$500,000,000
FACE AMOUNT CERTIFICATE AGREEMENT
This is a FACE AMOUNT CERTIFICATE AGREEMENT (this "Agreement") in the
principal amount of $500,000,000 made as of the 24th day of April, 1998, by and
among (i) 312 CERTIFICATE COMPANY, a bankruptcy-remote Delaware corporation (the
"Issuer"); (ii) INTERNATIONAL SECURITIZATION CORPORATION, a bankruptcy-remote
Delaware corporation ("ISC"); and (iii) THE FIRST NATIONAL BANK OF CHICAGO
("FNBC") as agent (the "Agent") for ISC and any subsequent entity which,
pursuant to the Liquidity Agreement (as defined below), purchases an interest in
the installment face amount certificate being issued hereunder substantially in
the form attached hereto as EXHIBIT A (as amended, substituted or replaced from
time to time, the "Certificate") (collectively, ISC and such future potential
Certificate purchasers are hereinafter referred to as the "Certificateholders").
WHEREAS, the Issuer desires to sell the Certificate to ISC and place
the periodic proceeds of such sale (the "Sale Proceeds") into that certain
custodial account #3402824200 (the "Custodial Account") held with Bank One,
Kentucky, N.A., an independent, third-party custodian (the "Custodian"); and
WHEREAS, the Issuer and ISC desire that such Sale Proceeds be
maintained as security for the Certificate and invested in a pool of
fixed-income securities (the "Portfolio") which will be actively managed
pursuant to that certain Investment Management Agreement of even date herewith
by and among the Issuer, the Agent and Integrity Capital Advisors, Inc., as the
Portfolio Advisor thereunder (in such capacity, the "Portfolio Manager") (as
the same may be amended, restated, supplemented or otherwise modified from time
to time, the "Investment Management Agreement"); and
WHEREAS, ISC desires to pay for its purchase of the Certificate
through the issuance of its A-1/P-1 asset-backed commercial paper notes (the
"Asset-Backed CP") and the Agent desires to hold the Certificate for the benefit
of the Certificateholders and perform the administrative functions set forth
herein and in the other documents related to the transaction contemplated
hereby;
NOW, THEREFORE, in consideration of the premises and mutual promises
set forth herein, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
1. INSTALLMENT PURCHASES. Upon execution of this Agreement (hereinafter
such time shall be referred to as the "Closing" and the date on which the
Closing occurs shall hereinafter be referred to as the "Closing Date"), ISC,
subject to the conditions set forth below, will purchase an initial amount of
the principal of the Certificate (the "Initial Purchase") and may thereafter, in
its sole discretion and subject to the conditions contained elsewhere herein,
make additional installment purchases (the Initial Purchase and any subsequent
installment purchases are hereinafter each referred to as an "Installment
Purchase") from time to time up to a total principal
amount of $500,000,000.
2. CONDITIONS PRECEDENT TO EACH INSTALLMENT PURCHASE. The initial
Purchase and any subsequent Installment Purchases hereunder shall be subject to
satisfaction of the conditions precedent contained in EXHIBIT B attached hereto
and hereby incorporated herein by reference thereto (each as applicable to any
given Installment Purchase).
3. INSTALLMENT PURCHASE PAYMENTS. Installment Purchases shall be made in
immediately available U.S. funds by wire transfer to the Custodian pursuant to
wire transfer instructions to be provided to the Agent by the Issuer.
4. CERTIFICATE YIELD. During all times that any or all of the principal
amount of the Certificate is outstanding (the "Invested Amount"), the Issuer
shall pay with respect to each Settlement Period (or portion thereof) an amount
equal to the sum of (a) + (b) + (c), where:
(a) is equal to the applicable Earned Yield (as defined below) with
respect to such Settlement Period (or portion thereof),
(b) is equal to the applicable Liquidity Fee (as defined below)
payable by the Issuer pursuant to the Liquidity Fee Letter with respect to such
Settlement Period (or portion thereof), and
(c) is equal to the applicable Letter of Credit Fee (as defined
below) payable by the Issuer to the Agent pursuant to the FNBC Fee Letter for
the benefit of the Letter of Credit Banks (in each case, as defined below) with
respect to such Settlement Period (or portion thereof) (collectively, the sum
(a) + (b) + (c) for any calculation period shall be referred to as the
"Certificate Yield").
For purposes of making the above-referenced calculation and payment, the
foregoing capitalized terms shall have the following meanings:
"EARNED YIELD" means, with respect to any Settlement Period (or portion
thereof), the sum of:
(i) with respect to any portion of the Invested Amount held on the
books and records of the Agent by ISC and funded through sales of
Asset-Backed CP from time to time, the product of (x) the applicable
average daily outstanding Invested Amount during such Settlement Period (or
portion thereof), TIMES (y) a rate as reasonably selected and determined by
the Agent which, acting in good faith, reflects the basis for maintaining
ISC's interest in the Invested Amount, which is equal to either (a) from
the Closing Date to the date which is 364 days thereafter, the excess of
(i) the One-Month LIBOR applicable with respect to such period, LESS (ii)
0.08% per annum, and thereafter, unless otherwise agreed by the parties
hereto in writing, the "Pass-Through Rate" (as defined below) or (b) the
Base rate; PLUS
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(ii) with respect to any portion of the Invested Amount held on the
books and records of the Agent by the Liquidity Banks as a result of sales
of interests in any Invested Amount by ISC to the Liquidity Banks under the
Liquidity Agreement from time to time, the product of (x) the applicable
average daily outstanding Invested Amount during such Settlement Period (or
portion thereof), TIMES (y) a rate as reasonably selected and determined by
the Agent which, acting in good faith, reflects the basis for maintaining
such Liquidity Bank's interest in the Invested Amount which is equal to
either (a) the sum of the applicable One-Month Bank LIBOR with respect to
such period plus 0.75% per annum or (b) the Base Rate; PLUS
(iii) the sum of (x) any and all applicable commissions of placement
agents and commercial paper dealers in respect of any Asset-Backed CP
issued by ISC to maintain its interest in the Invested Amount (such fees
not to exceed 0.05% per annum on such Invested Amount for such Settlement
Period (or portion thereof)), (y) any and all issuing and paying agent fees
in respect of any Asset-Backed CP issued by ISC to maintain its interest in
the Invested Amount for such Settlement Period (or portion thereof) and (z)
the "Administrative Fee" as defined in, and payable under, the FNBC Fee
Letter with respect to such Settlement Period (or portion thereof).
PROVIDED, HOWEVER that notwithstanding the foregoing, upon the occurrence of an
Amortization Event, the Earned Yield payable with respect to clauses (i) and
(ii) above shall thereafter be calculated based on an applicable interest rate
equal to the Base Rate plus 2.00% per annum. If any Liquidity Bank notifies the
Agent that it has determined in good faith that funding its portion of the
Invested Amount at a rate equal to One-Month Bank LIBOR would violate any
applicable law, rule, regulation, or directive of any governmental or regulatory
authority, whether or not having the force of law, or that (x) deposits of a
type and maturity appropriate to match fund its portion of the Invested Amount
at a rate equal to One-Month Bank LIBOR are not available or (y) such One-Month
Bank LIBOR does not accurately reflect the cost of acquiring or maintaining the
outstanding Invested Amount at such One-Month Bank LIBOR, then the Agent shall
suspend the availability of such One-Month Bank LIBOR, and the amount of Earned
Yield determined pursuant to clause (ii) above during the period of such
suspension shall be calculated based on an applicable interest rate equal to the
Base Rate. The Agent shall promptly inform the Issuer of the rate used to
calculate the Earned Yield payable on the Invested Amount upon its determination
thereof.
"LIQUIDITY FEE" means the then-applicable fees payable (on an annualized
basis) under that certain fee letter of even date herewith between the Issuer
and the Agent as amended from time to time (as amended from time to time, the
"Liquidity Fee Letter").
"LETTER OF CREDIT FEE" means the then-applicable fees payable (on an
annualized basis) under that certain fee letter agreement between the FNBC and
the Issuer (as amended from time to time, the "FNBC Fee Letter") for benefit of
the "Letter of Credit Banks" party to that certain Letter of Credit
Reimbursement Agreement of even date herewith among ISC, such Letter of Credit
Banks and FNBC, as the Letter of Credit Agreement thereunder (as amended from
time to time, the "Letter of Credit Agreement").
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"PASS-THROUGH RATE" means an interest rate equivalent to the weighted
average rate at which ISC's Asset-Backed CP, which is allocated, in whole or in
part, by ISC to fund its investment in the Certificate during the relevant
Settlement Period, is sold by the placement agents or commercial paper dealers
selected by ISC, as agreed between each such dealer or agent and ISC; PROVIDED,
HOWEVER, that if the rate (or rates) as agreed between any such agent or dealer
and ISC is a discount rate (or rates), the "Pass-Through Rate" for such period
shall be the rate (or if more than one rate, the weighted average of the rates)
resulting from ISC's converting such discount rate (or rates) to an
interest-bearing equivalent rate per annum.
5. DEFINITIONS. Each capitalized term used but not defined herein shall
have the meaning given to such term in the applicable Transaction Document where
such definition appears, or in any exhibit or schedule thereto (as defined
below). For purposes of this Agreement and any exhibits and schedules hereto,
the following terms shall have the meanings set forth below:
"AMORTIZATION EVENT" means the occurrence of any of the following events:
(i) The failure of the Issuer, the Portfolio Manager or the Swap
Provider to make any payment, or deposit, when due under this Agreement or
any Transaction Document;
(ii) The Issuer, the Portfolio Manager, the Swap Provider or any
agent of any of the foregoing (each a "Transaction-Related Party" and,
collectively, the "Transaction-Related Parties") shall fail to perform, or
shall breach any covenant or other agreement under any of the Transaction
Documents as they may be applicable to such parties, including, without
limitation, any "Event of Default" or "Termination Event" with respect to
the Swap Provider under the Swap Agreement (but excluding any payment
default thereunder with respect to which clause (i) above shall apply) and
such breach or failure to perform remains uncured for a period of five
Business Days, such period to begin at the time at which such
Transaction-Related Party knew, or reasonably should have known, of such
breach or failure to perform;
(iii) Any representation or warranty made by any of the Transaction-
Related Parties contained in any of the Transaction Documents shall be
untrue when made;
(iv) A Change of Control shall occur;
(v) The senior short-term claims paying ability of the Swap
Provider shall cease to be rated A-1 or better by Standard & Poor's and
D-1 or better by Duff & Phelps Credit Rating Co.;
(vi) The weighted average credit quality of the Portfolio falls
below AA (as determined pursuant to the then-applicable "Investment
Guidelines" (as such term is defined in the Investment Management
Agreement)), subject to an ongoing five Business
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Day cure period as long as the weighted average credit quality remains above A
during such cure period;
(vii) The average effective duration of the Portfolio is above 1.75
years (as determined pursuant to the then applicable Investment
Guidelines), subject to an ongoing five Business Day cure period as long as
the average effective duration remains below 2.00 years during such cure
period;
(viii) Any Transaction-Related Party becomes unable to pay its debts as
such debts become due or shall admit in writing its inability to pay its
debts generally or shall make a general assignment for the benefit of
creditors, or any proceeding shall be instituted by or against any
Transaction-Related Party seeking to adjudicate it bankrupt or insolvent,
or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any
law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of
a receiver, trustee or other similar official for it or any substantial
part of its property and any such proceeding is not dismissed within sixty
Business Days of the institution thereof, or any Transaction-Related Party
shall take any corporate action to authorize any of the actions set forth
above;
(ix) The Issuer is required to register as an investment company by
the provisions of the Investment Company Act of 1940, as amended; or
(x) The failure of the Issuer to cause the Agent to have a first
priority perfected security interest with respect to any Pledged
Collateral.
"AMORTIZATION PERIOD" means the period commencing on the earliest of (i)
the Scheduled Liquidity Termination Date, as the same may be extended from
time to time in accordance with the terms hereof, (ii) the delivery of notice
of, or the automatic occurrence of, an Amortization Event hereunder and (iii)
the Maturity Date, as the same may be extended from time to time in
accordance with the terms hereof, and ending on the date on which the
Invested amount under the Certificate and all other amounts payable by the
Issuer hereunder have been fully paid in cash (such date, the "Termination
Date").
"BASE RATE" means a rate per annum equal to the base rate of interest
determined and announced by FNBC from time to time, changing when and as such
rate changes.
"BUSINESS Day" means any day on which national banks are not authorized
or required to close in New York or Chicago and The Depository Trust Company
of New York is open for business, and, if the applicable Business Day relates
to any computation or payment to be made with respect to One-Month LIBOR or
One-Month Bank LIBOR, any day on which dealings in U.S. Dollar deposits are
transacted in the London interbank market.
"CASHFLOW" means all cashflow attributable to the Portfolio including,
without limitation, payments of principal, interest and dividends received,
proceeds from securities sales
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and any other monies internally generated by the Portfolio or received by the
Custodian for placement in the Custodial Account (including, without
limitation, any amounts paid to the Issuer pursuant to the Swap Agreement).
"CHANGE OF CONTROL" means ARM Financial Group, Inc., a Delaware
Corporation (the "Parent"), shall cease to own, directly or indirectly, all
of the outstanding shares of the voting stock of the Issuer, the Swap
Provider or the Portfolio Manager on a fully diluted basis.
"CUSTODIAL AGREEMENT" means the Standard Custody Agreement dated on or
about the date hereof among the Issuer and the Custodian, as supplemented by
the Control Agreement (as amended from time to time, the "Control Agreement")
of even date herewith among the Issuer, the Custodian and the Agent, as the
same may be amended, restated, supplemented or otherwise modified from time
to time.
"ELIGIBLE SECURITIES" shall have the meaning given to such term in the
Investment Management Agreement.
"LIBO RESERVE PERCENTAGE" means, for any period of time, the maximum
aggregate rate at which reserves (including all basic, marginal, supplemental
or emergency reserves) are required to be maintained during such period under
Regulation D issued by the Federal Reserve Board by member banks of the
Federal Reserve System against "Eurocurrency Liabilities" (as defined in
Regulation D), if such liabilities were outstanding.
"LIQUIDATION EVENT" means the occurrence of any Amortization Event
described in clauses (i), (v), (vi), (vii) or (viii) of the definition
thereof.
"LIQUIDITY AGREEMENT" means the Liquidity Agreement of even date
herewith among ISC, the Liquidity Banks and FNBC, as "Liquidity Agent"
thereunder, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"LIQUIDITY BANKS" means the financial institutions from time to time
party to the Liquidity Agreement as "Liquidity Banks".
"ONE-MONTH LIBOR" means a per annum rate applicable for the period from
each Settlement Date to, but excluding, the next succeeding Settlement Date,
equal to, the one (1) month London Interbank Offered Rate for such time
period as shown on either (i) Bloomberg L.P.'s Financial Markets Commodities
News under the Ticker Symbol USOOO1M Index as of 11:00 a.m. London time on
the second Business Day preceding the applicable Settlement Date or (ii) the
display designated as "British Bankers Assoc. Interest Settlement Rates" on
the Telerate System ("Telerate"), Page 3750 or Page 3740 as of 11:00 a.m.
London time on the second Business Day preceding the applicable Settlement
Date, or such other page or pages as may replace such pages on Telerate for
the purpose of displaying such rate.
"ONE-MONTH BANK LIBOR" means a per annum rate applicable for any period
beginning on a date designated by the Agent during which the Liquidity Banks
are funding an
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interest in the Invested Amount through, but excluding, the next Settlement Date
(such period a "LIBOR Interest Period"), equal to the quotient of (x) the one
(1) month London Interbank Offered Rate for such LIBOR Interest Period as shown
on either (i) Bloomberg L.P.'s Financial Markets Commodities News under the
Ticker Symbol US0001M Index as of 11:00 a.m. London time on the second Business
Day preceding the first day of such LIBOR Interest Period or (ii) the display
designated as "British Bankers Assoc. Interest Settlement Rates" on the Telerate
System ("Telerate"), Page 3750 or Page 3740 as of 11:00 a.m. London Time on the
second Business Day preceding the first day of such LIBOR Interest Period, or
such other page or pages as may replace such pages on Telerate for the purpose
of displaying such rate divided by (y) a number equal to 1.00 MINUS the LIBO
Reserve Percentage for such LIBOR Interest Period, if applicable.
"PLEDGE AGREEMENT" means the Pledge and Security Agreement of even date
herewith made by the Issuer in favor of the Agent, as amended, restated,
supplemented or otherwise modified from time to time.
"PLEDGED COLLATERAL" shall have the meaning given to such term in the
Pledge Agreement.
"SCHEDULED LIQUIDITY TERMINATION DATE" means April 22, 1999, as such
date may be extended from time to time.
"SETTLEMENT DATE" means the 12th calendar day of each month, or, if such
day is not a Business Day, the next succeeding Business Day.
"SETTLEMENT PERIOD" means the period commencing the first day of each
calendar month and ending on and including the last day of such calendar
month, PROVIDED that the initial Settlement Period will commence on the
Closing Date and end on, and include, May 31, 1998.
"SWAP AGREEMENT" means the ISDA Master Agreement of even date herewith,
together with the accompanying Schedule, Exhibits and Confirmations delivered
pursuant thereto by and between the Issuer and Integrity Life Insurance
Company (in such capacity, the "Swap Provider") as amended, restated,
supplemented or otherwise modified from time to time.
"TRANSACTION DOCUMENTS" means this Agreement, the Certificate, the
Custodial Agreement, the Pledge Agreement, the Investment Management
Agreement, the Swap Agreement, the Liquidity Agreement, the Letter of Credit
Agreement, the FNBC Fee Letter, the Liquidity Fee Letter and each of the
other documents, agreements or instruments from time to time executed and
delivered by a Transaction-Related Party to the Agent or any
Certificateholder in connection with the transactions contemplated hereby.
6. CALCULATION OF CERTIFICATE YIELD. The Certificate Yield shall be
computed daily on the basis of the actual number of days elapsed over an assumed
year consisting of 360 days and shall be due and payable in arrears on each
Settlement Date. The Certificate Yield applicable to any Settlement Period
hereunder shall be determined in good-faith by the
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Agent as to such Settlement Period and promptly conveyed in writing to the
Issuer at least four Business Days prior to the applicable Settlement Date when
such amounts are required to be paid.
7. PAYMENT OF CERTIFICATE YIELD. While any Invested Amount is outstanding
under the Certificate, the Issuer shall make periodic payments of the
Certificate Yield to the Agent in arrears on each Settlement Date. The Issuer
shall pay, or shall cause the Portfolio Manager or the Custodian to pay, the
Certificate Yield to the Agent in accordance with the priority of payments set
forth in the Investment Management Agreement in immediately available funds by
wire transfer to the Agent pursuant to wire transfer instructions to be provided
to the Issuer by the Agent. The Issuer's obligation to make any specific
payments of Certificate Yield shall cease as to such payment upon the Issuer's
receipt of wire transfer validation from the Agent and the Agent shall be solely
responsible for ensuring that the proper parties receive the appropriate portion
of each payment of Certificate Yield made hereunder.
8. STATED MATURITY. Except as provided otherwise in Section 9, the
Certificate and all other amounts due hereunder will have an initial stated
maturity of three years from the date hereof (the "Maturity Date"), as such
Maturity Date may be extended from time to time in accordance with the terms
herewith.
9. EARLY REDEMPTION. The Certificate may be redeemed prior to its stated
maturity as follows:
(a) Following the occurrence of an Amortization Event, the Agent on
behalf of the Certificateholders may, by written notice to the Issuer, declare
the Amortization Period to begin, PROVIDED, HOWEVER, that in the case of any
event described in clause (viii) of the definition of "Amortization Event"
herein, then, automatically upon the occurrence of such event without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Issuer, anything contained herein or in the
Certificate to the contrary notwithstanding, the Invested Amount and any other
amounts payable hereunder shall be immediately due and payable and an
Amortization Event shall be deemed to have occurred automatically and the
Amortization Period shall begin. All Cashflow received during the Amortization
Period shall be paid to the Agent for the benefit of the Certificateholders on
each Settlement Date, or each Business Day, if the Agent so elects, to reduce
the Invested Amount in accordance with the payment priorities set forth in the
Investment Management Agreement until such Invested Amount and the other
obligations hereunder are reduced to zero. No Installment Purchases shall be
made during the Amortization Period.
(b) The Issuer may redeem part or all of the Certificate at any
time upon prior written notice to the Agent stating the portion of the Invested
Amount to be redeemed (the "Partial Amortization Notice") following the
occurrence of either (i) ISC's failure to remarket the Asset-Backed CP in whole
or in part to fund its interest in the Invested Amount, or (ii) upon not less
than 5 days, written notice to the Agent. Under such circumstances, the Issuer
will have up to one year from the date of the Agent's receipt of the Issuer's
Partial Amortization Notice to redeem that portion of the Invested Amount
selected (i.e., part or all of the Invested Amount of the Certificate).
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10. MAINTENANCE OF RESERVES AND DEPOSIT OF ASSETS. The Issuer shall
deposit the Sale Proceeds in the Custodial Account and shall, at all times that
any portion of the Certificate is outstanding unless otherwise provided in any
Transaction Document, deposit and maintain such Sales Proceeds in the Custodial
Account as collateral securing its obligations under the Certificate and the
Transaction Documents (unless otherwise applied in the payment of any applicable
third-party fees or expenses required or permitted under this Agreement or any
of the Transaction Documents including, without limitation, any payments
required or permitted under the Swap Agreement).
11. SECURITY INTEREST. The obligations of the Issuer to pay the
Certificate Yield, and to repay the Invested Amount and such other amounts
payable hereunder shall be secured by a security interest in the Portfolio
assets pursuant to the Pledge Agreement.
12. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Issuer hereby makes the
representations, warranties and affirmative and negative covenants contained in
EXHIBIT C attached hereto and incorporated herein by reference thereto.
13. INDEMNIFICATIONS. The Issuer hereby agrees to indemnify and make
payments to the Agent and the Certificateholders to the extent set forth in
EXHIBIT D attached hereto and incorporated herein by reference thereto.
14. MISCELLANEOUS.
(a) ASSIGNMENT.
(i) The Issuer hereby agrees and consents to the complete or
partial assignment by ISC of all of its rights under, interest in, title to and
obligations under this Agreement to the Liquidity Banks pursuant to the
Liquidity Agreement or to any other person or entity, and upon such assignment,
ISC shall be released from its obligations so assigned. Further, the Issuer
hereby agrees that any assignee of ISC of this Agreement or all or any portion
of its rights under the Certificate held by ISC shall have all of the rights and
benefits under this Agreement as if the term "ISC" explicitly referred to such
party, and no such assignment shall in any way impair the rights and benefits of
ISC hereunder. The Issuer shall not have the right to assign its rights or
obligations under this Agreement. The Agent may assign its rights and
obligations under this Agreement and the other Transaction Documents as
permitted by the Certificateholders from time to time.
(ii) No Certificateholder, Letter of Credit Bank or other
person or entity may sell, transfer or otherwise dispose of (each, a "Sale") any
interest in the Certificate (including, without limitation, assignments made
under the Liquidity Agreement by Liquidity Banks and under the Letter of Credit
Agreement by Letter of Credit Banks, held by it (other than, in the case of a
ISC, any assignment to the Liquidity Banks or the Letter of Credit Banks)
pursuant to clause (i) and the related Transaction Document) unless:
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(x) such Sale is to a person or entity that such transferor
reasonably believes is a "Qualified Institutional Buyer" (as such term is
defined in Rule 144A ("Rule 144A") as promulgated under the Securities Act
of 1933, as amended (the "Securities Act")) that purchases for its own
account or for the account of another person or entity that is a Qualified
Institutional Buyer in a transaction that complies with Rule 144A, which
person or entity is aware that the proposed Sale is being made in reliance
on Rule 144A and to whom such Sale is being made pursuant to an available
exemption from the registration requirements of applicable state securities
laws and in each case in accordance with all applicable securities and
"Blue Sky" laws of the States of the United States of America, and, prior
to the proposed Sale, such transferor has delivered to the Issuer (1) an
investor letter executed by the transferee, substantially in the form of
EXHIBIT E-1 hereto and (2) a letter executed by such transferring
Certificateholder substantially in the form of EXHIBIT E-2 hereto
(collectively, the "Rule 144A Letters"), or
(y) the transferee to whom such Sale is being made is a
sophisticated institutional investor that is an "Accredited Investor" (as
such term is defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) in a transaction exempt from the registration requirements
of the Securities Act, and to whom such Sale is being made pursuant to an
available exemption from the registration requirements of applicable state
securities laws and in each case in accordance with all applicable
securities and "Blue Sky" laws of the States of the United States of
America, and, prior to the proposed Sale, such transferor has (x) delivered
to the Issuer and the Issuer an investor letter executed by the transferee,
substantially in the form of EXHIBIT F hereto (a "Non-Rule 144A Letter")
and (y) provided an opinion of counsel in form and substance satisfactory
to the Issuer, concerning such proposed Sale and confirming the
availability of such exemption in connection therewith.
The Certificate shall not be offered for sale, sold or delivered, directly or
indirectly, nor shall any circular, prospectus, form of application, or other
offering material or general advertisement relating to the Certificate be
distributed or published in or from any country or jurisdiction, except under
circumstances that will result in compliance with all applicable laws and
regulations of any such country or jurisdiction and the terms and restrictions
contained herein. Without limiting the foregoing in any manner, no
Certificateholder or Letter of Credit Bank or other person or entity acting on
behalf of such a Certificateholder or Letter of Credit Bank shall use any means
of general solicitation or distribution or general advertising in connection
with the Sale of any interest in the Certificate. The Certificate shall bear a
legend substantially as set forth in the form of the Certificate attached to
this Agreement as EXHIBIT A. Each Certificateholder and Letter of Credit Bank
will be deemed to have acknowledged and agreed that (x) the Certificate has not
been and will not be registered under the Securities Act and may not be sold,
transferred or otherwise disposed of except as permitted in this Section
14(a)(ii), and (y) such Certificateholder will notify any purchaser, pledgee or
other transferee of the Certificate, or interest therein, from such
Certificateholder of the transfer restrictions referred to in this Section
14(a)(ii).
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(b) GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws applicable to
contracts made and to be performed entirely within the State of Illinois,
without regard to any conflict of law principles.
(c) NOTICE. All notices, statements or requests provided for
hereunder shall be deemed to have been duly given when delivered by hand to an
officer of the other party, or when deposited with the U.S. Postal Service, as
first class certified or registered mail, postage prepaid, overnight courier
services, telex or telecopier, addressed:
(i) If to Issuer to:
312 Certificate Company
515 West Market Street, 8th Floor
Louisville, KY 40202
Attention: Robert L. Maddox, President
Facsimile: (502) 582-7903
(ii) If to ISC or the Agent to:
The First National Bank of Chicago
One First National Plaza
Mail Suite 0597
Chicago, IL 60670-0597
Attention: Michael Krushena, Asset-Backed Finance
Facsimile: (312) 732-4487
or to such other persons or places as each party may from time to time designate
by written notice sent as aforesaid.
(e) ENTIRE AGREEMENT. This Agreement and the other Transaction
Documents, together with such amendments as may from time to time be executed in
writing by the parties hereto or thereto, constitutes the entire agreement and
understanding between the parties in respect to the transactions contemplated
hereby and supersedes all prior agreements, arrangements and understandings
relating to the subject matter hereof.
(f) INVALID PROVISIONS. If any provision of this Agreement is held
to be illegal, invalid, or unenforceable under any present or future law, and if
the rights or obligations of any party under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable; (ii) this Agreement will be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part hereof;
and (iii) the remaining provisions of this Agreement will remain in full force
and effect and will not be affected by the illegal, invalid, or unenforceable
provision or by its severance herefrom.
(g) SECTION HEADINGS. Section headings contained herein are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
11
(h) COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(i) CONFIDENTIALITY.
(i) Each party shall maintain and shall cause each of its
employees and officers to maintain the confidentiality of this Agreement and the
other confidential proprietary information ("Confidential Information") with
respect to the other party hereto and their respective businesses obtained by it
or them in connection with the structuring, negotiating and execution of the
transactions contemplated herein, except that each party and its officers and
employees may disclose such information to the Issuer's external accountants and
attorneys and as required by any applicable law or order of any judicial or
administrative proceeding. In addition, each party may disclose any such
nonpublic information pursuant to any law, rule, regulation, direction, request
or order of any judicial, administrative or regulatory authority or proceedings
(whether or not having the force or effect of law).
(ii) In connection with the transactions contemplated by this
Agreement each of the undersigned hereby agrees that the Issuer is entitled to
publicize the transaction evidenced by this Agreement and to publish or release
to the media an announcement of the transactions contemplated hereby; PROVIDED,
HOWEVER, no such publicity material, in the form of an announcement, release or
other items, shall disclose the name of FNBC or ISC or the terms of the
transaction unless the Agent shall have consented in writing to the copy for any
such material.
(iii) Anything herein to the contrary notwithstanding, the
Issuer hereby consents to the disclosure of any Confidential Information with
respect to it (x) to the Agent, the Certificateholders and the Letter of Credit
Banks by each other, (y) by the Agent, the Certificateholders and the Letter of
Credit Banks to any prospective or actual assignee or participant of any of them
or (z) by the Agent to any rating agency, commercial paper dealer or provider of
a surety, guaranty or credit or liquidity enhancement to ISC or any entity
organized for the purpose of purchasing, or making loans secured by, financial
assets for which FNBC acts as the administrative agent and to any officers,
directors, employees, outside accountants and attorneys of any of the foregoing,
provided each such Person is informed of the confidential nature of such
information in a manner consistent with the practice of the Agent for the making
of such disclosures generally to persons of such type and agrees not make any
further disclosure of any such information. In addition, the Certificateholders
and the Agent may disclose any such nonpublic information pursuant to any law,
rule, regulation, direction, request or order of any judicial, administrative or
regulatory authority or proceedings (whether or not having the force or effect
of law) and to any person or entity in connection with the enforcement of this
Agreement, the other Transaction Documents and the other documents delivered in
connection therewith and in connection with any restructuring or workout related
to this Agreement, the Transaction Documents or such other documents following
an Amortization Event.
12
(j) BANKRUPTCY PETITION.
(i) The Issuer, the Agent and each Certificateholder hereby
covenants and agrees that, prior to the date which is one year and one day after
the payment in full of all outstanding senior indebtedness of ISC, it will not
institute against, or join any other person or entity 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.
(ii) The Agent and each Certificateholder hereby covenants and
agrees that, prior to the date which is one year and one day after the payment
in full of the Issuer's obligations hereunder and under the Certificate and the
other Transaction Documents, it will not institute against, or join any other
person or entity in instituting against, the Issuer 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.
(k) WAIVERS AND AMENDMENTS.
(i) No failure or delay on the part of any party hereto in
exercising any power, right or remedy under this Agreement or any other
Transaction Document 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 and provided in each of the other
Transaction Documents 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.
(ii) No provision of this Agreement may be amended,
supplemented, modified or waived except in writing signed by ISC, the Issuer and
the Agent. The other Transaction Documents may only be amended, supplemented,
modified or waived by a signed writing executed by the parties thereto in
accordance with their respective terms.
(l) JURISDICTION. THE ISSUER HEREBY CONSENTS AND AGREES THAT THE
STATE OR FEDERAL COURTS LOCATED IN COOK COUNTY, CITY OF CHICAGO, ILLINOIS,
SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN THE ISSUER AND THE AGENT PERTAINING TO THIS AGREEMENT OR ANY
OF THE OTHER TRANSACTION DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS,
PROVIDED, THAT THE ISSUER AND THE AGENT ACKNOWLEDGE THAT ANY APPEALS FROM
THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF COOK COUNTY,
CITY OF CHICAGO, ILLINOIS, AND, PROVIDED, FURTHER, THAT NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE AGENT FROM BRINGING SUIT
OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE
PLEDGED COLLATERAL OR ANY
13
OTHER SECURITY FOR THE OBLIGATIONS HEREUNDER, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF THE AGENT. THE ISSUER EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND THE ISSUER HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. THE ISSUER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREE
THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE ISSUER AT THE ADDRESS SET FORTH IN
SECTION 15(D) AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S.
MAILS, PROPER POSTAGE PREPAID.
(m) WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT DISPUTES
ARISING HEREUNDER OR RELATING HERETO BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
TRANSACTION DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO.
(n) FEES AND EXPENSES. The Issuer shall pay to the Agent on demand
all reasonable costs and out-of-pocket expenses in connection with the
preparation, execution, and delivery of this Agreement and the other Transaction
Documents, the transactions contemplated hereby and thereby and the other
documents to be delivered hereunder and all costs of the Agent's auditors
auditing the books, records and procedures of the Issuer, and FNBC's reasonable
legal and other out-of-pocket costs of syndication associated with the Liquidity
Agreement incurred within 60 days of the Closing Date. The Issuer shall pay to
the Agent on demand any and all reasonable costs and expenses of the Agent and
the Certificateholders, if any, including reasonable attorneys' fees and
expenses in connection with the enforcement of this Agreement, the Transaction
Documents and the other documents delivered in connection therewith and in
connection with any restructuring or workout of this Agreement, the Transaction
Documents or such other documents, or the administration of this Agreement and
the other Transaction Documents following an Amortization Event. The Issuer
shall reimburse the Agent, for the benefit of ISC, on demand for all other costs
and expenses incurred by ISC or any shareholder of
14
ISC ("Other Costs"), including, without limitation, the cost of auditing ISC's
books by certified public accountants, the cost of rating the Asset-Backed CP by
independent financial rating agencies, and the reasonable fees and out-of-pocket
expenses of legal counsel for ISC or any legal counsel for any shareholder of
ISC with respect to advising ISC or such shareholder as to matters relating to
ISC's operations. ISC shall allocate the liability for Other Costs among the
Issuer and other persons or entities with whom ISC has entered into agreements
to purchase interests in receivables or other asset-backed securities ("Other
Issuers"). If any Other Costs are attributable to the Issuer and not
attributable to any Other Issuer, the Issuer shall be solely liable for such
Other Costs. However, if Other Costs are attributable to Other Issuers and not
attributable to the Issuer, such other Issuers shall be solely liable for such
Other Costs. All allocations to be made pursuant to the foregoing provisions of
this Section 14(n) shall be made by ISC in its sole discretion and shall be
binding on the Issuer PROVIDED, HOWEVER, that the aggregate Other Costs payable
by the Issuer hereunder during any calendar year shall not exceed the product of
(x) 0.01% per annum, times (ii) the average daily outstanding Invested Amount
hereunder during such calendar year.
(o) TAX TREATMENT. The Issuer has entered into this Agreement, and
the Certificate has been (or will be) issued to and acquired by the Agent for
the benefit of the Certificateholders, with the intention that, for federal,
state, foreign and local income and franchise tax purposes, the Certificate will
be indebtedness of the Issuer secured by the Pledged Collateral. The Issuer, by
entering into this Agreement, and the Agent and each Certificateholder, by the
acceptance of its interest in Certificate, agree to treat the Certificate for
purposes of federal, state and local income and franchise taxes and for any
other tax imposed on or measured by income as indebtedness of the Issuer. In
accordance with the foregoing, the Issuer agrees that it will report its income
for such federal, state, foreign and local income or franchise taxes, or for
purposes of any other taxes on or measured by income, on the basis that it is
the owner of the Portfolio.
15
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in duplicate by their respective officers duty authorized so to do as
of the date and year first above written.
312 CERTIFICATE COMPANY ("ISSUER")
By: /s/ Robert L. Maddox, III
---------------------------
Name: Robert L. Maddox, III
Title: President
INTERNATIONAL SECURITIZATION
CORPORATION ("ISC")
By: /s/ Eleanor C. Nadbielny
----------------------------
Name: Eleanor C. Nadbielny
Title: Authorized Signer
THE FIRST NATIONAL BANK OF CHICAGO
("AGENT")
By: /s/ Eleanor C. Nadbielny
----------------------------
Name: Eleanor C. Nadbielny
Title: Authorized Agent
Signature Page to Face Amount Agreement
Exhibit A
FORM OF INSTALLMENT FACE AMOUNT CERTIFICATE
312 CERTIFICATE COMPANY
$500,000,000 INSTALLMENT FACE AMOUNT CERTIFICATE
APRIL 24, 1998
312 Certificate Company, a corporation duly organized and existing under
the laws of the State of Delaware (the "Issuer"), shall pay to The First
National Bank of Chicago, as agent (the "Agent") for International
Securitization Corporation ("ISC") and any subsequent entity which, in the
future purchases an interest in this installment face amount certificate (this
"Certificate") pursuant to the Liquidity Agreement (collectively, ISC and such
future potential purchasers are hereinafter referred to as the
"Certificateholders") the principal amount of $500,000,000, or, if less, the
aggregate unpaid principal amount of all installment purchase payments made by
the Certificateholders from time to time (the "Invested Amount"), and to pay
interest on the Invested Amount as more fully set forth in that certain Face
Amount Certificate Agreement dated as of April 24, 1998, among the Issuer, ISC
and the Agent (as amended, restated, supplemented or otherwise modified from
time to time, the "Face Amount Certificate Agreement").
This Certificate is issued pursuant to the Face Amount Certificate
Agreement. Reference is hereby made to the Face Amount Certificate Agreement for
a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Issuer, the Agent and the Certificateholders and
the terms upon which this Certificate is delivered. All terms used in this
Certificate which are not defined herein shall have the meanings assigned to
them in the Face Amount Certificate Agreement. The provisions of the Face Amount
Certificate Agreement are hereby incorporated by reference herein and shall be
binding on the Issuer, the Agent and the Certificateholders as if fully set
forth herein. As provided in the Face Amount Certificate Agreement, this
Certificate is secured by the Pledged Collateral. To the extent provided in the
Face Amount Certificate Agreement and the Pledge Agreement, the
Certificateholders (and the Agent on their behalf) shall be entitled to the
benefits of a security interest in the Pledged Collateral, for the benefit of
the Certificateholders.
THIS INSTALLMENT FACE AMOUNT CERTIFICATE IS SUBJECT TO PREPAYMENT AND/OR
REDEMPTION PRIOR TO ITS STATED MATURITY AS SET FORTH IN THE FACE AMOUNT
CERTIFICATE AGREEMENT.
THIS INSTALLMENT FACE AMOUNT CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "'33 ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OF AMERICA (THE "BLUE SKY
LAWS"). THE HOLDER HEREOF, BY PURCHASING THIS INSTALLMENT FACE AMOUNT
CERTIFICATE OR ANY INTEREST HEREIN (THE "INTEREST"), REPRESENTS THAT IT IS AN
"ACCREDITED INVESTOR" AS THAT TERM IS DEFINED IN RULE 501(a)(1), (2),(3) OR (7)
UNDER THE '33 ACT AND AGREES THAT SUCH INTEREST WILL ONLY BE OFFERED, RESOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN COMPLIANCE WITH THE '33 ACT,
THE APPLICABLE BLUE SKY LAWS AND THE RESTRICTIONS SET FORTH IN THE FACE AMOUNT
CERTIFICATE AGREEMENT. THIS FACE AMOUNT CERTIFICATE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS,
WITHOUT REFERENCE TO CONFLICT OF LAWS
PRINCIPLES, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed as of the date first above-written.
Dated: April 24, 1998 312 CERTIFICATE COMPANY
By:
-----------------------------
Name:
Title:
A-2
Exhibit B
CONDITIONS PRECEDENT TO EACH INSTALLMENT PURCHASE
(a) Each Installment Purchase must be for at least $5,000,000 (and
integral multiples of $1,000,000 in excess thereof);
(b) Each Installment Purchase (other than the "Initial Purchase") must be
preceded by at least three Business Day's prior notice (written or telephonic)
from the Issuer to the Agent (to be received by the Agent no later than 12:00
Noon (Central Standard Time));
(c) Each Installment Purchase other than the Initial Purchase must be made
only on a Settlement Date;
(d) The Issuer shall have furnished to the Agent at the Closing opinions
of counsel for the Issuer, Integrity Life Insurance Company (the "Swap
Provider") and the Portfolio Manager satisfactory in form and substance to the
Agent and their counsel as to such matters as the Agent may reasonably require;
(e) Each of the following statements shall be true at the time of the
applicable Installment Purchase (including the Initial Purchase), and the Issuer
and the Agent shall have received a certificate, dated the date of the
Installment Purchase, of an officer of each of the Issuer and the Portfolio
Manager in which such officer shall state that, to his or her best knowledge:
(i) no Amortization Event, or event that with the lapse of time or
giving of notice would cause an Amortization Event to occur, has occurred
and is continuing;
(ii) all representations and warranties made by each of the Issuer
and the Portfolio Manager, as applicable, in each of the Transaction
Documents are true and correct as if repeated on the date of such
Installment Purchase with respect to the facts and circumstances then
existing;
(iii) each Transaction Document (including the Agreement to which
this Exhibit is attached) has been executed and delivered by the parties
thereto, is in full force and effect and constitutes the legal, valid and
binding obligation of each party thereto; and
(f) At Closing, the Agent shall have received executed UCC-1 financing
statements for filing with each of (i) the County Clerk of Jefferson County
(Louisville), Kentucky, (ii) the Secretary of the State of Ohio, and (iii) the
County Clerk of Franklin County (Columbus), Ohio; and
(g) The Agent shall have received each of the reports and such other
information required to be delivered to it on or prior to each Installment
Purchase from the Issuer and/or the Portfolio Manager, including, without
limitation, each "Weekly Report", "Settlement Report" and "Monthly Compliance
Report" under and as defined in the Investment Management Agreement.
(h) The Issuer shall have received investor letters from each of ISC, the
Liquidity Banks party to the Liquidity Agreement on the Closing Date and the
Letter of Credit Banks party to the Letter of Credit Agreement on the Closing
Date pursuant to which each shall certify as to certain securities law issues in
form and substance satisfactory to the Issuer and the Agent and their respective
counsel.
B-2
Exhibit C
REPRESENTATIONS, WARRANTIES AND COVENANTS
1. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer hereby represents
and warrants that:
(a) ORGANIZATION AND GOOD STANDING. The Issuer is a corporation
duly organized and validly existing under the laws of the State of Delaware and
in good standing under the laws of each jurisdiction where it does business and
has full power and authority to own its properties and conduct its business as
presently owned or conducted, to execute, deliver and perform its obligations
under this Agreement and the other Transaction Documents to which it is party.
(b) DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement and the Certificate by the Issuer, and the consummation by the
Issuer of the transactions provided for in this Agreement and the other
Transaction Documents, have been duly authorized by all necessary action on the
part of the Issuer and this Agreement and the other documents and agreements
executed in connection herewith and therewith have been duly executed and
delivered on behalf of the issuer.
(c) ENFORCEABILITY. Each of this Agreement, the Certificate and the
other documents and agreements executed in connection wherewith constitutes a
legal, valid and binding obligation of the Issuer enforceable against the Issuer
in accordance with its terms, except as may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditors' rights generally, now or hereafter in effect, and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
(d) NO CONFLICT. The Issuer's execution and delivery of this
Agreement and the other Transaction Documents to which it is party, performance
of the transactions contemplated by this Agreement, and fulfillment of the terms
hereof and thereof applicable to the Issuer, do not conflict with or violate in
any material respect any law or regulation applicable to the Issuer or conflict
with, result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time or both) a default under, any
indenture, mortgage, deed of trust or other material contract, agreement or
instrument to which the Issuer is a party or by which it or its properties are
bound.
(e) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the best knowledge of the Issuer, threatened against the Issuer
before any governmental agency which asserts the invalidity of this Agreement,
the Certificate or the other documents and agreements executed in connection
herewith or which otherwise would have a material adverse effect on the Issuer's
financial condition or operations or on the Pledged Collateral or the
transactions contemplated by this Agreement.
(f) CONSENTS. No authorization, consent, license, order or approval
of, registration or declaration with any governmental agency or other person or
entity is required to
be obtained, effected or given by the Issuer in connection with the execution
and delivery of this Agreement, the Certificate and the other documents and
agreements executed in connection herewith.
(g) INVESTMENT COMPANY. The Issuer is not required to be registered
as an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
(h) TAXES. The Issuer has filed all tax returns (federal, state and
local) which it reasonably believes are required to be filed by it and has paid
or made adequate provision for the payment of all taxes, assessments and other
governmental charges due from the Issuer except to the extent that the Issuer is
contesting any such tax, assessment or other governmental charge in good faith
through appropriate proceedings and has adequately reserved against the
obligation to pay such amount in accordance and to the extent required by
generally accepted accounting principles.
(i) MATERIAL ADVERSE CHANGE. Since December 31, 1997, no event has
occurred which could have a material adverse effect on (i) the financial
condition, business or operations of the Issuer, the Portfolio Manager or the
Swap Provider, (ii) the ability of the Issuer, the Portfolio Manager or the Swap
Provider to perform its obligations under any Transaction Document, (iii) the
legality, validity or enforceability of the Agreement or any other Transaction
Document, or (iv) the Issuer's interest in the Pledged Collateral, or (v) the
collectibility of the Pledged Collateral generally or of any material portion of
the Pledged Collateral.
(j) OWNERSHIP. All of the outstanding capital stock of the Issuer,
the Portfolio Manager and the Swap Provider is owned, either directly or
indirectly, by the Parent.
(k) ACCURACY OF INFORMATION. All information heretofore furnished
by the Issuer or any Transaction-Related Party to the Agent or the
Certificateholders for purposes of or in connection with this Agreement, any of
the other Transaction Documents or any transaction contemplated hereby or
thereby is, and all such information hereafter furnished by the Issuer or any
Transaction-Related Party will be, true and accurate in every material respect,
on the date such information is stated or certified and does not and will not
contain any material misstatement of fact or omit to state a material fact or
any fact necessary to make the statements contained therein not misleading.
The representations and warranties set forth in the SECTION 11 shall
survive the issuance of the Certificate and any liability of the Issuer in
respect of such representations and warranties as and when made shall cease and
be of no effect only upon repayment in full of the Certificate and all other
obligations of the Issuer hereunder.
2. AFFIRMATIVE COVENANTS OF THE ISSUER. During any time any Invested
Amount is outstanding under the Agreement to which this Exhibit is attached, the
Issuer hereby covenants that:
(a) COMPLIANCE WITH LAW. The Issuer will comply in all material
respects with
C-2
any law or regulation applicable to the Issuer, its business and properties and
the Pledged Collateral, where failure to so comply would have a material adverse
effect on the Pledged Collateral or the ability of the Issuer to perform in any
material respect its obligations hereunder.
(b) PRESERVATION OF EXISTENCE. The Issuer will preserve and maintain
its existence, rights, franchises and privileges in the jurisdiction of its
formation, and qualify and remain qualified in good standing as a corporation in
each jurisdiction where the failure to maintain such qualification would
materially and adversely affect the ability of the Issuer to perform its
obligations hereunder or under any other documents or agreements executed in
connection herewith in any material respect.
(c) PAYMENT OF TAXES, ETC. The Issuer will pay promptly when due all
taxes, assessments and governmental charges or levies imposed upon it or any
Pledged Collateral or in respect of income or profits therefrom, and any and all
claims of any kind, except that no such amount need be paid if (i) the charge or
levy is being contested in good faith and by appropriate proceedings, and (ii)
the obligation to pay such amount is adequately reserved against in accordance
with and to the extent required by generally accepted accounting principles.
(d) REPORTING REQUIREMENTS. The Issuer will:
(i) within three Business Days after of the occurrence of any
Amortization Event, notify the Agent of such occurrence;
(ii) within ten Business Days after any receipt thereof,
furnish to the Agent copies of any documents relating to any litigation,
claim, counterclaim or proceeding commenced against the Issuer, the
Portfolio Manager or the Swap Provider which could have a material
adverse effect on (i) the financial condition, business or operations of
the Issuer, the Portfolio Manager or the Swap Provider, (ii) the ability
of each of the Issuer, the Portfolio Manager or the Swap Provider to
perform its respective obligations under any Transaction Document, (iii)
the legality, validity or enforceability of this Agreement or any other
Transaction Document, or (iv) the Issuer's interest in the Pledged
Collateral, or (v) the collectibility of the Pledged Collateral generally
or of any material portion of the Pledged Collateral;
(iii) as soon as practicable and in any event within 60 days
after the end of each first three fiscal quarters of each fiscal year of
the Issuer, furnish to the Agent a balance sheet of the Issuer as of the
end of such quarter, and the related revenue and expense statements for the
period commencing at the end of the previous fiscal year and ending with
the end of such quarter, all of the foregoing to be certified by an officer
of the Portfolio Manager and prepared in accordance with generally accepted
accounting principles;
(iv) as soon as practicable and in any event within 120 days
after the end of each fiscal year of the Issuer and the Parent, furnish to
the Agent, audited financial statements of the Parent which include the
Parent's consolidated Subsidiaries (including,
C-3
without limitation, the Issuer and the Swap Provider) prepared in
accordance with generally accepted accounting principles by certified
public accountants of national standing reasonably satisfactory to the
Agent;
(v) within three Business Days after of the withdrawal or
reduction of the ratings of any debt obligations or claims paying ability
of any of the Parent, or any of its affiliates, including, without
limitation, the Issuer, the Portfolio Manager or the Swap Provider, notify
the Agent of such withdrawal or reduction; and
(vi) promptly, from time to time, furnish to the Agent such
other information, documents, records or reports respecting the Pledged
Collateral or the condition or operations, financial or otherwise, of the
Issuer as the Agent may from time to time reasonably request.
(e) COMPLIANCE WITH OTHER AGREEMENTS. The Issuer will at its expense
(i) timely perform and comply in all material respects with all provisions,
covenants and other promises required to be observed by it under each
Transaction Document and each document, instrument or agreement relating to
Pledged Collateral, (ii) use reasonable efforts to ensure that each Transaction
Document and each of the documents, instruments and agreements related to the
Portfolio are at all times enforceable pursuant (and subject) to their
respective terms and (iii) enforce its rights under each such Related Document
substantially in accordance with its respective terms.
(f) EQUITY SECURITIES. Upon obtaining any beneficial interest in an
equity security the Issuer shall promptly (and in no event more than 30 days
after its acquisition) sell, assign or otherwise transfer such equity security
and during the period prior to such sale, assignment or transfer, the Issuer
shall not exercise any of the rights arising from the ownership of such equity
security, including, without limitation, any voting rights with respect thereto.
(g) AUDITS. The Issuer will furnish to the Agent from time to time
such information with respect to it and the Portfolio as the Agent may
reasonably request. The Issuer shall, from time to time during regular
business hours as requested by the Agent upon reasonable notice, permit the
Agent, or its agents or representatives (and shall cause the Portfolio
Manager to permit the Agent or its agents or representatives) (i) to examine
and make copies of and abstracts from all books and records in the possession
or under the control of the Issuer or the Portfolio Manager relating to the
Portfolio, including, without limitation, the documents, instruments and
agreements related to the Portfolio, and (ii) to visit the offices and
properties of the Issuer or the Portfolio Manager for the purpose of
examining such materials described in clause (i) above, and to discuss
matters relating to the Issuer's or the Portfolio Manager's financial
condition or the Portfolio or the Issuer's performance hereunder, or the
Portfolio Manager's performance under any of the other Transaction Documents
with any of the officers or employees of the Issuer or the Portfolio Manager
having knowledge of such matters.
C-4
3. NEGATIVE COVENANTS OF THE ISSUER. The Issuer hereby further covenants that
at any time any Invested Amount is outstanding under the Agreement to which this
Exhibit is attached:
(a) NO SALES, LIENS, ETC. Except for the security interest created
under the Pledge Agreement and as permitted from time to time under the various
Transaction Documents, the Issuer will not sell, pledge, assign or transfer any
Pledged Collateral to any other person or entity, or grant, create, incur,
assume or suffer to exist any lien on, any Pledged Collateral or any other
property or asset of the Issuer, whether now existing or hereafter created, or
any interest therein, and the Issuer shall defend the right, title and interest
of the Agent in and to the Pledged Collateral, whether now existing or hereafter
created, against all claims of third parties claiming through or under the
Issuer.
(b) ACTIVITIES OF THE ISSUER. The Issuer will not engage in, enter
into or be a party to any business, activity or transaction of any kind other
than the businesses, activities and transactions contemplated and authorized by
its Certificate of Incorporation or incidental to its ability to carry out its
obligations hereunder.
(c) INDEBTEDNESS. Except as expressly provided herein or in any
Transaction Document, the Issuer will not create, incur or assume any
indebtedness (other than operating expenses incurred in the performance of or
incidental to its obligations under this Agreement or any document or agreement
entered into in connection herewith) or sell or transfer any loans or securities
to a trust or other person or entity which issues securities in respect of any
such loans or securities.
(d) GUARANTEES. Except as provided for herein or in any Transaction
Document, the Issuer will not become or remain liable, directly or contingently,
in connection with any indebtedness or other liability of any other person or
entity, whether by guarantee, endorsement (other than endorsements of negotiable
instruments for deposit or collection in the ordinary course of business),
agreement to purchase or repurchase, agreement to supply or advance funds, or
otherwise.
(e) INVESTMENTS: SWAP AGREEMENT. The Issuer will not make or suffer
to exist any loans or advances to, or extend any credit to, or make any
investments (by way of transfer of property, contributions to capital, purchase
of stock or securities or evidences of indebtedness, acquisition of the business
or assets, or otherwise) in, any affiliate or any other person or entity except
for purchases and fundings of Eligible Securities and the Swap Agreement
pursuant to the terms hereof, and investments in "Permitted Investments" under
and in accordance with the terms of the Pledge Agreements.
(f) ORGANIZATION. The Issuer will not amend its Certificate of
Incorporation or By-Laws in any manner.
(g) MAINTENANCE OF SEPARATE EXISTENCE. The Issuer will not (i) fail
to do any thing necessary to maintain its existence as a corporation separate
and apart from the Parent and
C-5
any other affiliate of the Parent or of the Issuer, including, without
limitation, conducting business correspondence in its own name, holding regular
meetings of, or obtaining regular written consents from, its shareholders and
its Board of Directors in each case where required, and maintaining appropriate
books and records; (ii) suffer any limitation on the authority of or its
officers to conduct their business and affairs in accordance with their
independent business judgment, or authorize or suffer any person or entity other
than its officers and, to the extent described in the Investment Management
Agreement, the Portfolio Manager to act on its behalf with respect to matters
(other than matters customarily delegated to others under powers of attorney)
for which a corporation's own directors and officers would customarily be
responsible; (iii) fail to (A) maintain, or cause to be maintained by an agent
of the Issuer under the Issuer's control, physical possession of all its books
and records, (B) maintain capitalization adequate for the conduct of its
business, (C) account for and manage its liabilities separately from those of
any other person or entity, including, without limitation, payment of all
payroll and other administrative expenses and taxes from its own assets, (D)
segregate and identify separately all of its assets from those of any other
person or entity, and (E) maintain any offices through which its business is
conducted separate from those of its affiliates (PROVIDED that, to the extent
the Issuer and the Portfolio Manager have offices in the same location, there
shall be a fair and appropriate allocation of overhead costs and expenses among
them, and each such entity shall bear its fair share of such expenses); or (iv)
commingle its funds with those of any of its affiliates or the Portfolio
Manager, or use its funds for other than the Issuer's uses.
(h) OWNERSHIP; MERGER. The Issuer will not (i) sell any of its equity
interest to any person or entity (other than its sole shareholder, ARM Face
Amount Certificate Group, Inc.) or enter into any transaction of merger or
consolidation, or convey or otherwise dispose of all or substantially all of its
assets (except as contemplated herein), (ii) terminate, liquidate or dissolve
itself (or suffer any termination, liquidation or dissolution) or (iii) acquire
or be acquired by any person or entity.
(i) ACQUISITION OF ELIGIBLE SECURITIES. The Issuer shall not acquire
any assets except in accordance with the terms of the Investment Management
Agreement.
(j) INVESTMENT GUIDELINES. Subject to compliance with any law or
regulation the Issuer shall not, and shall not permit the Portfolio Manager to,
modify or waive the terms and provisions of its Investment Guidelines in any
manner.
(k) USE OF PROCEEDS. The Issuer will not use proceeds of any Advance
to acquire any security in a transaction that is subject to Sections 13 and 14
of the Securities Exchange Act of 1934, as amended, or to purchase or carry
any margin security in violation of any applicable law or regulation.
(l) RETURN OF CAPITAL. The Issuer will not make any distributions to
its shareholder that would cause its paid in capital to be less than $250,000 at
any time.
C-6
(m) ISSUANCE OF CERTIFICATES. The Issuer will not sell any equity or
debt certificates, instruments or other documents evidencing any equity interest
in, or debt obligations of the Issuer after the date of this Agreement.
C-7
Exhibit D
INDEMNIFICATION OF THE AGENT AND THE CERTIFICATEHOLDERS BY THE ISSUER
(a) GENERAL INDEMNIFICATION. Without limiting any other rights
which the Agent (including, without limitations, its officers, directors,
employees and agents), any Certificateholder or Letter of Credit Bank (each, an
"Indemnified Party") may have hereunder or under applicable law, the Issuer
hereby agrees to indemnify each Indemnified Party from and against any and all
taxes, claims, suits, losses, liabilities and expenses (including, without
limitation, costs and expenses of litigation, and of investigation and
reasonable counsel fees, damages, judgments and amounts paid in settlement) (all
of the foregoing being collectively referred to as "Indemnified Amounts")
arising out of or resulting from this Agreement the activities of the Issuer in
connection herewith, the Issuer's use of proceeds from the issuance of the
Certificate and the interest conveyed under the Pledge Agreement in the Pledged
Collateral, EXCLUDING, HOWEVER, (a) Indemnified Amounts to the extent resulting
from the willful misconduct or gross negligence of such Indemnified Party, (b)
recourse for uncollectible Pledged Collateral (unless such Pledged Collateral is
uncollectible as a result of any breach by the Issuer) (c) indemnification for
lost profits or for consequential, special or punitive damages or (d) any income
or franchise taxes (or any interest or penalties with respect thereto) or other
taxes on or measured by the gross or net income or receipts of such Indemnified
Party. Without limiting or being limited by the foregoing (other than clauses
(a), (b), (c) and (d)), the Issuer shall pay to each Indemnified Party any and
all amounts necessary to indemnify such Indemnified Party from and against any
and all Indemnified Amounts relating to or resulting from:
(i) reliance on any representation or warranty or statement
made or remade by the Issuer under or in connection with this Agreement or
any other Transaction Document, or in any certificate or any other
information or report delivered by the Issuer from time to time, containing
an untrue fact or a materially misleading omission;
(ii) any failure by the Issuer or the Portfolio Manager to
comply with this Agreement or any other Transaction Document, or the
failure by the Issuer to comply with any applicable law or regulation with
respect to any Pledged Collateral;
(iii) the failure to vest and maintain vested in the Issuer an
ownership interest in the Pledged Collateral or the failure to vest and
maintain vested in the Agent, a security interest in the Pledged
Collateral, which in each case, is free and clear of any other lien, to the
extent such security interest may be perfected by the filing of a financing
statement or possession, constitutes a first priority perfected ownership
or security interest, as the case may be;
(iv) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under the
UCC of any applicable jurisdiction or other applicable laws with respect to
any Pledged Collateral, whether at the time of a grant of a security
interest therein hereby or reinvestment of the proceeds thereof or at any
subsequent time;
(v) any dispute, claim, offset or defense (other than
discharge in bankruptcy of any obligor of any Pledged Collateral or other
defense relating to such obligor's inability to pay) of any obligor of any
Pledged Collateral to the payment of any Pledged Collateral including a
defense based on such Pledged Collateral not being a legal, valid and
binding obligation of such obligor enforceable against it in accordance
with its terms;
(vi) any investigation, litigation or proceeding related to
this Agreement or any Transaction Documents or the use of proceeds from the
issuance of the Certificate, or in respect of the Pledged Collateral;
(vii) the failure of the Issuer or the Portfolio Manager to
perform any of its duties or obligations under or in connection with any
Pledged Collateral;
(viii) any failure by the Issuer to be duly qualified to do
business or be in good standing in any jurisdiction in which such
qualification or good standing is necessary for the enforcement of any
Pledged Collateral;
(ix) the failure of the Issuer to remit collections or
payments with respect to any Pledged Collateral as required under this
Agreement or any other Transaction Document or the commingling of such
collections or payments at any time with other funds prior to distribution
under the any Transaction Document;
(x) any lender liability or equitable subordination claim,
suit or action or any other similar claim or action (including any claim of
a lending obligation on the part of the Agent) arising out of or in
connection with the Pledged Collateral, or the use, possession, ownership
or operation by the Issuer or the Portfolio Manager or any affiliate
thereof of any of the Pledged Collateral that constitute real property or
any environmental liability claim allegedly arising out of or in connection
with any such real property;
(xi) any act or omission by the Issuer or the Portfolio
Manager impairing the security interest of the Agent or the
Certificateholders in the Pledged Collateral;
(xii) any failure of the Issuer to pay any tax or governmental
fee; or
(xiii) the failure of the Certificate to be treated as
indebtedness of the Issuer for federal, state, foreign and local income or
franchise tax purposes (it being agreed that the Indemnified Amounts shall
include such additional amounts as may be required to indemnify the
Indemnified Parties on an after-tax basis).
(b) BREAKAGE COSTS. The Issuer shall indemnify each Indemnified
Party against any loss (including loss of anticipated profits or income), cost
or expense incurred as a result of the Issuer's repayment of any Invested Amount
under the Certificate on any date which is not a Settlement Date.
D-2
(c) COSTS; EXPENSES AND INDEMNITIES. The Issuer shall indemnify
each of ISC and the Agent against all costs, expenses and indemnities (including
reasonable attorneys' fees) incurred by ISC or the Agent under the terms of the
Liquidity Agreement or the Letter of Credit Agreement, EXCLUDING, HOWEVER, any
such costs, expenses or indemnities to the extent resulting from the willful
misconduct or gross negligence of ISC or the Agent.
(d) INCREASED COSTS AND REDUCED RETURN. If after the date hereof,
any Certificateholder or any insurance company, bank or other financial
institution providing liquidity, credit enhancement or back-up purchase support
or facilities to ISC, including, without limitation, the Letter of Credit Banks
(each a "Funding Source"), shall be charged any fee, expense or increased cost
on account of the adoption of any applicable law, rule or regulation (including
any applicable law, rule or regulation regarding capital adequacy) or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency (a "Regulatory Change"): (i) which subjects
any Funding Source to any charge or withholding on or with respect to this
Agreement or any agreement or instrument executed by such Funding Source for the
benefit of ISC (a "Funding Agreement") or a Funding Source's obligations under a
Funding Agreement, or on or with respect to the Certificate, or changes the
basis of taxation of payments to any Funding Source of any amounts payable under
any Funding Agreement (except for changes in the rate of tax on the overall net
income of a Funding Source) or (ii) which imposes, modifies or deems applicable
any reserve, assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the account of a Funding
Source, or credit extended by a Funding Source pursuant to a Funding Agreement
or (iii) which imposes any other condition the result of which is to increase
the cost to a Funding Source of performing its obligations under a Funding
Agreement, or to reduce the rate of return on a Funding Source's capital as a
consequence of its obligations under a Funding Agreement, or to reduce the
amount of any sum received or receivable by a Funding Source under a Funding
Agreement or to require any payment calculated by reference to the amount of
interests or loans held or interest received by it, then, upon demand by the
Agent, the Issuer shall pay to the Agent, for the benefit of the relevant
Funding Source, such amounts charged to such Funding Source or compensate such
Funding Source for such reduction.
Payment of any sum pursuant to this section (d) shall be made by the Issuer
to the Agent, for the benefit of the relevant Funding Source, in accordance with
the priority of payments set forth in the Investment Management Agreement, in
immediately available funds by wire transfer pursuant to wire transfer
instructions to be provided by the Agent, not later than ten (10) days after any
such demand is made. A certificate of any Funding Source, signed by an
authorized officer claiming compensation under this Section (d) and setting
forth the additional amount to be paid for its benefit and explaining the manner
in which such amount was determined shall be conclusive evidence of the amount
to be paid, absent manifest error. Demand for payment of any amount pursuant to
this Section (d) shall be made within 30 days after the end of the applicable
Settlement Period during which the same shall have been incurred by (or, in the
case of a Funding Agreement other than this Agreement, 30 days after demand
shall have been made under such
D-3
Funding Agreement against) ISC; PROVIDED that, in the case of any claim arising
by reason of a requirement that a Funding Source's capital be increased, demand
by such Funding Source under this Section (d) therefor shall not be made for any
portion of any period prior to 45 days before the date of such demand.
D-4
Exhibit E-1
FORM OF RULE 144A TRANSFEREE LETTER
[Date]
312 Certificate Company
515 West Market Street, 4th Floor
Louisville, Kentucky 40202
Attention: Robert L. Maddox, President
Re: $500,000,000 Installment Face Amount Certificate
------------------------------------------------
Ladies and Gentlemen:
This letter (the "Investor Letter") is delivered by the undersigned
(the "Purchaser") pursuant to Section 14(a)(ii) of that certain Face Amount
Certificate Agreement of even date herewith (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the "Face Amount
Certificate Agreement"), among 312 Certificate Company, a Delaware corporation
(the "Issuer"), International Securitization Corporation, a Delaware corporation
("ISC"), and The First National Bank of Chicago, as the "Agent" thereunder (in
such capacity, the "Agent"). Capitalized terms used herein without definition
shall have the meanings set forth in the Face Amount Certificate Agreement. The
Purchaser, in connection with its proposed [insert nature of assignment/purchase
of interest in the Certificate], hereby represents to, and agrees with, the
Issuer as follows:
(a) The Purchaser has received all relevant information as it shall
have deemed necessary or desirable in order to make its investment decision.
(b) The Purchaser, and all other persons or entities for whose account
the Purchaser shall be acquiring an interest in the Certificate, has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of its investment in the Certificate and is able
to bear the economic risk of such investment.
(c) The Purchaser understands that the offer and sale of interests in
the Certificate have not been and will not be registered under the Securities
Act, and has not and will not be registered or qualified under any applicable
"Blue Sky" law, and that the offering and sale of such interests have has not
been reviewed by, passed on or submitted to any federal or state agency or
commission, securities exchange or other regulatory body.
(d) The Purchaser is a "Qualified Institutional Buyer." The Purchaser
is aware that the sale to it is being made in reliance on Rule 144A. The
Purchaser is acquiring its interest in the Certificate for its own account or
for one or more other accounts (each of which is a Qualified Institutional
Buyer) as to each of which the Purchaser has sole investment discretion, and
agrees that its interest in the Certificate may be resold, pledged or
transferred only (i) in a transaction that complies with Rule 144A, to a person
or entity reasonably believed to be a
Qualified Institutional Buyer that purchases for its own account or for one or
more other accounts of Qualified Institutional Buyers as to each of which the
Purchaser has sole investment discretion and to whom notice has been given that
the resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
to a sophisticated institutional investor that is an Accredited Investor
pursuant to an applicable exemption from the registration requirements of the
Securities Act and in each case in accordance with all applicable securities and
"Blue-Sky" laws of the States of the United States of America.
(e) The Purchaser further acknowledges and agrees that, on any proposed
resale of its interest in the Certificate, it may be required to furnish to the
Issuer such certifications, legal opinions and other information that any such
person or entity may reasonably require to confirm that the Sale thereof
complies with the foregoing restrictions.
(f) The Purchaser makes the representation contained in the following
sentence, and agrees that interests in the Certificate may be transferred to a
person or entity only if the transferee makes the representation and warranty
and the covenant set forth in paragraph (g) below. The Purchaser (or transferee,
as applicable) is not acquiring its interests in the Certificate with the assets
of any employee benefit plan which is subject to Title I of EISA or any "plan"
which is subject to Section 4975 of the Internal Revenue Code (each such
employee benefit plan and plan being referred to herein as a "Benefit Plan").
(g) The Purchaser (and transferee) covenants that it will not dispose of
any interest in the Certificate to any person or entity unless such person or
entity shall make the representations, warranties and covenants in paragraph (f)
above.
(h) You are entitled to rely on this letter and are irrevocably authorized
to produce this letter or a copy hereof to any interested person or entity in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
[PURCHASER]
By:
----------------------------------
Name:
Title:
E-1-2
Exhibit E-2
FORM OF RULE 144A TRANSFEROR LETTER
[Date]
312 Certificate Company
515 West Market Street, 4th Floor
Louisville, Kentucky 40202
Attention: Robert L. Maddox, President
Re: $500,000,000 Installment Face Amount Certificate
------------------------------------------------
Ladies and Gentlemen:
This letter (the "Investor Letter") is delivered by the undersigned
(the "Seller") pursuant to Section 14(a)(ii) of that certain Face Amount
Certificate Agreement of even date herewith (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the "Face Amount
Certificate Agreement"), among 312 Certificate Company, a Delaware corporation
(the "Issuer"), International Securitization Corporation, a Delaware corporation
("ISC"), and The First National Bank of Chicago, as the "Agent" thereunder (in
such capacity, the "Agent"). Capitalized terms used herein without definition
shall have the meanings set forth in the Face Amount Certificate Agreement. The
Purchaser, in connection with its proposed [insert nature of assignment/purchase
of interest in the Certificate], hereby represents to, and agrees with, the
Issuer as follows:
(a) Neither the Seller nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of any interest in the
Certificate, or solicited any offer to buy or accept a transfer, pledge or other
disposition of the Certificate, or otherwise approached or negotiated with
respect to the Certificate, any interest in the Certificate with, any person or
entity in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action, which would
constitute a distribution of interests in the Certificate under the Securities
Act and the Seller has not offered interests in the Certificate to any person or
entity other than [insert name of buyer] or another person or entity (as
applicable) which the Seller reasonably believes is a "qualified institutional
buyer" as defined in Rule 144A under the Securities Act purchasing for its own
account or the account of another "qualified institutional buyer".
(b) It has notified [insert name of buyer] that (i) the proposed
sale is made in reliance on an exemption from the registration requirements of
the Securities Act and (ii) on any proposed resale of interests in the
Certificate, the Purchaser may be required to furnish to the Issuer such
certifications, legal opinions and other information that any such person or
entity may reasonably require to confirm that the sale thereof complies with the
terms of the Face Amount Certificate Agreement.
Very truly yours,
[SELLER]
By:
----------------------
Name:
Title:
E-2-2
Exhibit F
FORM OF NON-RULE 144A LETTER
[Date]
312 Certificate Company
515 West Market Street, 4th Floor
Louisville, Kentucky 40202
Attention: Robert L. Maddox, President
Re: $500,000,000 Installment Face Amount Certificate
------------------------------------------------
Ladies and Gentlemen:
This letter (the "Investor Letter") is delivered by the undersigned
(the "Purchaser") pursuant to Section 14(a)(ii) of that certain Face Amount
Certificate Agreement of even date herewith (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the "Face Amount
Certificate Agreement"), among 312 Certificate Company, a Delaware corporation
(the "Issuer"), International Securitization Corporation, a Delaware corporation
("ISC"), and The First National Bank of Chicago, as the "Agent" thereunder (in
such capacity, the "Agent"). Capitalized terms used herein without definition
shall have the meanings set forth in the Face Amount Certificate Agreement. The
Purchaser, in connection with its proposed [insert nature of assignment/purchase
of interest in the Certificate], hereby represents to, and agrees with, the
Issuer as follows:
(a) The Purchaser has received all relevant information as it shall
have deemed necessary or desirable in order to make its investment decision.
(b) The Purchaser, and all other person or entities for whose account
the Purchaser shall be acquiring an interest in the Certificate has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of its investment in the Certificate and is able
to bear the economic risk of such investment.
(c) The Purchaser (as well as any such other person or entity for
whose account the Purchaser may be acquiring interests in the Certificate) is a
sophisticated institutional investor that is an Accredited Investor. The
Purchaser understands that the offer and sale of such interests have not been
and will not be registered under the Securities Act, and has not and will not be
registered or qualified under any applicable "Blue Sky" law, and that the
offering and sale of such interests has not been reviewed by, passed on or
submitted to any federal or state agency or commission, securities exchange or
other regulatory body.
(d) The Purchaser is acquiring its interest in the Certificate without
a view to any distribution, resale or other transfer thereof other than as
contemplated in the following sentence. The Purchaser will not distribute,
resell or otherwise transfer (a "Sale") any interest in any of the Certificate
except (i) to a limited number of sophisticated institutional investors that are
Accredited Investors in a transaction exempt from the registration requirement
of the Securities Act and which proposed transferee shall have, prior to such
Sale, executed and delivered to the Issuer a certificate in the form hereof, or
(ii) in a transaction that complies with Rule 144A, to a person or entity
reasonably believed to be a Qualified Institutional Buyer that purchases for its
own account or for one or more other accounts of Qualified Institutional Buyers
as to each of which such Purchaser has sole investment discretion and to whom
notice has been given that the resale, pledge or transfer is being made in
reliance on Rule 144A and in each case in accordance with all applicable
securities and "Blue-Sky" laws of the States of the United States of America.
(e) The Purchaser further acknowledges and agrees that, on any
proposed resale of any interests in the Certificate, it may be required to
furnish to the Issuer such certifications, legal opinions and other information
that any such person or entity may reasonably require to confirm that the Sale
thereof complies with the foregoing restrictions.
(f) The Purchaser makes the representation contained in the following
sentence, and agrees that interests in the Certificate may be transferred to a
person or entity only if the transferee makes the same representation and
warranty and makes the covenant set forth in paragraph (g) below. The Purchaser
(or transferee, as applicable) is not acquiring its interest in the Certificate
with the assets of any employee benefit plan which is subject to Title I of
ERISA or any "plan" which is subject to Section 4975 of the Internal Revenue
Code (each such employee benefit plan and plan being referred to herein as a
"Benefit Plan").
(g) The Purchaser (and transferee) covenants that it will not dispose
of the Certificate to be purchased by it or any interest therein to any person
or entity unless such person or entity shall make representations, warranties
and covenants in paragraph (f) above.
(h) You are entitled to rely on this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested person or
entity in any administrative or legal proceeding or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[PURCHASER]
By:
-----------------------------
Name:
Title:
F-2