UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 1, 1999
Union Financial Services-1, Inc.
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(Exact name of registrant as specified in its charter)
Nevada 333-08929 86-081775
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6991 East Camelback Road, Suite B290, Scottsdale, Arizona 85251
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (602) 947-7703
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N/A
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
This Current Report on Form 8-K is being filed to file copies of an
Underwriting Agreement between Union Financial Services-1, Inc. and PaineWebber
Incorporated (hereinafter the "Underwriting Agreement") dated as of June 30,
1999 and the 1999 Supplemental Indenture of Trust by and between Union Financial
Services-1, Inc. and Zions First National Bank dated as of July 1, 1999
(hereinafter the "Indenture"). The Underwriting Agreement and the Indenture were
executed in connection with the issuance by Union Financial Services-1, Inc. of
$278,700,000 of its Taxable Student Loan Asset-Backed Auction Rate Certificate
Notes Series 1999 on July 1, 1999. The details of this issuance are contained in
the Prospectus Supplement filed on June 21, 1999 (File No. 333-28551).
Item 7. Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
The following Exhibits are furnished as part of this report:
Exhibit No. Description
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1 Underwriting Agreement between Union Financial
Services-1, Inc. and PaineWebber Incorporated
dated June 30, 1999.
4.3 Series 1999 Supplemental Indenture of Trust
between Union Financial Services-1, Inc. and Zions
First National Bank dated July 1, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNION FINANCIAL SERVICES-1, INC.
By: /s/ Ronald W. Page
--------------------------
Ronald W. Page
Senior Vice President
Dated: July 8, 1999
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EXHIBIT INDEX
Exhibit Page
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1 5
4.3 28
EXHIBIT 1
UNION FINANCIAL SERVICES-1, INC.
$278,700,000
Taxable Student Loan Asset-Backed Auction Rate Certificate SM Notes
(Series 1999)
UNDERWRITING AGREEMENT
June 30, 1999
PaineWebber Incorporated
as representative of the Underwriters
1285 Avenue of the Americas
New York, New York 10019
Ladies and Gentlemen:
Union Financial Services-1, Inc., a Nevada corporation (the
"Company"), proposes to sell to PaineWebber Incorporated (the "Representative")
and the other underwriters listed on Schedule A hereto (the "Underwriters"),
pursuant to the terms of this Underwriting Agreement, $278,700,000 aggregate
principal amount of its Taxable Student Loan Asset-Backed Auction Rate
CertificateSM Notes, Series 1999 (the "Notes"). Zions First National Bank, a
national banking association, will act as eligible lender (the "Eligible
Lender") on behalf of the Company. The Notes will be issued under a Second
Amended and Restated Indenture of Trust dated as of November 1, 1996 (as
previously amended and supplemented, the "Master Indenture") between the Company
and Zions First National Bank, a national banking association, as successor
indenture trustee ("Trustee"), as supplemented by the Series 1999 Supplemental
Indenture of Trust (the "Indenture Supplement" and collectively with the Master
Indenture, the "Indenture"). Upon issuance, the Notes will be secured by, among
other things, Financed Eligible Loans (as defined in the Indenture) pledged to
the Trustee and described in the Prospectus (as defined in Section 3 below). The
Financed Eligible Loans currently are serviced by Union Bank and Trust Company
(the "Bank") pursuant to an Amended and Restated Servicing Agreement dated as of
December 18, 1998, as amended (the "Servicing Agreement"), between the Bank and
the Company. The Bank has entered into subservicing agreements with (i) UNIPAC
Service Corporation ("UNIPAC") dated as of January 1, 1995 as amended by the
parties thereto on March 1, 1996 and June 19, 1996 (the "UNIPAC Subservicing
Agreement") pursuant to which UNIPAC will act as subservicer or, upon inability
of the Bank to do so, as servicer with respect to certain of the Financed
Eligible Loans and (ii) InTuition, Inc. ("InTuition"), dated as of December 22,
1998 (the "InTuition Subservicing Agreement"), pursuant to which InTuition will
act as subservicer with respect to certain of the Financed Eligible Loans.
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Subject to the approval of Fitch IBCA, Inc. and Standard &
Poor's, on or prior to the Closing Date (as defined below) (i) the Bank expects
to assign its rights and obligations under the Servicing Agreement, the UNIPAC
Subservicing Agreement and the InTuition Subservicing Agreement to National
Education Loan Network, Inc. ("NelNet" or the "Servicer"), (ii) the Company
expects to enter into a new servicing agreement with NelNet (the "Servicing
Agreement"), and (iii) NelNet excepts to enter into new subservicing agreements
with UNIPAC and InTuition (the "Subservicing Agreements").
This Agreement, the Loan Sale Agreement, dated as of June 30,
1999, between NHELP-I, Inc. (the "Seller") and the Company (the "Sale
Agreement"), the Servicing Agreement, the Subservicing Agreements, and the
Indenture shall collectively hereinafter be referred to as the "Basic
Documents;"
Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Indenture or the Prospectus.
The Company proposes, upon the terms and conditions set forth
herein, to sell to each of the Underwriters on the Closing Date (as hereinafter
defined) the aggregate principal amount of each Class of Notes set forth next to
the name of each Underwriter on Schedule A hereto.
The Company wishes to confirm as follows this agreement with the
Underwriters in connection with the purchase and resale of the Notes.
1. Agreements to Sell, Purchase and Resell. (a) The Company
hereby agrees, subject to all the terms and conditions set forth herein to sell
to each of the Underwriters and, upon the basis of the representations,
warranties and agreements of the Company herein contained and subject to all the
terms and conditions set forth herein, each of the Underwriters severally agrees
to purchase from the Company, such principal amount of the Classes of the Notes
at such respective purchase prices as are set forth on Schedule A hereto.
(b) It is understood that the Underwriters propose to offer the
Notes for sale to the public (which may include selected dealers) as set forth
in the Prospectus.
2. Delivery of the Notes and Payment Therefor. Delivery to the
Underwriters of and payment for the Notes shall be made at the office of Kutak
Rock, Denver, Colorado, at 11:00 a.m., Denver time, on July 1, 1999 (the
"Closing Date"). The place of such closing and the Closing Date may be varied
by agreement between the Representative and the Company.
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The Notes will be delivered to the Underwriters against payment
of the purchase price therefor to the Company in Federal Funds, by wire, or such
other form of payment as to which the parties may agree. Unless otherwise agreed
to by the Company and the Representative, each Class of Notes will be evidenced
by a single global security in definitive form and/or by additional definitive
securities, and will be registered, in the case of the global Classes of Notes,
in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"),
and in the other cases, in such names and in such denominations as the
Underwriters shall request prior to 1:00 p.m., New York City time, no later than
the business day preceding the Closing Date. The Notes to be delivered to the
Underwriters shall be made available to the Underwriters in Denver, Colorado,
for inspection and packaging not later than 9:30 a.m., Denver time, on the
business day next preceding the Closing Date.
3. Representations and Warranties of the Company. The Company
represents and warrants to each of the Underwriters that:
(a) A registration statement on Form S-3 (No. 333-28551),
including a prospectus and such amendments thereto as may have been required to
the date hereof, relating to the Notes and the offering thereof from time to
time in accordance with Rule 415 under the Securities Act of 1933, as amended
(the "Act"), has been filed with the Securities and Exchange Commission (the
"SEC" or the "Commission") and such registration statement, as amended, has
become effective; such registration statement, as amended, and the prospectus
relating to the sale of the Notes offered thereby constituting a part thereof,
as from time to time amended or supplemented (including the base prospectus, any
prospectus supplement filed with the Commission pursuant to Rule 424(b) under
the Act, the information deemed to be a part thereof pursuant to Rule 430A(b)
under the Act, and the information incorporated by reference therein) are
respectively referred to herein as the "Registration Statement" and the
"Prospectus"; and the conditions to the use of a registration statement on Form
S-3 under the Act, as set forth in the General Instructions to Form S-3, and the
conditions of Rule 415 under the Act, have been satisfied with respect to the
Registration Statement;
(b) On the effective date of the Registration Statement, the
Registration Statement and the Prospectus conformed in all respects to the
requirements of the Act, the rules and regulations of the SEC (the "Rules and
Regulations") and the Trust Indenture Act of 1939, as amended, and the rules and
regulations thereunder (the "Trust Indenture Act"), and, except with respect to
information omitted pursuant to Rule 430A of the Act, did not include any untrue
statement of a material fact or, in the case of the Registration Statement, omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading and, in the case of the Prospectus, omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and on
the date of this Agreement, the Registration Statement and the Prospectus will
conform in all respects to the requirements of the Act, the Rules and
Regulations and the Trust Indenture Act, and neither of such documents included
or will include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the foregoing does not apply to
statements in or omissions from the Registration Statement or the Prospectus
based upon written information furnished to the Company by the Underwriters,
specifically for use therein.
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(c) The Commission has not issued and, to the best knowledge of
the Company, is not threatening to issue any order preventing or suspending the
use of the Registration Statement.
(d) As of the Closing Date, each consent, approval, authorization
or order of, or filing with, any court or governmental agency or body which is
required to be obtained or made by the Company or its affiliates for the
consummation of the transactions contemplated by this Agreement shall have been
obtained, except as otherwise provided in the Basic Documents.
(e) The Master Indenture and the Indenture Supplement have been
duly and validly authorized by the Company and, upon their execution and
delivery by the Company and assuming due authorization, execution and delivery
by the Trustee, will be valid and binding agreements of the Company, enforceable
in accordance with their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally and conform in all material respects to the description thereof in the
Prospectus.
(f) The Notes have been duly authorized by the Company and the
Notes to be issued on the Closing Date, when executed by the Company and
authenticated by the Trustee in accordance with the Indenture, and delivered to
the Underwriters against payment therefor in accordance with the terms hereof,
will have been validly issued and delivered, and will constitute valid and
binding obligations of the Company entitled to the benefits of the Indenture and
enforceable in accordance with their terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, moratorium, fraudulent conveyance or other
similar laws relating to or affecting creditors' rights generally and court
decisions with respect thereto, and the Notes will conform in all material
respects to the description thereof in the Prospectus.
(g) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada with full corporate
power and authority to own, lease and operate its properties and to conduct its
business as conducted on the date hereof, and is duly registered and qualified
to conduct its business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify does not have a material adverse effect on the condition (financial or
other), business, prospects, properties, net worth or results of operations of
the Company.
(h) Other than as contemplated by this Agreement or as
disclosed in the Prospectus, there is no broker, finder or other party that is
entitled to receive from the Company or any of its affiliates any brokerage or
finder's fee or other fee or commission as a result of any of the transactions
contemplated by this Agreement.
(i) There are no legal or governmental proceedings pending or,
to the knowledge of the Company threatened, against the Company, or to which the
Company or any of its properties is subject, that are not disclosed in the
Prospectus or that will not be disclosed in any subsequent amendment or
supplement to the Prospectus and which, if adversely decided, are reasonably
likely to materially affect the issuance of the Notes or the consummation of the
transactions contemplated hereby or by the Basic Documents.
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(j) Neither the offer, sale or delivery of the Notes by the
Company nor the execution, delivery or performance of this Agreement by the
Company, nor the consummation by the Company of the transactions contemplated
hereby or thereby (i) requires or will require any consent, approval,
authorization or other order of, or registration or filing with, any court,
regulatory body, administrative agency or other governmental body, agency or
official (except for compliance with the securities or Blue Sky laws of various
jurisdictions, the qualification of the Indenture under the Trust Indenture Act
and such other consents, approvals or authorizations as shall have been obtained
prior to the Closing Date) or conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, the organizational documents or
bylaws of the Company or (ii) conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, in any material respect, any
material agreement, indenture, lease or other instrument to which the Company is
a party or by which the Company or any of its properties may be bound, or
violates or will violate in any material respect any statute, law, regulation or
filing or judgment, injunction, order or decree applicable to the Company or any
of its properties, or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company pursuant to the
terms of any agreement or instrument to which it is a party or by which it may
be bound or to which any of its properties is subject other than as contemplated
by the Basic Documents.
(k) The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement; the execution and
delivery of, and the performance by the Company of its obligations under, this
Agreement have been duly and validly authorized by the Company and this
Agreement has been duly executed and delivered by the Company and constitutes
the valid and legally binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as the enforcement hereof may be
limited by bankruptcy, insolvency, moratorium, fraudulent conveyance or other
similar laws relating to or affecting creditors' rights generally and court
decisions with respect thereto and subject to the applicability of general
principles of equity, and except as rights to indemnity and contribution
hereunder may be limited by Federal or state securities laws or principles of
public policy.
(l) The Seller's assignment and delivery of Financed Eligible
Loans to the order of the Trustee on behalf of the Company as of the applicable
sale date described in the Sale Agreement will vest in the Trustee on behalf of
the Company all of the Seller's right, title and interest therein, subject to no
prior lien, mortgage, security interest, pledge, adverse claim, charge or other
encumbrance.
(m) The Company's assignment of the Financed Eligible Loans to
the Trustee pursuant to the Indenture will vest in the Trustee, for the benefit
of the Noteholders, a first priority perfected security interest therein,
subject to no prior lien, mortgage, security interest, pledge, adverse claim,
charge or other encumbrance.
(n) The Company is not, nor as a result of the issuance and sale
of the Notes as contemplated hereunder will it become, subject to registration
as an "investment company" under the Investment Company Act of 1940, as amended
(the "1940 Act").
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(o) The representations and warranties made by the Company in
any Basic Document to which the Company is a party and made in any Officer's
Certificate of the Company will be true and correct at the time made and on and
as of the applicable Closing Date.
4. Agreements of the Company. The Company agrees with each of the
Underwriters as follows:
(a) The Company will prepare a supplement to the Prospectus
setting forth the amount of the Notes covered thereby and the terms thereof not
otherwise specified in the Prospectus, the price at which the Notes are to be
purchased by the Underwriters, either the initial public offering price or the
method by which the price at which the Notes are to be sold will be determined,
the selling concessions and reallowances, if any, and such other information as
the Underwriters and the Company deem appropriate in connection with the
offering of the Notes, and the Company will timely file such supplement to the
prospectus with the SEC pursuant to Rule 424(b) under the Act, but the Company
will not file any amendments to the Registration Statement as in effect with
respect to the Notes or any amendments or supplements to the Prospectus, unless
it shall first have delivered copies of such amendments or supplements to the
Underwriters, or if the Underwriters shall have reasonably objected thereto
promptly after receipt thereof; the Company will immediately advise the
Underwriters or the Underwriters' counsel (i) when notice is received from the
SEC that any post-effective amendment to the Registration Statement has become
or will become effective and (ii) of any order or communication suspending or
preventing, or threatening to suspend or prevent, the offer and sale of the
Notes or of any proceedings or examinations that may lead to such an order or
communication, whether by or of the SEC or any authority administering any state
securities or Blue Sky law, as soon as the Company is advised thereof, and will
use its best efforts to prevent the issuance of any such order or communication
and to obtain as soon as possible its lifting, if issued.
(b) If, at any time when the Prospectus relating to the Notes is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend or supplement
the Prospectus to comply with the Act or the Rules and Regulations, the Company
promptly will prepare and file with the SEC, an amendment or supplement to such
Prospectus that will correct such statement or omission or an amendment that
will effect such compliance.
(c) The Company will immediately inform the Underwriters (i) of
the receipt by the Company of any communication from the SEC or any state
securities authority concerning the offering or sale of the Notes and (ii) of
the commencement of any lawsuit or proceeding to which the Company is a party
relating to the offering or sale of the Notes.
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(d) The Company will furnish to the Underwriters, without
charge, copies of the Registration Statement (including all documents and
exhibits thereto or incorporated by reference therein), the Prospectus, and all
amendments and supplements to such documents relating to the Notes, in each case
in such quantities as the Underwriters may reasonably request.
(e) No amendment or supplement will be made to the Registration
Statement or Prospectus which the Underwriters shall not previously have been
advised or to which it shall reasonably object after being so advised.
(f) The Company will cooperate with the Underwriters and with its
counsel in connection with the qualification of, or procurement of exemptions
with respect to, the Notes for offering and sale by the Underwriters and by
dealers under the securities or Blue Sky laws of such jurisdictions as the
Underwriters may designate and will file such consents to service of process or
other documents necessary or appropriate in order to effect such qualification
or exemptions; provided that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so qualified or
to take any action which would subject it to service of process in suits, other
than those arising out of the offering or sale of the Notes, in any jurisdiction
where it is not now so subject.
(g) The Company consents to the use, in accordance with the
securities or Blue Sky laws of such jurisdictions in which the Notes are offered
by the Underwriters and by dealers, of the Prospectus furnished by the Company.
(h) To the extent, if any, that the rating or ratings provided
with respect to the Notes by the rating agency or agencies that initially rate
the Notes is conditional upon the furnishing of documents or the taking of any
other actions by the Company, the Company shall cause to be furnished such
documents and such other actions to be taken.
(i) So long as any of the Notes are outstanding, the Company
will furnish to the Underwriters (i) as soon as available, a copy of each
document relating to the Notes required to be filed with the SEC pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any order
of the SEC thereunder, and (ii) such other information concerning the Company as
the Underwriters may request from time to time.
(j) If this Agreement shall terminate or shall be terminated
after execution and delivery pursuant to any provisions hereof (otherwise than
by notice given by the Representative terminating this Agreement pursuant to
Section 8 or Section 9 hereof) or if this Agreement shall be terminated by the
Representative because of any failure or refusal on the part of the Company to
comply with the terms or fulfill any of the conditions of this Agreement, the
Company agrees to reimburse the Underwriters for all out-of-pocket expenses
(including fees and expenses of their counsel) reasonably incurred by it in
connection herewith, but without any further obligation on the part of the
Company for loss of profits or otherwise.
(k) The net proceeds from the sale of the Notes hereunder will be
applied substantially in accordance with the description set forth in the
Prospectus.
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(l) Except as stated in this Agreement and in the Prospectus,
the Company has not taken, nor will it take, directly or indirectly, any action
designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Notes to facilitate the sale
or resale of the Notes.
(m) For a period from the date of this Agreement until the
retirement of the Notes, the Company will deliver to you the annual statements
of compliance and the annual independent certified public accountants' reports
furnished to the Trustee or the Company pursuant to the Servicing Agreement as
soon as such statements and reports are furnished to the Trustee or the Company.
(n) On or before the Closing Date, the Company shall mark its
accounting and other records, if any, relating to the Financed Eligible Loans
and shall cause the Servicer, UNIPAC and InTuition to mark their respective
computer records relating to the Financed Eligible Loans to show the absolute
ownership by the Trustee, as eligible lender of, and the interest of the Company
in, the Initial Financed Eligible Loans, and from and after each Closing Date
the Company will take, or cause the Servicer, UNIPAC and InTuition to take, as
the case may be, such actions with respect to the respective records of each
with regard to any Additional Acquired Eligible Loans at the time of the
acquisition thereof by the Trustee on behalf of the Company and the Company
shall not take, or shall permit any other person to take, any action
inconsistent with the ownership of, and the interest of the Company in, the
Financed Eligible Loans, other than as permitted by the Basic Documents.
(o) For the period beginning on the date of this Agreement and
ending 90 days hereafter, after none of the Company and any entity affiliated,
directly or indirectly, with the Company will, without the prior written notice
to the Underwriters, offer to sell or sell notes (other than the Notes)
collateralized by FFELP Loans; PROVIDED, HOWEVER, that this shall not be
construed to prevent the sale of FFELP Loans by the Company.
(p) If, at the time the Registration Statement became effective,
any information shall have been omitted therefrom in reliance upon Rule 430A
under the 1933 Act, then, immediately following the execution of this Agreement,
the Company will prepare, and file or transmit for filing with the Commission in
accordance with such Rule 430A and Rule 424(b) under the 1933 Act, copies of an
amended Prospectus containing all information so omitted.
5. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each of the Underwriters and each person, if any,
who controls an Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement, the Prospectus, or in
any amendment or supplement thereto, or any preliminary prospectus, or arising
out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which has been made therein or
omitted therefrom in reliance upon and in conformity with the information
relating to an Underwriter furnished in writing to the Company by or on behalf
of such Underwriter expressly for use in connection therewith; PROVIDED,
HOWEVER, that the indemnification contained in this paragraph (a) with respect
to any preliminary prospectus shall not inure to the benefit of an Underwriter
(or to the benefit of any person controlling an Underwriter) on account of any
such loss, claim, damage, liability or expense arising from the sale of the of
Notes by an Underwriter to any person if the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in such
preliminary prospectus was corrected in the final Prospectus and such
Underwriter sold Notes to that person without sending or giving at or prior to
the written confirmation of such sale, a copy of the final Prospectus (as then
amended or supplemented) if the Company has previously furnished sufficient
copies thereof to such Underwriter. The foregoing indemnity agreement shall be
in addition to any liability which the Company may otherwise have.
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(b) If any action, suit or proceeding shall be brought against an
Underwriter or any person controlling an Underwriter in respect of which
indemnity may be sought against the Company, such Underwriter or such
controlling person shall promptly notify the parties against whom
indemnification is being sought (the "indemnifying parties"), but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party except to the extent that the indemnifying
party is materially prejudiced by such omission. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party). The applicable
Underwriter or any such controlling person shall have the right to employ
separate counsel in any such action, suit or proceeding and to participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Underwriter or such controlling person unless (i) the
indemnifying parties have agreed in writing to pay such fees and expenses, (ii)
the indemnifying parties have failed to assume the defense and employ counsel,
or (iii) the named parties to any such action, suit or proceeding (including any
impleaded parties) include both the Underwriter or such controlling person and
the indemnifying parties and the Underwriter or such controlling person shall
have been advised by its counsel that there may be one or more legal defenses
available to it which are different from or additional to or in conflict with
those available to the indemnifying parties and in the reasonable judgment of
such counsel it is advisable for the Underwriter or such controlling person to
employ separate counsel (in which case the indemnifying party shall not have the
right to assume the defense of such action, suit or proceeding on behalf of the
Underwriter or such controlling person). It is understood, however, that the
indemnifying parties shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related actions, suits or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
each Underwriter and controlling persons not having actual or potential
differing interests with such Underwriter or among themselves, which firm shall
be designated in writing by such Underwriter, and that all such fees and
expenses shall be reimbursed on a monthly basis as provided in paragraph (a)
hereof. An indemnifying party will not, without the prior written consent of the
indemnified party, settle or compromise or consent to the entry of any judgment
with respect to any pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding.
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(c) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Company and its directors and officers, and any
person who controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, to the same extent as the indemnity from the
Company to the Underwriters set forth in paragraph (a) hereof, but only with
respect to information relating to an Underwriter furnished in writing by or on
behalf of such Underwriter expressly for use in the Registration Statement, the
Prospectus, or any amendment or supplement thereto, or any related preliminary
prospectus. If any action, suit or proceeding shall be brought against the
Company, any of its directors or officers, or any such controlling person based
on the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus and in respect of which indemnity
may be sought against an Underwriter pursuant to this paragraph (c), such
Underwriter shall have the rights and duties given to the Company by paragraph
(b) above (except that if the Company shall have assumed the defense thereof the
Underwriter shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof, but the fees and expenses of
such counsel shall be at such Underwriter's expense), and the Company, its
directors and officers, and any such controlling person shall have the rights
and duties given to the Underwriters by paragraph (b) above. The foregoing
indemnity agreement shall be in addition to any liability which the Underwriters
may otherwise have.
(d) If the indemnification provided for in this Section 5 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the applicable Underwriter on the other hand from
the offering of the Notes, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the applicable
Underwriter on the other in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company on the one hand and an Underwriter on the other shall be deemed to
be in the same proportion as the total net proceeds from the offering of the
Notes (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by such Underwriter. The
relative fault of the Company on the one hand and the Underwriters on the other
hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or by an Underwriter on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
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(e) The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 5 were determined by
a pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in paragraph (d) above
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 5, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total underwriting discounts and commissions received by such Underwriter exceed
the amount of any damages which such Underwriter has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(f) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 5 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 5 and the
representations and warranties of the Company and the Underwriters set forth in
this Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of the Underwriters, the Company
or any person controlling any of them or their respective directors or officers,
(ii) acceptance of any Notes and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to the Underwriters, the Company or
any person controlling any of them or their respective directors or officers,
shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 5.
6. Conditions of the Underwriters' Obligations. The obligations
of the Underwriters to purchase the Notes hereunder are subject to the following
conditions:
(a) All actions required to be taken and all filings required to
be made by the Company under the Act prior to the sale of the Notes shall have
been duly taken or made. At and prior to the Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or, to the
knowledge of the Company or the Underwriters, shall be contemplated by the
Commission.
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(b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, properties, net worth, or results of operations of the Company, the
Seller, the Servicer, UNIPAC or InTuition not contemplated by the Registration
Statement, which in the opinion of the Representative, would materially
adversely affect the market for the Notes, (ii) any downgrading in the rating of
any debt securities of the Company, a Seller, the Servicer, UNIPAC or InTuition
by any nationally recognized statistical rating organization or any public
announcement that any such organization has under surveillance or review its
rating of any debt securities of the Company, the Seller, the Servicer, UNIPAC
or InTuition (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating), or (iii) any event or development which makes any statement made in the
Registration Statement or Prospectus untrue or which, in the opinion of the
Company and its counsel or the Underwriters and their counsel, requires the
filing of any amendment to or change in the Registration Statement or Prospectus
in order to state a material fact required by any law to be stated therein or
necessary in order to make the statements therein not misleading, if amending or
supplementing the Registration Statement or Prospectus to reflect such event or
development would, in the opinion of the Representative, materially adversely
affect the market for the Notes.
(c) You shall have received an opinion addressed to you of Kutak
Rock, in its capacity as counsel to the Company, dated the Closing Date, in form
and substance satisfactory to you and your counsel with respect to the status of
the Company, to each of the Sale Agreement, Servicing Agreement, Indenture,
Auction Agency Agreement, Broker-Dealer Agreement and this Agreement and to the
validity of the Notes and such related matters as you shall reasonably request.
In addition, you shall have received an opinion addressed to you of Kutak Rock,
in its capacity as counsel for the Company, in form and substance satisfactory
to you and your counsel, concerning "true sale," "non-consolidation" and "first
perfected security interest" and certain other issues with respect to the
transfer of the Financed Eligible Loans from the Seller to the Company and from
the Company to the Trustee.
(d) You shall have received an opinion addressed to you of Kutak
Rock, in its capacity as counsel for the Company, dated the Closing Date, in
form and substance satisfactory to you and your counsel to the effect that the
statements in the Prospectus under the headings "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES" and "ERISA CONSIDERATIONS", to the extent that they constitute
statements of matters of law or legal conclusions with respect thereto, have
been prepared or reviewed by such counsel and are correct in all material
respects.
(e) You shall have received an opinion addressed to you of Kutak
Rock, in its capacity as counsel for the Company, dated the Closing Date, in
form and substance satisfactory to you and your counsel with respect to the
character of the Notes for federal tax purposes.
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(f) You shall have received an opinion addressed to you of
Stroock & Stroock & Lavan LLP, in its capacity as Underwriters' Counsel, dated
the Closing Date, in form and substance satisfactory to you.
(g) You shall have received an opinion addressed to you of
Ballard Spahr Andrews & Ingersoll LLP, in its capacity as counsel for the
Company, dated the Closing Date in form and substance satisfactory to you and
your counsel with respect to the Prospectus and the Registration Statement and
certain matters arising under the Trust Indenture Act of 1939, as amended, and
the Investment Company Act of 1940, as amended.
(h) You shall have received opinions addressed to you of Perry,
Guthery, Haase & Gessford, P.C. in their capacity as counsel to NelNet and
NHELP-1, Inc., each dated the Closing Date and satisfactory in form and
substance to you and your counsel, to the effect that:
(i) NelNet is a corporation in good standing under the laws of
the State of Nevada; NHELP-1, Inc. is a corporation in good standing
under the laws of the State of Nevada; each having the full power and
authority (corporate and other) to own its properties and conduct its
business, as presently conducted by it, and to enter into and perform
its obligations under each of the Servicing Agreement, the Sale
Agreement and the Subservicing Agreements to which it is a party.
(ii) The Sale Agreement has been duly authorized, executed and
delivered by the Seller and the Servicing Agreement and the
Subservicing Agreements have been duly authorized, executed and
delivered by NelNet, and each such agreement is the legal, valid and
binding obligations of the Seller and NelNet, as the case may be,
enforceable against the Seller and NelNet, as the case may be, in
accordance with their respective terms, except (x) the enforceability
thereof may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights and (y) remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought.
(iii) Neither the execution and delivery by NelNet of the
Servicing Agreement or the Subservicing Agreements, or the execution by
the Seller of the Sale Agreement, nor the consummation by NelNet or the
Seller of the transactions contemplated therein nor the fulfillment of
the terms thereof by NelNet or the Seller will conflict with, result in
a breach, violation or acceleration of, or constitute a default under,
any term or provision of the by-laws of NelNet or the Seller or of any
indenture or other agreement or instrument to which NelNet or the
Seller is a party or by which NelNet or the Seller is bound, or result
in a violation of or contravene the terms of any statute, order or
regulation applicable to NelNet or the Seller of any court, regulatory
body, administrative agency or governmental body having jurisdiction
over NelNet or the Seller.
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(iv) There are no actions, proceedings or investigations pending
or, to the best of such counsel's knowledge after due inquiry and
reasonable investigation, threatened against NelNet or the Seller
before or by any governmental authority that might materially and
adversely affect the performance by NelNet or the Seller of its
obligations under, or the validity or enforceability of, the Servicing
Agreement, the Subservicing Agreements or the Sale Agreement to which
it is a party.
(v) Nothing has come to such counsel's attention that would lead
such counsel to believe that the representations and warranties of
NelNet contained in the Servicing Agreement, or the Subservicing
Agreements or the representations and warranties of the Seller
contained in the Sale Agreement are other than as stated therein.
(vi) No authorization, approval, or other action by, and no
notice to or filing with, any governmental authority or regulatory body
is required (a) for the due execution, delivery and performance by
NelNet of the Servicing Agreement or the Subservicing Agreements, (b)
for the due execution, delivery and performance by the Seller of the
Sale Agreement or (c) for the perfection of the Company's and the
Trustee's interest in the Student Loans sold pursuant to the Sale
Agreement or the exercise by the Company (or it permitted assigns) and
the Trustee of their rights and remedies under the Sale Agreement,
including specifically the filings of any Uniform Commercial Code
financing statements, EXCEPT for the execution and delivery of the
Guarantee Agreements.
(vii) The Sale Agreement together with the related bill of sale
and blanket endorsement effects a valid sale to the Trustee of the
Student Loans to be sold under the Sale Agreement enforceable against
creditors of, and purchasers from, the Seller.
(viii) As of the date specified in a schedule to such opinion,
there were no (a) UCC financing statements naming the Seller as debtor
or seller and covering any Student Loans to be sold under the Sale
Agreement or interest therein or (b) notices of the filing of any
federal tax lien (filed pursuant to Section 6323 of the Internal
Revenue Code) or lien of the Pension Benefit Guaranty Corporation
(filed pursuant to Section 4068 of ERISA) covering any Student Loan to
be sold under the Sale Agreement or interest therein, listed in the
available records in the respective offices set forth in such schedule
opposite each such date (which are all of the offices that are
prescribed under either the internal law of the conflict of law rules
of the Nebraska UCC as the offices in which filings should be made to
perfect security interests in Student Loans), except as set forth in
such schedule.
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(ix) As of the date of such opinion, by executing the Guarantee
Agreements and upon execution and delivery of the instruments of
transfer described in the Sale Agreement and notification of the
Guarantors and borrowers of the transfer contemplated thereby, and
assuming that the Trustee is an eligible lender as that term is defined
in 20 U.S.C. ss.1085(d)(1) of the Higher Education Act of 1965, as
amended, the Trustee on behalf of the Company will be entitled to the
benefit of the applicable Guarantor and/or Department of Education
payments under the Act related to the Student Loans sold from time to
time under the Sale Agreement, subject to the terms and conditions of
the Guarantee Agreements and the Act.
(i) You shall have received an opinion addressed to you of
counsel to the Trustee, dated the Closing Date and in form and
substance satisfactory to you and your counsel, to the effect that:
(i) The Trustee is a national banking association duly organized
and validly existing under the laws of the United States of America.
(ii) The Trustee has the full corporate trust power to accept
the office of indenture trustee under the Indenture and to enter into
and perform its obligations under the Indenture, the Amendments to the
Custodian Agreements, the Auction Agency Agreement, the Market Agent
Agreement and each Guarantee Agreement.
(iii) The execution and delivery of each of the Indenture, the
Amendments to the Custodian Agreements, the Auction Agency Agreement,
the Market Agent Agreement and each Guarantee Agreement, and the
performance by the Trustee of its obligations under the Indenture, the
Amendments to the Custodian Agreements, the Auction Agency Agreement,
the Market Agent Agreement and each Guarantee Agreement, have been duly
authorized by all necessary action of the Trustee and each has been
duly executed and delivered by the Trustee.
(iv) The Indenture, the Amendments to the Custodian Agreements,
the Auction Agency Agreement, the Market Agent Agreement and each
Guarantee Agreement constitute valid and binding obligations of the
Trustee enforceable against the Trustee.
(v) The execution and delivery by the Trustee of the Indenture,
the Amendments to the Custodian Agreements, the Auction Agency
Agreement, the Market Agent Agreement and each Guarantee Agreement do
not require any consent, approval or authorization of, or any
registration or filing with, any state or United States Federal
governmental authority.
(vi) Each of the Notes has been duly authenticated by the
Trustee.
(vii) Neither the consummation by the Trustee of the
transactions contemplated in the Indenture, the Amendments to the
Custodian Agreements, the Auction Agency Agreement and each Guarantee
Agreement nor the fulfillment of the terms thereof by the Trustee will
conflict with, result in a breach or violation of, or constitute a
default under any law or the charter, by-laws or other organizational
documents of the Trustee or the terms of any indenture or other
agreement or instrument known to such counsel and to which the Trustee
or any of its subsidiaries is a party or is bound or any judgment,
order or decree known to such counsel to be applicable to the Trustee
or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over the Trustee or any of its subsidiaries.
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(viii) There are no actions, suits or proceedings pending or, to
the best of such counsel's knowledge after due inquiry, threatened
against the Trustee (as indenture trustee under the Indenture or in its
individual capacity) before or by any governmental authority that might
materially and adversely affect the performance by the Trustee of its
obligations under, or the validity or enforceability of, the Indenture,
the Amendments to the Custodian Agreements, the Auction Agency
Agreement, the Market Agent Agreement or any Guarantee Agreement.
(ix) The execution, delivery and performance by the Trustee of
the Indenture the Amendments to the Custodian Agreements, the Auction
Agency Agreement, the Market Agent Agreement or any Guarantee Agreement
will not subject any of the property or assets of the Company or any
portion thereof, to any lien created by or arising under the Indenture
that is unrelated to the transactions contemplated in such agreements.
(x) The Trustee is an "eligible lender" for purposes of the
FFELP Program in its capacity as trustee with respect to Financed
Eligible Loans held under the Indenture.
(j) You shall have received certificates addressed to you dated
the Closing Date of any two of the Chairman of the Board, the President, any
Executive Vice President, Senior Vice President or Vice President, the
Treasurer, any Assistant Treasurer, the principal financial officer or the
principal accounting officer of the Seller and the Servicer in which such
officers shall state that, to the best of their knowledge after reasonable
investigation, (i) the representations and warranties of the Seller or the
Servicer, as the case may be, contained in the Sale Agreement, the Servicing
Agreement and the Subservicing Agreements, as applicable, are true and correct
in all material respects, that each of the Seller and the Servicer has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied under such agreements at or prior to the Closing Date, (ii) that they
have reviewed the Prospectus and that the information therein regarding the
Seller or the Servicer, as applicable, is fair and accurate in all material
respects, and (iii) since the date set forth in such certificate, except as may
be disclosed in the Prospectus, no material adverse change or any development
involving a prospective material adverse change, in or affecting particularly
the business or properties of the Seller or the Servicer, as applicable, has
occurred.
(k) You shall have received certificates addressed to you dated
the Closing Date of any two of the Chairman of the Board, the President, any
Executive Vice President, Senior Vice President or Vice President, the
Treasurer, any Assistant Treasurer, the principal financial officer or the
principal accounting officer of UNIPAC and InTuition in which such officers
shall state that, to the best of their knowledge after reasonable investigation,
(i) the representations and warranties of UNIPAC and InTuition contained in the
Subservicing Agreements are true and correct in all material respects, that each
of UNIPAC and InTuition has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied under such agreements at or
prior to the Closing Date, (ii) that they have reviewed the Prospectus and that
the information therein regarding UNIPAC and InTuition is fair and accurate in
all material respects, and (iii) since the date set forth in such certificate,
except as may be disclosed in the Prospectus, no material adverse change or any
development involving a prospective material adverse change in, or affecting
particularly the business or properties of UNIPAC and InTuition has occurred.
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(l) You shall have received evidence satisfactory to you that,
on or before the Closing Date, UCC-1 financing statements have been or are being
filed in the office of the Secretary of State of the States of Nevada and
Nebraska reflecting the grant of the security interest by the Company in the
Financed Eligible Loans and the proceeds thereof to the Trustee.
(m) You shall have received a certificate addressed to you dated
the Closing Date from a responsible officer acceptable to you of the Trustee in
form and substance satisfactory to you and your counsel and to which shall be
attached each Guarantee Agreement.
(n) The Underwriters shall have received on the Closing Date
from KPMG Peat Marwick a letter dated the Closing Date, and in form and
substance satisfactory to the Representative, to the effect that they have
carried out certain specified procedures, not constituting an audit, with
respect to certain information regarding the Financed Eligible Loans and setting
forth the results of such specified procedures.
(o) All the representations and warranties of the Company
contained in this Agreement and the Basic Documents shall be true and correct in
all material respects on and as of the date hereof and on and as of the Closing
Date as if made on and as of the Closing Date and the Underwriters shall have
received a certificate, dated the Closing Date and signed by an executive
officer of the Company to the effect set forth in this Section 6(p) and in
Section 6(q) hereof.
(p) The Company shall not have failed at or prior to the Closing
Date to have performed or complied with any of its agreements herein contained
and required to be performed or complied with by it hereunder at or prior to the
Closing Date.
(q) The Underwriters shall have received by instrument dated the
Closing Date (at the option of the Representative), in lieu of or in addition to
the legal opinions referred to in this Section 6, the right to rely on opinions
provided by such counsel and all other counsel under the terms of the Basic
Documents.
(r) Each of the Class A Notes shall be rated at least "AAA" and
"AAA", respectively, by Fitch IBCA, Inc. ("Fitch") and Standard & Poor's Ratings
Service, a division of The McGraw-Hill Companies ("S&P"), and that neither Fitch
nor S&P have placed the Class A Notes under surveillance or review with possible
negative implications.
(s) The issuance of the Notes shall not have resulted in a
reduction or withdrawal by Fitch or S&P of the current rating of any outstanding
securities issued or originated by the Company or any of its affiliates.
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(t) You shall have received evidence satisfactory to you of the
completion of all actions necessary to effect the transfer of the Financed
Eligible Loans as described in the Prospectus and the recordation thereof on the
Seller's, UNIPAC's and InTuition's computer systems.
(u) You shall have received certificates addressed to you dated
the Closing Date from officers of the Company addressing such additional matters
as you may reasonably request in form and substance satisfactory to you and your
counsel.
(v) You shall have received a signed Indemnity Agreement from
NelNet in form and substance satisfactory to you and your counsel.
(w) You shall have received such other opinions, certificates
and documents as are required under the Indenture as a condition to the issuance
of the Notes.
The Company will provide or cause to be provided to you such
conformed copies of such of the foregoing opinions, notes, letters and documents
as you reasonably request.
7. Expenses. The Company agrees to pay or to otherwise cause the
payment of the following costs and expenses and all other costs and expenses
incident to the performance by it of its obligations hereunder: (i) the
preparation, printing or reproduction of the Registration Statement, the
Prospectus and each amendment or supplement to any of them, this Agreement, and
each other Basic Document; (ii) the printing (or reproduction) and delivery
(including postage, air freight charges and charges for counting and packaging)
of such copies of the Registration Statement, the Prospectus and all amendments
or supplements to any of them as may be reasonably requested for use in
connection with the offering and sale of the Notes; (iii) the preparation,
printing, authentication, issuance and delivery of definitive certificates for
the Notes; (iv) the printing (or reproduction) and delivery of this Agreement,
the preliminary and supplemental Blue Sky Memoranda and all other agreements or
documents printed (or reproduced) and delivered in connection with the offering
of the Notes; (v) qualification of the Indenture under the Trust Indenture Act;
(vi) the qualification of the Notes for offer and sale under the securities or
Blue Sky laws of the several states as provided in Section 3(h) hereof
(including the reasonable fees, expenses and disbursements of counsel relating
to the preparation, printing or reproduction, and delivery of the preliminary
and supplemental Blue Sky Memoranda and such qualification); (vii) the fees and
disbursements of (A) the Company's counsel, (B) the Underwriters' counsel, (C)
the Trustee and its counsel, (D) the Depository Trust Company in connection with
the book-entry registration of the Notes and (G) KPMG Peat Marwick, accountants
for the Company and issuer of the Comfort Letter; and (viii) the fees charged by
S&P and Fitch for rating the Notes.
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8. Effective Date of Agreement. This Agreement shall be deemed
effective as of the date first above written upon the execution and delivery
hereof by all the parties hereto. Until such time as this Agreement shall have
become effective, it may be terminated by the Company, by notifying the
Representative, or by the Representative, by notifying the Company.
Any notice under this Section 8 may be given by telecopy or
telephone but shall be subsequently confirmed by letter.
9. Termination of Agreement. This Agreement shall be subject to
termination in the absolute discretion of the Representative, without liability
on the part of the Underwriters to the Company, by notice to the Company, if
prior to the Closing Date (i) trading in securities generally on the New York
Stock Exchange, American Stock Exchange or the Nasdaq National Market shall have
been suspended or materially limited, (ii) a general moratorium on commercial
banking activities in New York shall have been declared by either Federal or
state authorities, or (iii) there shall have occurred any outbreak or escalation
of hostilities or other international or domestic calamity, crisis or change in
political, financial or economic conditions, the effect of which on the
financial markets of the United States is such as to make it, in the judgment of
the Representative, impracticable or inadvisable to commence or continue the
offering of the Notes on the terms set forth in the Prospectus, as applicable,
or to enforce contracts for the resale of the Notes by the Underwriters. Notice
of such termination may be given to the Company by telecopy or telephone and
shall be subsequently confirmed by letter.
10. Information Furnished by the Underwriters. The statements
set forth under the heading "Plan of Distribution" in the Prospectus Supplement
constitute the only information furnished by or on behalf of the Underwriters as
such information is referred to in Sections 3(b) and 5 hereof.
Section 11. Default by One of the Underwriters. If any of the
Underwriters shall fail on the Closing Date to purchase the Notes which it is
obligated to purchase hereunder (the "Defaulted Notes"), the remaining
Underwriters (the "Non-Defaulting Underwriters") shall have the right, but not
the obligation, within one (1) Business Day thereafter, to make arrangements to
purchase all, but not less than all, of the Defaulted Notes upon the terms
herein set forth; if, however, the Non-Defaultin Underwriters shall have not
completed such arrangements within such one (1) Business Day period, then this
Agreement shall terminate without liability on the part of the Non-Defaulting
Underwriters.
No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Non-Defaulting Underwriters or the
Company shall have the right to postpone the Closing Date for a period not
exceeding seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements.
Section 12. Computational Materials. (a) It is understood that
the Underwriters may prepare and provide to prospective investors certain
Computational Materials (as defined below) in connection with the Company's
offering of the Notes, subject to the following conditions:
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(i) The Underwriters shall comply with all applicable laws and
regulations in connection with the use of Computational Materials including the
No-Action Letter of May 20, 1994 issued by the Commission to Kidder, Peabody
Acceptance Corporation I, Kidder, Peabody & Co. Incorporated and Kidder
Structured Asset Corporation, as made applicable to other issuers and
underwriters by the Commission in response to the request of the Public
Securities Association dated May 24, 1994, and the No-Action Letter of February
17, 1995 issued by the Commission to the Public Securities Association
(collectively, the "Kidder/PSA Letters").
(ii) As used herein, "Computational Materials" and the term "ABS
Term Sheets" shall have the meanings given such terms in the Kidder/PSA Letters,
but shall include only those Computational Materials that have been prepared or
delivered to prospective investors by or at the direction of an Underwriter.
(iii) Each Underwriter shall provide the Company with
representative forms of all Computational Materials prior to their first use, to
the extent such forms have not previously been approved by the Company for use
by such Underwriter. Each Underwriter shall provide to the Company, for filing
on Form 8-K as provided in Section 11(b), copies of all Computational Materials
that are to be filed with the Commission pursuant to the Kidder/PSA Letters.
Each Underwriter may provide copies of the foregoing in a consolidated or
aggregated form. All Computational Materials described in this subsection
(a)(iii) must be provided to the Company not later than 10:00 A.M., Colorado
time, one business day before filing thereof is required pursuant to the terms
of this Agreement.
(iv) If an Underwriter does not provide the Computational
Materials to the Company pursuant to subsection (a)(iii) above, such Underwriter
shall be deemed to have represented, as of the applicable Closing Date, that it
did not provide any prospective investors with any information in written or
electronic form in connection with the offering of the Notes that is required to
be filed with the Commission in accordance with the Kidder/PSA Letters.
(v) In the event of any delay in the delivery by an Underwriter
to the Company of all Computational Materials required to be delivered in
accordance with subsection (a)(iii) above, the Company shall have the right to
delay the release of the Prospectus to investors or to such Underwriter, to
delay the Closing Date and to take other appropriate actions in each case as
necessary in order to allow the Company to comply with its agreement set forth
in Section 11(b) to file the Computational Materials by the time specified
therein.
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(b) The Company shall file the Computational Materials (if any)
provided to it by the Underwriter under Section 11(a)(iii) with the Commission
pursuant to a Current Report on Form 8-K no later than 5:30 P.M., New York time,
on the date required pursuant to the Kidder/PSA Letters.
13. Survival of Representations and Warranties. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement or contained in notes of officers of the Company submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation or statement as to the results thereof, made by or on
behalf of the Underwriters, the Company or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Notes.
14. Miscellaneous. Except as otherwise provided in Sections 5, 8
and 9 hereof, notice given pursuant to any provision of this Agreement shall be
in writing and shall be delivered (i) if to the Company, at 6991 East Camelback
Road, Suite B290, Scottsdale, Arizona 85251, Attention: Stephen F. Butterfield,
and (ii) if to the Underwriters, to PaineWebber Incorporated, 1285 Avenue of the
Americas, New York, New York 10019, Attention: John A. Hupalo.
This Agreement has been and is made solely for the benefit of the
Underwriters, the Company, their respective directors, officers, trustees and
controlling persons referred to in Section 5 hereof and their respective
successors and assigns, to the extent provided herein, and no other person shall
acquire or have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from an Underwriter of any of the Notes in his status
as such purchaser.
15. Applicable Law; Counterparts. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed within the State of New York
without giving effect to the choice of laws or conflict of laws principles
thereof.
This Agreement may be signed in various counterparts which
together constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof or
thereof shall have been executed and delivered on behalf of each party hereto.
21
<PAGE>
Please confirm that the foregoing correctly sets forth the
agreement between the Company and the Underwriters.
Very truly yours,
UNION FINANCIAL SERVICES-1, INC.
By: /s/ Ronald W. Page
------------------------
Ronald W. Page
Vice President
Confirmed as of the date first above mentioned.
PAINEWEBBER INCORPORATED, as acting on
behalf of itself and as Representative of the Underwriters
By /s/ John A. Hupalo
- ---------------------------
John A. Hupalo, Managing Director
22
<PAGE>
SCHEDULE A
Principal Amount of Notes
Underwriter Class A-13 Class A-14 Class A-15 Class A-16
PaineWebber Incorporated $66,500,000 $66,500,000 $66,500,000 $65,265,000
Salomon Smith Barney Inc. 2,100,000 2,100,000 2,100,000 2,061,000
Merrill Lynch & Co. 700,000 700,000 700,000 687,000
J.P. Morgan & Co. 700,000 700,000 700,000 687,000
------------ ----------- ----------- -----------
Total $70,000,000 $70,000,000 $70,000,000 $68,700,000
========== ========== ========== ==========
<TABLE>
<CAPTION>
Terms of the Notes
Class Interest Rate Final Maturity Date Price to Public Underwriting Discount Proceeds to Issuer
------------- ------------------- --------------- --------------------- ------------------
<S> <C> <C> <C> <C> <C>
A-13 Auction Rate December 1, 2032 100% 0.38% $69,734,000
A-14 Auction Rate December 1, 2032 100% 0.38% $69,734,000
A-15 Auction Rate December 1, 2032 100% 0.38% $69,734,000
A-16 Auction Rate December 1, 2032 100% 0.38% $68,438,940
</TABLE>
EXHIBIT 4.3
SERIES 1999 SUPPLEMENTAL INDENTURE OF TRUST
by and between
UNION FINANCIAL SERVICES-1, INC.
and
ZIONS FIRST NATIONAL BANK,
as Trustee
Authorizing the Issuance of
$278,700,000
Union Financial Services-1, Inc.
Taxable Student Loan Asset-Backed Notes
Series 1999
Dated as of July 1, 1999
<PAGE>
SERIES 1999 SUPPLEMENTAL INDENTURE OF TRUST
THIS SERIES 1999 SUPPLEMENTAL INDENTURE OF TRUST (this "Supplemental
Indenture") dated as of July 1, 1999, is by and between UNION FINANCIAL
SERVICES-1, INC., a corporation duly organized and existing under the laws of
the State of Nevada (the "Issuer"), and ZIONS FIRST NATIONAL BANK, a national
banking association duly organized and operating under the laws of the United
States of America (together with its successors, the "Trustee"), as successor
trustee hereunder (all capitalized terms used in these preambles, recitals and
granting clauses shall have the same meanings assigned thereto in Article I
hereof);
W I T N E S S E T H:
WHEREAS, the Issuer has previously entered into an Indenture of Trust
dated as of March 1, 1996 (as amended by an Amended and Restated Indenture of
Trust dated as of June 15, 1996 and by a Second Amended and Restated Indenture
of Trust dated as of November 1, 1996, a Series 1996C Supplemental Indenture of
Trust dated as of November 1, 1996, a Series 1997A Supplemental Indenture of
Trust dated as of March 1, 1997, a First Supplement to Second Amended and
Restated Indenture of Trust dated as of March 1, 1997, a Second Supplement to
Second Amended and Restated Indenture of Trust dated as of September 1, 1998, a
Third Supplement to Second Amended and Restated Indenture of Trust dated as
December 1, 1998 and a Series 1998 Supplemental Indenture of Trust dated as of
December 15, 1998, the "Original Indenture," and together with this Supplemental
Indenture, the "Indenture"), between the Issuer and the Trustee;
WHEREAS, the Issuer desires to enter into this Supplemental Indenture in
order to issue Additional Notes pursuant to the terms of the Indenture,
including Section 2.12 thereof;
WHEREAS, the Issuer represents that it is duly created as a corporation
under the laws of the State and that by proper action it has duly authorized the
issuance of $278,700,000 of its Taxable Student Loan Asset-Backed Notes, Series
1999 consisting of one Class, designated as Senior Class 1999A, (the "Series
1999 Notes"), and it has by proper corporate action authorized the execution and
delivery of this Supplemental Indenture;
WHEREAS, the Series 1999 Notes constitute Additional Notes as defined in
the Indenture;
WHEREAS, the Trustee has agreed to accept the trusts herein created upon
the terms herein set forth; and
NOW, THEREFORE, it is mutually covenanted and agreed as follows:
<PAGE>
ARTICLE I
DEFINITIONS AND USE OF PHRASES
All words and phrases defined in Article I of the Indenture shall have
the same meaning in this Supplemental Indenture, except as otherwise appears in
this Article. In addition, the following terms have the following meanings in
this Supplemental Indenture unless the context clearly requires otherwise:
"Authorized Denominations" means $100,000 and any integral multiple
thereof.
"Class 1999A-13 Notes" means the $70,000,000 Union Financial Services-1,
Inc., Taxable Student Loan Asset-Backed Notes, Senior Class 1999A-13 Auction
Rate Certificate Notes (ARCs).
"Class 1999A-14 Notes" means the $70,000,000 Union Financial Services-1,
Inc., Taxable Student Loan Asset-Backed Notes, Senior Class 1999A-14 Auction
Rate Certificate Notes (ARCs).
"Class 1999A-15 Notes" means the $70,000,000 Union Financial Services-1,
Inc., Taxable Student Loan Asset-Backed Notes, Senior Class 1999A-15 Auction
Rate Certificate Notes (ARCs).
"Class 1999A-16 Notes" means the $68,700,000 Union Financial Services-1,
Inc., Taxable Student Loan Asset-Backed Notes, Senior Class 1999A-16 Auction
Rate Certificate Notes (ARCs).
"Date of Issuance" means, with respect to the Series 1999 Notes, July 1,
1999.
"Rating Agency" means, collectively, Fitch IBCA, Inc. and Standard &
Poor's Ratings Services.
"Series 1999 Notes" means the Union Financial Services-1, Inc., Taxable
Student Loan Asset-Backed Notes, Series 1999 issued pursuant to the Indenture
and this Supplemental Indenture in the aggregate principal amount of
$278,700,000, consisting of the Class 1999A-13 Notes, the Class 1999A-14 Notes,
the Class 1999A-15 Notes and the Class 1999A-16 Notes.
"Series 1999 Reserve Fund Requirement" means $00.00; provided, however,
that so long as any Notes remain Outstanding there shall be at least $1,500,000
on deposit in the Reserve Fund.
"Servicer" means National Education Loan Network, Inc., a Nevada
corporation.
"Servicing Agreement" means, collectively, (i) the Servicing Agreement
dated as of July 1, 1999, as supplemented and amended, between the Issuer and
the Servicer, (ii) the Loan Servicing Agreement dated as of July 1, 1999, as
supplemented and amended, between the Servicer and UNIPAC Service Corporation,
as subservicer and (iii) the Loan Sub-Servicing Agreement dated as of July 1,
1999, as supplemented and amended, between the Servicer and InTuition, Inc., as
subservicer.
"Subservicer" means, collectively, UNIPAC Service Corporation and
InTuition, Inc.
"Underwriter" means, collectively, PaineWebber Incorporated, Salomon
Smith Barney Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P.
Morgan Securities Inc.
2
<PAGE>
Words importing the masculine gender include the feminine gender. Words
importing persons include firms, associations and corporations. Words importing
the singular number include the plural number and vice versa. Additional terms
are defined in the body of this Supplemental Indenture and the Appendices
hereto.
In the event that any term or provision contained herein with respect to
the Series 1999 Notes shall conflict with or be inconsistent with any term or
provision contained in the Indenture, the terms and provisions of this
Supplemental Indenture shall govern.
ARTICLE II
SERIES 1999 NOTE DETAILS,
FORM OF SERIES 1999 NOTES,
REDEMPTION OF SERIES 1999 NOTES
AND USE OF PROCEEDS OF SERIES 1999 NOTES
Section 2.01. Series 1999 Note Details.
(a) The aggregate principal amount of the Series 1999 Notes which
may be initially authenticated and delivered under this Supplemental
Indenture is limited to $278,700,000, except for Series 1999 Notes
authenticated and delivered upon transfer of, or in exchange for, or in
lieu of Notes pursuant to Sections 2.03 and 2.04 of the Indenture. The
Series 1999 Notes shall be issued in four (4) separate subclasses (each
a "subclass") consisting of $70,000,000 of Class 1999A-13 Notes,
$70,000,000 of Class 1999A-14 Notes, $70,000,000 of Class 1999A-15 Notes
and $68,700,000 of Class 1999A-16 Notes." The Class 1999A-13 Notes shall
be known and designated as "Union Financial Services-1, Inc., Taxable
Student Loan Asset-Backed Notes, Senior Class 1999A-13 Auction Rate
Certificate Notes (ARCs)." The Class 1999A-14 Notes shall be known and
designated as "Union Financial Services-1, Inc., Taxable Student Loan
Asset-Backed Notes, Senior Class 1999A-14 Auction Rate Certificate Notes
(ARCs)." The Class 1999A-15 Notes shall be known and designated as
"Union Financial Services-1, Inc., Taxable Student Loan Asset-Backed
Notes, Senior Class 1999A-15 Auction Rate Certificate Notes (ARCs)." The
Class 1999A-16 Notes shall be known and designated as "Union Financial
Services-1, Inc., Taxable Student Loan Asset-Backed Notes, Senior Class
1999A-16 Auction Rate Certificate Notes (ARCs)." The Series 1999 Notes
shall be issuable only as fully registered notes in the Authorized
Denominations. The Series 1999 Notes of each subclass shall each be
lettered "R" and shall be numbered separately from 1 upwards,
respectively.
The Series 1999 Notes (collectively, the "Auction Rate Notes")
shall be dated their Date of Issuance and shall bear interest from their
Date of Issuance, payable on each Interest Payment Date (as defined in
Appendix A to this Supplemental Indenture), except that Auction Rate
Notes which are issued upon transfer, exchange or other replacement
shall bear interest from the most recent Interest Payment Date to which
interest has been paid, or if no interest has been paid, from the date
of the Auction Rate Notes. The Series 1999 Notes shall mature on
December 1, 2032. Interest on the Auction Rate Notes shall be computed
on the basis of a 360-day year and actual days elapsed. The terms of and
definitions related to the Auction Rate Notes are found in Article I
hereof and Appendix A to this Supplemental Indenture.
3
<PAGE>
The principal of the Series 1999 Notes due at its Stated Maturity
or redemption in whole shall be payable at the Principal Office of the
Trustee, or such other location as directed by the Trustee, or at the
Principal Office of its successor in trust upon presentation and
surrender of the Series 1999 Notes. Payment of interest and principal
paid subject to a redemption on any Series 1999 Note shall be made to
the Registered Owner thereof by check or draft mailed on the Interest
Payment Date by the Trustee to the Registered Owner at his address as it
last appears on the registration books kept by the Trustee at the close
of business on the Record Date for such interest payment date, but any
such interest not so timely paid or duly provided for shall cease to be
payable to the Registered Owner thereof at the close of business on the
Record Date and shall be payable to the Registered Owner thereof at the
close of business on a special record date (a "Special Record Date") for
the payment of any such defaulted interest. Such Special Record Date
shall be fixed by the Trustee whenever moneys become available for
payment of the defaulted interest, and notice of such Special Record
Date shall be given to the Registered Owners of the Series 1999 Notes
not less than 10 days prior thereto by first-class mail to each such
Registered Owner as shown on the Trustee's registration books on the
date selected by the Trustee, stating the date of the Special Record
Date and the date fixed for the payment of such defaulted interest.
Payment of interest to the Securities Depository or its nominee shall,
and at the written request addressed to the Trustee of any other
Registered Owner owning at least $1,000,000 principal amount of the
Series 1999 Notes, payments of interest shall, be paid by wire transfer
within the United States to the bank account number filed no later than
the Record Date or Special Record Date with the Trustee for such
purpose. All payments on the Series 1999 Notes shall be made in lawful
money of the United States of America.
(b) Except as otherwise provided in this Section, the Series 1999
Notes in the form of one global note for each Stated Maturity date shall
be registered in the name of the Securities Depository or its nominee
and ownership thereof shall be maintained in book-entry form by the
Securities Depository for the account of the Agent Members. Initially,
each Series 1999 Note shall be registered in the name of CEDE & Co., as
the nominee of The Depository Trust Company. Except as provided in
subsection (d) of this Section, the Series 1999 Notes may be
transferred, in whole but not in part, only to the Securities Depository
or a nominee of the Securities Depository or to a successor Securities
Depository selected or approved by the Issuer or to a nominee of such
successor Securities Depository. Each global note shall bear a legend
substantially to the following effect: "Except as otherwise provided in
the Indenture, this global note may be transferred, in whole but not in
part, only to another nominee of the Securities Depository (as defined
in the Indenture) or to a successor Securities Depository or to a
nominee of a successor Securities Depository."
(c) Except as otherwise provided herein, the Issuer and the
Trustee shall have no responsibility or obligation with respect to (i)
the accuracy of the records of the Securities Depository or any Agent
Member with respect to any beneficial ownership interest in the Series
1999 Notes, (ii) the delivery to any Agent Member, beneficial owner of
the Series 1999 Notes or other Person, other than the Securities
Depository, of any notice with respect to the Series 1999 Notes or (iii)
the payment to any Agent Member, beneficial owner of the Series 1999
Notes or other Person, other than the Securities Depository, of any
4
<PAGE>
amount with respect to the principal of or interest on the Series 1999
Notes. So long as the certificates for the Series 1999 Notes issued
under this Supplemental Indenture are not issued pursuant to subsection
(d) of this Section the Issuer and the Trustee may treat the Securities
Depository as, and deem the Securities Depository to be, the absolute
owner of the Series 1999 Notes for all purposes whatsoever, including,
without limitation, (A) the payment of principal of and interest on such
Series 1999 Notes, (B) giving notices of redemption and other matters
with respect to such Series 1999 Notes and (C) registering transfers
with respect to such Series 1999 Notes. In connection with any notice or
other communication to be provided to the Registered Owners pursuant to
this Supplemental Indenture by the Issuer or the Trustee with respect to
any consent or other action to be taken by the Registered Owners, the
Issuer or the Trustee, as the case may be, shall establish a record date
for such consent or other action and, if the Securities Depository shall
hold all of the Series 1999 Notes, give the Securities Depository notice
of such record date not less than 15 calendar days in advance of such
record date to the extent possible. Such notice to the Securities
Depository shall be given only when the Securities Depository is the
sole Registered Owner.
(d) If at any time the Securities Depository notifies the Issuer
and the Trustee that it is unwilling or unable to continue as Securities
Depository with respect to any or all of the Series 1999 Notes or if at
any time the Securities Depository shall no longer be registered or in
good standing under the Securities Exchange Act or other applicable
statute or regulation and a successor Securities Depository is not
appointed by the Issuer within 90 days after the Issuer receives notice
or becomes aware of such condition, as the case may be, subsections (b)
and (c) of this Section shall no longer be applicable and the Issuer
shall execute and the Trustee shall authenticate and deliver
certificates representing the Series 1999 Notes as provided below. In
addition, the Issuer may determine at any time that the Series 1999
Notes shall no longer be represented by global certificates and that the
provisions of subsections (b) and (c) of this Section shall no longer
apply to the Series 1999 Notes. In such event, the Issuer shall execute
and the Trustee shall authenticate and deliver certificates representing
the Series 1999 Notes as provided below. Certificates for the Series
1999 Notes issued in exchange for a global certificate pursuant to this
subsection shall be registered in such names and authorized
denominations as the Securities Depository, pursuant to instructions
from the Agent Members or otherwise, shall instruct in writing the
Issuer and the Trustee, and upon which written instructions the Trustee
may rely without investigation. The Trustee shall promptly deliver such
certificates representing the Series 1999 Notes to the Persons in whose
names such Notes are so registered.
Section 2.02. Redemption of the Series 1999 Notes.
5
<PAGE>
(a) Mandatory Redemption. Subject to the provisions of Section
2.02(d) hereof, the Series 1999 Notes are subject to mandatory
redemption at the direction of the Issuer, in whole or in part, on any
Interest Payment Date, at a redemption price equal to the principal
amount thereof plus interest accrued, if any, to the date of redemption
thereof from moneys in the Senior Note Redemption Account of the Note
Redemption Fund available therefor pursuant to the Indenture.
(b) Optional Redemptions and Optional Purchase.
(i) Optional Redemption of Series 1999 Notes. Subject to the
provisions of Section 2.02(d) hereof, the Series 1999 Notes are
subject to redemption at the option of the Issuer, from funds
received by the Trustee constituting interest on Financed
Eligible Loans remaining in the Revenue Fund after all other
prior required payments have been made from the Revenue Fund, in
whole or in part, on any Interest Payment Date, at a redemption
price equal to the principal amount thereof being redeemed, plus
interest accrued, if any, to the date of redemption.
(ii) Extraordinary Optional Redemption of Series 1999 Notes.
Subject to the provisions of Section 2.02(d) hereof, the Series
1999 Notes shall also be subject to extraordinary optional
redemption, at the option of the Issuer, from any unallocated and
available moneys in the Trust Estate, at a redemption price equal
to the principal amount of the Series 1999 Notes being redeemed,
plus accrued interest to the date of redemption, without premium
in whole or in part on any Interest Payment Date, if the Issuer
reasonably determines that it is unable to acquire Financed
Eligible Loans, that the rate of return on Financed Eligible
Loans has materially decreased, or that the costs of
administering the Trust Estate have placed unreasonable burdens
upon the ability of the Issuer to perform its obligations under
the Indenture.
(iii) Optional Purchase of Series 1999 Notes. Subject to the
provisions of Section 2.02(d) hereof, the Issuer may purchase or
cause to be purchased all of the Series 1999 Notes on any
Interest Payment Date on which the aggregate current principal
balance of the Series 1999 Notes shall be less than or equal to
10% of the initial aggregate principal balance of the Series 1999
Notes on their Date of Issuance, at a purchase price equal to the
aggregate current principal balance of such Series 1999 Notes,
plus accrued interest on the Series 1999 Notes through the day
preceding the Interest Payment Date on which the purchase occurs.
The amount deposited pursuant to this subsection (iv) shall be
paid to the Registered Owners on the related Interest Payment
Date following the date of such deposit. All Series 1999 Notes
which are purchased pursuant to this subsection (iv) shall be
delivered by the Issuer upon such purchase to, and be canceled
by, the Trustee and be disposed of in a manner satisfactory to
the Trustee and the Issuer.
6
<PAGE>
(c) Notice of Redemption and Purchase. The Trustee shall cause
notice of any redemption or purchase to be given by mailing a copy of
the notice by first-class mail to the Registered Owner of any Series
1999 Notes, and the Auction Agent, designated for redemption or purchase
in whole or in part, at their address as the same shall last appear upon
the registration books, in each case not less than 15 days prior to the
redemption or purchase date; provided, however, that failure to give
such notice, or any defect therein, shall not affect the validity of any
proceedings for the redemption or purchase date of such Series 1999
Notes for which no such failure or defect occurs.
(d) Partial Redemption.
(i) If less than all of the Series 1999 Notes are to be
redeemed pursuant to Section 2.02(a) or 2.02(b) hereof, the
subclass of Series 1999 Notes to be redeemed shall be redeemed as
directed by an Issuer Order. If less than all of the Series 1999
Notes of any Stated Maturity of any subclass of the Series 1999
Notes are to be redeemed, the Series 1999 Notes of the same
Stated Maturity to be redeemed shall be selected by lot in such
manner as the Trustee shall determine. Notwithstanding the
foregoing, the Series 1999 Notes may only be redeemed pursuant to
the provisions of Section 5.06 of the Indenture.
(ii) In case a Series 1999 Note is of a denomination larger
than an Authorized Denomination, a portion of such Note (in an
Authorized Denomination) may be redeemed. Upon surrender of any
Series 1999 Note for redemption in part only, the Issuer shall
execute and the Trustee shall authenticate and deliver to the
Registered Owner thereof, the cost of which shall be paid by the
Issuer, a new Series 1999 Note or Series 1999 Notes of the same
series, maturity and of authorized denominations, in an aggregate
principal amount equal to the unredeemed portion of the Series
1999 Note surrendered.
Section 2.03. Delivery of Series 1999 Notes. Upon the execution and
delivery of this Supplemental Indenture, the Issuer shall execute and deliver to
the Trustee and the Trustee shall authenticate the Series 1999 Notes and deliver
them to The Depository Trust Company and as hereinafter in this Section
provided.
Prior to the delivery by the Trustee of any of the Series 1999 Notes,
there shall have been filed with or delivered to the Trustee the following:
(a) A resolution duly adopted by the Issuer, certified by the
Secretary or other Authorized Officer thereof, authorizing the execution
and delivery of this Supplemental Indenture and the issuance of the
Series 1999 Notes.
(b) Duly executed copies of this Supplemental Indenture and a
copy of the Indenture.
(c) The written order of the Issuer as to the delivery of the
Series 1999 Notes, signed by an Authorized Officer.
(d) A Cash Flow Certificate pursuant to Section 2.12(b)(ii) of
the Original Indenture.
(e) Rating letters from each Rating Agency pursuant to Section
2.12(b)(iii) of the Original Indenture.
7
<PAGE>
(f) An opinion of Note Counsel pursuant to Sections 2.12(b)(iv)
and (vi) of the Original Indenture.
Section 2.04. Trustee's Authentication Certificate. The Trustee's
authentication certificate upon the Series 1999 Notes shall be substantially in
the form provided in Exhibit A hereof. No Series 1999 Note shall be secured
hereby or entitled to the benefit hereof, or shall be valid or obligatory for
any purpose, unless a certificate of authentication, substantially in such form,
has been duly executed by the Trustee; and such certificate of the Trustee upon
any Series 1999 Note shall be conclusive evidence and the only competent
evidence that such Bond has been authenticated and delivered hereunder. The
Trustee's certificate of authentication shall be deemed to have been duly
executed by it if manually signed by an authorized officer of the Trustee, but
it shall not be necessary that the same person sign the certificate of
authentication on all of the Series 1999 Notes issued hereunder.
Section 2.05. Deposit of Series 1999 Note Proceeds. Upon the issuance
and delivery of the Series 1999 Notes, the Trustee shall deposit the net
proceeds thereof (i.e., net of Underwriters' discount of $1,059,060.00):
(a) an amount equal to $883,667.00 shall be deposited
to the Cost of Issuance Fund; and
(b) an amount equal to $276,757,273.00 shall be deposited to the
Series 1999 Loan Account of the Student Loan Fund.
Section 2.06. Forms of Series 1999 Notes. The Series 1999 Notes shall be
in substantially the form set forth in Exhibit A hereto, each with such
variations, omissions and insertions as may be necessary.
ARTICLE III
AMENDMENTS TO ORIGINAL INDENTURE
Section 3.01. Amendment of Indenture. The Indenture is hereby amended
and supplemented hereby, as provided in Sections 2.12 and 8.01(i) and 8.01(m)
thereof, as follows:
(a) Section 5.01(a)(i) of the Indenture shall be supplemented to
create the following Accounts:
(i) a Series 1999 Loan Account;
(ii) a Series 1999 Note Account; and
(iii) a Series 1999 Recycling Account.
(b) Section 5.08 of the Indenture shall be supplemental to
include the following:
8
<PAGE>
The Trustee shall deposit in the Cost of Issuance Fund on
the Date of Issuance the amounts set forth in Section
2.05(a) of the Series 1999 Supplemental Indenture of
Trust. Moneys in the Cost of Issuance Fund shall be used
by the Trustee, upon the written direction of an
Authorized Officer of the Issuer, solely for the purpose
of paying costs of issuance of the Series 1999 Notes,
including, without limitation, any compensation of the
Underwriter not paid from the proceeds of the Notes. If
any moneys remain in the Cost of Issuance Fund on
September 1, 1999, such amounts shall be paid by the
Trustee without further direction to the Issuer.
ARTICLE IV
GENERAL PROVISIONS
Section 4.01. Date of Execution. Although this Supplemental Indenture
for convenience and for the purpose of reference is dated as of July 1, 1999.
Section 4.02. Laws Governing. It is the intent of the parties hereto
that this Supplemental Indenture shall in all respects be governed by the laws
of the State.
Section 4.03. Severability. Of any covenant, agreement, waiver, or part
thereof in this Supplemental Indenture contained be forbidden by any pertinent
law or under any pertinent law be effective to render this Supplemental
Indenture invalid or unenforceable or to impair the lien hereof, then each such
covenant, agreement, waiver, or part thereof shall itself be and is hereby
declared to be wholly ineffective, and this Supplemental Indenture shall be
construed as if the same were not included herein.
Section 4.04. Exhibits. The terms of the Exhibits attached to this
Supplemental Indenture are incorporated herein in all particulars.
ARTICLE V
APPLICABILITY OF INDENTURE
The provisions of the Indenture are hereby ratified, approved and
confirmed, except as otherwise expressly modified by this Supplemental
Indenture. The representations, warranties and covenants contained in the
Indenture (except as expressly modified herein) are hereby reaffirmed with the
same force and effect as if fully set forth herein and made again as of the date
hereof.
9
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Supplemental Indenture to
be executed in its corporate name and behalf by the Secretary, and the Trustee,
to evidence its acceptance of the trusts hereby created, has caused this
Supplemental Indenture to be executed in its corporate name and behalf, has
caused its corporate seal to be hereunto affixed by its duly authorized officer,
all in multiple counterparts, each of which shall be deemed an original, and the
Issuer and the Trustee have caused this Supplemental Indenture to be dated as of
the date herein above first shown, although actually executed on the dates shown
in the acknowledgments hereafter appearing.
[SEAL] UNION FINANCIAL SERVICES-1, INC.
By: /s/ Ronald W. Page
--------------------------
Ronald W. Page
Vice President
ZIONS FIRST NATIONAL BANK, as Trustee
By: /s/ David W. Bata
--------------------------
David W. Bata
Vice President
10
<PAGE>
APPENDIX A
CERTAIN TERMS AND PROVISIONS OF
THE AUCTION RATE NOTES
ARTICLE I
DEFINITIONS
Except as provided below in this Section, all terms which are defined in
Article I of the Indenture and Article I of this Supplemental Indenture shall
have the same meanings, respectively, in this Appendix A as such terms are given
in the Indenture and Article I of this Supplemental Indenture. In addition, the
following terms shall have the following respective meanings:
"After-Tax Equivalent" means the "AA" Composite Commercial Paper Rate.
"All Hold Rate" means the Applicable LIBOR Rate less .20%; provided that
in no event shall the applicable All Hold Rate be greater than the applicable
Maximum Auction Rate.
"Applicable LIBOR Rate" means, (a) for Auction Periods of 35 days or
less, One-Month LIBOR, (b) for Auction Periods of more than 35 days but less
than 91 days, Three-Month LIBOR, (c) for Auction Periods of more than 90 days
but less than 181 days, Six-Month LIBOR, and (d) for Auction Periods of more
than 180 days, One-Year LIBOR.
"Auction" means the implementation of the Auction Procedures on an
Auction Date.
"Auction Agent" means the Initial Auction Agent under the Initial
Auction Agent Agreement unless and until a Substitute Auction Agent Agreement
becomes effective, after which "Auction Agent" shall mean the Substitute Auction
Agent.
"Auction Agent Agreement" means the Initial Auction Agent Agreement
unless and until a Substitute Auction Agent Agreement is entered into, after
which "Auction Agent Agreement" shall mean such Substitute Auction Agent
Agreement.
"Auction Agent Fee" has the meaning set forth in the Auction Agent
Agreement.
"Auction Date" means, initially, July 21, 1999 with respect to the Class
1999A-13 Notes, July 28, 1999 with respect to the Class 1999A-14 Notes, August
4, 1999 with respect to the Class 1999A-15 Notes and August 11, 1999 with
respect to the Class 1999A-16 Notes, and thereafter, the Business Day
immediately preceding the first day of each Auction Period for each respective
Subclass, other than:
(a) each Auction Period commencing after the ownership of the
applicable Auction Rate Notes is no longer maintained in Book-entry Form
by the Securities Depository;
(b) each Auction Period commencing after and during the
continuance of a Payment Default; or
<PAGE>
(c) each Auction Period commencing less than two Business Days
after the cure or waiver of a Payment Default.
Notwithstanding the foregoing, the Auction Date for one or more Auction Periods
may be changed pursuant to Section 2.02(h) of this Appendix A.
"Auction Rate Notes" means, collectively, the Class 1999A-13 Notes, the
Class 1999A-14 Notes, the Class 1999A-15 Notes and the Class 1999A-16 Notes.
"Auction Note Interest Rate" means each variable rate of interest per
annum borne by an Auction Rate Note for each Auction Period and determined in
accordance with the provisions of Sections 2.01 and 2.02 hereof; provided,
however, that in the event of a Payment Default, the Auction Note Interest Rate
shall equal the applicable Non-Payment Rate; provided, further, however that
such Auction Note Interest Rate shall in no event exceed the applicable Maximum
Auction Rate.
"Auction Period" means the Interest Period applicable to the Auction
Rate Notes during which time the Interest Rate is determined pursuant to Section
2.02(a) hereof, which Auction Period (after the Initial Period for such
Subclass) initially shall consist generally of 28 days for the Class 1999A-13
Notes, 28 days for the Class 1999A-14 Notes, 28 days for the Class 1999A-15
Notes and 28 days for the Class 1999A-16 Notes, as the same may be adjusted
pursuant to Section 2.02(g) hereof.
"Auction Period Adjustment" means an adjustment to the Auction Period as
provided in Section 2.02(g) hereof.
"Auction Procedures" means the procedures set forth in Section 2.02(a)
hereof by which the Auction Rate is determined.
"Auction Rate" means the rate of interest per annum that results from
implementation of the Auction Procedures and is determined as described in
Section 2.02(a)(iii)(B) hereof.
"Authorized Denominations" means $100,000 and any integral multiple
thereof.
"Available Auction Rate Notes" has the meaning set forth in Section
2.02(a)(iii)(A)(1) hereof.
"Bid" has the meaning set forth in Section 2.02(a)(i)(A) hereof.
"Bid Auction Rate" has the meaning set forth in Section 2.02(a)(iii)(A)
hereof.
"Bidder" has the meaning set forth in Section 2.02(a)(i)(A) hereof.
"Bond Equivalent Yield" means, in respect of any security the rate for
which is quoted in The Wall Street Journal on a bank discount basis, the "bond
equivalent yield" (expressed as a percentage) for such security which appears on
Telerate's United States Treasury and Money Market Composite Page 0223, rounded
up to the nearest one one-hundredth of one percent.
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"Book-entry Form" or "Book-entry System" means a form or system under
which (a) the beneficial right to principal and interest may be transferred only
through a book entry, (b) physical securities in registered form are issued only
to a Securities Depository or its nominee as registered owner, with the
securities "immobilized" to the custody of the Securities Depository, and (c)
the book entry is the record that identifies the owners of beneficial interests
in that principal and interest.
"Broker-Dealer" means PaineWebber Incorporated or any other broker or
dealer (each as defined in the Securities Exchange Act of 1934, as amended),
commercial bank or other entity permitted by law to perform the functions
required of a Broker-Dealer set forth in the Auction Procedures that (a) is a
Participant (or an affiliate of a Participant), (b) has been appointed as such
by the Issuer pursuant to Section 2.02(f) hereof, and (c) has entered into a
Broker-Dealer Agreement that is in effect on the date of reference.
"Broker-Dealer Agreement" means each agreement between the Auction Agent
and a Broker-Dealer, and approved by the Issuer, pursuant to which the
Broker-Dealer agrees to participate in Auctions as set forth in the Auction
Procedures, as from time to time amended or supplemented. Each Broker-Dealer
Agreement shall be in substantially the form of the Broker-Dealer Agreements,
each dated as of July 1, 1999, among the Issuer, Bankers Trust Company, as
Auction Agent, and the Broker-Dealers.
"Broker-Dealer Fee" has the meaning set forth in the Auction Agent
Agreement.
"Broker-Dealer Fee Rate" has the meaning set forth in the Auction Agent
Agreement.
"Business Day" means a day of the year on which (a) banks located in the
city in which the Principal Office of the Trustee is located are not required or
authorized to remain closed, (b) banks located in the city in which the
Principal Office of the Auction Agent, as set forth in and for purposes of the
Auction Agent Agreement, is located are not required or authorized to remain
closed and (c) The New York Stock Exchange is not closed.
"Carry-over Amount" means the excess, if any, of (a) the amount of
interest on an Auction Rate Note that would have accrued with respect to the
related Interest Period at the applicable Auction Rate over (b) the amount of
interest on such Auction Rate Note actually accrued with respect to such Auction
Rate Note with respect to such Interest Period based on the applicable Maximum
Auction Rate (without regard to the last two clauses of the definition thereof)
together with the unreduced portion of any such excess from prior Interest
Periods; provided that any reference to "principal" or "interest" in this
Appendix A and the Auction Rate Notes shall not include within the meanings of
such words any Carry-over Amount or any interest accrued on any Carry-over
Amount.
"Closing Date" means the Date of Issuance of the Auction Rate Notes
(July 1, 1999).
"Commercial Paper Dealer" means PaineWebber Incorporated, its
successors and assigns, and any other commercial paper dealer appointed pursuant
to Section 2.02(c) of this Appendix A.
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"Effective Interest Rate" means, with respect to any Financed Eligible
Loan, the interest rate per annum payable by the borrower as of the last day of
the calendar quarter borne by such Financed Eligible Loan after giving effect to
any reduction in such interest rate pursuant to borrower incentives, (a) less
all accrued rebate fees on such Financed Eligible Loan constituting
Consolidation Loans paid during such calendar quarter expressed as a percentage
per annum and (b) plus all accrued Interest Benefit Payments and Special
Allowance Payments applicable to such Financed Eligible Loan during such
calendar quarter expressed as a percentage per annum.
"Eligible Carry-over Make-Up Amount" means, with respect to each
Interest Period relating to the Auction Rate Notes as to which, as of the first
day of such Interest Period, there is any unpaid Carry-over Amount, an amount
equal to the lesser of (a) interest computed on the principal balance of the
Auction Rate Notes in respect to such Interest Period at a per annum rate equal
to the excess, if any, of applicable Maximum Auction Rate (without regard to the
last two clauses of the definition thereof) over the Auction Rate, together with
the unreduced portion of any such excess from prior Interest Periods and (b) the
aggregate Carry-over Amount remaining unpaid as of the first day of such
Interest Period together with interest accrued and unpaid thereon through the
end of such Interest Period.
"Existing Owner" means (a) with respect to and for the purpose of
dealing with the Auction Agent in connection with an Auction, a Person who is a
Broker-Dealer listed in the Existing Owner Registry at the close of business on
the Business Day immediately preceding the Auction Date for such Auction and (b)
with respect to and for the purpose of dealing with the Broker-Dealer in
connection with an Auction, a Person who is a beneficial owner of Auction Rate
Notes.
"Existing Owner Registry" means the registry of Persons who are owners
of the Auction Rate Notes, maintained by the Auction Agent as provided in the
Auction Agent Agreement.
"Hold Order" has the meaning set forth in Section 2.02(a)(i)(A) hereof.
"Initial Auction Agent" means Bankers Trust Company, a New York banking
corporation, its successors and assigns.
"Initial Auction Agent Agreement" means, collectively, the Auction Agent
Agreement dated as of July 1, 1999, by and among the Issuer, the Trustee and the
Initial Auction Agent, including any amendment thereof or supplement thereto.
"Initial Period" means, as to Auction Rate Notes, the period commencing
on the Closing Date and continuing through the day immediately preceding the
Initial Rate Adjustment Date for such Auction Rate Notes.
"Initial Rate" means 5.25% for the Class 1999A-13 Notes, 5.25% for the
Class 1999A-14 Notes, 5.25% for the Class 1999A-15 Notes and 5.25% for the Class
1999A-16 Notes.
"Initial Rate Adjustment Date" means, with respect to the Class
1999A-13 Notes, July 22, 1999; with respect to the Class 1999A-14 Notes,
July 29, 1999; with respect to the Class 1999A-15 Notes, August 5, 1999;
and with respect to the Class 1999A-16 Notes, August 12, 1999.
"Interest Payment Date" means (a) so long as the Auction Rate Notes bear
interest at an Auction Note Interest Rate for an Interest Period of not greater
than 180 days, the Business Day immediately following the expiration of the
Initial Period for such Subclass, and each related Auction Period thereafter and
(b) if and for so long as the Auction Rate Notes bear interest at an Auction
Note Interest Rate for an Interest Period of greater than 180 days, each January
1 and July 1.
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"Interest Period" means, with respect to the Auction Rate Notes, the
Initial Period and each period commencing on an Interest Rate Adjustment Date
for such Subclass and ending on the day before (a) the next Interest Rate
Adjustment Date for such Subclass or (b) the Stated Maturity of such Subclass,
as applicable.
"Interest Rate Adjustment Date" means the date on which an Auction Note
Interest Rate is effective, and means, with respect to the Auction Rate Notes,
the date of commencement of each Auction Period.
"Interest Rate Determination Date" means, with respect to the Auction
Rate Notes, the Auction Date, or if no Auction Date is applicable to such
Subclass, the Business Day immediately preceding the date of commencement of an
Auction Period.
"Maintenance and Operating Expense Percentage" means, the percentage
that all Maintenance and Operating Expenses estimated for the next 12 months
represent of the principal amount of the Notes, which as of July 1, 1999 is
1.05%, and which the Issuer shall calculate at least annually. Any adjustment in
the Maintenance and Operating Expense Percentage shall be effective beginning on
the first Interest Rate Determination Date following each such calculation.
"Market Agent" means PaineWebber Incorporated, New York, New York, in
such capacity hereunder, or any successor to it in such capacity hereunder.
"Maximum Auction Rate" means the least of (a) either (i) the Applicable
LIBOR Rate plus 1.50% (if the ratings assigned by the Rating Agency to the
Auction Rate Notes are "Aa3" and "AA-," respectively, or better) or (ii) the
Applicable LIBOR Rate plus 2.50% (if any one of the ratings assigned by the
Rating Agency to the Auction Rate Notes is less than "Aa3" or "AA-,"
respectively), (b) the Net Loan Rate, (c) 18% and (d) the highest rate the
Issuer may legally pay, from time to time, as interest on the Auction Rate
Notes. For purposes of the Auction Agent and the Auction Procedures, the ratings
referred to in this definition shall be the last ratings of which the Auction
Agent has been given written notice pursuant to the Auction Agent Agreement.
"Net Loan Rate" means, respect to any Interest Period applicable to the
Auction Rate Notes, the greater of (a) the rate of interest per annum (rounded
to the next highest one one-hundredth of one percent) equal to the applicable
United States Treasury Security Rate plus 1.50% or (b) the rate of interest per
annum (rounded to the next highest one-hundredth of one percent) equal to (i)
the weighted average Effective Interest Rate of the Financed Eligible Loans for
the calendar quarter immediately preceding such Interest Period, as determined
by the Issuer on the last day of such calendar quarter, less (ii) the
Maintenance and Operating Expense Percentage, as calculated by the Issuer. In
making the determination of the Net Loan Rate, the Issuer shall take into
account as an increase to such Net Loan Rate the receipt of any Swap
Counterparty Payments and as a decrease to any Issuer Swap Payment.
"Non-Payment Rate" means One-Month LIBOR plus 1.50%.
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<PAGE>
"One-Month LIBOR," "Three-Month LIBOR," "Six-Month LIBOR" or "One-Year
LIBOR," means the rate of interest per annum equal to the rate per annum at
which United States dollar deposits having a maturity of one month, three
months, six months or one year, respectively, are offered to prime banks in the
London interbank market which appear on the Reuters Screen LIBOR Page as of
approximately 11:00 a.m., London time, on the Interest Rate Determination Date.
If at least two such quotations appear, One-Month LIBOR, Three-Month LIBOR,
Six-Month LIBOR or One-Year LIBOR, respectively, will be the arithmetic mean
(rounded upwards, if necessary, to the nearest one-hundredth of one percent) of
such offered rates. If fewer than two such quotes appear, One-Month LIBOR,
Three-Month LIBOR, Six-Month LIBOR or One-Year LIBOR, respectively, with respect
to such Interest Period will be determined at approximately 11:00 a.m., London
time, on such Interest Rate Determination Date on the basis of the rate at which
deposits in United States dollars having a maturity of one month, three months,
six months or one year, respectively, are offered to prime banks in the London
interbank market by four major banks in the London interbank market selected by
(a) the Auction Agent or (b) the Trustee, as applicable, and in a principal
amount of not less than U.S. $1,000,000 and that is representative for a single
transaction in such market at such time. The Auction Agent or the Trustee, as
applicable, will request the principal London office of each of such banks to
provide a quotation of its rate. If at least two quotations are provided,
One-Month LIBOR, Three-Month LIBOR, Six-Month LIBOR or One-Year LIBOR,
respectively, will be the arithmetic mean (rounded upwards, if necessary, to the
nearest one-hundredth of one percent) of such offered rates. If fewer than two
quotations are provided, One-Month LIBOR, Three-Month LIBOR, Six-Month LIBOR or
One-Year LIBOR, respectively, with respect to such Interest Period will be the
arithmetic mean (rounded upwards, if necessary, to the nearest one-hundredth of
one percent) of the rates quoted at approximately 11:00 a.m., New York City time
on such Interest Rate Determination Date by three major banks in New York, New
York selected by (i) the Auction Agent or (ii) the Trustee, as applicable, for
loans in United States dollars to leading European banks having a maturity of
one month, three months, six months or one year, respectively, and in a
principal amount equal to an amount of not less than U.S. $1,000,000 and that is
representative for a single transaction in such market at such time; provided,
however, that if the banks selected as aforesaid are not quoting as mentioned in
this sentence, One-Month LIBOR, Three-Month LIBOR, Six-Month LIBOR or One-Year
LIBOR, respectively, in effect for the applicable Interest Period will be
One-Month LIBOR, Three-Month LIBOR, Six-Month LIBOR or One-Year LIBOR,
respectively, in effect for the immediately preceding Interest Period.
"Order" has the meaning set forth in Section 2.02(a)(i)(A) hereof.
"Payment Default" means, with respect to the Auction Rate Notes, (a) a
default in the due and punctual payment of any installment of interest on such
Auction Rate Notes, or (b) a default in the due and punctual payment of any
interest on and principal of such Auction Rate Notes at their maturity.
"Potential Owner" means any Person (including an Existing Owner that is
(a) a Broker-Dealer when dealing with the Auction Agent and (b) a potential
beneficial owner when dealing with a Broker-Dealer) who may be interested in
acquiring Auction Rate Notes (or, in the case of an Existing Owner thereof, an
additional principal amount of Auction Rate Notes).
"PSA" means the Public Securities Association, its successors and
assigns.
A-6
<PAGE>
"Quarterly Average Auction Rate" means the simple average of the Auction
Rates for the Auction Dates preceding the current Auction Date by 91 days or
less, including the current Auction Date.
"Quarterly Average T-Bill Rate" means the simple average of the Bond
Equivalent Yields of 91-day Treasury bills auctioned in the 91 days preceding
(but not including) the current Auction Date.
"Regular Record Date" means the Business Day next preceding the
applicable Auction Date.
"Reuters Screen LIBOR Page" means the display designated as page "LIBOR"
on the Reuters Monitor Money Rates Service (or such other page as may replace
the LIBOR page for the purposes of displaying London interbank offered rates of
major banks).
"S&P" means Standard & Poor's Ratings Services, a Division of The
McGraw-Hill Companies, Inc., its successors and assigns.
"Sell Order" has the meaning set forth in Section 2.02(a)(i)(A) hereof.
"Submission Deadline" means 1:00 p.m., eastern time, on any Auction Date
or such other time on any Auction Date by which Broker-Dealers are required to
submit Orders to the Auction Agent as specified by the Auction Agent from time
to time.
"Submitted Bid" has the meaning set forth in Section 2.02(a)(iii)(A)
hereof.
"Submitted Hold Order" has the meaning set forth in Section
2.02(a)(iii)(A) hereof.
"Submitted Order" has the meaning set forth in Section 2.02(a)(iii)(A)
hereof.
"Submitted Sell Order" has the meaning set forth in Section
2.02(a)(iii)(A) hereof.
"Substitute Auction Agent" means the Person with whom the Issuer and the
Trustee enter into a Substitute Auction Agent Agreement.
"Substitute Auction Agent Agreement" means an auction agent agreement
containing terms substantially similar to the terms of the Initial Auction Agent
Agreement, whereby a Person having the qualifications required by Section
2.02(e) of this Appendix A agrees with the Trustee and the Issuer to perform the
duties of the Auction Agent under this Appendix A.
"Sufficient Bids" has the meaning set forth in Section 2.02(a)(iii)(A)
hereof.
"United States Treasury Security Rate" means, for purposes of
calculating the Net Loan Rate applicable to the Auction Rate Notes, that rate of
interest per annum equal to the Bond Equivalent Yield on the applicable United
States Treasury securities sold at the last auction thereof that immediately
precedes the Interest Rate Adjustment Date for the Auction Rate Notes.
"Variable Rate" means the variable rate of interest per annum, including
the Initial Rate, borne by each Subclass of Auction Rate Notes during the
Initial Period for such Subclass, and each Interest Period thereafter as such
rate of interest is determined in accordance with the provisions of Article II
hereof.
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<PAGE>
ARTICLE II
TERMS AND ISSUANCE
Section 2.01. Auction Rate Notes. During the Initial Period, the Auction
Rate Notes shall bear interest at the Initial Rate for such Subclass.
Thereafter, and except with respect to an Auction Period Adjustment, the Auction
Rate Notes shall bear interest at an Auction Note Interest Rate based on a
28-day Auction Period for the Auction Rate Notes, as determined pursuant to this
Section 2.01 and Section 2.02 hereof.
For the Auction Rate Notes during the Initial Period and each Auction
Period thereafter, interest at the applicable Auction Rate Notes Interest Rate
shall accrue daily and shall be computed for the actual number of days elapsed
on the basis of a year consisting of 360 days.
The Auction Note Interest Rate to be borne by the Auction Rate Notes
after such Initial Period for each Auction Period until an Auction Period
Adjustment, if any, shall be determined as described below. Each such Auction
Period after the Initial Period shall commence on and include the day following
the expiration of the immediately preceding Auction Period and terminate on and
include the (i) third Business Day of the following fourth week in the case of
the Class 1999A-13 Notes, (ii) third Business Day of the following fourth week
in the case of the Class 1999A-14 Notes, (iii) third Business Day of the
following fourth week in the case of the Class 1999A-15 Notes, and (iv) third
Business Day of the following fourth week in the case of the Class 1999A-16
Notes; provided, however, that in the case of the Auction Period that
immediately follows the Initial Period for the Auction Rate Notes, such Auction
Period shall commence on the Initial Rate Adjustment Date. The Auction Note
Interest Rate of the Auction Rate Notes for each Auction Period shall be the
Auction Rate in effect for such Auction Period as determined in accordance with
Section 2.02(a) hereof; provided that if, on any Interest Rate Determination
Date, an Auction is not held for any reason, then the Auction Note Interest Rate
on such Auction Rate Notes for the next succeeding Auction Period shall be the
applicable Maximum Auction Rate.
Notwithstanding the foregoing:
(a) if the ownership of an Auction Rate Note is no longer
maintained in Book-entry Form, the Auction Note Interest Rate on the
Auction Rate Notes for any Interest Period commencing after the delivery
of certificates representing Auction Rate Notes pursuant to this
Supplemental Indenture shall equal the applicable Maximum Auction Rate
on the Business Day immediately preceding the first day of such
subsequent Interest Period; or
(b) if a Payment Default shall have occurred, the Auction Note
Interest Rate on the Auction Rate Notes for the Interest Period
commencing on or immediately after such Payment Default, and for each
Interest Period thereafter, to and including the Interest Period, if
any, during which, or commencing less than two Business Days after, such
Payment Default is cured, shall equal the applicable Non-Payment Rate on
the first day of each such Interest Period.
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In accordance with Section 2.02(a)(iii)(B) hereof, the Auction Agent
shall promptly give written notice to the Trustee and the Issuer of each Auction
Note Interest Rate (unless the Auction Note Interest Rate is the applicable
Non-Payment Rate) and the Maximum Auction Rate when such rate is not the Auction
Note Interest Rate, applicable to the Auction Rate Notes. The Trustee shall
notify the Registered Owners of Auction Rate Notes of the applicable Auction
Note Interest Rate applicable to such Auction Rate Notes for each Auction Period
not later than the third Business Day of such Auction Period.
Notwithstanding any other provision of the Auction Rate Notes or this
Supplemental Indenture and except for the occurrence of a Payment Default,
interest payable on the Auction Rate Notes for an Auction Period shall never
exceed for such Auction Period the amount of interest payable at the applicable
Maximum Auction Rate in effect for such Auction Period.
If the Auction Rate for the Auction Rate Notes is greater than the
applicable Maximum Auction Rate, then the Variable Rate applicable to such
Auction Rate Notes for that Interest Period will be the applicable Maximum
Auction Rate. If the Variable Rate applicable to such Auction Rate Notes for any
Interest Period is the applicable Maximum Auction Rate (without regard to the
last two clauses of the definition thereof), the Trustee shall determine the
Carry-over Amount, if any, with respect to such Auction Rate Notes for such
Interest Period. Such Carry-over Amount shall bear interest calculated at a rate
equal to One-Month LIBOR (as determined by the Auction Agent, provided the
Trustee has received notice of One-Month LIBOR from the Auction Agent, and if
the Trustee shall not have received such notice from the Auction Agent, then as
determined by the Trustee) from the Interest Payment Date for the Interest
Period with respect to which such Carry-over Amount was calculated, until paid.
Any payment in respect of Carry-over Amount shall be applied, first, to any
accrued interest payable thereon and, second, in reduction of such Carry-over
Amount. For purposes of this Appendix A, any reference to "principal" or
"interest" herein shall not include within the meaning of such words Carry-over
Amount or any interest accrued on any such Carry-over Amount. Such Carry-over
Amount shall be separately calculated for each Auction Rate Note by the Trustee
during such Interest Period in sufficient time for the Trustee to give notice to
each Registered Owner of such Carry-over Amount as required in the next
succeeding sentence. Not less than four days before the Interest Payment Date
for an Interest Period with respect to which such Carry-over Amount has been
calculated by the Trustee, the Trustee shall give written notice to each
Registered Owner of the Carry-over Amount applicable to each Registered Owner's
Auction Rate Note, which written notice may accompany the payment of interest by
check made to each such Registered Owner on such Interest Payment Date or
otherwise shall be mailed on such Interest Payment Date by first-class mail,
postage prepaid, to each such Registered Owner at such Registered Owner's
address as it appears on the registration records maintained by the Registrar.
Such notice shall state, in addition to such Carry-over Amount, that, unless and
until an Auction Rate Note has been redeemed (other than by optional
redemption), after which all accrued Carry-over Amounts (and all accrued
interest thereon) that remains unpaid shall be canceled and no Carry-over Amount
(and interest accrued thereon) shall be paid with respect to an Auction Rate
Note, (a) the Carry-over Amount (and interest accrued thereon calculated at a
rate equal to One-Month LIBOR) shall be paid by the Trustee on an Auction Rate
Note on the earliest of (i) the date of defeasance of the Auction Rate Notes or
(ii) the first occurring Interest Payment Date (or on the date of any such
optional redemption) if and to the extent that (A) the Eligible Carry-over
Make-Up Amount with respect to such subsequent Interest Period is greater than
zero, and (B) moneys are available pursuant to the terms of this Appendix A in
an amount sufficient to pay all or a portion of such Carry-over Amount (and
interest accrued thereon), and (b) interest shall accrue on the Carry-over
Amount at a rate equal to One-Month LIBOR until such Carry-over Amount is paid
in full or is cancelled.
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The Carry-over Amount (and interest accrued thereon) for Auction Rate
Notes shall be paid by the Trustee on Outstanding Auction Rate Notes on the
earliest of (a) the date of defeasance of any of the Auction Rate Notes or (b)
the first occurring Interest Payment Date if and to the extent that (i) the
Eligible Carry-over Make-Up Amount with respect to such Interest Period is
greater than zero, and (ii) on such Interest Payment Date there are sufficient
moneys in the Senior Interest Account of the Interest Fund to pay all interest
due on the Auction Rate Notes on such Interest Payment Date. Any Carry-over
Amount (and any interest accrued thereon) on any Auction Rate Note which is due
and payable on an Interest Payment Date, which Auction Rate Note is to be
redeemed (other than by optional redemption) on said Interest Payment Date,
shall be paid to the Registered Owner thereof on said Interest Payment Date to
the extent that moneys are available therefor in accordance with the provisions
of this Appendix A; provided, however, that any Carry-over Amount (and any
interest accrued thereon) which is not yet due and payable on said Interest
Payment Date shall be cancelled with respect to said Auction Rate Note that is
to be redeemed (other than by optional redemption) on said Interest Payment Date
and shall not be paid on any succeeding Interest Payment Date. To the extent
that any portion of the Carry-over Amount (and any interest accrued thereon)
remains unpaid after payment of a portion thereof, such unpaid portion shall be
paid in whole or in part as required hereunder until fully paid by the Trustee
on the earliest of (a) the date of defeasance of any of the Auction Rate Notes
or (b) the next occurring Interest Payment Date or Dates, as necessary, if and
to the extent that the conditions in the second preceding sentence are
satisfied. On any Interest Payment Date on which the Trustee pays only a portion
of the Carry-over Amount (and any interest accrued thereon) on Auction Rate
Notes, the Trustee shall give written notice in the manner set forth in the
immediately preceding paragraph to the Registered Owner of such Auction Rate
Note receiving such partial payment of the Carry-over Amount remaining unpaid on
such Auction Rate Note.
The Interest Payment Date or other date on which such Carry-over Amount
(or any interest accrued thereon) for Auction Rate Notes shall be paid shall be
determined by the Trustee in accordance with the provisions of the immediately
preceding paragraph, and the Trustee shall make payment of the Carry-over Amount
(and any interest accrued thereon) in the same manner as, and from the same
Account from which, it pays interest on the Auction Rate Notes on an Interest
Payment Date. Any payment of Carry-over Amounts (and interest accrued thereon)
shall reduce the amount of Eligible Carry-Over Make-Up Amount.
In the event that the Auction Agent no longer determines, or fails to
determine, when required, the Auction Note Interest Rate with respect to Auction
Rate Notes, or, if for any reason such manner of determination shall be held to
be invalid or unenforceable, the Auction Note Interest Rate for the next
succeeding Interest Period, which Interest Period shall be an Auction Period,
for Auction Rate Notes shall be the applicable Maximum Auction Rate as
determined by the Auction Agent for such next succeeding Auction Period, and if
the Auction Agent shall fail or refuse to determine the Maximum Auction Rate,
the Maximum Auction Rate shall be determined by the securities dealer appointed
by the Issuer capable of making such a determination in accordance with the
provisions hereof and written notice of such determination shall be given by
such securities dealer to the Trustee.
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Section 2.02. Auction Rate Note Interest Rate.
(a) Determining the Auction Rate Note Interest Rate. By
purchasing Auction Rate Notes, whether in an Auction or otherwise, each
purchaser of the Auction Rate Notes, or its Broker-Dealer, must agree
and shall be deemed by such purchase to have agreed (x) to participate
in Auctions on the terms described herein, (y) to have its beneficial
ownership of the Auction Rate Notes maintained at all times in
Book-entry Form for the account of its Participant, which in turn will
maintain records of such beneficial ownership and (z) to authorize such
Participant to disclose to the Auction Agent such information with
respect to such beneficial ownership as the Auction Agent may request.
So long as the ownership of Auction Rate Notes is maintained in
Book-entry Form by the Securities Depository, an Existing Owner may
sell, transfer or otherwise dispose of Auction Rate Notes only pursuant
to a Bid or Sell Order placed in an Auction or otherwise sell, transfer
or dispose of Auction Rate Notes through a Broker-Dealer, provided that,
in the case of all transfers other than pursuant to Auctions, such
Existing Owner, its Broker-Dealer or its Participant advises the Auction
Agent of such transfer. Auctions shall be conducted on each Auction
Date, if there is an Auction Agent on such Auction Date, in the
following manner:
(i) (A) Prior to the Submission Deadline on each
Auction Date;
(1) each Existing Owner of Auction Rate
Notes may submit to a Broker-Dealer by telephone or
otherwise any information as to:
a. the principal amount of
Outstanding Auction Rate Notes, if any,
owned by such Existing Owner which such
Existing Owner desires to continue to own
without regard to the Auction Note Interest
Rate for the next succeeding Auction Period;
b. the principal amount of
Outstanding Auction Rate Notes, if any,
which such Existing Owner offers to sell if
the Auction Note Interest Rate for the next
succeeding Auction Period shall be less than
the rate per annum specified by such
Existing Owner; and/or
c. the principal amount of
Outstanding Auction Rate Notes, if any,
owned by such Existing Owner which such
Existing Owner offers to sell without regard
to the Auction Note Interest Rate for the
next succeeding Auction Period;
and
(2) one or more Broker-Dealers may contact
Potential Owners to determine the principal amount
of Auction Rate Notes which each Potential Owner
offers to purchase, if the Auction Note Interest
Rate for the next succeeding Auction Period shall
not be less than the rate per annum specified by
such Potential Owner.
A-11
<PAGE>
The statement of an Existing Owner or a Potential
Owner referred to in (1) or (2) of this paragraph (A) is
herein referred to as an "Order," and each Existing Owner
and each Potential Owner placing an Order is herein
referred to as a "Bidder"; an Order described in clause
(1)a is herein referred to as a "Hold Order"; an Order
described in clauses (1)b and (2) is herein referred to as
a "Bid"; and an Order described in clause (1)c is herein
referred to as a "Sell Order."
(B) (1) Subject to the provisions of Section
2.02(a)(ii) hereof, a Bid by an Existing Owner
shall constitute an irrevocable offer to sell:
a. the principal amount of
Outstanding Auction Rate Notes specified in
such Bid if the Auction Note Interest Rate
determined as provided in this Section
2.02(a) shall be less than the rate
specified therein; or
b. such principal amount, or a
lesser principal amount of Outstanding
Auction Rate Notes to be determined as set
forth in Section 2.02(a)(iv)(A)(4) hereof,
if the Auction Note Interest Rate determined
as provided in this Section 2.02(a) shall be
equal to the rate specified therein; or
c. such principal amount, or a
lesser principal amount of Outstanding
Auction Rate Notes to be determined as set
forth in Section 2.02(a)(iv)(B)(3) hereof,
if the rate specified therein shall be
higher than the applicable Maximum Auction
Rate and Sufficient Bids have not been made.
(2) Subject to the provisions of Section
2.02(a)(ii) hereof, a Sell Order by an Existing
Owner shall constitute an irrevocable offer to
sell:
a. the principal amount of
Outstanding Auction Rate Notes specified in
such Sell Order; or
b. such principal amount, or a
lesser principal amount of Outstanding
Auction Rate Notes set forth in Section
2.02(a)(iv)(B)(3) hereof, if Sufficient Bids
have not been made.
(3) Subject to the provisions of Section
2.02(a)(ii) hereof, a Bid by a Potential Owner
shall constitute an irrevocable offer to purchase:
A-12
<PAGE>
a. the principal amount of
Outstanding Auction Rate Notes specified in
such Bid if the Auction Note Interest Rate
determined as provided in this Section
2.02(a) shall be higher than the rate
specified in such Bid; or
b. such principal amount, or a
lesser principal amount of Outstanding
Auction Rate Notes set forth in Section
2.02(a)(iv)(A)(5) hereof, if the Auction
Note Interest Rate determined as provided in
this Section 2.02(a) shall be equal to the
rate specified in such Bid.
(ii) (A) Each Broker-Dealer shall submit in writing to the
Auction Agent prior to the Submission Deadline on each
Auction Date all Orders obtained by such Broker-Dealer and
shall specify with respect to each such Order:
(1) the name of the Bidder placing such
Order;
(2) the aggregate principal amount of
Auction Rate Notes that are the subject of such
Order;
(3) to the extent that such Bidder is an
Existing Owner:
a. the principal amount of Auction
Rate Notes, if any, subject to any Hold
Order placed by such Existing Owner;
b. the principal amount of Auction
Rate Notes, if any, subject to any Bid
placed by such Existing Owner and the rate
specified in such Bid; and
c. the principal amount of Auction
Rate Notes, if any, subject to any Sell
Order placed by such Existing Owner;
and
(4) to the extent such Bidder is a Potential
Owner, the rate specified in such Potential Owner's
Bid.
(B) If any rate specified in any Bid contains more
than three figures to the right of the decimal point, the
Auction Agent shall round such rate up to the next higher
one thousandth of 1%.
(C) If an Order or Orders covering all Outstanding
Auction Rate Notes owned by an Existing Owner is not
submitted to the Auction Agent prior to the Submission
Deadline, the Auction Agent shall deem a Hold Order to
have been submitted on behalf of such Existing Owner
covering the principal amount of Outstanding Auction Rate
Notes owned by such Existing Owner and not subject to an
Order submitted to the Auction Agent.
A-13
<PAGE>
(D) Neither the Issuer, the Trustee nor the Auction
Agent shall be responsible for any failure of a
Broker-Dealer to submit an Order to the Auction Agent on
behalf of any Existing Owner or Potential Owner.
(E) If any Existing Owner submits through a
Broker-Dealer to the Auction Agent one or more Orders
covering in the aggregate more than the principal amount
of Outstanding Auction Rate Notes owned by such Existing
Owner, such Orders shall be considered valid as follows
and in the following order of priority:
(1) All Hold Orders shall be considered
valid, but only up to the aggregate principal
amount of Outstanding Auction Rate Notes owned by
such Existing Owner, and if the aggregate principal
amount of Auction Rate Notes subject to such Hold
Orders exceeds the aggregate principal amount of
Auction Rate Notes owned by such Existing Owner,
the aggregate principal amount of Auction Rate
Notes subject to each such Hold Order shall be
reduced pro rata so that the aggregate principal
amount of Auction Rate Notes subject to such Hold
Order equals the aggregate principal amount of
Outstanding Auction Rate Notes owned by such
Existing Owner.
(2) a. Any Bid shall be considered valid up
to an amount equal to the excess of the
principal amount of Outstanding Auction Rate
Notes owned by such Existing Owner over the
aggregate principal amount of Auction Rate
Notes subject to any Hold Order referred to
in clause (A) of this paragraph (v);
b. subject to subclause (1) of this
clause (B), if more than one Bid with the
same rate is submitted on behalf of such
Existing Owner and the aggregate principal
amount of Outstanding Auction Rate Notes
subject to such Bids is greater than such
excess, such Bids shall be considered valid
up to an amount equal to such excess;
c. subject to subclauses (1) and (2)
of this clause (B), if more than one Bid
with different rates are submitted on behalf
of such Existing Owner, such Bids shall be
considered valid first in the ascending
order of their respective rates until the
highest rate is reached at which such excess
exists and then at such rate up to the
amount of such excess; and
d. in any such event, the amount of
Outstanding Auction Rate Notes, if any,
subject to Bids not valid under this clause
(B) shall be treated as the subject of a Bid
by a Potential Owner at the rate therein
specified; and
A-14
<PAGE>
(3) All Sell Orders shall be considered
valid up to an amount equal to the excess of the
principal amount of Outstanding Auction Rate Notes
owned by such Existing Owner over the aggregate
principal amount of Auction Rate Notes subject to
Hold Orders referred to in clause (1) of this
paragraph (v) and valid Bids referred to in clause
(2) of this paragraph (E).
(F) If more than one Bid for Auction Rate Notes is
submitted on behalf of any Potential Owner, each Bid
submitted shall be a separate Bid with the rate and
principal amount therein specified.
(G) An Existing Owner that offers to purchase
additional Auction Rate Notes is, for purposes of such
offer, treated as a Potential Owner.
(H) Any Bid or Sell Order submitted by an Existing
Owner covering an aggregate principal amount of Auction
Rate Notes not equal to an Authorized Denomination shall
be rejected and shall be deemed a Hold Order. Any Bid
submitted by a Potential Owner covering an aggregate
principal amount of Auction Rate Notes not equal to an
Authorized Denomination shall be rejected.
(I) Any Bid specifying a rate higher than the
applicable Maximum Auction Rate will (1) be treated as a
Sell Order if submitted by an Existing Owner and (2) not
be accepted if submitted by a Potential Owner.
(J) Any Order submitted in an Auction by a
Broker-Dealer to the Auction Agent prior to the Submission
Deadline on any Auction Date shall be irrevocable.
(iii) (A) Not earlier than the Submission Deadline on each
Auction Date, the Auction Agent shall assemble all valid
Orders submitted or deemed submitted to it by the
Broker-Dealers (each such Order as submitted or deemed
submitted by a Broker-Dealer being herein referred to
individually as a "Submitted Hold Order," a "Submitted
Bid" or a "Submitted Sell Order," as the case may be, or
as a "Submitted Order," and collectively as "Submitted
Hold Orders," "Submitted Bids" or "Submitted Sell Orders,"
as the case may be, or as "Submitted Orders") and shall
determine:
(1) the excess of the total principal amount
of Outstanding Auction Rate Notes over the sum of
the aggregate principal amount of Outstanding
Auction Rate Notes subject to Submitted Hold Orders
(such excess being herein referred to as the
"Available Auction Rate Notes"), and
A-15
<PAGE>
(2) from the Submitted Orders whether:
a. the aggregate principal amount of
Outstanding Auction Rate Notes subject to
Submitted Bids by Potential Owners
specifying one or more rates equal to or
lower than the applicable Maximum Auction
Rate;
exceeds or is equal to the sum of:
b. the aggregate principal amount of
Outstanding Auction Rate Notes subject to
Submitted Bids by Existing Owners specifying
one or more rates higher than the applicable
Maximum Auction Rate; and
c. the aggregate principal amount of
Outstanding Auction Rate Notes subject to
Submitted Sell Orders;
(in the event such excess or such equality exists,
other than because all of the Outstanding Auction
Rate Notes are subject to Submitted Hold Orders,
such Submitted Bids described in subclause a. above
shall be referred to collectively as "Sufficient
Bids"); and
(3) if Sufficient Bids exist, the Bid
Auction Rate, which shall be the lowest rate
specified in such Submitted Bids such that if:
a. (x) each Submitted Bid from
Existing Owners specifying such lowest rate
and (y) all other Submitted Bids from
Existing Owners specifying lower rates were
rejected, thus entitling such Existing
Owners to continue to own the principal
amount of Auction Rate Notes subject to such
Submitted Bids; and
b. (x) each such Submitted Bid from
Potential Owners specifying such lowest rate
and (y) all other Submitted Bids from
Potential Owners specifying lower rates were
accepted;
the result would be that such Existing Owners
described in subclause a. above would continue to
own an aggregate principal amount of Outstanding
Auction Rate Notes which, when added to the
aggregate principal amount of Outstanding Auction
Rate Notes to be purchased by such Potential Owners
described in subclause b. above, would equal not
less than the Available Auction Rate Notes.
A-16
<PAGE>
(B) Promptly after the Auction Agent has made the
determinations pursuant to Section 2.02(a)(iii)(A) hereof,
the Auction Agent shall advise the Trustee, the
Broker-Dealers and the Issuer of the Maximum Auction Rate
and the All Hold Rate and the components thereof on the
Auction Date and, based on such determinations, the
Auction Rate for the next succeeding Interest Period as
follows:
(1) if Sufficient Bids exist, that the
Auction Rate for the next succeeding Interest
Period shall be equal to the Bid Auction Rate so
determined;
(2) if Sufficient Bids do not exist (other
than because all of the Outstanding Auction Rate
Notes are subject to Submitted Hold Orders), that
the Auction Rate for the next succeeding Interest
Period shall be equal to the applicable Maximum
Auction Rate; or
(3) if all Outstanding Auction Rate Notes
are subject to Submitted Hold Orders, that the
Auction Rate for the next succeeding Interest
Period shall be equal to the applicable All Hold
Rate.
(C) Promptly after the Auction Agent has determined
the Auction Rate, the Auction Agent shall determine and
advise the Trustee of the Auction Note Interest Rate,
which rate shall be the Auction Rate; provided, however,
that in no event shall the Auction Note Interest Rate
exceed the applicable Maximum Auction Rate.
(iv) Existing Owners shall continue to own the principal
amount of Auction Rate Notes that are subject to Submitted Hold
Orders. If Sufficient Bids have been received by the Auction
Agent, the Bid Auction Rate will be the Auction Note Interest
Rate, and Submitted Bids and Submitted Sell Orders will be
accepted or rejected and the Auction Agent will take such other
action as described below in subparagraph (A).
If the Auction Rate is greater than the applicable Maximum
Auction Rate, the Auction Note Interest Rate shall be equal to
the applicable Maximum Auction Rate. If the Auction Agent has not
received Sufficient Bids (other than because all of the
Outstanding Auction Rate Notes are subject to Submitted Hold
Orders), the Auction Note Interest Rate will be the applicable
Maximum Auction Rate. In any of the cases described above,
Submitted Orders will be accepted or rejected and the Auction
Agent will take such other action as described below in
subparagraph (B).
(A) If Sufficient Bids have been made and if the
applicable Maximum Auction Rate does not apply (in which
case the Auction Note Interest Rate shall be the Bid
Auction Rate), all Submitted Sell Orders shall be accepted
and, subject to the provisions of clauses (4) and (5) of
this Section 2.02(a)(iv), Submitted Bids shall be accepted
or rejected as follows in the following order of priority,
and all other Submitted Bids shall be rejected:
A-17
<PAGE>
(1) Existing Owners' Submitted Bids
specifying any rate that is higher than the Auction
Note Interest Rate shall be accepted, thus
requiring each such Existing Owner to sell the
aggregate principal amount of Auction Rate Notes
subject to such Submitted Bids;
(2) Existing Owners' Submitted Bids
specifying any rate that is lower than the Auction
Note Interest Rate shall be rejected, thus
entitling each such Existing Owner to continue to
own the aggregate principal amount of Auction Rate
Notes subject to such Submitted Bids;
(3) Potential Owners' Submitted Bids
specifying any rate that is lower than the Auction
Note Interest Rate shall be accepted;
(4) Each Existing Owners' Submitted Bid
specifying a rate that is equal to the Auction Note
Interest Rate shall be rejected, thus entitling
such Existing Owner to continue to own the
aggregate principal amount of Auction Rate Notes
subject to such Submitted Bid, unless the aggregate
principal amount of Outstanding Auction Rate Notes
subject to all such Submitted Bids shall be greater
than the principal amount of Auction Rate Notes
(the "remaining principal amount") equal to the
excess of the Available Auction Rate Notes over the
aggregate principal amount of Auction Rate Notes
subject to Submitted Bids described in clauses (2)
and (3) of this Section 2.02(a)(iv)(D)(1), in which
event such Submitted Bid of such Existing Owner
shall be rejected in part, and such Existing Owner
shall be entitled to continue to own the principal
amount of Auction Rate Notes subject to such
Submitted Bid, but only in an amount equal to the
aggregate principal amount of Auction Rate Notes
obtained by multiplying the remaining principal
amount by a fraction, the numerator of which shall
be the principal amount of Outstanding Auction Rate
Notes owned by such Existing Owner subject to such
Submitted Bid and the denominator of which shall be
the sum of the principal amount of Outstanding
Auction Rate Notes subject to such Submitted Bids
made by all such Existing Owners that specified a
rate equal to the Auction Note Interest Rate,
subject to the provisions of Section 2.02(a)(iv)(D)
hereof; and
(5) Each Potential Owner's Submitted Bid
specifying a rate that is equal to the Auction Note
Interest Rate shall be accepted, but only in an
amount equal to the principal amount of Auction
Rate Notes obtained by multiplying the excess of
the aggregate principal amount of Available Auction
Rate Notes over the aggregate principal amount of
Auction Rate Notes subject to Submitted Bids
described in clauses (2), (3) and (4) of this
Section 2.02(a)(iv)(A) by a fraction the numerator
of which shall be the aggregate principal amount of
Outstanding Auction Rate Notes subject to such
Submitted Bid and the denominator of which shall be
the sum of the principal amount of Outstanding
Auction Rate Notes subject to Submitted Bids made
by all such Potential Owners that specified a rate
equal to the Auction Note Interest Rate, subject to
the provisions of Section 2.02(a)(iv)(D) hereof.
A-18
<PAGE>
(B) If Sufficient Bids have not been made (other
than because all of the Outstanding Auction Rate Notes are
subject to submitted Hold Orders), or if the applicable
Maximum Auction Rate applies, subject to the provisions of
Section 2.02(a)(iv)(D) hereof, Submitted Orders shall be
accepted or rejected as follows in the following order of
priority and all other Submitted Bids shall be rejected:
(1) Existing Owners' Submitted Bids
specifying any rate that is equal to or lower than
the Auction Note Interest Rate shall be rejected,
thus entitling such Existing Owners to continue to
own the aggregate principal amount of Auction Rate
Notes subject to such Submitted Bids;
(2) Potential Owners' Submitted Bids
specifying (x) any rate that is equal to or lower
than the Auction Note Interest Rate shall be
accepted and (y) any rate that is higher than the
Auction Note Interest Rate shall be rejected; and
(3) each Existing Owner's Submitted Bid
specifying any rate that is higher than the Auction
Note Interest Rate and the Submitted Sell Order of
each Existing Owner shall be accepted, thus
entitling each Existing Owner that submitted any
such Submitted Bid or Submitted Sell Order to sell
the Auction Rate Notes subject to such Submitted
Bid or Submitted Sell Order, but in both cases only
in an amount equal to the aggregate principal
amount of Auction Rate Notes obtained by
multiplying the aggregate principal amount of
Auction Rate Notes subject to Submitted Bids
described in clause (2)(x) of this Section
2.02(a)(iv)(B) by a fraction the numerator of which
shall be the aggregate principal amount of
Outstanding Auction Rate Notes owned by such
Existing Owner subject to such submitted Bid or
Submitted Sell Order and the denominator of which
shall be the aggregate principal amount of
Outstanding Auction Rate Notes subject to all such
Submitted Bids and Submitted Sell Orders.
(C) If all Auction Rate Notes are subject to
Submitted Hold Orders, all Submitted Bids shall be
rejected.
A-19
<PAGE>
(D) If, as a result of the procedures described in
paragraph (A) or (B) of this Section 2.02(a)(iv), any
Existing Owner would be entitled or required to sell, or
any Potential Owner would be entitled or required to
purchase, a principal amount of Auction Rate Notes that is
not equal to an Authorized Denomination, the Auction Agent
shall, in such manner as in its sole discretion it shall
determine, round up or down the principal amount of
Auction Rate Notes to be purchased or sold by any Existing
Owner or Potential Owner so that the principal amount of
Auction Rate Notes purchased or sold by each Existing
Owner or Potential Owner shall be equal to an Authorized
Denomination.
(E) If, as a result of the procedures described in
paragraph (B) of this Section 2.02(a)(iv), any Potential
Owner would be entitled or required to purchase less than
an Authorized Denomination of Auction Rate Notes, the
Auction Agent shall, in such manner as in its sole
discretion it shall determine, allocate Auction Rate Notes
for purchase among Potential Owners so that only Auction
Rate Notes in Authorized Denominations are purchased by
any Potential Owner, even if such allocation results in
one or more of such Potential Owners not purchasing any
Auction Rate Notes.
(v) Based on the result of each Auction, the Auction Agent
shall determine the aggregate principal amount of Auction Rate
Notes to be purchased and the aggregate principal amount of
Auction Rate Notes to be sold by Potential Owners and Existing
Owners on whose behalf each Broker-Dealer submitted Bids or Sell
Orders and, with respect to each Broker-Dealer, to the extent
that such aggregate principal amount of Auction Rate Notes to be
sold differs from such aggregate principal amount of Auction Rate
Notes to be purchased, determine to which other Broker-Dealer or
Broker-Dealers acting for one or more purchasers such
Broker-Dealer shall deliver, or from which other Broker-Dealer or
Broker-Dealers acting for one or more sellers such Broker-Dealer
shall receive, as the case may be, Auction Rate Notes.
(vi) Any calculation by the Auction Agent or the Trustee,
as applicable, of the Auction Note Interest Rate, the Maximum
Auction Rate, the All Hold Rate and the Non-Payment Rate shall,
in the absence of manifest error, be binding on all other
parties.
(vii) Notwithstanding anything in this Appendix A to the
contrary, (A) no Auction for the Auction Rate Notes for an
Auction Period of less than 180 days will be held on any Auction
Date hereunder on which there are insufficient moneys in the
Senior Interest Account of the Interest Fund and the Senior
Redemption Account of the Note Redemption Fund to pay, or
otherwise held by the Trustee under the Indenture and available
to pay, the principal of and interest due on the Auction Rate
Notes on the Interest Payment Date immediately following such
Auction Date, and (B) no Auction will be held on any Auction Date
hereunder during the continuance of a Payment Default. The
Trustee shall promptly notify the Auction Agent of any such
occurrence.
A-20
<PAGE>
(b) Application of Interest Payments for the Auction Rate Notes.
(i) The Trustee shall determine not later than 2:00 p.m.,
eastern time, on the Business Day next succeeding an Interest
Payment Date, whether a Payment Default has occurred. If a
Payment Default has occurred, the Trustee shall, not later than
2:15 p.m., eastern time, on such Business Day, send a notice
thereof in substantially the form of Exhibit C attached hereto to
the Auction Agent by telecopy or similar means and, if such
Payment Default is cured, the Trustee shall immediately send a
notice in substantially the form of Exhibit D attached hereto to
the Auction Agent by telecopy or similar means.
(ii) Not later than 2:00 p.m., eastern time, on each
anniversary of the Closing Date, the Trustee shall pay to the
Auction Agent, in immediately available funds out of amounts in
the Revenue Fund, an amount equal to the Auction Agent Fee as set
forth in the Auction Agent Agreement. Not later than 2:00 p.m.,
eastern time, on each Auction Date, the Trustee shall pay to the
Auction Agent, in immediately available funds out of amounts in
the Revenue Fund, an amount equal to the Broker-Dealer Fee as
calculated in the Auction Agent Agreement. The Trustee shall,
from time to time at the request of the Auction Agent and at the
direction of an Authorized Officer, reimburse the Auction Agent
for its reasonable expenses as provided in the Auction Agent
Agreement, such expenses to be paid out of amounts in the Revenue
Fund.
(c) Calculation of Maximum Auction Rate, All Hold Rate and
Non-Payment Rate. The Auction Agent shall calculate the applicable
Maximum Auction Rate and All Hold Rate, as the case may be, on each
Auction Date and shall notify the Trustee and the Broker-Dealers of the
applicable Maximum Auction Rate and All Hold Rate, as the case may be,
as provided in the Auction Agent Agreement; provided, that if the
ownership of the Auction Rate Notes is no longer maintained in
Book-entry Form, or if a Payment Default has occurred, then the Trustee
shall determine the applicable Maximum Auction Rate, All Hold Rate and
Non-Payment Rate for each such Interest Period. The Market Agent shall
calculate the Index (if the Index is other than the PSA Municipal Swap
Index) on each Interest Rate Determination Date and shall notify the
Trustee and the Auction Agent of the Index prior to 9:30 a.m., eastern
time, on each Interest Rate Determination Date. If the ownership of the
Auction Rate Notes is no longer maintained in Book-entry Form by the
Securities Depository, the Trustee shall calculate the applicable
Maximum Auction Rate on the Business Day immediately preceding the first
day of each Interest Period after the delivery of certificates
representing the Auction Rate Notes pursuant to the Indenture. If a
Payment Default shall have occurred, the Trustee shall calculate the
Non-Payment Rate on the Interest Rate Determination Date for (i) each
Interest Period commencing after the occurrence and during the
continuance of such Payment Default and (ii) any Interest Period
commencing less than two Business Days after the cure of any Payment
Default. The determination by the Trustee or the Auction Agent, as the
case may be, of the applicable Maximum Auction Rate, All Hold Rate and
Non-Payment Rate shall (in the absence of manifest error) be final and
binding upon all parties. If calculated or determined by the Auction
Agent, the Auction Agent shall promptly advise the Trustee of the
applicable Maximum Auction Rate and All Hold Rate. The determination by
the Market Agent of the Index shall (in the absence of manifest error)
be final and binding upon all parties.
A-21
<PAGE>
If the Federal Reserve Bank of New York does not make available
its 30-day commercial paper rate for purposes of determining the "AA"
Composite Commercial Paper Rate, the Auction Agent shall notify the
Trustee of such fact and the Trustee shall thereupon request that an
Authorized Officer promptly appoint at least two Commercial Paper
Dealers (in addition to PaineWebber Incorporated) to provide commercial
paper quotes for purposes of determining the "AA" Composite Commercial
Paper Rate. Pending appointment of both such additional Commercial Paper
Dealers, PaineWebber Incorporated and any other Commercial Paper Dealer
appointed and serving as such shall provide the required quotations, and
such quotations shall be used for purposes of this Appendix A.
PaineWebber Incorporated is hereby appointed as a Commercial Paper
Dealer to provide commercial paper quotes for purposes of determining
the "AA" Composite Commercial Paper Rate as provided above.
(d) Notification of Rates, Amounts and Payment Dates.
(i) By 12:00 noon, eastern time, on the Business Day
following each Regular Record Date, the Trustee shall determine
the aggregate amounts of interest distributable on the next
succeeding Interest Payment Date to the beneficial owners of
Auction Rate Notes.
(ii) At least four days prior to any Interest Payment
Date, the Trustee shall:
(A) confirm with the Auction Agent, so long as no
Payment Default has occurred and is continuing and the
ownership of the Auction Rate Notes is maintained in
Book-entry Form by the Securities Depository, (1) the date
of such next Interest Payment Date and (2) the amount
payable to the Auction Agent on the Auction Date pursuant
to Section 2.02(b)(ii) hereof;
(B) pursuant to Section 2.01 hereof, advise the
Registered Owners of a Subclass of Auction Rate Notes of
any Carry-over Amount accruing on such Auction Rate Notes;
and
(C) advise the Securities Depository, so long as
the ownership of the Auction Rate Notes is maintained in
Book-entry Form by the Securities Depository, upon
request, of the aggregate amount of interest distributable
on such next Interest Payment Date to the beneficial
owners of each Subclass of the Auction Rate Notes.
If any day scheduled to be an Interest Payment Date shall be
changed after the Trustee shall have given the notice or confirmation
referred to in clause (i) of the preceding sentence, the Trustee shall,
not later than 11:15 a.m., eastern time, on the Business Day next
preceding the earlier of the new Interest Payment Date or the old
Interest Payment Date, by such means as the Trustee deems practicable,
give notice of such change to the Auction Agent, so long as no Payment
Default has occurred and is continuing and the ownership of the Auction
Rate Notes is maintained in Book-entry Form by the Securities
Depository.
A-22
<PAGE>
(e) Auction Agent.
(i) Bankers Trust Company is hereby appointed as Initial
Auction Agent to serve as agent for the Issuer in connection with
Auctions. The Trustee and the Issuer will, and the Trustee is
hereby directed to, enter into the Initial Auction Agent
Agreement with Bankers Trust Company, as the Initial Auction
Agent. Any Substitute Auction Agent shall be (A) a bank, national
banking association or trust company duly organized under the
laws of the United States of America or any state or territory
thereof having its principal place of business in the Borough of
Manhattan, New York, or such other location as approved by the
Trustee in writing and having a combined capital stock or surplus
of at least $50,000,000, or (B) a member of the National
Association of Securities Dealers, Inc., having a capitalization
of at least $50,000,000, and, in either case, authorized by law
to perform all the duties imposed upon it hereunder and under the
Auction Agent Agreement. The Auction Agent may at any time resign
and be discharged of the duties and obligations created by this
Appendix A by giving at least 90 days' notice to the Trustee, the
Market Agent and the Issuer. The Auction Agent may be removed at
any time by the Trustee upon the written direction of an
Authorized Officer or the Registered Owners of 51% of the
aggregate principal amount of the Auction Rate Notes then
Outstanding, and if by such Registered Owners, by an instrument
signed by such Registered Owners or their attorneys and filed
with the Auction Agent, the Issuer and the Trustee upon at least
90 days' written notice. Neither resignation nor removal of the
Auction Agent pursuant to the preceding two sentences shall be
effective until and unless a Substitute Auction Agent has been
appointed and has accepted such appointment. If required by the
Issuer, a Substitute Auction Agent Agreement shall be entered
into with a Substitute Auction Agent. Notwithstanding the
foregoing, the Auction Agent may terminate the Auction Agent
Agreement if, within 25 days after notifying the Trustee, the
Market Agent and the Issuer in writing that it has not received
payment of any Auction Agent Fee due it in accordance with the
terms of the Auction Agent Agreement, the Auction Agent does not
receive such payment.
(ii) If the Auction Agent shall resign or be removed or be
dissolved, or if the property or affairs of the Auction Agent
shall be taken under the control of any state or federal court or
administrative body because of bankruptcy or insolvency, or for
any other reason, the Trustee at the direction of an Authorized
Officer, shall use its best efforts to appoint a Substitute
Auction Agent.
(iii) The Auction Agent is acting as agent for the Issuer
in connection with Auctions. In the absence of bad faith,
negligent failure to act or negligence on its part, the Auction
Agent shall not be liable for any action taken, suffered or
omitted or any error of judgment made by it in the performance of
its duties under the Auction Agent Agreement and shall not be
liable for any error of judgment made in good faith unless the
Auction Agent shall have been negligent in ascertaining (or
failing to ascertain) the pertinent facts.
A-23
<PAGE>
(f) Broker-Dealers.
(i) The Auction Agent will enter into a Broker-Dealer
Agreement with PaineWebber Incorporated, as the initial
Broker-Dealer. An Authorized Officer may, from time to time,
approve one or more additional persons to serve as Broker-Dealers
under Broker-Dealer Agreements and shall be responsible for
providing such Broker-Dealer Agreements to the Trustee and the
Auction Agent.
(ii) Any Broker-Dealer may be removed at any time, at the
request of an Authorized Officer, but there shall, at all times,
be at least one Broker-Dealer appointed and acting as such.
(g) Changes in Auction Period or Periods and Certain Percentages.
(i) While any of the Auction Rate Notes are Outstanding,
the Issuer may, from time to time, change the length of one or
more Auction Periods (an "Auction Period Adjustment"), in order
to conform with then current market practice with respect to
similar securities or to accommodate economic and financial
factors that may affect or be relevant to the length of the
Auction Period and the interest rate borne by the Auction Rate
Notes. The Issuer shall not initiate an Auction Period Adjustment
unless it shall have received the written consent of the Market
Agent, which consent shall not be unreasonably withheld, not
later than nine days prior to the Auction Date for such Auction
Period. The Issuer shall initiate the Auction Period Adjustment
by giving written notice by Issuer Order to the Trustee, the
Auction Agent, the Market Agent, each Rating Agency and the
Securities Depository in substantially the form of, or containing
substantially the information contained in, Exhibit E attached
hereto at least 10 days prior to the Auction Date for such
Auction Period.
(ii) Any such adjusted Auction Period shall not be less
than 7 days nor more than 366 days.
(iii) An Auction Period Adjustment shall take effect only
if (A) the Trustee and the Auction Agent receive, by 11:00 a.m.,
eastern time, on the Business Day before the Auction Date for the
first such Auction Period, an Issuer Certificate in substantially
the form attached as, or containing substantially the same
information contained in, Exhibit F attached hereto, authorizing
the Auction Period Adjustment specified in such certificate along
with a copy of the written consent of the Market Agent and, (B)
Sufficient Bids exist as of the Auction on the Auction Date for
such first Auction Period. If the condition referred to in (A)
above is not met, the applicable Auction Note Interest Rate for
the next Auction Period shall be determined pursuant to the above
provisions of this Section 2.02 and the Auction Period shall be
the Auction Period determined without reference to the proposed
change. If the condition referred to in (A) is met but the
condition referred in (B) above is not met, the applicable
Auction Note Interest Rate for the next Auction Period shall be
the applicable Maximum Auction Rate and the Auction Period shall
be the Auction Period determined without reference to the
proposed change.
A-24
<PAGE>
In connection with any Auction Period Adjustment, the
Auction Agent shall provide such further notice to such parties
as is specified in Section 2.03 of the Auction Agent Agreement.
(h) Changes in the Auction Date. The Market Agent, with the
written consent of an Authorized Officer and, if applicable, upon
receipt of the opinion of Note Counsel as required below, may specify an
earlier Auction Date (but in no event more than five Business Days
earlier) than the Auction Date that would otherwise be determined in
accordance with the definition of "Auction Date" in Section 1.01 of this
Appendix A with respect to one or more specified Auction Periods in
order to conform with then current market practice with respect to
similar securities or to accommodate economic and financial factors that
may affect or be relevant to the day of the week constituting an Auction
Date and the interest rate borne on the Auction Rate Notes. The Market
Agent shall deliver a written request for consent to such change in the
length of the Auction Date to the Issuer at least 14 days prior to the
effective date of such change. If the Issuer shall have delivered such
written consent to the Market Agent, the Market Agent shall provide
notice of its determination to specify an earlier Auction Date for one
or more Auction Periods by means of a written notice delivered at least
10 days prior to the proposed changed Auction Date to the Trustee, the
Auction Agent, the Issuer, each Rating Agency and the Securities
Depository. Such notice shall be substantially in the form of, or
contain substantially the information contained in, Exhibit G attached
hereto.
In connection with any change described in this Section 2.02(h),
the Auction Agent shall provide such further notice to such parties as
is specified in Section 2.03 of the Auction Agent Agreement.
Section 2.03. Additional Provisions Regarding the Interest Rates on the
Auction Rate Notes. The determination of a Variable Rate by the Auction Agent or
any other Person pursuant to the provisions of the applicable Section of this
Article II shall be conclusive and binding on the Registered Owners of the
Auction Rate Notes to which such Variable Rate applies, and the Issuer and the
Trustee may rely thereon for all purposes.
In no event shall the cumulative amount of interest paid or payable on
the Auction Rate Notes (including interest calculated as provided herein, plus
any other amounts that constitute interest on the Auction Rate Notes under
applicable law, which are contracted for, charged, reserved, taken or received
pursuant to the Auction Rate Notes or related documents) calculated from the
Date of Closing of the Auction Rate Notes through any subsequent day during the
term of the Auction Rate Notes or otherwise prior to payment in full of the
Auction Rate Notes exceed the amount permitted by applicable law. If the
applicable law is ever judicially interpreted so as to render usurious any
amount called for under the Auction Rate Notes or related documents or otherwise
contracted for, charged, reserved, taken or received in connection with the
Auction Rate Notes, or if the redemption or acceleration of the maturity of the
Auction Rate Notes results in payment to or receipt by the Registered Owner or
any former Registered Owner of the Auction Rate Notes of any interest in excess
of that permitted by applicable law, then, notwithstanding any provision of the
Auction Rate Notes or related documents to the contrary, all excess amounts
theretofore paid or received with respect to the Auction Rate Notes shall be
credited on the principal balance of the Auction Rate Notes (or, if the Auction
Rate Notes have been paid or would thereby be paid in full, refunded by the
recipient thereof), and the provisions of the Auction Rate Notes and related
documents shall automatically and immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without the necessity
of the execution of any new document, so as to comply with the applicable law,
but so as to permit the recovery of the fullest amount otherwise called for
under the Auction Rate Notes and under the related documents.
A-25
<PAGE>
Section 2.04. Qualifications of Market Agent. The Issuer hereby directs
the Trustee to appoint PaineWebber Incorporated as the Market Agent. The Market
Agent shall be a member of the National Association of Securities Dealers, Inc.,
have a capitalization of at least $50,000,000 and be authorized by law to
perform all the duties imposed upon it by this Appendix A. The Market Agent may
resign and be discharged of the duties and obligations created by this Appendix
A by giving at least 30 days notice to the Issuer and the Trustee, provided that
such resignation shall not be effective until the appointment of a successor
market agent by the Issuer and the acceptance of such appointment by such
successor market agent. The Market Agent may be replaced at the direction of the
Issuer, by an instrument signed by an Authorized Officer, filed with the Market
Agent and the Trustee at least 30 days before the effective date of such
replacement, provided that such replacement shall not be effective until the
appointment of a successor market agent by the Issuer and the acceptance of such
appointment by such successor market agent.
In the event that the Market Agent shall be removed or be dissolved, or
if the property or affairs of the Market Agent shall be taken under the control
of any state or federal court or administrative body because of bankruptcy or
insolvency, or for any other reason, and there is no Market Agent and the Issuer
shall not have appointed its successor as Market Agent, the Trustee,
notwithstanding the provisions of the first paragraph of this Section, shall be
deemed to be the Market Agent for all purposes of this Appendix A until the
appointment by the Issuer of the successor Market Agent. Nothing in this Section
shall be construed as conferring on the Trustee additional duties other than as
set forth herein.
A-26
<PAGE>
EXHIBIT A
FORM OF CLASS 1999A-13, CLASS 1999A-14
CLASS 1999A-15 AND CLASS 1999A-16 SENIOR (ARCs) NOTES
EXCEPT AS OTHERWISE PROVIDED IN THE INDENTURE, THIS GLOBAL NOTE MAY BE
TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE SECURITIES
DEPOSITORY (AS DEFINED HEREIN) OR TO A SUCCESSOR SECURITIES DEPOSITORY OR TO A
NOMINEE OF A SUCCESSOR SECURITIES DEPOSITORY.
UNION FINANCIAL SERVICES-1, INC.
TAXABLE STUDENT LOAN ASSET-BACKED NOTE
SENIOR CLASS 1999A-[13] [14] [15] [16]
AUCTION RATE CERTIFICATE NOTES
REGISTERED NO. R-__ REGISTERED $________________
Maturity Date Interest Rate Original Issue Date CUSIP No.
December 1, 2032 Variable July 1, 1999 906619__________
PRINCIPAL SUM: _________________________________________ AND 00/100 DOLLARS
REGISTERED OWNER: CEDE & CO.
UNION FINANCIAL SERVICES-1, INC., a corporation organized under the
corporation laws of the State of Nevada (the "Issuer," which term includes any
successor corporation under the Second Amended and Restated Indenture of Trust,
dated as of November 1, 1996 (as amended, the "Original Indenture") and the
Series 1999 Supplemental Indenture of Trust dated as of July 1, 1999 (as
amended, the "Series 1999 Supplemental Indenture," and together with the
Original Indenture, the "Indenture"), each between the Issuer and Zions First
National Bank, as successor trustee (the "Trustee," which term includes any
successor trustee under the Indenture)) for value received, hereby promises to
pay to the Registered Owner (stated above) or registered assigns, the Principal
Sum of (stated above), but solely from the revenues and receipts hereinafter
specified and not otherwise, on the Maturity Date specified above (subject to
the right of prior redemption hereinafter described), upon presentation and
surrender of this note at the Principal Office of the Trustee, as paying agent,
trustee, authenticating agent and registrar for the Notes, or a duly appointed
successor paying agent, and to pay interest in arrears on said Principal Sum,
but solely from the revenues and receipts hereinafter specified and not
otherwise, to the Registered Owner hereof from the most recent Interest Payment
Date to which interest has been paid hereon, until the payment of said principal
sum in full.
<PAGE>
Any capitalized words and terms used as defined words and terms in this
note and not otherwise defined herein shall have the meanings given them in the
Indenture.
This note shall bear interest at an Auction Rate, all as determined in
Appendix A of the Series 1999 Supplemental Indenture.
The principal of and interest on this note are payable in lawful money
of the United States of America. If the specified date for any payment of
principal or interest accrued to such specified date shall be a day other than a
Business Day then such payment may be made on the next succeeding Business Day,
with the same force and effect as if made on the specified date for such payment
without additional interest.
Interest payable on this note shall be computed on the assumption that
each year contains 360 days and actual days elapsed.
This note is one of a series of notes of the Issuer designated Taxable
Student Loan Asset-Backed Notes, Senior Class 1999A-[13][14][15][16] Auction
Rate Certificate Notes (ARCs), dated the Original Issue Date, in the aggregate
original principal amount of $_______________ (the "Class 1999A-[13][14][15][16]
Notes") which have been authorized by the Issuer under a certain resolution, and
issued by the Issuer pursuant to the Indenture. The following notes of the
Issuer are being issued simultaneously with the Class 1999A-[13][14][15][16]
Notes or currently remain Outstanding under the Indenture: $48,300,000 of its
Taxable Student Loan Asset-Backed Notes, Senior Class 1996A-1 Auction Rate
Securities (ARSSM) (the "Class 1996A-1 Notes"), $48,300,000 of its Taxable
Student Loan Asset-Backed Notes, Senior Class 1996A-2 Auction Rate Securities
(ARSSM) (the "Class 1996A-2 Notes"), $73,700,000 of its Taxable Student Loan
Asset-Backed Notes, Senior Class 1996A-3 Auction Rate Securities (ARSSM) (the
"Class 1996A-3 Notes"), $54,300,000 of its Taxable Student Loan Asset-Backed
Notes, Senior Class 1996A-4 Auction Rate Securities (ARSSM) (the "Class 1996A-4
Notes"), $225,000,000 of its Taxable Student Loan Asset-Backed Notes, Senior
Class 1996A-5 Treasury Rate (the "Class 1996A-5 Notes"), $75,500,000 of its
Taxable Student Loan Asset-Backed Notes, Senior Class 1996A-6 Auction Rate
Securities (ARSSM) (the "Class 1996A-6 Notes"), $125,000,000 of its Taxable
Student Loan Asset-Backed Notes, Senior Class 1998A-7 Fixed Rate (the "Class
1998A-7 Notes"), $125,000,000 of its Taxable Student Loan Asset-Backed Notes,
Senior Class 1998A-8 Fixed Rate (the "Class 1998A-8 Notes"), $125,000,000 of its
Taxable Student Loan Asset-Backed Notes, Senior Class 1998A-9 Fixed Rate (the
"Class 1998A-9 Notes"), $100,000,000 of its Taxable Student Loan Asset-Backed
Notes, Senior Class 1998A-10 Auction Rate Securities (ARSSM) (the "Class
1998A-10 Notes"), $100,000,000 of its Taxable Student Loan Asset-Backed Notes,
Senior Class 1998A-11 Auction Rate Securities (ARSSM) (the "Class 1998A-11
Notes"), $100,000,000 of its Taxable Student Loan Asset-Backed Notes, Senior
Class 1998A-12 Auction Rate Securities (ARSSM) (the "Class 1998A-12 Notes"),
$_______________ of its Taxable Student Loan Asset-Backed Notes, Senior Class
1999A-[13][14][15][16] Auction Rate Certificate Notes (ARCs) (the "Class
1999A-[13][14][15][16] Notes"), $_______________ of its Taxable Student Loan
Asset-Backed Notes, Senior Class 1999A-[13][14][15][16] Auction Rate Certificate
Notes (ARCs) (the "Class 1999A-[13][14][15][16] Notes"), $_______________ of its
Taxable Student Loan Asset-Backed Notes, Senior Class 1999A-[13][14][15][16]
Auction Rate Certificate Notes (ARCs) (the "Class 1999A-[13][14][15][16]
Notes"), $15,600,000 of its Taxable Student Loan Asset-Backed Notes, Subordinate
Class 1996B-3 LIBOR Rate (the "Class 1996B-3 Notes"), $30,800,000 of its Taxable
A-2
<PAGE>
Student Loan Asset-Backed Notes, Subordinate Class 1997B-4 LIBOR Rate (the
"Class 1997B-4 Notes") and $70,000,000 of its Taxable Student Loan Asset-Backed
Notes, Subordinate Class 1998B-5 Auction Rate Securities (ARSSM) (the "Class
1998B-5 Notes"). The Class 1996A-1 Notes, the Class 1996A-2 Notes, the Class
1996A-3 Notes, the Class 1996A-4 Notes, the Class 1996A-5 Notes, the Class
1996A-6 Notes, the Class 1998A-7 Notes, the Class 1999A-8 Notes, the Class
1999A-9 Notes, the Class 1999A-10 Notes, the Class 1999A-11 Notes, the Class
1999A-12 Notes, the Class 1999A-13 Notes, the Class 1999A-14 Notes, the Class
1999A-15 Notes and the Class 1999A-16 Notes are collectively referred to herein
as the "Class A Notes." The Class 1996B-3 Notes, the Class 1997B-4 Notes and the
Class 1998B-5 Notes are collectively referred to herein as the "Class B Notes."
The proceeds of such notes have been used by the Issuer, together with other
moneys of the Issuer, for the purpose of providing funds to finance the
acquisition of student loans, fund a reserve fund and to pay certain costs and
expenses in connection with the issuance of such notes. The Indenture provides
for the issuance of additional notes (the "Additional Notes") which may be
secured on a parity with or subordinate to the Class A Notes or the Class B
Notes as determined by the Issuer. The Class A Notes, the Class B Notes and any
Additional Notes are collectively referred to herein as the "Notes."
Mandatory Redemption, Optional Redemption and Extraordinary Redemption.
This note is subject to mandatory redemption, optional redemption and
extraordinary redemption, all as described in the Indenture.
Optional Purchase. The Issuer may purchase or cause to be purchased all
of the Notes on any Interest Payment Date on which the aggregate current
principal balance of the Notes shall be less than or equal to 10% of the initial
aggregate principal balance of the Notes on the Date of Issuance, at a purchase
price equal to the aggregate current principal balance of such Notes, plus
accrued interest on the Notes through the day preceding the Interest Payment
Date on which the purchase occurs.
Notice of Redemption or Purchase. Notice of the call for redemption
shall be given by the Trustee by mailing a copy of the notice at least 15 days
prior to the redemption or purchase date to the Registered Owners of the Notes
to be redeemed in whole or in part at the address of such Registered Owner last
showing on the registration books. Failure to give such notice or any defect
therein shall not affect the validity of any proceedings for the redemption or
purchase of such Auction Rate Notes for which no such failure or defect occurs.
All Notes called for redemption or purchase will cease to bear interest after
the specified redemption or purchase date, provided funds for their payment are
on deposit at the place of payment at the time. If less than all Notes are to be
redeemed or purchased, Notes shall be selected for redemption or purchase as
provided in the Indenture.
Swap Agreements. The Indenture provides that the Issuer may enter into
an interest rate swap or basis agreement between the Issuer and a swap provider
(a "Swap Counterparty"), as originally executed and as amended or supplemented,
or other interest rate hedge agreement between the Issuer and a Swap
Counterparty, as originally executed and as amended or supplemented, in each
case approved in writing by the Rating Agency, for the purpose of converting in
whole or in part the Issuer's variable interest rate liability on all or a
portion of the Notes bearing interest at a variable rate issued on a parity
A-3
<PAGE>
therewith to a fixed rate liability or for the purpose of converting in whole or
in part the Issuer's fixed interest rate liability on all or a portion of any
Additional Notes bearing interest at a fixed rate issued on a parity therewith
to a variable rate liability. Payments due to a Swap Counterparty from the
Issuer pursuant to the applicable Swap Agreement (including, but not limited to,
payments in respect of an Early Termination Date, as defined in the applicable
Swap Agreement) are referred to herein as "Issuer Swap Payments."
The principal of and interest on the Class A Notes and any Additional
Notes issued on a parity with the Class A Notes and any Issuer Swap Payments
secured on a parity with the Class A Notes are payable on a superior basis to
such payments on the Class B Notes and any Additional Notes issued on a parity
or subordinate to the Class B Notes; provided, however, that current principal
and interest may be paid on the Class B Notes and any Additional Notes issued on
a parity with the Class B Notes or subordinate to the Class B Notes if all
principal and interest payments due and owing at such time on the Class A Notes
and any Additional Notes issued on a parity with the Class A Notes and any
Issuer Swap Payments secured on a parity with the Class A Notes have been
previously made or provided for as provided in the Indenture.
Reference is hereby made to the Indenture, copies of which are on file
in the Principal Office of the Trustee, and to all of the provisions of which
any Registered Owner of this note by his acceptance hereof hereby assents, for
definitions of terms; the description of and the nature and extent of the
security for the Notes; the Issuer's student loan origination and acquisition
program; the revenues and other money pledged to the payment of the principal of
and interest on the Notes; the nature and extent and manner of enforcement of
the pledge; the conditions upon which the Indenture may be amended or
supplemented with or without the consent of the Registered Owners of the Notes
and any Swap Counterparty; the rights and remedies of the Registered Owner
hereof with respect hereto and thereto, including the limitations upon the right
of a Registered Owner hereof to institute any suit, action, or proceeding in
equity or at law with respect hereto and thereto; the rights, duties, and
obligations of the Issuer and the Trustee thereunder; the terms and provisions
upon which the liens, pledges, charges, trusts, and covenants made therein may
be discharged at or prior to the stated maturity or earlier redemption of this
note, and this note thereafter shall no longer be secured by the Indenture or be
deemed to be Outstanding, as defined in the Indenture, thereunder; and for the
other terms and provisions thereof.
THE NOTES ARE LIMITED OBLIGATIONS OF THE ISSUER, PAYABLE SOLELY FROM,
AND FURTHER SECURED BY, THE TRUST ESTATE, AS DEFINED IN THE INDENTURE.
No recourse, either directly or indirectly, shall be had for the payment
of the principal of and interest on this note or any claim based hereon or in
respect hereof or of the Indenture, against the Trustee, or any incorporator,
director, officer, employee, or agent of the Issuer, nor against the State of
Nevada, or any official thereof, but the obligation to pay all amounts required
by the Indenture securing this note and the obligation to do and perform the
covenants and acts required of the Issuer therein and herein shall be and remain
the responsibility and obligation of said Issuer, limited as herein set forth.
A-4
<PAGE>
Subject to the restrictions specified in the Indenture, this note is
transferable on the Note Register kept for that purpose by the Trustee, as
registrar, upon surrender of this note for transfer at the principal office of
the Trustee, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by, the Registered
Owner hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes of the same series, Stated Maturity, of authorized denominations,
bearing interest at the same rate, and for the same aggregate principal amount
will be issued to the designated transferee or transferees. At the option of the
Registered Owner, any Note may be exchanged for other Notes in authorized
denominations upon surrender of the Note to be exchanged at the principal office
of the Trustee. Upon any such presentation for exchange, one or more new Notes
of the same series, Stated Maturity, in authorized denominations, bearing
interest at the same rate, and for the same aggregate principal amount as the
Note or Notes so surrendered will be issued to the Registered Owner of the Note
or Notes so surrendered; and the Note or Notes so surrendered shall thereupon be
cancelled by the Trustee.
Notwithstanding the foregoing, so long as the ownership of the Notes is
maintained in book-entry form by The Depository Trust Company (the "Securities
Depository") or a nominee thereof, this note may be transferred in whole but not
in part only to the Securities Depository or a nominee thereof or to a successor
Securities Depository or its nominee.
The Issuer, the Trustee, and any agent of either of them shall treat the
Person in whose name this note is registered as the Registered Owner hereof (a)
on the record date for purposes of receiving timely payment of interest hereon,
and (b) on the date of surrender of this note for purposes of receiving payment
of principal hereof at its stated maturity and (c) for all other purposes,
whether or not this note is overdue, and neither the Issuer, the Trustee, nor
any such agent shall be affected by notice to the contrary.
To the extent permitted by the Indenture, modifications or alterations
of the Indenture and any supplemental indenture may be made with the consent of
less than all of the Registered Owners of the Notes then outstanding or without
the consent of any of such Registered Owners (by reason of a change in the Act
or Regulation or to cure ambiguities or conflicts), but such modification or
alteration is not permitted to affect the maturity date, Stated Maturity,
amount, Interest Payment Date, or rate of interest on any outstanding Notes or
affect the rights of the Registered Owners of less than all of the Notes
outstanding.
The Registered Owner hereof shall not have the right to demand payment
of this note or any interest hereon out of funds raised or to be raised by
taxation.
Any capitalized term used herein and not otherwise defined herein shall
have the same meaning ascribed to such term in the herein defined Indenture
unless the context shall clearly indicate otherwise.
It is hereby certified and recited that all acts and things required by
the laws of the State of Nevada to happen, exist, and be performed precedent to
and in the issuance of this note, and the passage of said resolution and the
execution of said Indenture, have happened, exist and have been performed as so
required.
A-5
<PAGE>
IN TESTIMONY WHEREOF, the Board of Directors of UNION FINANCIAL
SERVICES-1, INC. has caused the seal of the Issuer to be impressed or a
facsimile thereof to be printed hereon, and this note to be executed by the
manuel or facsimile signatures of the President and Secretary of the Issuer all
as of the Original Issue Date.
[SEAL] UNION FINANCIAL SERVICES-1, INC.
By
President
By
Secretary
A-6
<PAGE>
CERTIFICATE OF AUTHENTICATION
This note is one of the Class 1999A-__ Notes designated therein and
described in the within-mentioned Indenture.
ZIONS FIRST NATIONAL BANK, as Trustee
By
Authorized Signatory
Authentication Date:
A-7
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
unto __________ (Social Security or other identifying number __________) the
within note and all rights thereunder and hereby irrevocably appoints __________
attorney to transfer the within note on the books kept for registration thereof,
with full power of substitution in the premises.
Dated: SIGNED:
NOTICE: The signature on this Assignment must
correspond with the name of the Registered Owner
as it appears on the face of the within note in
every particular.
Signature Guaranteed by:
A Member of The New York Stock
Exchange or a State or National
Bank
A-8
<PAGE>
EXHIBIT B
SERIES 1999 CLOSING CASH FLOW PROJECTIONS
<PAGE>
EXHIBIT C
NOTICE OF PAYMENT DEFAULT
UNION FINANCIAL SERVICES-1, INC.
TAXABLE STUDENT LOAN ASSET-BACKED NOTES
CLASS 1999A-__
AUCTION RATE CERTIFICATE NOTES
NOTICE IS HEREBY GIVEN that a Payment Default has occurred and is
continuing with respect to the Auction Rate Notes identified above. The next
Auction for the Auction Rate Notes will not be held. The Auction Rate for the
Auction Rate Notes for the next succeeding Interest Period shall be the
Non-Payment Rate.
ZIONS FIRST NATIONAL BANK, as Trustee
Dated: _______________________ By
<PAGE>
EXHIBIT D
NOTICE OF CURE OF PAYMENT DEFAULT
UNION FINANCIAL SERVICES-1, INC.
TAXABLE STUDENT LOAN ASSET-BACKED NOTES
CLASS 1999A-__
AUCTION RATE CERTIFICATE NOTES
NOTICE IS HEREBY GIVEN that a Payment Default with respect to the
Auction Rate Notes identified above has been waived or cured. The next Interest
Payment Date is __________________________ and the Auction Date is
__________________________.
ZIONS FIRST NATIONAL BANK, as Trustee
Dated: _______________________ By
<PAGE>
EXHIBIT E
NOTICE OF PROPOSED CHANGE IN LENGTH
OF ONE OR MORE AUCTION PERIODS
UNION FINANCIAL SERVICES-1, INC.
TAXABLE STUDENT LOAN ASSET-BACKED NOTES
CLASS 1999A-__
AUCTION RATE CERTIFICATE NOTES
Notice is hereby given that the Issuer proposes to change the length of
one or more Auction Periods pursuant to the Second Amended and Restated
Indenture of Trust, as amended (the "Indenture") as follows:
1. The change shall take effect on _______________, the Interest Rate
Adjustment Date for the next Auction Period (the "Effective Date").
2. The Auction Period Adjustment in Paragraph 1 shall take place only if
(a) the Trustee and the Auction Agent receive, by 11:00 a.m., eastern time, on
the Business Day before the Auction Date for the Auction Period commencing on
the Effective Date, a certificate from the Issuer, as required by the Indenture
authorizing the change in length of one or more Auction Periods and (b)
Sufficient Bids exist on the Auction Date for the Auction Period commencing on
the Effective Date.
3. If the condition referred to in (a) above is not met, the Auction
Rate for the Auction Period commencing on the Effective Date will be determined
pursuant to the Auction Procedures and the Auction Period shall be the Auction
Period determined without reference to the proposed change. If the condition
referred to in (a) is met but the condition referred to in (b) above is not met,
the Auction Rate for the Auction Period commencing on the Effective Date shall
be the Maximum Rate and the Auction Period shall be the Auction Period
determined without reference to the proposed change.
4. It is hereby represented, upon advice of the Auction Agent for the
Class 1999__ Notes described herein, that there were Sufficient Bids for such
Class 1999__ Notes at the Auction immediately preceding the date of this Notice.
5. Terms not defined in this Notice shall have the meanings set forth in
the Indenture entered into in connection with the Class 1999__ Notes.
UNION FINANCIAL SERVICES-1, INC.
Dated: By
<PAGE>
EXHIBIT F
NOTICE ESTABLISHING CHANGE IN LENGTH
OF ONE OR MORE AUCTION PERIODS
UNION FINANCIAL SERVICES-1, INC.
TAXABLE STUDENT LOAN ASSET-BACKED NOTES
CLASS 1999A-__
AUCTION RATE CERTIFICATE NOTES
Notice is hereby given that the Issuer hereby establishes new lengths
for one or more Auction Periods pursuant to the Second Amended and Restated
Indenture of Trust, as amended:
1. The change shall take effect on _______________, the Interest Rate
Adjustment Date for the next Auction Period (the "Effective Date").
2. For the Auction Period commencing on the Effective Date, the Interest
Rate Adjustment Date shall be _______________, or the next succeeding Business
Day if such date is not a Business Day.
3. For Auction Periods occurring after the Auction Period commencing on
the Effective Date, the Interest Rate Adjustment Date shall be
[_______________(date) and every ______________(number) ______________(day of
week) thereafter] [every ______________(number) ______________(day of week)
after the date set forth in paragraph 2 above], or the next Business Day if any
such day is not a Business Day; provided, however, that the length of subsequent
Auction Periods shall be subject to further change hereafter as provided in the
Indenture of Trust.
4. The changes described in paragraphs 2 and 3 above shall take place
only upon delivery of this Notice and the satisfaction of other conditions set
forth in the Indenture of Trust and our prior notice dated _______________
regarding the proposed change.
5. Terms not defined in this Notice shall have the meanings set forth in
the Indenture of Trust relating to the Class 1999__ Notes.
UNION FINANCIAL SERVICES-1, INC.
Dated: By
<PAGE>
EXHIBIT G
NOTICE OF CHANGE IN AUCTION DATE
UNION FINANCIAL SERVICES-1, INC.
TAXABLE STUDENT LOAN ASSET-BACKED NOTES
CLASS 1999A-__
AUCTION RATE CERTIFICATE NOTES
Notice is hereby given by [ ], as Market Agent for the Auction Rate
Notes, that with respect to the Auction Rate Notes, the Auction Date is hereby
changed as follows:
1. With respect to Class 1999__ Notes, the definition of "Auction Date"
shall be deemed amended by substituting "_______________(number) Business Day"
in the second line thereof and by substituting "_______________(number) Business
Days" for "two Business Days" in subsection (d) thereof.
2. This change shall take effect on _______________ which shall be the
Auction Date for the Auction Period commencing on _______________.
3. The Auction Date for the Class 1999__ Notes shall be subject to
further change hereafter as provided in the Indenture of Trust.
4. Terms not defined in this Notice shall have the meaning set forth in
the Second Amended and Restated Indenture of Trust, as amended, relating to the
Class 1999__ Notes.
PAINEWEBBER INCORPORATED, as Market Agent
Dated: By
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND USE OF PHRASES.............................................2
ARTICLE II
SERIES 1999 NOTE DETAILS, FORM OF SERIES 1999 NOTES, REDEMPTION OF
SERIES 1999 NOTES AND USE OF PROCEEDS OF SERIES 1999 NOTES
Section 2.01. Series 1999 Note Details....................................3
Section 2.02. Redemption of the Series 1999 Notes.........................5
Section 2.03. Delivery of Series 1999 Notes...............................7
Section 2.04. Trustee's Authentication Certificate........................8
Section 2.05. Deposit of Series 1999 Note Proceeds........................8
Section 2.06. Forms of Series 1999 Notes..................................8
ARTICLE III
AMENDMENTS TO ORIGINAL INDENTURE
Section 3.01. Amendment of Indenture......................................8
ARTICLE IV
GENERAL PROVISIONS
Section 4.01. Date of Execution............................................9
Section 4.02. Laws Governing..............................................9
Section 4.03. Severability................................................9
Section 4.04. Exhibits....................................................9
ARTICLE V
APPLICABILITY OF INDENTURE.................................................9
APPENDIX A CERTAIN TERMS AND PROVISIONS OF THE AUCTION RATE NOTES
EXHIBIT A FORM OF SERIES 1999 SENIOR (ARCs)
EXHIBIT B SERIES 1999 CLOSING CASH FLOW PROJECTIONS
EXHIBIT C NOTICE OF PAYMENT DEFAULT
EXHIBIT D NOTICE OF CURE OF PAYMENT DEFAULT
EXHIBIT E NOTICE OF PROPOSED CHANGE IN LENGTH OF ONE OR MORE AUCTION PERIODS
EXHIBIT F NOTICE ESTABLISHING CHANGE IN LENGTH OF ONE OR MORE AUCTION PERIODS
EXHIBIT G NOTICE OF CHANGE IN AUCTION DATE
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