EXECUTION COPY
LIQUIDITY AGREEMENT
(ISC)
THIS LIQUIDITY AGREEMENT (ISC) is entered into as of the 24th day of
April, 1998, by and among INTERNATIONAL SECURITIZATION CORPORATION, a Delaware
corporation (together with its successors and assigns, "ISC"), each of the
LIQUIDITY BANKS (hereinafter defined), and THE FIRST NATIONAL BANK OF CHICAGO
("FNBC"), individually and as Liquidity Agent, with respect to that certain Face
Amount Certificate Agreement dated as of April 24, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Face Amount
Certificate Agreement") among 312 Certificate Company (the "Company"), ISC and
the Liquidity Banks (ISC and the Liquidity Banks collectively, the
"Certificateholders").
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 INCORPORATION OF DEFINITIONS. Capitalized terms used herein and not
otherwise defined herein shall have the meanings attributed to such terms in the
Face Amount Certificate Agreement or the Investment Management Agreement.
1.2. CERTAIN OTHER DEFINED TERMS. As used in this Agreement, the following
terms have the following meanings:
"Aggregate Commitment" means, at any time, the sum of the Commitments
then in effect.
"Agreement" means this Liquidity Agreement (ISC), as amended, modified
or restated from time to time in accordance with the terms hereof.
"Article" means a numbered article of this Agreement unless otherwise
specified.
"Assigned Percentage" means the percentage interest in the ISC
Interest transferred to the Liquidity Banks hereunder, in the aggregate.
"Available L/C Amount" means the amount available to be drawn under
the Letter of Credit.
"Certificate" means the Face Amount Certificate in the maximum
principal amount of $500,000,000 issued by the Company pursuant to the Face
Amount Certificate Agreement.
"Certificate Balance" means, with respect to any Liquidity Bank, at
any time of determination thereof, an amount equal to (a) such Liquidity
Bank's Pro Rata Share of the Assigned Percentage times (b) the unpaid
principal balance of the Certificate as of such date.
"Commitment" means, with respect to any Liquidity Bank, the amount set
forth on Annex 1 hereto opposite such Liquidity Bank's name, or in its Transfer
Supplement, as the same may be reduced from time to time in accordance with
Section 2.5 or Section 5.5(c), and, in the case of FNBC, increased in accordance
with Section 2.2(c).
"Commitment Expiry Date" means the earliest to occur of (i) the
date on which all amounts due and owing to the Certificateholders under the
Face Amount Certificate Agreement have been indefeasibly paid in full, (ii)
the date on which the Aggregate Commitment has been reduced to zero pursuant
to Section 2.5 of this Agreement, and (iii) the Fixed Expiry Date.
"Fair Market Value" has the meaning given to such term in the
Investment Management Agreement.
"Federal Funds Effective Rate" means, for any day, an interest rate
per annum equal to (a) the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published for such day (or, if such day is
not a Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or (b) if such rate is not so published for any day
which is a Business Day, the average of the quotations at approximately 10:00
a.m. (Chicago time) on such day on such transactions received by the Liquidity
Agent from three federal funds brokers of recognized standing selected by the
Liquidity Agent in its sole discretion.
"Fixed Expiry Date" means April 22, 1999, as such date may be extended
from time to time.
"FNBC" means The First National Bank of Chicago, in its individual
capacity, and its successors.
"FNBC Roles" is defined in Section 4.10.
"Investment Management Agreement" means the Investment Management
Agreement of even date herewith among the Company, Integrity Capital Advisors,
Inc., as the
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Portfolio Manager and FNBC as the Agent, as the same may be amended, restated,
supplemented or otherwise modified from time to time.
"Investor Purchase Option" means an irrevocable written notice given
to ISC by the Required Liquidity Banks, delivered following the occurrence of
the Investor Purchase Trigger, committing the Liquidity Banks to purchase the
ISC Interest, which notice shall designate (a) the applicable Purchase Date and
(b) the Purchase Price (including a calculation of the Purchase Price acceptable
to ISC).
"Investor Purchase Trigger" means the occurrence of a Swap Event.
"ISC" is defined in the preamble to this Agreement.
"ISC Insolvency Event" means the occurrence of any one or more of the
following: (a) ISC shall have voluntarily commenced any proceeding or filed any
petition under any bankruptcy, insolvency or similar law seeking the
dissolution, liquidation or reorganization of ISC, or (b) involuntary
proceedings or an involuntary petition shall have been commenced or filed
against ISC by any Person under any bankruptcy, insolvency or similar law
seeking the dissolution, liquidation or reorganization of ISC and an order of
relief shall have been entered or such proceeding or petition shall not have
been dismissed within sixty (60) days.
"ISC Interest" means ISC's rights to the repayment of the Invested
Amount and to payment of Earned Yield thereon, and its other rights and
interests evidenced by the Face Amount Certificate Agreement, together with its
related rights and interests under the Transaction Documents.
"Letter of Credit" means that certain standby letter of credit dated
April 24, 1998 issued by the Letter of Credit Banks in favor of ISC.
"Letter of Credit Agent" means FNBC in its capacity as agent for the
Letter of Credit Banks pursuant to the Letter of Credit and related documents.
"Letter of Credit Banks" means the collective reference to each
financial institution party to the Letter of Credit.
"Letter of Credit Reimbursement Agreement" means that certain
reimbursement agreement among the Company, the Letter of Credit Agent and the
Letter of Credit Banks with respect to the Letter of Credit,
"L/C Draw Amount" means, on any date of determination, with respect to
the ISC Interest transferred to the Liquidity Banks hereunder pursuant to
Section 2.1(a), an amount equal to the lesser of (A) the amount available to be
drawn on the Letter of Credit and
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(B) the positive difference (if any) of (i) an amount equal to the product of
the Assigned Percentage as of such date TIMES the sum of (a) the unpaid
principal balance of the Certificate as of such date, (b) all accrued and
unpaid Earned Yield as of such date and (c) all accrued and unpaid fees and
other amounts due under the Face Amount Certificate Agreement as of such date
minus (ii) an amount equal to the product of the Assigned Percentage as of
such date TIMES the Fair Market Value of all Securities and Short-Term
Investments owned by the Company on such date PLUS any free cash balance on
deposit in the Custodial Account on such date PLUS the accrued interest or
discount with respect to such Securities and Short-Term Investments on such
date.
"L/C Draw Percentage" means, on any date of determination, a fraction
(converted to a percentage) with the L/C Draw Amount paid to the Liquidity Agent
pursuant to Section 2.1(c) as the numerator and the aggregate Purchase Price
amounts paid hereunder by the Liquidity Banks as the denominator.
"L/C Insolvency Event" means the occurrence of any one or more of the
following with respect to any letter of Credit Bank: (a) such Letter of Credit
Bank shall have an order for relief entered with respect to it under the Federal
bankruptcy laws as now or hereafter in effect, (b) such Letter of Credit Bank
shall have voluntarily commenced any proceeding or filed any petition under any
bankruptcy, insolvency or similar law of the United States, any state of the
United States or any applicable foreign jurisdiction in which such Letter of
Credit Bank is organized seeking the dissolution, liquidation or reorganization
of such Letter of Credit Bank, or (c) involuntary proceedings or an involuntary
petition shall have been commenced or filed against such Letter of Credit Bank
under any bankruptcy, receivership, insolvency, liquidation or similar law of
the United States, any state of the United States or any applicable foreign
jurisdiction in which such Letter of Credit Bank is organized seeking the
dissolution, liquidation or reorganization of, or the appointment of a receiver
for, such Letter of Credit Bank, and such proceeding shall not have been
dismissed for sixty (60) days, or (d) such Letter of Credit Bank has failed to
make any payment when due under the relevant Letter of Credit after giving
effect to any applicable grace period; PROVIDED that, solely with respect to
this subsection (d), this shall not include any failure to make a payment on the
basis that all conditions to and defenses against such payment, if any, have not
been duly satisfied or waived, and with respect to which the obligations of such
Letter of Credit Bank to make such payment is being contested in good faith by
appropriate proceedings, which shall not be limited to legal proceedings.
"Liquidity Agent" means The First National Bank of Chicago in its
capacity as Liquidity Agent for the Liquidity Banks pursuant to Article IV and
not in its individual capacity as a Liquidity Bank.
"Liquidity Banks" means the Persons listed on Annex 1 hereto
(including, without limitation, FNBC), and the Persons which from time to time
may become a party hereto in accordance with Section 5.5(c).
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"Participant" is defined in Section 5.5(b).
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"Pro Rata Share" means, on any date of determination, (i) with respect
to any Liquidity Bank, the ratio (expressed as a percentage) of such Liquidity
Bank's Commitment to the Aggregate Commitment at such time and (ii) with respect
to ISC, the ratio (expressed as a percentage) of the outstanding principal
balance of the Certificate allocable to ISC, as its interest appears on the
books and records of the Agent, to the aggregate outstanding principal balance
of the Certificate on such date.
"Purchase" means an assignment by ISC to a Liquidity Bank of such
Liquidity Bank's Pro Rata Share of the ISC Interest pursuant to Section 2.1.
"Purchase Date" means the date specified by ISC in a Sale Notice as
being the effective date of ISC's assignment to the Liquidity Banks of the
Assigned Percentage of the ISC Interest specified therein.
"Purchase Price" means, at any Purchase Date, the Assigned Percentage
of an amount equal to the sum of (i) the unpaid principal balance of the
Certificate and (ii) all accrued and unpaid interest, fees and other amounts
whether then or thereafter payable to ISC with respect to the Certificate.
"Required Liquidity Banks" means Liquidity Banks having Pro Rata
Shares in the aggregate at least equal to 66-2/3% or, if the Commitments have
been terminated, having at least 66-2/3% of the outstanding Assigned
Percentages.
"Sale Notice" means an irrevocable written notice given by an
authorized signer or authorized officer of ISC (or on behalf of ISC by FNBC in
its capacity as ISC's administrative agent) to the Liquidity Agent committing to
sell, assign and transfer to the Liquidity Banks the Assigned Percentage of the
ISC Interest to be assigned, which notice shall state (a) the applicable
Purchase Date, (b) the outstanding principal balance of the Certificate, (c) the
Assigned Percentage, (d) the Purchase Price (including a calculation of the
Purchase Price), (e) ISC's Pro Rata Share prior to giving effect to the
contemplated sale, assignment and transfer, (f) ISC's Pro Rata Share, if any,
after giving effect to such sale, assignment and transfer and (g) that no ISC
Insolvency Event has occurred and is continuing. Any Sale Notice given by ISC
upon the exercise of the Investor Purchase Option shall be made in conformity
with the terms of the Investor Purchase Option.
"Section" means a numbered section of this Agreement unless otherwise
specified.
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"SWAP EVENT" means the occurrence of any one or more of the following:
(a) the Swap Provider shall have voluntarily commenced any proceeding or filed
any petition under any bankruptcy, insolvency or similar law seeking the
dissolution, liquidation or reorganization of the Swap Provider, (b) involuntary
proceedings or an involuntary petition shall have been commenced or filed
against the Swap Provider by any person or entity under any bankruptcy,
insolvency or similar law seeking the dissolution, liquidation or reorganization
of the Swap Provider or an order of relief shall have been entered or such
proceeding or petition shall not have been dismissed within sixty (60) days, or
(c) the Swap Provider (i) shall fail to make any payment or deposit when due
under the Swap Agreement or (ii) shall fail to perform or shall breach any
covenant or any other agreement under the Swap Agreement and such failure to
perform or breach is not cured within five Business Days, such period to begin
at the time at which the Swap Provider knew, or reasonably should have known, of
such breach or failure to perform.
"Transfer Supplement" is defined in Section 5.5(c).
ARTICLE II
COMMITMENT TO PURCHASE
2.1. PURCHASE BY LIQUIDITY AGENT FOR THE BENEFIT OF THE LIQUIDITY BANKS;
L/C DRAWING.
(a) TRANSFERS BY ISC. Prior to the Commitment Expiry Date, ISC,
(i) in its sole discretion, may elect to give (or to cause FNBC as its
administrative agent to give), and (ii) shall give upon the exercise of the
Investor Purchase Option by the Required Liquidity Banks, a Sale Notice to
the Liquidity Agent, which Sale Notice shall constitute an irrevocable offer
to sell the ISC Interest at the Purchase Price indicated therein. Each Sale
Notice shall be deemed to be a representation and warranty by ISC that no ISC
Insolvency Event shall have occurred and be continuing. Each Liquidity Bank
hereby agrees to purchase from ISC such Liquidity Bank's Pro Rata Share of
the Assigned Percentage of the ISC Interest for a purchase price equal to
such Liquidity Bank's Pro Rata Share of the Purchase Price on the Purchase
Date (which date, subject to Section 2.1(b) below, may be the same as the
date of the Sale Notice). Notwithstanding anything to the contrary set forth
in this Agreement, no Liquidity Bank shall have any obligation to purchase
the ISC Interest if, on such Purchase Date, any ISC Insolvency Event or L/C
Insolvency Event shall have occurred and be continuing. The Liquidity Agent
shall promptly advise each Liquidity Bank (by fax or by telephone call
promptly confirmed in writing by fax) of the receipt and content of the Sale
Notice and shall promptly advise ISC of each Liquidity Bank's Pro Rata Share
of the Purchase Price thereunder. The Purchase Price shall be deposited in
immediately available funds into ISC's clearing account no. BNF
7521-7683/FMSD (Reference: 312 Certificate Company/ARM/ISC) at FNBC's
principal office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ABA #
▇▇▇▇▇▇▇▇▇.
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(b) TIMING OF SALE NOTICE AND PURCHASE DATE. If, at or prior to 12:00
noon (Chicago time) on any Business Day, ISC delivers a Sale Notice to the
Liquidity Agent specifying that the Purchase Date shall be the same date as the
date of such Sale Notice, ISC may require the Purchase Price to be paid in
immediately available funds to ISC's account at the principal office of the
Liquidity Agent no later than 2:00 p.m. (Chicago time) on the date of the Sale
Notice. Notwithstanding the fact that the Purchase Date may occur on a date
which is later than the date on which the Sale Notice is delivered to the
Liquidity Agent, the several obligations of each Liquidity Bank to accept such
transfer and to make payment of the amounts required to be paid by it pursuant
to Section 2.2 shall arise immediately upon receipt by the Liquidity Agent of
the Sale Notice. Regardless of when the Sale Notice is received, any Liquidity
Bank may designate any one or more of its domestic or foreign branches, offices
or affiliates through which it will fund its Pro Rata Share of the Purchase
Price for a Purchase, and the term "Liquidity Bank" shall include any such
branch, office or affiliate for such purpose.
(c) L/C DRAW AMOUNT AND LETTER OF CREDIT DRAWING. On the Purchase
Date, the Liquidity Agent shall calculate the L/C Draw Amount, if any,
relating to the ISC Interest transferred to the Liquidity Banks on the
Purchase Date, and shall notify each Liquidity Bank of the amount, if any, of
such L/C Draw Amount. The Liquidity Agent shall, within two Business Days
following its determination of a positive L/C Draw Amount under the
circumstance described above, make a demand for payment under the Letter of
Credit in an amount equal to the L/C Draw Amount for the ratable benefit of
each Liquidity Bank. The Liquidity Agent shall pay to ISC, for payment under
the Letter of Credit Reimbursement Agreement, the L/C Draw Percentage of any
Earned Yield received by the Liquidity Agent with respect to the ISC Interest
transferred to any Liquidity Bank until such time as the assignment described
in the succeeding sentence is made by the Liquidity Banks. In consideration
of the obligations of ISC in respect of the issuance of the Letter of Credit
to the Liquidity Agent for the ratable benefit of each Liquidity Bank,
effective only at such time as a Liquidity Bank receives payment in full of
all Purchase Price payments made by such Liquidity Bank together with accrued
and unpaid Earned Yield with respect to such Purchase Price payments and any
other amounts due to such Liquidity Bank hereunder, such Liquidity Bank shall
assign all of its right, title and interest in the ISC Interest to the Letter
of Credit Banks.
2.2. SEVERAL COMMITMENTS OF THE LIQUIDITY BANKS.
(a) FUNDING UPON RECEIPT OF THE SALE NOTICE. Promptly upon being
advised of the Liquidity Agent's receipt of a Sale Notice, each Liquidity Bank
hereby absolutely and unconditionally severally commits to ISC and the Liquidity
Agent to provide the Liquidity Agent, on the Purchase Date at the principal
office of the Liquidity Agent in Chicago for delivery to ISC, with immediately
available funds in an amount equal to such Liquidity Bank's Pro Rata Share of
the Purchase Price, whereupon such Liquidity Bank's interest in the Certificate
shall be equal to its Pro Rata Share of the Assigned Percentage of the
outstanding
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balance of the ISC Interest. The Liquidity Banks' several obligations under this
Section 2.2(a) to provide the Liquidity Agent with funds shall terminate on the
Commitment Expiry Date. Notwithstanding anything contained in this Section
2.2(a) or elsewhere in this Agreement to the contrary, except as expressly
provided in Section 2.2(c), no Liquidity Bank shall be obligated to provide the
Liquidity Agent with aggregate funds in connection with a Purchase in an amount
that would exceed such Liquidity Bank's unused Commitment then in effect, and
the failure of any Liquidity Bank to make its Pro Rata Share of the Purchase
Price available to the Liquidity Agent shall not relieve any other Liquidity
Bank of its obligations hereunder.
(b) DEFAULTING LIQUIDITY BANKS. If one or more Liquidity Banks (each,
a "Defaulting Liquidity Bank" and each Liquidity Bank other than the Defaulting
Liquidity Bank being referred to as a "Non-Defaulting Liquidity Bank") fails to
make its Pro Rata Share of the Purchase Price available to the Liquidity Agent
pursuant to Section 2.1(a) (the aggregate amount not so made available to the
Liquidity Agent being herein called the "ISC Purchase Price Deficit"), then upon
notice from the Liquidity Agent, each Non-Defaulting Liquidity Bank shall
promptly pay to the Liquidity Agent, in immediately available funds, at an
account designated by the Liquidity Agent, an amount equal to the lesser of (x)
such Non-Defaulting Liquidity Bank's proportionate share (based upon the
relative Commitments of the Non-Defaulting Liquidity Banks) of the ISC Purchase
Price Deficit and (y) its unused Commitment. If the Liquidity Agent has not
received the full amount of the ISC Purchase Price Deficit pursuant to the
immediately preceding sentence, upon notice from the Liquidity Agent, each
Non-Defaulting Liquidity Bank shall pay to the Liquidity Agent its proportionate
share (based upon the relative Commitments of the Non-Defaulting Liquidity
Banks) of such deficiency up to the amount of each such Non-Defaulting Liquidity
Bank's unused Commitment, until no such deficiency exists. A Defaulting
Liquidity Bank shall forthwith upon demand pay to the Non-Defaulting Liquidity
Banks all amounts paid by each Non-Defaulting Liquidity Bank on behalf of such
Defaulting Liquidity Bank, together with interest thereon, for each day from the
date such payment was made by a Non-Defaulting Liquidity Bank until the date
such Non-Defaulting Liquidity Bank has been paid such amounts in full, at a rate
per annum equal to the sum of the Federal Funds Effective Rate plus 2%. In
addition, without prejudice to any other rights that ISC may have under
applicable law, each Defaulting Liquidity Bank shall pay to ISC forthwith upon
demand, the difference between the Defaulting Liquidity Bank's unpaid Pro Rata
Share of the Purchase Price and the amount paid with respect thereto by the
Non-Defaulting Liquidity Banks, together with interest thereon, for each day
from the date of the Liquidity Agent's request for such Defaulting Liquidity
Bank's Pro Rata Share of the Purchase Price pursuant to Section 2.1(b) until
the date the requisite amount is paid to ISC in full, at a rate per annum equal
to the sum of the Federal Funds Effective Rate plus 2%.
(c) ADJUSTMENT OF FNBC'S COMMITMENT. In the event that after giving
prospective effect to the Purchase to be made in connection with Section
2.1(b), any Liquidity Bank's Pro Rata Share of the Purchase Price would
exceed its unused Commitment then in effect (whether due to the existence of
accrued and unpaid interest, or otherwise), then the Commitment of FNBC shall
be increased in the amount necessary to eliminate such excess and the
Aggregate
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Commitment and respective Pro Rata Shares of the Liquidity Banks shall be
adjusted to reflect such increase in FNBC's Commitment.
2.3. NONRECOURSE NATURE OF TRANSACTIONS. Each of the Liquidity Agent and
the Liquidity Banks hereby agrees that all Purchases shall be without recourse
of any kind to ISC, the Agent or the Liquidity Agent except as expressly
provided in Sections 4.3 and 4.7 with respect to the Liquidity Agent.
2.4. SHARING OF PAYMENTS; INDEMNITY.
(a) SHARING OF PAYMENTS. From and after the time of a Purchase
hereunder, all other payments (except as hereinafter provided), whether received
on account of Cashflow, counterclaim, cross claim, exercise of any right of
banker's lien or setoff, or otherwise which are allocated to the Certificate,
shall be shared ratably amongst the Certificateholders pursuant to the terms of
the Agency Agreement, dated as of even date herewith, between ISC AND FNBC, as
agent and as a liquidity bank (the "Agency Agreement"). Notwithstanding the
foregoing, each Certificateholder agrees that if the Commitment of FNBC shall be
increased as provided in Section 2.2(c), all payments that would otherwise be
shared ratably amongst the Certificateholders shall be applied to FNBC to reduce
any amounts extended by FNBC hereunder as a result of the aforementioned
increase in its Commitment until such time as the amounts owed to each Liquidity
Bank reflect the Pro Rata Shares of the Liquidity Banks that existed immediately
prior to such increase (it being agreed that FNBC's Pro Rata Share shall be
reduced to reflect any such payment).
(b) REQUESTS FOR INDEMNITY UNDER THE FACE AMOUNT CERTIFICATE
AGREEMENT. The Liquidity Agent shall, at the written request of any Liquidity
Bank, make demand of the Agent for payment of any amounts from time to time
claimed by such Liquidity Bank pursuant to Section 13 of the Face Amount
Certificate Agreement, and the Liquidity Agent shall, upon its receipt of
such amounts, distribute them to each such Liquidity Bank ratably in
accordance with their respective Pro Rata Shares.
(c) PAYMENTS CONDITIONAL UPON RECEIPT FROM THE COMPANY, AGENT,
SWAP PROVIDER, CUSTODIAN OR PORTFOLIO MANAGER. Anything in this Agreement to
the contrary notwithstanding, the Liquidity Agent shall have no obligation to
make any payments to the Liquidity Banks unless and until it has received
such amounts from the Company, the Agent, the Swap Provider, the Custodian or
the Portfolio Manager pursuant to the Face Amount Certificate Agreement or
the other Transaction Documents.
2.5. REDUCTION OF COMMITMENTS. The Aggregate Commitment shall be
automatically reduced, ratably amongst the Liquidity Banks, by the amount of
any permanent reduction of the ISC Interest pursuant to the Face Amount
Certificate Agreement (including, without limitation, an early redemption
under Section 9(b) thereof). The Liquidity Agent shall notify the Liquidity
Banks of the occurrence of any such reduction specified in the immediately
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preceding sentence promptly after the Liquidity Agent (individually or in its
capacity as Agent or Liquidity Agent) becomes aware of the same. In addition to
the foregoing, the Commitment of each Liquidity Bank and the Aggregate
Commitment shall be reduced to zero on the Commitment Expiry Date.
2.6. OPINION DELIVERY. If requested by ISC or the Liquidity Agent
each Liquidity Bank agrees to deliver a legal opinion in substantially the form
of Exhibit B hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. ISC DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. By executing and
delivering any Sale Notice pursuant to Section 2.1(a), (a) ISC makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Face
Amount Certificate Agreement or any other Transaction Document or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Face Amount Certificate Agreement, any other Transaction Document or any other
instrument or document furnished pursuant thereto or in connection therewith,
and (b) ISC makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Company, the Swap Provider or the
Portfolio Manager or the performance or observance by the Company, the Swap
Provider or the Portfolio Manager of any of their respective obligations under
the Face Amount Certificate Agreement or any other Transaction Document or any
other instrument or document furnished pursuant thereto or in connection
therewith.
3.2. REPRESENTATIONS OF THE LIQUIDITY BANKS. Each of the Liquidity Banks
(a) confirms that it has received copies of the Face Amount Certificate
Agreement and the other Transaction Documents (other than the FNBC Fee Letter
referred to therein); (b) represents and warrants to the Liquidity Agent and ISC
that it has, independently and without reliance upon the Liquidity Agent, ISC or
any other Liquidity Bank or any of their respective officers, directors,
employees, agents, attorneys-in-fact or affiliates, and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, prospects, financial and
other conditions and creditworthiness of the Company, the Portfolio Manager, the
Swap Provider and the Custodian and made its own decision to enter into this
Agreement; (c) represents that it will, independently and without reliance upon
the Liquidity Agent, ISC or any other Liquidity Bank, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement or the Face Amount Certificate Agreement, and to
make such investigation as it deems necessary to inform itself as to the
business, operations, property, prospects, financial and other condition and
creditworthiness of the Company, the Portfolio Manager, the Swap
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Provider and the Custodian and the quality and character of the Portfolio; (d)
appoints and authorizes the Liquidity Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Liquidity Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; (e) appoints as its agent the Agent under the Face Amount
Certificate Agreement to enforce its respective rights and interests thereunder;
(f) appoints and authorizes the Agent under the Face Amount Certificate
Agreement to take such action as agent on its behalf and to exercise such powers
under the Face Amount Certificate Agreement as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental thereto;
(g) represents and warrants that it is an "Accredited Investor" under and as
defined in the Face Amount Certificate Agreement; (h) represents and warrants
that it is a corporation or a banking association duly organized and validly
existing under the laws of its jurisdiction of incorporation or organization and
has all corporate power to perform its obligations hereunder; (i) represents and
warrants that no authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by it of this Agreement, which has
not otherwise been obtained; (j) represents and warrants that the execution,
delivery and performance of this Agreement are within its corporate powers, have
been duly authorized by all necessary corporate action, do not contravene or
violate (i) its certificate or articles of incorporation or association or
by-laws, (ii) any law, rule or regulation applicable to it, (iii) any
restrictions under any agreement, contract or instrument to which it is a party
or any of its property is bound, or (iv) any order, writ, judgement, award,
injunction or decree binding on or affecting it or its property, and do not
result in the creation or imposition of any adverse claim on its assets, which
contravention or violation in any of the foregoing cases could have a material
adverse effect on its financial condition or its ability to perform its
obligations hereunder; (k) represents and warrants that this Agreement
constitutes its legal, valid and binding obligations enforceable against it in
accordance with their terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to limiting creditors' rights generally and by equitable principles (regardless
of whether such enforceability is considered in a proceeding in equity or at
law); and (l) represents and warrants that it has duly authorized, executed and
delivered this Agreement.
ARTICLE IV
LIQUIDITY AGENT
4.1 APPOINTMENT. Each Liquidity Bank hereby irrevocably designates and
appoints FNBC as Liquidity Agent hereunder, and authorizes the Liquidity Agent
to take such action on its behalf under the provisions of this Agreement and to
exercise such powers and perform such duties as are expressly delegated to the
Liquidity Agent by the terms of this Agreement, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Liquidity Agent shall not have any
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duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Liquidity Bank or ISC, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities on the part of
the Liquidity Agent shall be read into this Agreement or otherwise exist against
the Liquidity Agent. The provisions of this Article IV are solely for the
benefit of the Liquidity Agent and the Liquidity Banks, and neither ISC nor the
Company shall have any rights as a third-party beneficiary or otherwise under
any of the provisions hereof. In performing its functions and duties hereunder,
the Liquidity Agent shall act solely as the agent of the Liquidity Banks and
does not assume nor shall be deemed to have assumed any obligation or
relationship of trust or agency with or for ISC, the Company or any of their
respective successors and assigns.
4.2. DELEGATION OF DUTIES. The Liquidity Agent may execute any of its
duties under this Agreement by or through its subsidiaries, affiliates, agents
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Liquidity Agent shall not be responsible
for the negligence or misconduct of any agents or attorneys-in-fact selected by
it with reasonable care.
4.3. EXCULPATORY PROVISIONS. Neither the Liquidity Agent nor any of its
directors, officers, agents or employees shall be (a) liable for any action
lawfully taken or omitted to be taken by it or them or any Person described in
Section 4.2 under or in connection with this Agreement or the Face Amount
Certificate Agreement (except for its, their or such Person's own gross
negligence or willful misconduct), or (b) responsible in any manner to any of
the Liquidity Banks for any recitals, statements, representations or warranties
contained in the Face Amount Certificate Agreement or in any certificate,
report, statement or other document referred to or provided for in, or received
under or in connection with, the Face Amount Certificate Agreement or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
the Face Amount Certificate Agreement, this Agreement or any other Transaction
Documents furnished in connection therewith or herewith, or for any failure of
ISC to perform its obligations under the Face Amount Certificate Agreement or
for the satisfaction of any condition specified in the Face Amount Certificate
Agreement. The Liquidity Agent shall not be under any obligation to any
Liquidity Bank to ascertain or to inquire as to the observance or performance of
any of the agreements or covenants contained in, or conditions of, the Face
Amount Certificate Agreement, or to inspect the properties, books or records of
the Company.
4.4. RELIANCE BY LIQUIDITY AGENT. The Liquidity Agent shall in all cases be
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to each of
the Liquidity Banks), independent accountants and other experts selected by the
Liquidity Agent. The Liquidity Agent shall in all cases be fully justified in
failing or refusing to take any action
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under this Agreement, the Face Amount Certificate Agreement or any other
Transaction Documents furnished in connection herewith or therewith unless it
shall first receive such advice or concurrence of the Required Liquidity Banks
or all of the Liquidity Banks, as applicable, as it deems appropriate or it
shall first be indemnified to its satisfaction by the Liquidity Banks against
any and all liability, cost and expense which may be incurred by it by reason of
taking or continuing to take any such action. The Liquidity Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement, the Face Amount Certificate Agreement, or any other Transaction
Documents furnished in connection herewith or therewith in accordance with a
request of the Required Liquidity Banks or all of the Liquidity Banks, as
applicable, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Liquidity Banks.
4.5. NOTICE OF LIQUIDATION EVENTS; VOTING ON WAIVERS AND AMENDMENTS. The
Liquidity Agent shall not be deemed to have knowledge or notice of the
occurrence of any Amortization Event or Liquidation Event, unless the Liquidity
Agent has received notice from the Agent, any Liquidity Bank or ISC referring to
the Face Amount Certificate Agreement, stating that an Amortization Event or a
Liquidation Event has occurred thereunder and describing such event. In the
event that the Liquidity Agent receives such a notice, the Liquidity Agent shall
promptly give notice thereof to each Liquidity Bank. Subject to the provisions
of Section 5.1(b), to the extent the Liquidity Agent is entitled to consent to
or withhold its consent of any waiver or amendment of the Face Amount
Certificate Agreement pursuant to Section 16(k) thereof, the Liquidity Agent
shall (a) give prompt notice to the Liquidity Banks of any such waiver or
amendment of which it is aware, and (b) take such action with respect to such
waiver, amendment or Liquidation Event as shall be directed by the Required
Liquidity Banks; provided, however, that unless and until the Liquidity Agent
shall have received such directions, the Liquidity Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Liquidation Event or potential or unmatured Liquidation Event as the
Liquidity Agent shall deem advisable and in the best interests of the Liquidity
Banks.
4.6. NON-RELIANCE ON LIQUIDITY AGENT AND OTHER LIQUIDITY BANKS. Each
Liquidity Bank expressly acknowledges that neither the Liquidity Agent, nor any
of its officers, directors, employees, agents, attorneys-in-fact or affiliates
has made any representations or warranties to it and that no act by the
Liquidity Agent hereafter taken, including, without limitation, any review of
the affairs of ISC, shall be deemed to constitute any representation or warranty
by the Liquidity Agent. The Liquidity Agent shall not have any duty or
responsibility to provide any Liquidity Bank with any credit or other
information concerning the business, operations, property, prospects, financial
and other condition or creditworthiness of ISC which may come into the
possession of the Liquidity Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.
4.7. INDEMNIFICATION. The Liquidity Banks agree to indemnify the Liquidity
Agent and its officers, directors, employees, representatives and agents (to the
extent not reimbursed
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by the Company and without limiting the obligation of the Company to do so),
ratably according to their Pro Rata Shares, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel for the
Liquidity Agent or such Person in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
the Liquidity Agent or such Person shall be designated a party thereto) that may
at any time be imposed on, incurred by or asserted against the Liquidity Agent
or such Person as a result of, or arising out of, or in any way related to or by
reason of, any of the transactions contemplated hereunder or under this
Agreement or the execution, delivery or performance of this Agreement, the Face
Amount Certificate Agreement, or any other Transaction Documents furnished in
connection herewith or therewith (but excluding any such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the gross negligence or willful
misconduct of the Liquidity Agent or such Person).
4.8. LIQUIDITY AGENT IN ITS INDIVIDUAL CAPACITY. The Liquidity Agent and
its affiliates may make loans to, accept deposits from and generally engage in
any kind of business with the Company, ISC or any affiliate of the Company as
though the Liquidity Agent were not the Liquidity Agent hereunder. With respect
to the acquisition of its Pro Rata Share of the Assigned Percentage of the ISC
Interest pursuant to this Agreement, FNBC shall have the same rights and powers
under this Agreement as any Liquidity Bank and may exercise the same as though
it were not the Liquidity Agent, and the terms "Liquidity Bank" and "Liquidity
Banks" shall include FNBC in its individual capacity.
4.9. SUCCESSOR LIQUIDITY AGENT. The Liquidity Agent may, upon five (5)
days' notice to ISC and the Liquidity Banks, and the Liquidity Agent will, upon
the direction of Liquidity Banks having 66-2/3% of the Pro Rata Shares
(calculated without regard to the Pro Rata Share of FNBC or any affiliate of
FNBC) resign as Liquidity Agent, provided, in either case, that a Liquidity Bank
agrees to become the successor Liquidity Agent hereunder in accordance with the
next sentence. If the Liquidity Agent shall resign as Liquidity Agent under this
Agreement, then the Required Liquidity Banks during such 5-day period shall
appoint from among the Liquidity Banks a successor Liquidity Agent, whereupon
such successor Liquidity Agent shall succeed to the rights, powers and duties of
the Liquidity Agent and the term "Liquidity Agent" shall mean such successor
Liquidity Agent, effective upon its appointment, and the former Liquidity
Agent's rights, powers and duties as Liquidity Agent shall be terminated,
without any other or further act or deed on the part of such former Agent or any
of the parties to this Agreement. After the retiring Liquidity Agent's
resignation hereunder as Liquidity Agent, the provisions of this Article IV
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Liquidity Agent under this Agreement.
4.10. FNBC CONFLICT WAIVER. FNBC acts as administrative agent for ISC,
issuing and paying agent for ISC's commercial paper, provides other backup
facilities for ISC, and
-14-
may provide other services or facilities to ISC from time to time (the "FNBC
Roles"). Without limiting the generality of Section 4.8, each Liquidity Bank
hereby acknowledges and consents to any and all FNBC Roles, waives any
objections it may have to any actual or potential conflict of interest caused by
FNBC's acting as the Liquidity Agent or as a Liquidity Bank hereunder and acting
as or maintaining any of the FNBC Roles, and agrees that in connection with any
FNBC Role, FNBC may take, or refrain from taking, any action which it in its
discretion deems appropriate. The Liquidity Banks are hereby notified that ISC
may delegate responsibility for signing and/or sending Sale Notices to FNBC as
ISC's administrative agent.
ARTICLE V
MISCELLANEOUS
5.1. WAIVERS; AMENDMENTS; ETC.
(a) NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part
of the Liquidity Agent or any Liquidity Bank in exercising any power, right or
remedy under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or remedy preclude any other
further exercise thereof or the exercise of any other power, right or remedy.
The rights and remedies herein provided shall be cumulative and nonexclusive of
any rights or remedies provided by law. Any waiver of this Agreement shall be
effective only in the specific instance and for the specific purpose for which
given.
(b) LIMITATIONS ON CONSENTS BY THE LIQUIDITY AGENT TO WAIVERS AND
AMENDMENTS. ISC shall not consent to any amendment, supplement, waiver or
modification of the Face Amount Certificate Agreement to which it is entitled to
consent pursuant to Section 14 thereof without the prior written consent of the
Required Liquidity Banks, PROVIDED, HOWEVER, that no such modification or waiver
shall, without the consent of each affected Certificateholder, (i) extend the
Certificate's final maturity date or the date of any payment or deposit of any
amounts by the Issuer, the Portfolio Manager or the Swap Provider, (ii) reduce
the rate or extend the time of payment of Earned Yield (or any component
thereof), (iii) reduce any fee payable to the Liquidity Agent for the benefit of
the Certificateholders, (iv) change the amount of the outstanding Invested
Amounts of any Certificateholder, a Liquidity Bank's Pro Rata Share or a
Liquidity Bank's Commitment, (v) amend, modify or waive any provision of the
definition of "Required Liquidity Banks" or this Section 5.1(b), (vi) consent
to or permit the assignment or transfer by the Issuer or the Swap Provider of
any of their respective rights and obligations under this Agreement or the Swap
Agreement, or (vii) amend or modify any defined term (or any term used directly
or indirectly in such defined term) used in clauses (i) through (vi) above in a
manner which would circumvent the intention of the restrictions set forth in
such clauses.
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(c) WAIVERS AND AMENDMENTS MUST BE IN WRITING. This Agreement may not
be amended, supplemented, modified, or waived except in accordance with the
provisions of this Section 5.1 or Section 5.5(c). The Liquidity Agent and ISC
may, from time to time, with the consent of the Required Liquidity Banks, enter
into written amendments, supplements, modifications or waivers for the purpose
of adding, deleting, changing or waiving any provisions to this Agreement;
provided, however, that no such amendment, supplement, modification or waiver
shall, without the written consent of ISC, the Liquidity Agent and all of the
Liquidity Banks: (i) extend the Commitment Expiry Date, (ii) reduce any fee
payable pursuant to Section 2.4. (iii) except pursuant to Section 5.5(c), change
the amount of or percentage interest represented by any Liquidity Bank's Pro
Rata Share or alter any Liquidity Bank's Commitment hereunder, (iv) amend,
modify or waive any provision of the definition of "Required Liquidity Banks",
Section 5.1(b) above or this Section 5.1(c), or (v) amend or modify any
defined term used in the foregoing clauses (i) through (iv) in a manner which
would circumvent the intention of the restrictions set forth in such clauses.
Notwithstanding the foregoing, without the consent of the Liquidity Banks, the
Liquidity Agent and ISC may amend this Agreement solely to add additional
Persons as Liquidity Banks. Any such amendment, supplement, modification or
waiver shall apply to each of the Liquidity Banks equally and shall be binding
upon ISC, the Liquidity Banks and the Liquidity Agent. In the case of any
waiver, ISC, the Liquidity Banks and the Liquidity Agent shall be restored to
their former positions and rights hereunder.
(d) INTEGRATION. This Agreement, the Face Amount Certificate
Agreement and the other Transaction Documents contain a final and complete
integration of all prior expressions by the parties hereto with respect to the
subject matter hereof and shall constitute the entire agreement among the
parties hereto with respect to the subject matter hereof, superseding all prior
oral or written understandings.
5.2. NOTICES. Except as otherwise expressly provided herein, all
communications and notices provided for hereunder shall be in writing and shall
be (a) hand-delivered by messenger, (b) sent by reputable overnight or second
business day courier, or (c) sent by facsimile, telecopy or similar electronic
facsimile transmission directed to the applicable address or facsimile number,
as the case may be, set forth on the signature page hereto (as amended from time
to time) or at such other address or facsimile number as any party may hereafter
specify in writing to the Liquidity Agent for the purpose of receiving notices.
Each such notice or other communication shall be effective only upon receipt
thereof.
5.3. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement shall
be governed by and construed in accordance with the internal law, and not the
law of conflicts, of the State of Illinois.
5.4. SEVERABILITY; COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which when taken together shall
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constitute one and the same agreement. Any provisions of this Agreement which
are prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
5.5. SUCCESSORS AND ASSIGNS; PARTICIPATIONS; ASSIGNMENTS.
(a) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
parties hereto and their respective successors and permitted assigns. No
Liquidity Bank may participate, assign or sell any portion of its rights
hereunder except as required by operation of law, in connection with the merger,
consolidation or dissolution of any Liquidity Bank or as provided in this
Section 5.5.
(b) PARTICIPATIONS. Any Liquidity Bank may, with the consent of the
Liquidity Agent and in the ordinary course of its business and in accordance
with applicable law, at any time sell to one or more Persons (each a
"Participant") participating interests in its rights and obligations hereunder
and under the Face Amount Certificate Agreement; PROVIDED, HOWEVER, that each
Participant shall purchase an identical percentage in such selling Liquidity
Bank's Commitment, unused Commitment and Certificate Balance. Notwithstanding
any such sale by a Liquidity Bank of participating interests to a Participant,
such Liquidity Bank's rights and obligations under this Agreement and the Face
Amount Certificate Agreement shall remain unchanged, such Liquidity Bank shall
remain solely responsible for the performance thereof, and ISC and the Liquidity
Agent shall continue to deal solely and directly with such Liquidity Bank in
connection with such Liquidity Bank's rights and obligations under this
Agreement and the Face Amount Certificate Agreement. Each Liquidity Bank agrees
that any agreement between such Liquidity Bank and any such Participant in
respect of such participating interest shall not restrict such Liquidity Bank's
right to agree to any amendment, supplement, waiver or modification to the
Agreement, except for any amendment, supplement, waiver or modification
requiring the consent of all of the Liquidity Banks pursuant to Section 5.1(b)
or Section 5.1(c) or any agreement to extend the Fixed Expiry Date.
(c) ASSIGNMENTS TO PURCHASERS. (i) Any Liquidity Bank may at any time
and from time to time, upon the prior written consent of ISC, the Liquidity
Agent and FNBC, assign to one or more Accredited Investors or other Persons
("Purchasers") all or any part of its rights and obligations under this
Agreement and the Face Amount Certificate Agreement pursuant to a supplement to
this Agreement, substantially in the form of EXHIBIT A hereto (a "Transfer
Supplement"), executed by the Purchaser, such selling Liquidity Bank and, as
applicable, the Liquidity Agent; and provided however that (A) each Purchaser
shall purchase an identical percentage in such selling Liquidity Bank's
Commitment and Certificate Balance, (B) any such assignment cannot be for an
amount less than the lesser of (1) $10,000,000 and (2) such selling Liquidity
Bank's Commitment or Certificate Balance (calculated at the time of such
assignment), (C) each Purchaser must be able to make the representations and
warranties set
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forth in the Investor Letter referred to in Section 14(a)(ii) of the Face Amount
Certificate Agreement; (D) each Purchaser must be a financial institution
incorporated in an OECD Country and (E) if requested by ISC or by the Liquidity
Agent, each Purchaser shall deliver to the Liquidity Agent and ISC an opinion of
such Purchaser's counsel in substantially the form of Exhibit B hereto. Such
assignment shall also be subject to the other limitations set forth in the Face
Amount Certificate Agreement.
(ii) Each of the Liquidity Banks agrees that in the event that it
shall cease to have short-term debt ratings of at least A-1 by S&P and at least
P-1 by ▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's"), or, if such Liquidity Bank
does not have short-term debt which is rated by S&P's and Moody's, in the event
that the parent corporation of such Liquidity Bank has rated short-term debt,
such parent corporation ceases to have short-term debt ratings of at least A-1
by S&P and at least P-1 by Moody's (an "Affected Liquidity Bank"), such Affected
Liquidity Bank shall be obliged, at the request of ISC and the Liquidity Agent,
to assign all of its rights and obligations hereunder to (x) one or more other
Liquidity Banks selected by ISC and the Liquidity Agent, or (y) another
financial institution nominated by the Liquidity Agent and agreed to by ISC and
FNBC, and willing to participate in this facility through the Commitment Expiry
Date in the place of such Affected Liquidity Bank; provided that (i) the
Affected Liquidity Bank receives payment in full, pursuant to a Transfer
Supplement, of an amount equal to the Affected Liquidity Bank's Certificate
Balance and the accrued but unpaid (whether or not then due) Earned Yield and
accruing but unpaid fees and other costs and expenses payable in respect of such
Affected Liquidity Bank's Certificate Balance and (ii) such nominated financial
institution, if not an existing Liquidity Bank, satisfies all the requirements
of this Agreement and, if requested by ISC or the Liquidity Agent, provides the
Liquidity Agent with an opinion of counsel in substantially the form of Exhibit
B hereto.
(iii) Upon (A) execution of a Transfer Supplement, (B) delivery
of an executed copy thereof to ISC, the Liquidity Agent and the Agent and, if
requested by ISC or by the Liquidity Agent, delivery to the Liquidity Agent and
ISC of an opinion of such Purchaser's counsel in substantially the form of
EXHIBIT B hereto, and (C) payment, if applicable, by the Purchaser to such
selling Liquidity Bank of an amount equal to the purchase price agreed between
such selling Liquidity Bank and the Purchaser, such selling Liquidity Bank shall
be released from its obligations hereunder and under the Face Amount Certificate
Agreement to the extent of such assignment and the Purchaser shall for all
purposes be a Liquidity Bank party to this Agreement and, if and when
applicable, a Certificateholder under the Face Amount Certificate Agreement and
shall have all the rights and obligations of a Liquidity Bank under this
Agreement and, if and when applicable, a Certificateholder under the Face Amount
Certificate Agreement to the same extent as if it were an original party hereto
or thereto, and no further consent or action by ISC, the Company, the Liquidity
Banks or the Liquidity Agent shall be required. The amount of the assigned
portion of the selling Liquidity Bank's Certificate Balance allocable to the
Purchaser shall be equal to the Transferred Percentage (as defined in the
Transfer Supplement) of such selling Liquidity Bank's Certificate Balance which
is transferred thereunder regardless of the purchase price paid therefor. Such
Transfer
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Supplement shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of the Purchaser as a Liquidity
Bank and the resulting adjustment of the selling Liquidity Bank's Commitment
arising from the purchase by the Purchaser of all or a portion of the selling
Liquidity Bank's rights, obligations, and interest hereunder and under the Face
Amount Certificate Agreement.
5.6. EFFECTIVENESS OF THIS AGREEMENT. This Agreement, and the
obligations of the Liquidity Agent and the Liquidity Banks hereunder, shall
become effective when the Liquidity Agent has received counterparts hereof, duly
executed by the Liquidity Agent, ISC and each of the Liquidity Banks.
5.7. BANKRUPTCY PETITION AGAINST ISC. The Liquidity Agent and each
Liquidity Bank hereby covenant and agree that, prior to the date which is one
year and one day after the payment in full of all outstanding senior
indebtedness of ISC, such party will not institute against, or join any other
Person in instituting against, ISC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other similar proceeding under the laws
of the United States or any state of the United States.
5.8. INSOLVENCY PROCEEDINGS. Notwithstanding anything in this
Agreement to the contrary, each Liquidity Bank agrees that if at any time after
the Commitment Expiry Date, ISC is required to return, pursuant to a bankruptcy
or insolvency proceeding involving the Company, any payments received by ISC
from the Company prior to the Commitment Expiry Date, such Liquidity Bank shall
on demand pay to ISC its Pro Rata Share of such disgorged amounts and such
Liquidity Bank shall thereafter be entitled to receive from ISC its Pro Rata
Share of all amounts thereafter received by ISC in respect of such disgorged
amounts pursuant to such bankruptcy or insolvency proceeding.
5.9. WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE LIQUIDITY AGENT, THE LIQUIDITY BANKS AND ISC EACH IRREVOCABLY WAIVES
ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR IN CONNECTION WITH THIS AGREEMENT, THE FACE AMOUNT CERTIFICATE AGREEMENT
OR ANY MATTER ARISING HEREUNDER OR THEREUNDER.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers or signatories as of
the date hereof.
INTERNATIONAL SECURITIZATION
CORPORATION
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
Authorized Signer
c/o The First National Bank of Chicago
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Asset-Backed Securities Division
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
THE FIRST NATIONAL BANK OF CHICAGO,
Individually as a Liquidity Bank and as
Liquidity Agent
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
Title: Authorized Agent
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Asset-Backed Securities Division
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Exhibit A
TRANSFER SUPPLEMENT
THIS TRANSFER SUPPLEMENT is entered into as of the ____ day of ______,____
by and between _______________("Seller") and ________________("Purchaser").
PRELIMINARY STATEMENTS
A. This Transfer Supplement is being executed and delivered in accordance
with Section 5.5(c) of that certain Liquidity Agreement (ISC) dated as of April
24, 1998 (as amended, modified or restated from time to time, the "Agreement")
by and among International Securitization Corporation, the Liquidity Banks party
thereto and The First National Bank of Chicago, as Liquidity Agent. Capitalized
terms used herein and not otherwise defined herein are used with the meanings
set forth, or incorporated by reference, in the Agreement or the "Face Amount
Certificate Agreement" (as such term is defined in the Agreement).
B. The Seller is a Liquidity Bank party to the Agreement, and the Purchaser
wishes to become a Liquidity Bank thereunder.
C. The Seller is selling and assigning to the Purchaser an undivided _____%
(the "Transferred Percentage") interest in all of Seller's rights and
obligations under the Face Amount Certificate Agreement and the Agreement,
including, without limitation, the Seller's Commitment and (if applicable) the
Seller's Certificate Balance as set forth herein.
The parties hereto hereby agree as follows:
1. The transfer effected by this Transfer Supplement shall become
effective (the "Transfer Effective Date") two (2) Business Days (or such other
date selected by the Liquidity Agent in its sole discretion) following the date
on which a transfer effective notice substantially in the form of Schedule II to
this Transfer Supplement ("Transfer Effective Notice") is delivered by the
Liquidity Agent to ISC, the Seller and the Purchaser. From and after the
Transfer Effective Date, the Purchaser shall be a Liquidity Bank party to the
Agreement for all purposes thereof as if the Purchaser were an original party
thereto and the Purchaser agrees to be bound by all of the terms and provisions
contained therein.
2. If there is no outstanding principal balance on the Certificate, on
the Transfer Effective Date, Seller shall be deemed to have hereby transferred
and assigned to the Purchaser, without recourse, representation or warranty
(except as provided in paragraph 6 below), and the Purchaser shall be deemed to
have hereby irrevocably taken, received and assumed from the Seller, the
Transferred Percentage of the Seller's Commitment and all rights
A-1
and obligations associated therewith under the terms of the Agreement,
including, without limitation, the Transferred Percentage of the Seller's future
funding obligations under Section 2.2(a) of the Agreement.
3. If there is an outstanding principal balance on the Certificate, at
or before 12:00 noon, local time of the Seller, on the Transfer Effective Date,
the Purchaser shall pay to the Seller, in immediately available funds, an amount
equal to the sum of (i) the Transferred Percentage of an amount equal to the
Seller's Certificate Balance (such amount, being hereinafter referred to as the
"Purchaser's Certificate Balance"); (ii) all accrued but unpaid (whether or not
then due) interest attributable to the Purchaser's Certificate Balance; and
(iii) accruing but unpaid fees and other costs and expenses payable in respect
of the Purchaser's Certificate Balance for the period commencing upon each date
such unpaid amounts commence accruing, to and including the Transfer Effective
Date (the "Purchaser's Acquisition Cost"). Whereupon, the Seller shall be deemed
to have transferred and assigned to the Purchaser, without recourse,
representation or warranty (except as provided in paragraph 6 below), and the
Purchaser shall be deemed to have hereby irrevocably taken, received and assumed
from the Seller, the Transferred Percentage of the Seller's Commitment and
Certificate Balance and all related rights and obligations under the Agreement
and the Face Amount Certificate Agreement, including, without limitation, the
Transferred Percentage of the Seller's future funding obligations under Section
2.2(a) of the Agreement.
4. Concurrently with the execution and delivery hereof, the Seller
will provide to the Purchaser copies of all documents requested by the Purchaser
which were delivered to such Seller pursuant to the Agreement.
5. Each of the parties to this Transfer Supplement agrees that at any
time and from time to time upon the written request of any other party, it will
execute and deliver such further documents and do such further acts and things
as such other party may reasonably request in order to effect the purposes of
this Transfer Supplement.
6. By executing and delivering this Transfer Supplement, the Seller
and the Purchaser confirm to and agree with each other, the Liquidity Agent and
the Liquidity Banks as follows: (a) other than the representation and warranty
that it has not created any adverse claim upon any interest being transferred
hereunder, the Seller makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made by any other Person in or in connection with the Agreement, the Face Amount
Certificate Agreement or any other Transaction Document, or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Agreement, the Face Amount Certificate Agreement, any other Transaction Document
or any other instrument or document furnished pursuant thereto or the
perfection, priority, condition, value or sufficiency of any collateral; (b) the
Seller makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Company, the Portfolio Manager, the
Swap Provider any surety or any guarantor or the performance or observance by
the Company, the
A-2
Portfolio Manager, or the Swap Provider of any of their respective obligations
under the Face Amount Certificate Agreement or any other Transaction Document or
any other instrument or document furnished pursuant thereto or in connection
therewith; (c) the Purchaser confirms that it has received a copy of the
Agreement, the Agency Agreement, the Face Amount Certificate Agreement and the
other Transaction Documents (other than the FNBC Fee Letter referred to
therein), together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Transfer Supplement; (d) the Purchaser will, independently and without reliance
upon the Liquidity Agent, the Agent, ISC, the Company or any other Liquidity
Bank or Certificateholder and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Agreement and the Face Amount Certificate
Agreement; (e) the Purchaser appoints and authorizes the Liquidity Agent to take
such action as agent on its behalf and to exercise such powers under the
Agreement as are delegated to the Liquidity Agent by the terms thereof, together
with such powers as are reasonably incidental thereto; (f) the Purchaser
appoints as its agent the Agent under the Face Amount Certificate Agreement and
the Agency Agreement to enforce its respective rights and interests thereunder;
(g) the Purchaser appoints and authorizes the Agent under the Face Amount
Certificate Agreement and the Agency Agreement to take such action as agent on
its behalf and to exercise such powers under the Face Amount Certificate
Agreement and the Agency Agreement as are delegated to the Agent by the terms
thereof, together with such powers as are reasonably incidental thereto; (h)
the Purchaser has executed and delivered to the Liquidity Agent the Investor
Letter referred to in Section 14(a)(ii) of the Face Amount Certificate
Agreement; (i) the Purchaser was not formed for the purpose of acquiring the
interest being acquired hereunder; and (j) the Purchaser agrees that it will
perform in accordance with their terms all of the obligations which, by the
terms of the Agreement and the Face Amount Certificate Agreement are required
to be performed by it as a Liquidity Bank or, when applicable, as a
Certificateholder.
7. Each party hereto represents and warrants to and agrees with the
Liquidity Agent that it is aware of and will comply with the provisions of the
Agreement, including, without limitation, Sections 2.2, 5.5(c) and 5.7 thereof.
8. Schedule I hereto sets forth the revised Commitment of the Seller
and the Commitment of the Purchaser, as well as administrative information with
respect to the Purchaser.
9. THIS TRANSFER SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS.
A-3
IN WITNESS WHEREOF, the parties hereto have caused this Transfer Supplement
to be executed by their respective duly authorized officers of the date hereof.
[SELLER]
By:______________________
Title:______________________
[PURCHASER]
By:______________________
Title:______________________
A-4
SCHEDULE I TO TRANSFER SUPPLEMENT
LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AMOUNTS
DATE: ___________,____
TRANSFERRED PERCENTAGE: _______%
@@
Pro
Commitment Commitment Outstanding Rata
Seller [existing] [revised] Certificate Balance Share
------ ----------- ---------- ------------------- -----
Pro
Commitment Outstanding Rata
Purchaser [initial] Certificate Balance Share
--------- ---------- ------------------- -----
ADDRESS FOR NOTICES:
____________________
____________________
____________________
Attention:
Phone No.:
Facsimile No.:
A-5
SCHEDULE II TO TRANSFER SUPPLEMENT
TRANSFER EFFECTIVE NOTICE
TO: _________________________, Seller
_________________________
_________________________
_________________________
TO: _________________________, Purchaser
_________________________
_________________________
_________________________
The undersigned, as Liquidity Agent under the Liquidity Agreement
(ISC) dated as of April 24, 1998 (as amended, modified or supplemented from time
to time) by and among International Securitization Corporation, the Liquidity
Banks party thereto and The First National Bank of Chicago, as Liquidity Agent,
hereby acknowledges receipt of executed counterparts of a completed Transfer
Supplement dated as of ____________, ____ between _____________, as Seller,
and_______________, as Purchaser. Capitalized terms defined in such Transfer
Supplement are used herein as therein defined.
1. Pursuant to such Transfer Supplement, you are advised that the
Transfer Effective Date will be ________________, _________.
2. ISC, the Liquidity Agent and FNBC each hereby consents to the
Transfer Supplement as required by Section 5.5(c) of the Agreement.
[ 3. Pursuant to such Transfer Supplement, the Purchaser is required to
pay $____________ to the Seller at or before 12:00 noon (local time of the
Seller) on the Transfer Effective Date in immediately available funds.]
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO,
individually and as Liquidity Agent
By:_________________________
Title:______________________
INTERNATIONAL SECURITIZATION
CORPORATION
By:_________________________
Authorized Signatory
A-6
Exhibit B
FORM OF OPINION
International Securitization Corporation
c/o The First National Bank of Chicago
Asset-Backed Markets Division
Suite 0596
One First ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
The First National Bank of Chicago,
as Liquidity Agent
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Transfer Supplement dated as of _________ with ***[Name of Bank]***
Ladies and Gentlemen:
We have acted as counsel for the ***[Name of Bank]*** (the "Bank") in
connection with [(i)] the Liquidity Agreement (ISC) dated as of April 24, 1998
(the "Agreement"; terms defined therein and not otherwise defined in this letter
shall have the respective meanings ascribed therein), among International
Securitization Corporation ("ISC"), the First National Bank of Chicago, as
Liquidity Agent and the Liquidity Banks party thereto and [(ii) the Transfer
Supplement (the "Transfer Supplement") dated as of ___________ ______, ______
between ***[Name of Seller]*** as "Seller" (as defined therein) and
***[Name of Bank]*** as "Purchaser" (as defined therein), consented to by ISC,
the Liquidity Agent and FNBC.](1)
Subject to the qualifications and limitations stated herein, we hereby
advise you that, in our opinion:
Each of the Agreement [and the Transfer Supplement] has been duly
authorized by all necessary corporate action, has been duly executed and
delivered by the Bank and, assuming due authorization, execution and
delivery by each of the other parties thereto, constitutes a legal, valid
and binding obligation of the Bank, enforceable against the Bank in
accordance with its terms.
--------------------
(1) Bracketed language should be deleted for opinions delivered by Liquidity
Banks party to the Certificate Purchase Agreement.
B-1
Our opinion set forth above is subject to the qualifications that the
enforceability of the Bank's obligations under the Agreement [and the Transfer
Supplement] may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights generally or
by general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
This opinion may be relied upon by ▇▇▇▇▇'▇ Investors Service, Inc. and
by Standard & Poors Ratings Group to the same extent as if named as an addressee
hereof.
Respectfully submitted,
B-2
ANNEX I
COMMITMENTS
The First National Bank of Chicago $500,000,000