased if only a portion is
retained, shall be in an amount equal to an Authorized Denomination for the
Mode applicable to such Series D Bond after such Mandatory Purchase Date.
(g) Not later than 11:00 a.m. on the Business Day following the
receipt of an irrevocable written notice of an election described in paragraph
(b) or (c) above, the Tender Agent shall notify the Trustee and the Remarketing
Agent by Electronic Means of the principal amount of Series D Bonds to be
retained.
(h) Notwithstanding anything in the Supplemental Resolution to the
contrary, during any period that the Series D Bonds are registered in the name
of DTC or a nominee thereof (i) any election to retain Series D Bonds shall
also (A) provide evidence satisfactory to the Tender Agent that the party
delivering the notice is the beneficial owner or a custodian for the beneficial
owner of the Series D Bonds referred to in the notice, and (B) if the
beneficial owner is other than a DTC Participant, identify the DTC Participant
through whom the beneficial owner holds the Series D Bonds subject to the
election to retain. In accepting any election to retain Series D Bonds, the
Trustee and the Tender Agent may conclusively assume that the person providing
any election to retain Series D Bonds is the beneficial owner of the Series D
Bonds subject to such election. The Trustee and the Tender Agent assume no
liability to anyone in accepting any such election to retain Series D Bonds
from a person whom the Trustee or the Tender Agent, respectively, reasonably
believes to be such a beneficial owner of the Series D Bonds or, in its
reasonable discretion, rejecting any such election from a person whom the
Trustee or the Tender Agent, respectively, considers not to have demonstrated
its status as such a beneficial owner of the Series D Bonds.
Remarketing of Series D Bonds, Notices
(a) Remarketing of Series D Bonds. The Remarketing Agent shall offer
for sale and use its best efforts to find purchasers for (i) all Series D Bonds
or portions thereof as to which notice of tender at the option of the Owner has
been given, (ii) all Series D Bonds required to be tendered for purchase except
on account of an Expiration Date, a Termination Date or a Substitution Date and
except for such Series D Bonds which the Owners have elected to retain as
permitted hereby, and (iii) all Provider Bonds. No Series D Bonds shall be
remarketed after a notice of mandatory tender for purchase thereof has been
provided except on account of an Expiration Date, a Termination Date or a
Substitution Date (and not revoked) and before the Mandatory Purchase Date; and
any Series D Bonds so purchased shall not be remarketed unless the Liquidity
Facility has been reinstated or an Alternate Liquidity Facility is in effect or
unless the Series D Bonds are in a Term Rate Mode with an Interest Period
extending to the maturity thereof. No Series D Bonds shall be remarketed to the
Authority. No Bank Bonds shall be remarketed unless the Liquidity Facility has
or will be immediately upon such remarketing reinstated by the amount of the
reduction that occurred when such Series D Bonds become Bank Bonds or unless
the Liquidity Facility is no longer to be in effect. So long as any Provider
Bonds shall be outstanding, the Remarketing Agent shall assign priority to the
remarketing of such Provider Bonds over the remarketing of other Series D
Bonds.
(b) Notice of Remarketing; Registration Instructions; New Series D
Bonds.
(1) The Remarketing Agent shall notify the Tender Agent by Electronic
Means not later than 11:00 a.m. on the Purchase Date or Mandatory Purchase
Date of the registration instructions (i.e., the names of the tendering
Owners and the names, addresses and taxpayer identification numbers of the
purchasers, the desired Authorized Denominations and, in the case of
Series D Bonds in Short-Term Mode, any account number for payment of
principal and interest furnished by a purchaser to the Remarketing Agent)
with respect thereto.
(2) The Tender Agent shall authenticate and have available for
delivery to the Remarketing Agent prior to 11:30 p.m. on the Purchase Date
or Mandatory Tender Date new Series D Bonds for the respective purchasers
thereof.
(c) Transfer of Funds: Draw on Liquidity Facility.
(1) The Remarketing Agent shall at or before 11:00 a.m. on the
Purchase Date or Mandatory Purchase Date, as the case may be, (i) notify
the Tender Agent by Electronic Means of the amount of tendered Series D
Bonds that were successfully remarketed, and (ii) confirm to the Tender
Agent the transfer of the Purchase Price of remarketed Series D Bonds to
the Tender Agent in immediately available funds, such confirmation to
include the pertinent Fed Wire reference number.
(2) The Tender Agent shall draw on the Liquidity Facility by 11:30
a.m. on the Purchase Date or Mandatory Purchase Date, as the case may be,
in an amount equal to the Purchase Price of all Series D Bonds tendered or
deemed tendered less the aggregate amount of remarketing proceeds
transferred to the Tender Agent by the Remarketing Agent as described in
clause (1) of this paragraph (c). If the Tender Agent does not receive
notice from the Remarketing Agent pursuant to clause (1) above, the Tender
Agent shall draw on the Liquidity Facility in an amount equal to the
Purchase Price of all Series D Bonds tendered or deemed tendered for
purchase.
(3) The Tender Agent shall confirm to the Authority and the Trustee
by the close of business on the Purchase Date or Mandatory Purchase Date,
receipt of the proceeds of any draw on or advance under the Liquidity
Facility.
(d) Notice to Authority. The Remarketing Agent shall notify the
Authority and the Liquidity Facility Issuer by Electronic Means of any proposed
remarketing of Bank Bonds by the close of business on the Business Day
preceding the proposed date of remarketing of such Bank Bonds.
Source of Funds for Purchase of Series D Bonds
On or before the close of business on the Purchase Date or the
Mandatory Purchase Date with respect to Series D Bonds, the Tender Agent shall
purchase such Series D Bonds from the Owners at the Purchase Price. 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 Authority, the
Trustee, the Tender Agent nor the Remarketing Agent shall be obligated to
provide funds from any other source:
(a) immediately available funds on deposit in the Remarketing
Proceeds Account established as described below under "Purchase Fund";
(b) immediately available funds on deposit in the Liquidity Facility
Purchase Account established as described below under "Purchase Fund"; and
(c) in the case of a Purchase Date or Mandatory Purchase Date in
connection with a change of Mode (or Interest Period) to a Term Rate Mode
having an Interest Period extending to the maturity of such Series D
Bonds, when such Series D Bonds are being remarketed at a discount to
their par value, immediately available funds of the Authority not
exceeding the amount of the discount.
Delivery of Series D Bonds
The Series D Bonds shall be delivered as follows:
(a) Series D Bonds sold by the Remarketing Agent shall be delivered
by the Remarketing Agent to the purchasers of those Series D Bonds by 3:00
p.m., on the Purchase Date or the Mandatory Purchase Date, as the case may
be.
(b) Series D Bonds purchased by the Tender Agent with funds provided
under the Liquidity Facility shall be immediately registered in the name
of the Liquidity Facility Issuer or its nominee on or before the close of
business on the Purchase Date or Mandatory Purchase Date, as the case may
be.
(c) When any Provider Bonds are remarketed, the Tender Agent shall
not release the Series D Bonds so remarketed to the Remarketing Agent
until the Tender Agent has received and forwarded to the Liquidity
Facility Issuer the proceeds of such remarketing and (unless the Liquidity
Facility is no longer to remain in effect) has been advised in writing by
the Liquidity Facility Issuer that the Liquidity Facility has been
reinstated by an amount equal to the Liquidity Requirement calculated with
respect to the principal amount of such Provider Bonds.
Delivery and Payment for Purchased Series D Bonds; Undelivered Series D Bonds
Series D Bonds purchased pursuant to this Article shall be delivered
(with all necessary endorsements) at or before 12:00 noon on the Purchase Date
or Mandatory Purchase Date at the office of the Tender Agent in New York, New
York; provided, however, that payment of the Purchase Price of any Series D
Bond tendered at the option of the Owner shall be made only if such Series D
Bond so delivered to the Tender Agent conforms in all respects to the
description thereof in the notice of tender. Payment of the Purchase Price
shall be made by wire transfer in immediately available funds by the Tender
Agent by the close of business on the Purchase Date or, if the Owner has not
provided or caused to be provided wire transfer instructions, by check mailed
to the Owner. If Series D Bonds to be purchased are not delivered by the Owners
to the Tender Agent by 12:00 noon on the Purchase Date or the Mandatory
Purchase Date, as the case may be, the Tender Agent shall hold any funds
received for the purchase of those Series D Bonds in trust in a separate
account and shall pay such funds to the former Owners upon presentation of the
Series D Bonds subject to tender. Such undelivered Series D Bonds shall be
deemed tendered and cease to accrue interest or to be otherwise outstanding as
to the former Owners on the Purchase Date or the Mandatory Purchase Date, as
the case may be, and moneys representing the Purchase Price shall be available
against delivery of those Series D Bonds at the Principal Office of the Tender
Agent; provided, however, that any funds which shall be so held by the Tender
Agent and which remain unclaimed by the former Owner of any such Series D Bond
not presented for purchase for a period of five years after delivery of such
funds to the Tender Agent, shall, to the extent permitted by law, upon request
in writing by the Authority and the furnishing of security or indemnity to the
Tender Agent's satisfaction, be paid to the Authority free of any trust or lien
and thereafter the former Owner of such Series D Bond shall look only to the
Authority and then only to the extent of the amounts so received by the
Authority without any interest thereon and the Tender Agent shall have no
further responsibility with respect to such moneys or payment of the purchase
price of such Series D Bonds. The Tender Agent shall authenticate a replacement
Series D Bond for any undelivered Series D Bond which may then be delivered to
the purchasers thereof by the Remarketing Agent or to the Liquidity Facility
Issuer by the Tender Agent.
The following is a summary of certain provisions of the General
Resolution and the Supplemental Resolution, copies of which may be obtained
from the Authority.
THE LIQUIDITY FACILITY
The Obligations will rank equally with all of our other general
unsecured and unsubordinated obligations. The Obligations are not issued under
an indenture. As of the date of this prospectus supplement, we have
approximately $2.6 billion amount of obligations currently outstanding,
including the Obligations we are issuing under this prospectus supplement.
Owners of the Bonds to which the Obligations relate will be entitled
to the benefits and will be subject to the terms of the Liquidity Facility.
Under the Liquidity Facility, we agree to make available to a specified
intermediary, upon receipt of an appropriate demand for payment, the purchase
price for the Bonds. Our obligation under the Liquidity Facility will be
sufficient to pay a purchase price equal to the principal of and up to 37 days'
interest on the Bonds at an assumed rate of 12% per year.
Termination Events
The scheduled expiration date of the Liquidity Facility is December
22, 2003. The Supplemental Resolution relating to the Bonds will specify
certain circumstances where we must purchase Bonds which a holder tenders for
purchase pursuant to an optional or mandatory tender, which have not been
remarketed. Under certain circumstances, we may terminate our obligation to
purchase Bonds. The following events would permit such termination:
(a) nonpayment of any amount with respect to the Series D Bonds or of
any commitment fees payable to FGIC-SPI in respect of the Liquidity Facility
when due; or;
(b) nonpayment of any other fees, or any other amount, when due in
respect of the Liquidity Facility, if such failure to pay when due shall
continue for 3 Business Days; or
(c) the failure by the Authority to have at all times a Remarking
Agent performing the duties thereof contemplated by the Supplemental
Resolution; or
(d) the breach by the Authority of any covenant or agreement in the
Liquidity Facility which is not remedied within 90 days after written notice
thereof shall have been received by the Authority form FGIC-SPI; or
(e) the occurrence and continuation of any default by the Authority in
the payment of principal of or premium, if any, or interest on any bond, note
or other evidence of indebtedness (including the Series D Bonds) issued,
assumed or guaranteed by the Authority, which under the General Resolution is
senior to, or on parity with, the Series D Bonds; or
(f) the occurrence of any of certain bankruptcy events with respect to
by the Authority; or
(g) any event of default shall have occurred under the General
Resolution or the Supplemental Resolution.
(h) the Commonwealth shall take any action impairing the power of the
Authority to comply with the General Resolution or the Supplemental Resolution
or impairing any right or remedy of FGIC-SPI or Bondholders; or
(i) any material provision of the Standby Bond Purchase Agreement, the
Supplemental Resolution or the Series D Bonds shall cease for any reason
whatsoever to be a valid and binding agreement of the Authority or the
Authority shall contest the validity or enforceability thereof.
Upon the occurrence of a termination event, we may deliver notice to
the Trustee, the Authority, the Remarketing Agent and any applicable paying
agent or tender agent regarding our intention to terminate the Liquidity
Facility. In that case, the Liquidity Facility would terminate, effective at
the close of business on the 30th day following the date of the notice, or if
that date is not a business day, on the next business day. Before the time at
which termination takes effect, the Bonds will be 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 Bonds.
The obligations of the Authority under the Bonds are as described in
the Authority's separate disclosure document relating to the Bonds.
<PAGE>
THE STANDBY LOAN AGREEMENT; GE CAPITAL
In order to obtain funds to fulfill our obligations under the
Liquidity Facility, we 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 us as needed to purchase Bonds. The amount of each
loan under the Standby Loan Agreement will be no greater than the purchase
price for tendered Bonds. The purchase price represents the outstanding
principal amount of the tendered Bonds and interest accrued on the principal to
but excluding the date we borrow funds under the Standby Loan Agreement. Each
loan will mature on a date specified in the Standby Loan Agreement, which date
will be set forth in the applicable prospectus supplement. The proceeds of each
loan will be used only for the purpose of paying the purchase price for
tendered Bonds. When we wish to borrow funds under the Standby Loan Agreement,
we must give GE Capital prior written notice by a specified time on the
proposed borrowing date. No later than a specified time on each borrowing date
(if GE Capital has received the related notice of borrowing by the necessary
time 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 Bonds or of our obligations under the Liquidity
Facility. GE Capital will not have any responsibility or incur any liability
for any act, or any failure to act, by us which results in our failure to
purchase tendered Bonds with the funds provided under the Standby Loan
Agreement.
<PAGE>
Ratio of Earnings to Fixed Charges
The following table sets forth the consolidated ratio of earnings to
fixed charges of GE Capital for the periods indicated:
<TABLE>
<CAPTION>
Nine Months
Ended
- --------------------------------------------------------------------------------------- ----------------------
Year Ended December 31, September 26, 1998
- -------------- ----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1997
1.44 1.62 1.63 1.51 1.53 1.48 1.54
</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 we believe
reasonably approximates the interest factor of such rentals.
Where You Can Find More Information Regarding GE Capital
GE Capital files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information GE Capital files at the SEC's public
reference rooms located at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL
60661 and 7 World Trade Center, Suite 1300, New York, NY 10048. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms. GE
Capital's SEC filings are also available to the public from commercial document
retrieval services and at the web site maintained by the SEC at
"http://www.sec.gov."
Incorporation of Information Regarding GE Capital
The SEC allows us to "incorporate by reference" information into this
prospectus supplement, which means that we can disclose important information
to you by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this prospectus
supplement, except for any information superseded by information in this
prospectus supplement. This prospectus supplement incorporates by reference the
documents set forth below that GE Capital has previously filed with the SEC.
These documents contain important information about GE Capital, its business
and its finances.
Document Period
Annual Report on Form 10-K ........ ... Year ended December 31, 1997
Quarterly Reports on Form 10-Q ........ Quarters ended March 28, 1998,
June 27, 1998 and September 26, 1998
EXPERTS
The financial statements and schedule of General Electric Capital
Corporation and consolidated affiliates as of December 31, 1997 and 1996, and
for each of the years in the three year period ended December 31, 1997,
appearing in GE Capital's Annual Report on Form 10-K for the year ended
December 31, 1997, have been incorporated by reference in the prospectus
supplement, in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference in the prospectus
supplement, and upon the authority of said firm as experts in accounting and
auditing.
<PAGE>
APPENDIX A
TENDER TIMELINE
TENDERS FOR 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. Trustee 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 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 Purchase Date, GE Capital will
make available the amount of borrowing requested.
4. FGIC-SPI purchases Bonds, for which remarketing proceeds are
unavailable, by 2:30 p.m. on the Purchase Date.
<PAGE>
B-7
APPENDIX B
SUMMARY OF CERTAIN DEFINITIONS
"Alternate Credit Facility" means an instrument that provides (to the
extent, and subject to the terms and conditions, set forth therein) for the
payment of principal of and interest on the Series D Bonds becoming due and
payable during the term thereof and is issued in substitution for a Credit
Facility in accordance with, and pursuant to, the Supplemental Resolution.
"Alternate Liquidity Facility" means a liquidity facility, a
counterpart original or conformed copy of which shall be filed with the
Trustee, that provides (to the extent, and subject to the terms and conditions,
set forth therein) for the payment of the Purchase Price of Series D Bonds
tendered or deemed tendered to the Tender Agent pursuant to the Supplemental
Resolution, satisfies the Liquidity Requirement and is issued in substitution
for the Liquidity Facility in accordance with, and pursuant to, the
Supplemental Resolution.
"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 the Indexing
Agent's most recently provided index, provided that (i) with respect to Series
D Bonds which are in the Daily Mode, Weekly Mode or a Commercial Paper Mode
with an Interest Period of 30 days or less, the Index shall be the Indexing
Agent's most recently published index for seven day variable rate demand bonds,
(ii) with respect to Series D Bonds which are in a Commercial Paper 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,
and (iii) with respect to Series D Bonds which are in the Term Rate Mode or a
Commercial Paper Mode with an Interest Period greater than 180 days, the yield
evaluation period for the Index shall be one-year yield evaluations. For
purposes of clauses (ii) and (iii) of the immediately preceding sentence, 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 specific 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 Internal Revenue Code of 1986,
unless all tax-exempt bonds are subject to such tax.
If no Indexing Agent any longer produces 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 produced
Index for a comparable Interest Period.
"Authorized Denominations" means with respect to Series D Bonds (i) in
a Commercial Paper Mode, Daily Mode or Weekly Mode, $100,000 and any integral
multiple thereof and (ii) in a Term Rate Mode, $5,000 and any integral multiple
thereof, provided, however, that if as a result of the change in the Mode of
the Series D Bonds from a Term Rate Mode to a Short-Term Mode, it is not
possible to deliver all the Series D Bonds required or permitted to be
Outstanding in a denomination permitted above, Series D Bonds may be delivered,
to the extent necessary, in different denominations.
"Authorized Officer" means each of the Executive Director, the Chief
Financial Officer and the Treasurer of the Authority.
"Bond Counsel" means any firm of attorneys selected by the Authority
and experienced in the issuance of municipal bonds and matters relating to the
exclusion of the interest thereon from gross income for federal income tax
purposes.
"Bond Payment Date" means each Interest Payment Date and each
Principal Payment Date.
"Business Day" means any day except (i) a Saturday, Sunday or other
day on which commercial banks in the City of Boston, Massachusetts, the City of
New York, New York, or any other city in which is located the Principal Office
of any of the Trustee, the Tender Agent, the Remarketing Agent or the Liquidity
Facility Issuer are authorized by law to close or (ii) a day on which the New
York Stock Exchange is closed.
"Bond Insurer" means Financial Guaranty Insurance Company, a New York
stock insurance company, or any successor thereto.
"Closing Date" means the date on which the Series D Bonds are first
issued, sold and delivered.
"Commercial Paper Mode" means the mode during which the duration of
the Interest Periods and the interest rates are determined as provided below
under "Determination of Interest Rates and Interest Periods During Commercial
Paper Mode."
"Commercial Paper Rate Bond" means any Series D Bond in the Commercial
Paper Mode.
"Credit Facility" means the Initial Credit Facility, provided that if
the Initial Credit Facility is surrendered for cancellation pursuant to the
Supplemental Resolution in connection with the provision of an Alternate Credit
Facility, then such Alternate Credit Facility shall thereafter be the "Credit
Facility" (and shall thereafter be the "Initial Credit Facility" for purposes
of subsequent application of this proviso).
"Credit Facility Issuer" means Financial Guaranty, the Bond Insurer,
or any other bank or banks, insurance company or companies, or other financial
institution or institutions, or any combination of the foregoing, which is the
issuer of a Credit Facility of which the Trustee is notified in writing by the
Credit Facility Issuer.
"Daily Mode" means the mode during which the Series D Bonds bear
interest at a Daily Rate.
"Daily Rate" means an interest rate determined as provided below under
"Determination of Interest Rate During Daily Mode."
"Delivery Office" means such address as may be specified by the Tender
Agent for receiving the Series D Bonds and the notices provided for in the
Supplemental Resolution.
"DTC" means The Depository Trust Company, New York, New York, and its
successors and assigns.
"Election Deadline" means 4:00 p.m. (i) on the Business Day next
preceding the Purchase Date, if the Series D Bonds are in the Commercial Paper
Mode, (ii) on the fifteenth (15th) Business Day preceding the Purchase Date, if
the Series D Bonds are in the Term Rate Mode, (iii) on the fifth (5th) Business
Day preceding the Mode Change Date with respect to a change in Mode from a
Short-Term Mode to another Short-Term Mode, (iv) on the tenth (10th) Business
Day preceding the Mode Change Date, with respect to any other change in Mode,
and (v) on the tenth (10th) Business Day preceding the Mandatory Purchase Date
with respect to a Substitution Date.
"Electronic Means" means telecopy, telegraph, telex, facsimile
transmission or other similar electronic means of written communication.
"Expiration Date" means, with respect to a Liquidity Facility, the
scheduled expiration date of such Liquidity Facility, or such scheduled
expiration date as it may be extended from time to time as provided in the
Liquidity Facility, provided, however, that the "Expiration Date" shall not
mean any date upon which the Liquidity Facility is no longer effective by
reason of an event specified in the definition of the term "Termination Date"
or the date such Liquidity Facility expires in connection with all Series D
Bonds bearing interest at a Term Rate fixed to the maturity thereof by reason
of the obtaining of an Alternate Liquidity Facility.
"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 General Resolution and will not impair the
exclusion of interest on the Series D Bonds from gross income for purposes of
federal income taxation or the exemption of interest on the Series D Bonds from
personal income taxation under the laws of the Commonwealth (subject to the
inclusion of any exceptions contained in the opinion delivered upon original
issuance of the Series D Bonds).
"Fiscal Agent" means State Street Bank and Trust Company, N.A., New
York, New York, or its successors thereto.
"Fitch" means Fitch IBCA, Inc., 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 limited partnership shall be
dissolved or liquidated or shall no longer perform the functions of a
securities rating agency, then the term "Fitch" shall be deemed to refer to any
other nationally recognized securities rating agency selected by the Authority
and approved by the Credit Facility Issuer and the Liquidity Facility Issuer
(neither of which shall be under any liability by reason of such approval).
"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 produce the indices referred to in the definition
of Alternate Rate, then the term "Indexing Agent" shall be deemed to refer to
any other entity producing similar indices selected by the Authority and
approved by the Credit Facility Issuer and the Remarketing Agent (neither of
whom shall be under any liability by reason of such approval).
"Indicative Rate" means during the Term Rate Mode or, in connection
with a change of Mode going into a Term Rate Mode, the interest rate determined
by the Remarketing Agent and specified in writing by the Remarketing Agent to
the Notice Parties on the Indicative Rate Determination Date as the lowest rate
that, if borne by the Series D Bonds during the following Interest Period,
would, under existing market conditions, result in the sale of the Series D
Bonds on the Rate Determination Date at a price equal to the Purchase Price.
"Indicative Rate Determination Date" means the date on which the
Indicative Rate is to be determined by the Remarketing Agent, which date shall
be the thirty-fourth (34th) day (or if such day is not a Business Day, the next
succeeding Business Day) next preceding (i) the Purchase Date with respect to
Series D Bonds in the Term Rate Mode, the Term Rate Period with respect to
which is to be followed by another Term Rate Period, and (ii) the Mode Change
Date in connection with a change of Mode going into a Term Rate Mode.
"Initial Credit Facility" means the municipal bond insurance policy
(including all riders and endorsements thereto) issued by Financial Guaranty,
the Bond Insurer, insuring the payment when due of the principal of and
interest on the Series D Bonds as provided therein.
"Initial Liquidity Facility" means the Standby Bond Purchase Agreement
among the Authority, the Tender Agent and FGIC-SPI provided therefor on the
Closing Date, an original counterpart or conformed copy of which is filed with
the Trustee.
"Interest Payment Date" means the following dates upon which interest
is payable on Series D Bonds: (i) any Principal Payment Date or Mode Change
Date; (ii) with respect to each Commercial Paper Rate Bond, the day following
the last day of the Interest Period therefor; (iii) with respect to the Daily
Mode and the Weekly Mode, the first Business Day of each calendar month; (iv)
with respect to the Term Rate Mode, each November 1 and each other date
specified by the Authority pursuant to the Supplemental Resolution prior to the
Purchase Date or the Maturity Date, as the case may be, and the Purchase Date,
if applicable; and (v) with respect to Bank Bonds, the first Business Day of
each calendar month or as otherwise provided in the Liquidity Facility.
"Interest Period" means the period of time that any interest rate
remains in effect, which period:
(i) with respect to each Commercial Paper Rate Bond, shall be the
period of time established by the Remarketing Agent pursuant to the
Supplemental Resolution;
(ii) with respect to Series D Bonds in the Daily Mode, shall be the
period from and including a Business Day to and excluding the next
Business Day;
(iii) with respect to Series D Bonds in the Weekly Mode, shall be the
periods from and including the day that they began to bear interest at the
Weekly Rate to and including the following Tuesday and thereafter
commencing on each Wednesday to and including Tuesday of the following
week;
(iv) with respect to Series D Bonds in the Term Rate Mode, shall be
the period from and including the Mode Change Date to and including the
date (which shall be a day next preceding a Business Day or the Maturity
Date) selected by the Authority prior to the Mode Change Date as the last
day upon which an interest rate determined by the Remarketing Agent
pursuant to the Supplemental Resolution shall be in effect and thereafter
shall be the period beginning on the day after the end of the prior
Interest Period and ending on the date selected by the Authority prior to
the end of such Interest Period as the last day upon which an interest
rate determined by the Remarketing Agent shall be in effect, provided,
that each Interest Period with respect to Series D Bonds in the Term Rate
Mode shall be not less than 271 days; and
(v) with respect to Bank Bonds, shall be the period that such Bonds
remain Bank Bonds;
provided, that no Interest Period shall extend beyond the day
preceding any Mandatory Purchase Date or the Maturity Date.
"Liquidity Facility" means the Initial Liquidity Facility, provided
that if the Initial Liquidity Facility is surrendered for cancellation pursuant
to the Supplemental Resolution, or if the purchase or other funding obligations
(in respect of Series D Bonds or portions thereof tendered or deemed tendered
for purchase in accordance with the terms of the Supplemental Resolution) of
the Liquidity Facility Provider under the Liquidity Facility are otherwise
terminated (in accordance with the express terms of such Liquidity Facility),
in each case in connection with the provision of an Alternate Liquidity
Facility, then such Alternate Liquidity Facility shall thereafter be the
"Liquidity Facility" (and shall thereafter be the "Initial Liquidity Facility"
for purposes of subsequent application of this proviso).
"Liquidity Facility Issuer" means FGIC-SPI or any other bank or banks,
insurance company or companies, or other financial institution or institutions,
or any combination of the foregoing, which is the issuer of a Liquidity
Facility of which the Trustee is notified in writing by the Liquidity Facility
Issuer.
"Liquidity Requirement" means at any time and with respect to (i)
Commercial Paper Rate Bonds, an amount equal to the principal amount thereof
then Outstanding plus such additional amount as is necessary to cause the
Series D Bonds to be assigned the highest short term rating of each of Moody's,
S&P and Fitch, as evidenced by a written confirmation of rating delivered by
each such rating agency; (ii) the Series D Bonds bearing interest at the Daily
Rate or Weekly Rate, an amount to pay the Purchase Price equal to the principal
amount of Series D Bonds then Outstanding plus an amount equal to 37 days'
interest thereon calculated at the Maximum Rate on the basis of a 365 or 366
day, as applicable, year for the actual number of days elapsed; and (iii) the
Series D Bonds in the Term Rate Mode (unless such Term Mode extends to the
Maturity Date), an amount equal to the principal amount of such Series D Bonds
then Outstanding plus such additional amount as is necessary to cause the
Series D Bonds in the Term Rate Mode to be assigned the highest applicable
rating of Moody's, S&P and Fitch, as evidenced by a written confirmation of
rating delivered by each such rating agency.
"Mandatory Purchase Date" means (i) the Purchase Date of Series D
Bonds in the Commercial Paper Mode or the Term Rate Mode, (ii) any Mode Change
Date, (iii) the Substitution Date, (iv) the Expiration Tender Date and (v) the
Termination Tender Date.
"Maturity Date" means November 1, 2026.
"Maximum Rate" means twelve percent (12%) per annum; provided that the
Maximum Rate may be increased by the Authority to a higher rate, not to exceed
twenty percent (20%) per annum, if there shall have been delivered to the
Trustee (i) a Favorable Opinion of Bond Counsel, (ii) a new or amended
Liquidity Facility in an amount equal to the Liquidity Requirement calculated
using the new Maximum Rate and (iii) the written approval of the Credit
Facility Issuer of such increase; provided further, that the Maximum Rate shall
never exceed the highest lawful rate as advised by counsel to the Authority.
The Maximum Rate shall not apply to Bank Bonds, which shall bear interest at
the Bank Interest Rate.
"Mode" means each of the Commercial Paper Mode, the Daily Mode, the
Weekly Mode and the Term Rate Mode.
"Mode Change Date" means the date one Mode terminates and another Mode
begins.
"Moody's" means Moody's Investors Service, Inc., 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
Authority and approved by the Credit Facility Issuer and the Liquidity Facility
Issuer (neither of which shall be under any liability by reason of such
approval).
"Municipal Bond Insurance Policy" means the municipal bond new issue
insurance policy issued by Financial Guaranty, the Bond Insurer, that
guarantees payment of principal of and interest on the Series D Bonds.
"Notice Parties" means the Authority, the Trustee, each Remarketing
Agent, the Tender Agent, the Credit Facility Issuer and the Liquidity Facility
Issuer.
"Opinion of Counsel" means a written legal opinion from an attorney or
a firm of attorneys experienced in the matters to be covered in the opinion.
"Owners" means the registered owners of Series D Bonds or the duly
authorized attorney in fact, representative or assign thereof; the term
"Owners" shall include the Liquidity Facility Issuer or its assignee, if
appropriate.
"Principal Payment Date" means any date upon which the principal
amount of Series D Bonds is due hereunder at maturity or on any Redemption
Date.
"Provider Bond" means any Series D Bond during any period commencing
on the day such Series D Bond is owned by or held on behalf of the Liquidity
Facility Issuer or its successors and assigns under the Reimbursement Agreement
as a result of such Series D Bond having been purchased pursuant to the
Supplemental Resolution from the proceeds of an advance under the Liquidity
Facility and ending when such Series D Bond is, pursuant to the provisions of
the Reimbursement Agreement, no longer deemed to be a Provider Bond.
"Provider Rate" means with respect to any amounts owing under any
Provider Bond, the rate of interest which is (i) applicable to the amounts
owing under such Provider Bond as specified in the Standby Bond Purchase or
Reimbursement Agreement and (ii) not in excess of the lesser of twenty-five
percent (25%) per annum or the maximum rate permitted by applicable law as
advised by counsel to the Authority.
"Purchase Date" means, with respect to a Series D Bond (i) in the
Commercial Paper Mode or the Term Rate Mode, the Business Day after the last
day of the Interest Period applicable thereto and (ii) during the Daily Mode or
Weekly Mode, any Business Day upon which such Series D Bond is tendered or
deemed tendered for purchase at the option of the Owner pursuant to the
Supplemental Resolution.
"Purchase Price" means an amount equal to the principal amount of any
Series D Bonds purchased on any Purchase Date or Mandatory Purchase Date, plus,
unless the Purchase Date is an Interest Payment Date or the Mandatory Purchase
Date would be an Interest Payment Date even if not a Mandatory Purchase Date,
accrued interest to the Purchase Date or Mandatory Purchase Date; provided,
that in the case of a change of Mode (or Interest Period) to a Term Rate Mode
having an Interest Period extending to the Maturity Date of the Series D Bonds,
the Purchase Price may be less than 100% (but not less than 97%) of the
principal amount thereof.
"Rate Determination Date" means any date on which the interest rate on
any Series D Bonds that are not Bank Bonds is required to be determined, being:
(i) in the case of any Commercial Paper Rate Bond, the first day of each
Interest Period therefor; (ii) in the case of Series D Bonds in the Daily Mode,
each Business Day; (iii) in the case of any Series D Bonds to be in the Weekly
Mode, for any Interest Period commencing on the Closing Date or on any Mode
Change Date, the Business Day immediately preceding the respective Closing Date
or Mode Change Date, and for other Interest Periods, each Tuesday or, if such
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; and (iv) in the
case of any Series D Bonds to be, or continue to be, in the Term Rate Mode, a
Business Day prior to the first day of an Interest Period.
"Rating Category" means one of the general rating categories of any of
Moody's, S&P or Fitch, without regard to any refinement or gradation of such
rating category by a numerical modifier or otherwise.
"Rating Confirmation Notice" means a written notice from Moody's, S&P
or Fitch, as appropriate, confirming that the rating on the Series D Bonds will
not be lowered or withdrawn as a result of the action proposed to be taken.
"Record Date" means with respect to Series D Bonds other than Bank
Bonds (i) in a Commercial Paper Mode, the day (whether or not a Business Day)
next preceding each Interest Payment Date, (ii) in the Daily Mode or the Weekly
Mode, the opening of business on the Business Day next preceding an Interest
Payment Date and (iii) in the Term Rate Mode, the fifteenth (15th) day (whether
or not a Business Day) of the calendar month next preceding each Interest
Payment Date.
"Redemption Date" means the date fixed for redemption of Series D
Bonds subject to redemption in any notice of redemption given in accordance
with the terms of the Supplemental Resolution.
"Redemption Price" means an amount equal to the principal of and
premium, if any, and accrued interest, if any, on the Series D Bonds to be paid
on the Redemption Date.
"Reimbursement Agreement" means (i) the Initial Liquidity Facility,
and any and all modifications, alterations, amendments and supplements thereto,
(ii) the Payment Agreement dated as of the date of delivery of the Series D
Bonds between the Authority and FGIC-SPI and (iii) with respect to any
Alternate Liquidity Facility, the agreement providing for such Alternate
Liquidity Facility and any and all modifications, alterations, amendments and
supplements to such agreement.
"S&P" means Standard & Poor's, a Division of The McGraw-Hill
Companies, and its successors and assigns, except that if such division 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 Authority
and approved by the Credit Facility Issuer or the Liquidity Facility Issuer
(neither of which shall be under any liability by reason of such approval).
"Serial Bonds" means any Series D Bonds provided to be such pursuant
to the Supplemental Resolution.
"Short-Term Mode" means each of the Daily Mode, the Weekly Mode and
the Commercial Paper Mode.
"Substitution Date" means the date on which an Alternate Liquidity
Facility is to be substituted for the Liquidity Facility in effect pursuant to
the Supplemental Resolution. Under circumstances in which the credit ratings on
the Series D Bonds are not being maintained, as described below in paragraph
(b) under "Alternate Liquidity Facility".
"Term Rate" means an interest rate determined as described below under
"Determination of Term Rate(s)."
"Term Rate Mode" means the mode during which Series D Bonds bear
interest at a Term Rate.
"Termination Date" means the date upon which a Liquidity Facility is
to terminate as a result of the failure of the Authority to pay regularly
scheduled commitment fees or other amounts due to the Liquidity Facility Issuer
pursuant to the Reimbursement Agreement (other than principal of or interest on
any Series D Bond, including any Bank Bonds) or as the result of the occurrence
of any other event specified in the Reimbursement Agreement as providing the
Liquidity Facility Issuer an option to terminate the Liquidity Facility, which
date must be at least thirty (30) days after the date on which the Authority,
the Remarketing Agent, the Trustee and the Tender Agent receive notice from the
Liquidity Facility Issuer stating that as a result of such a failure or other
occurrence the Liquidity Facility Issuer in accordance with the provisions of
the Reimbursement Agreement has elected to terminate the Liquidity Facility and
stating the date of termination.
"Weekly Mode" means the mode during which the Series D Bonds bear
interest at a Weekly Rate.
"Weekly Rate" means an interest rate determined as described below
under "Determinations of Interest Rate During Daily Mode."
<PAGE>
$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 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 December 21, 1998
<PAGE>
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
Northwestern Atrium Center, 500 W. Madison Street, Suite 1400, Chicago,
Illinois 60661-2511, and 7 World Trade Center, 13th Floor, 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. In addition, the Commission maintains a Website that contains reports,
proxy and other information regarding registrants that file electronically,
such as FGIC-SPI. The address of the Commission's Website is http:/www.sec.gov.
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.
<PAGE>
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, 1997 and
the Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998, June
30, 1998 and September 30, 1998, 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.
<PAGE>
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, such
owner may elect to purchase from VRDN holders an amount of VRDNs equal to the
principal amount of INFLOs for which such INFLO owner 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, the
owner may "de-link" his or her 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 or her 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.
<PAGE>
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.
LEGAL MATTERS
The legality of the Obligations has been passed upon for FGIC-SPI by
Brown & Wood LLP, One World Trade Center, New York, New York 10048.
EXPERTS
The financial statements of FGIC Securities Purchase, Inc. at December
31, 1997 and 1996, and for each of the years in the three-year period ended
December 31, 1997 appearing in FGIC Securities Purchase, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 1997 have been incorporated herein
by reference in the prospectus in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, incorporated by reference in the
prospectus and upon the authority of said firm as experts in accounting and
auditing.
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<TABLE>
<CAPTION>
TABLE OF CONTENTS $198,895,000
<S> <C> <C>
principal amount
Page plus interest and premium,
if any
Prospectus Supplement
Documents Incorporated By Reference .............S-2
Introduction ....................................S-2 LIQUIDITY FACILITY OBLIGATIONS
Description of the Bonds ........................S-2
The Liquidity Facility ..........................S-21
The Standby Loan Agreement; GE Capital ..........S-23
Experts .........................................S-25 issued by
Appendix A ......................................A-1
Appendix B ......................................B-1
Prospectus FGIC Securities
Available Information .............................2 Purchase, Inc.
Documents Incorporated By Reference ...............3
Summary ...........................................4
The Company .......................................5
The Liquidity Facilities ..........................5 in support of
The Standby Loan Agreement ........................5
Plan of Distribution ..............................6 Massachusetts Water Resources Authority
Legal Matters .....................................6 Multi-Modal Subordinated General
Experts ...........................................6 Revenue Refunding Bonds
1998 Series D
PROSPECTUS SUPPLEMENT
December 21, 1998
</TABLE>
