AMENDMENT NO. 1
TO
SWAP TRANSACTION
This Amendment No. 1 (the "Amendment") is dated as of April 21, 1999
between INTEGRITY LIFE INSURANCE COMPANY, a Delaware corporation ("Party A") and
312 CERTIFICATE COMPANY, a Delaware corporation ("Party B").
W I T N E S S E T H:
WHEREAS, Party A and Party B have executed that certain ISDA Master
Agreement dated as of April 24, 1998 (as amended from time to time, the "Master
Agreement"); and
WHEREAS, Party A and Party B have executed that certain Swap Transaction
dated as of April 24, 1998 which is subject to and forms a part of the Master
Agreement (as amended from time to time, the "Swap Transaction"); and
WHEREAS, Party A and Party B desire to amend the Swap Transaction in
certain respects more fully described hereinafter;
NOW, THEREFORE, in consideration of the premises herein contained, and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. DEFINED TERMS. Capitalized terms used herein and not otherwise defined
shall have their meanings as attributed to such terms in the Swap Transaction.
2. AMENDMENTS TO THE SWAP TRANSACTION.
2.1. The definition of "Party A Floating Amount" in Section 2(A) of the
Swap Transaction shall be amended by inserting the following in line 13 thereof
immediately following "the Portfolio Manager,":
"the counterparties to Permitted Hedging Transactions,"
2.2. The definition of "Party A Payment Dates" in Section 2(B) of the Swap
Transaction shall be amended in its entirety to read as follows:
"The second to the last Business Day of each calendar week."
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2.3. The definition of "Party A Floating Amount" in Section 2(B) of the
Swap Transaction shall be amended in its entirety to read as follows:
"(a) If the ratio, expressed as a percentage and determined as of the
second to last Business Day of the preceding calendar week (such
percentage, the "Value Percentage"), of (i) the sum of the aggregate
Fair Market Value of the Portfolio on such date plus any free cash
balances on deposit in the Custodial Account (after taking into
account the Party B Floating Amount, if any, to be paid on such date)
on such date, to (ii) the outstanding "Invested Amount" under and as
defined in the Face Amount Certificate Agreement on such date, is less
than 97.0%, then an amount equal to the "Shortfall Amount" under and
as defined in the Investment Management Agreement, or (b) if the Value
Percentage is greater than or equal to 97.0%, then zero; PROVIDED,
HOWEVER, if the Value Percentage is less than 97.0% as of the second
to last Business Day of the preceding calendar week, and if the Value
Percentage has been less than 97.0% as of the second to last Business
Day of any calendar week occurring during both of (i) the immediately
preceding calendar month and (ii) the second immediately preceding
calendar month, then an amount equal to the "Additional True Up
Amount" under and as defined in the Investment Management Agreement."
2.4. The definition of "Party A Final Settlement Payment Amount" in Section
3 of the Swap Transaction shall be amended by inserting the following in line 13
thereof immediately following "the Portfolio Manager,":
"the counterparties to Permitted Hedging Transactions,"
2.4. The definition of "Book Income" in Section 7 of the Swap Transaction
shall be amended by inserting the following at the end thereof:
"PLUS (vii) any net cash in-flows under Permitted Hedging Transactions
(other than this Transaction) MINUS (viii) net cash outflows under
Permitted Hedging Transactions (other than this Transaction).
2.5. The definition of "Fair Market Value" in Section 7 of the Swap
Transaction shall be amended by inserting "(a)" in the first line thereof
immediately following "means," and by inserting the following at the end thereof
in place of the period:
"and (b) with respect to Permitted Hedging Transactions, at any date,
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the mark-to-market value thereof as determined by the Portfolio
Manager in accordance with the procedures set forth in the Investment
Guidelines attached as Exhibit A to the Investment Management
Agreement."
2.6. Section 7 of the Swap Transaction shall be amended by the insertion of
the following new defined term therein:
"'Permitted Hedging Transaction' shall have the meaning given to such
term in the Investment Management Agreement."
2.7. The definition of "Portfolio" in Section 7 of the Swap Transaction
shall be amended to read in its entirety as follows:
"'Portfolio' means the Securities and Short-Term Investments of the
Issuer held from time to time in the Custodial Account and the
Permitted Hedging Transactions of the Issuer in existence from time to
time."
3. EFFECTIVE DATE. This Amendment shall become effective as of the date
above first written upon the receipt by the Agent of (i) counterparts of this
Amendment duly executed by each of Party A and Party B and (ii) duly executed
counterparts of the documents described in Section 5 of that certain Amendment
No. 1 to Face Amount Certificate Agreement dated as of the date hereof among 312
Certificate Company, International Securitization Corporation and The First
National Bank of Chicago, as Agent.
4. RATIFICATION. Each of the Swap Transaction and the Master Agreement,
as amended hereby, is hereby ratified, approved and confirmed in all respects.
5. REFERENCE TO MASTER AGREEMENT. From and after the effective date
hereof, each reference in the Master Agreement to "this Agreement", "hereof", or
"hereunder" or words of like import, and all references to the Master Agreement
in any and all agreements, instruments, documents, notes, certificates and other
writings of every kind and nature shall be deemed to mean the Master Agreement,
as amended by this Amendment.
6. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS.
7. EXECUTION IN COUNTERPARTS. This Amendment may be executed in any
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number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, Party A and Party B have executed this Amendment as of
the date first above written.
INTEGRITY LIFE INSURANCE COMPANY
By: /s/ John R. McGeeney
-------------------------------
Name: John R. McGeeney
Title: Exec. V.P. and General Counsel
312 CERTIFICATE COMPANY
By: /s/ William D. Morris
-------------------------------
Name: William D. Morris
Title: CEO
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