NYLIFE STRUCTURED ASSET MANAGEMENT COMPANY LTD.
00 XXXXXXX XXXXXX - XXXX 0000
XXX XXXX, XXX XXXX 00000
May 21, 1997
WestSec Inc.,
000 Xxxxxx Xxxxxx,
Xxxxxx, Xxxxxx 00000
Dear Sir/Madam:
This letter memorializes certain collateral agreements and understandings
between NYLIFE Structured Asset Management Company Ltd. ("SAMCO"), as
Beneficiary, and WestSec Inc. ("WestSec"), as Applicant, under that certain
Letter of Credit No. P-271117, issued on May 22, 1997, by The Chase Manhattan
Bank (the "Bank") or any amendment, extension or replacement thereof (the
"Letter of Credit").
REDUCTION OF LETTER OF CREDIT AMOUNT
The Letter of Credit provides for the reduction from time to time, upon the
joint request of SAMCO and WestSec to the Bank, of the amount of the Letter
of Credit to an amount equal to $85,000,000 less the sum of (1) an amount equal
to all drawings by SAMCO under the Letter of Credit and (2) an amount equal to
the quotient resulting from dividing the aggregate amount of any payments after
December 31, 1996 to SAMCO made pursuant to the Operational Services Agreement
between SAMCO and WestSec, as assignee of Westinghouse Electric Corporation,
dated as of November 15, 1991 (the "OSA"), which payments are required to be
applied by SAMCO to repayment of principal under outstanding public debt
obligations of SAMCO pursuant to the terms of the OSA or any debt obligation of
SAMCO (each a "Payment"), by 61.133%.
In connection with the Letter of Credit, SAMCO hereby agrees to provide
notice to WestSec to the address
WestSec Inc. -2-
specified in the Letter of Credit within (i) five (5) business days after any
drawing under the Letter of Credit by SAMCO and (ii) within five (5) business
days after the end of any calendar quarter in which any Payment is made, which
notice shall state the date and amount of such drawing or Payment, as the case
may be. Simultaneous with delivery of any notice required by the foregoing
sentence, SAMCO shall deliver to WestSec a joint request of SAMCO and WestSec,
duly executed on behalf of SAMCO, directing the Bank to reduce the amount of the
Letter of Credit in connection with the applicable drawing or Payment, as the
case may be, to the amount specified by the formula set forth in the Letter of
Credit.
SAMCO hereby further agrees that, upon demand by WestSec, SAMCO shall
immediately reimburse WestSec in full for any commitment fees or other fees and
expenses incurred by WestSec under the Letter of Credit as a result of the
failure by SAMCO to deliver to WestSec in accordance with the deadlines
specified above a true and accurate notice and a joint request duly executed by
SAMCO as required in connection with any drawing or Payment.
FUNDS HELD IN TRUST
The Letter of Credit provides, among other things, that SAMCO may draw down
the aggregate amount available under the Letter of Credit not earlier than five
(5) business days prior to the expiration or earlier termination of the Letter
of Credit if WestSec has not provided to SAMCO either (i) another letter of
credit in favor of SAMCO drawn on a bank rated not less than "AA" with terms
that are the same in all material respects as those in the Letter of Credit
except for the new expiration date or (ii) an amendment to the Letter of Credit
extending the expiration date thereof.
SAMCO hereby acknowledges and agrees that any funds drawn down by SAMCO
pursuant to the immediately preceding paragraph ("Funds") shall be held by
SAMCO, and such agents as SAMCO shall appoint, in trust for the sole benefit of
WestSec except as otherwise specifically provided herein. Without limitation of
the foregoing, SAMCO shall as soon as practicable after receipt of such Funds
deposit all such Funds into an interest bearing demand account with a commercial
bank rated not less than "AA". SAMCO shall not, and shall not authorize or
permit any other person to, withdraw, expend, convert or otherwise deplete or
encumber any of such Funds; PROVIDED, HOWEVER, that SAMCO shall be permitted to
draw down
WestSec Inc. -3-
on such Funds in such amount, at such times and under such conditions as SAMCO
would have been permitted to draw down funds under the Letter of Credit (other
than a draw down solely in respect of the failure of WestSec at least five (5)
business days prior to the expiration or earlier termination of the Letter of
Credit to provide SAMCO with either (i) another letter of credit in favor of
SAMCO drawn on a bank rated not less than "AA" with terms that are the same in
all materials respects as those in the Letter of Credit except for the new
expiration date or (ii) an amendment to the Letter of Credit extending the
expiration date thereof).
SAMCO shall cause all such Funds and all interest thereon, less any portion
of such Funds properly drawn down by SAMCO pursuant to the proviso contained in
the foregoing paragraph, to be repaid to WestSec upon the earlier of (i) the
provision by WestSec to SAMCO of another letter of credit in favor of SAMCO
drawn on a bank rated not less than "AA" with terms that are the same in all
material respects as those in the Letter of Credit except for the new expiration
date, (ii) the provision by WestSec to SAMCO of an amendment to the Letter of
Credit extending the expiration date thereof and (iii) September 14, 1999.
SAMCO shall not be liable to or otherwise be required to indemnify WestSec
with respect to the waste, misuse, misappropriation or other loss of all or any
portion of the Funds by the commercial bank with which such Funds are deposited
or any other person acting on behalf of such commercial bank. WestSec shall
reimburse and indemnify SAMCO for any out-of-pocket fees or expenses including,
without limitation, wire transfer fees, bank fees and charges and reasonable
attorneys' fees, incurred in connection with the draw down of Funds under the
Letter of Credit and/or repayment thereof to WestSec in the circumstances
contemplated in this letter agreement.
WestSec Inc. -4-
This letter shall be governed by the laws of the State of New York without
regard to conflicts-of-law principles thereof.
Sincerely,
NYLIFE Structured Asset
Management Company Ltd.
Acknowledged: By: /s/ Xxxxx Xxxxx
------------------------------
Name: Xxxxx Xxxxx
WestSec, Inc. Title: Vice President
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President
