BROKER-DEALER AGREEMENT Dated September 20, 2007 Among THE BANK OF NEW YORK, as Auction Agent and CITIGROUP GLOBAL MARKETS INC., as Broker-Dealer and FIRST MARBLEHEAD DATA SERVICES, INC. relating to THE NATIONAL COLLEGIATE STUDENT LOAN TRUST 2007-3...
EXHIBIT
99.12
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___________________________
Dated
September 20, 2007
___________________________
Among
THE
BANK
OF NEW YORK,
as
Auction Agent
and
CITIGROUP
GLOBAL MARKETS INC.,
as
Broker-Dealer
and
FIRST
MARBLEHEAD DATA SERVICES, INC.
relating
to
$229,200,000
Student Loan Asset Backed Notes
consisting
of
Auction
Rate Class A-2-AR-1 Notes
Auction
Rate Class A-3-AR-1 Notes
Auction
Rate Class A-3-AR-2 Notes
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TABLE
OF CONTENTS
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SECTION
1.
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DEFINITIONS
AND RULES OF CONSTRUCTION.
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1.1
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Terms
Defined by Reference to the Auction Procedures
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1.2
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Additional
Terms Defined Herein
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1.3
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Rules
of Construction
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SECTION
2.
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THE
AUCTION.
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2.1
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Incorporation
by Reference of Auction Procedures.
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2.2
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Preparation
for Each Auction.
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2.3
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Securities
Depository Participant Numbers and Reconciliations.
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2.4
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Transfers.
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2.5
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Compensation.
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2.6
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Settlement.
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SECTION
3.
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THE
AUCTION AGENT.
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3.1
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Duties
and Responsibilities of the Auction Agent.
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3.2
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Rights
of the Auction Agent.
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3.3
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Auction
Agent’s Disclaimer.
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SECTION
4.
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FURNISHING
OF INFORMATION AND OFFERING MATERIALS; INDEMNIFICATION.
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4.1
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Furnishing
of Information.
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4.2
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Supplements
and Amendments to Prospectus.
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4.3
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Additional
Information.
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4.4
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Indemnification
and Contribution.
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SECTION
5.
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MISCELLANEOUS.
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5.1
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Termination
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5.2
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Participant
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5.3
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Communications
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5.4
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Recording
of Conversations
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5.5
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Entire
Agreement
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5.6
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Benefits;
Successors and Assigns
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5.7
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Amendment;
Waiver.
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5.8
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Severability
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5.9
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Execution
in Counterparts
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5.10
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Governing
Law; Jurisdiction; Waiver of Trial by Jury.
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5.11
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No
Implied Duties.
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EXHIBIT A — Auction Procedures
THIS
BROKER-DEALER AGREEMENT, dated September 20, 2007, among (i) The Bank of New
York (the “Auction Agent”), a New York banking corporation, not in its
individual capacity but solely as agent of U.S. Bank National Association (the
“Trustee”), pursuant to authority granted to the Auction Agent in the Auction
Agreement, dated September 20, 2007 (the “Auction Agreement”), between the
Trustee and the Auction Agent and acknowledged by the Corporation, as
hereinafter defined; (ii) CITIGROUP GLOBAL MARKETS INC., a New York corporation
(“BD”); and (iii) FIRST MARBLEHEAD DATA SERVICES, INC., a Massachusetts
corporation (the “Corporation”).
WITNESSETH
WHEREAS,
The National Collegiate Student Loan Trust 2007-3 (the “Issuer”) is issuing
$229,200,000 in aggregate principal amount of its Student Loan Asset Backed
Notes, Auction Rate Class A-2-AR-1 Notes, Auction Rate Class A-3-AR-1 Notes
and
Auction Rate Class A-3-AR-2 Notes (the “Bonds”) pursuant to an Indenture dated
as of September 1, 2007, (the “Indenture”; and
WHEREAS,
the interest rate on the Bonds will initially be set in accordance
with the Auction Procedures; and
WHEREAS,
The Bank of New York has been appointed as Auction Agent for purposes of the
Auction Agreement, and pursuant to Section 2.5 of the Auction Agreement, the
Corporation has requested and directed the Auction Agent to execute and deliver
this Broker-Dealer Agreement; and
WHEREAS,
the Auction Procedures require the participation of one or more
Broker-Dealers;
NOW,
THEREFORE, the Auction Agent, as agent for the Trustee, BD and the Corporation
agree as follows:
SECTION
1. DEFINITIONS
AND RULES OF CONSTRUCTION.
1.1 Terms
Defined by Reference to the Auction Procedures. Capitalized
terms used herein shall have the respective meanings specified in the Auction
Procedures.
1.2 Additional
Terms Defined Herein. As used herein, the following terms shall
have the following meanings, unless the context otherwise requires:
(a) “Auction
Procedures” shall mean the procedures for conducting Auctions for the Bonds
during an ARS Rate Period as set forth in Exhibit A hereto.
(b) “Authorized
Officers” shall mean each Managing Director, Vice President, Assistant Vice
President and Assistant Treasurer, authorized representative of the Auction
Agent assigned to the Dealing and Trading Group of the Corporate Trust
Department and every other officer or employee of the Auction Agent designated
as an “Authorized Officer” for purposes hereof in a written communication from
the Auction Agent signed by an Authorized Officer and delivered to the
Trustee.
(c) “BD
Officer” shall mean each officer or employee of BD designated as a “BD Officer”
for purposes of this Broker-Dealer Agreement in a communication to the Auction
Agent.
(d) “Broker-Dealer
Agreement” shall mean this Broker-Dealer Agreement, including Exhibit A hereto,
and any substantially similar agreement between the Auction Agent and a
Broker-Dealer.
(e) “Broker-Dealer
Fee” shall mean the fee due to the BD, as set forth in Section 2.5(b)
hereof.
(f) “Broker-Dealer
Fee Rate” shall have the meaning set forth in Section 2.5(a)
hereof.
(g) “Order
Form” shall mean the form by which Orders are to be submitted by any
Broker-Dealer on any Auction Date which shall be in a form acceptable to the
Auction Agent and may be by Electronic Means or in
writing.
1.3 Rules
of Construction. Unless the context or use indicates another or
different meaning or intent, the following rules shall apply to the construction
of this Broker-Dealer Agreement:
(a) Words
importing the singular number shall include the plural number and vice
versa.
(b) The
captions and headings herein are solely for convenience of reference and shall
neither constitute a part of this Broker-Dealer Agreement nor affect its
meaning, construction or effect.
(c) The
words
“hereof,” “herein,” “hereto,” and other words of similar import refer to this
Broker-Dealer Agreement as a whole and not to any particular section or
subsection.
(d) All
references herein to a particular time of day shall be to New York City
time.
(e) Each
reference to the purchase, sale or holding of “Bonds” shall refer to beneficial
ownership interests in Bonds unless the context clearly requires
otherwise.
(f) Any
reference herein to Bonds shall be deemed to be a reference to each Series
of
Bonds. References herein to an Auction and the Auction Procedures
shall apply separately to each Series of Bonds.
SECTION
2. THE
AUCTION.
2.1 Incorporation
by Reference of Auction Procedures.
(a) The
parties to this Broker-Dealer Agreement agree to comply with the Auction
Procedures. No amendment to the Auction Procedures shall be effective
without the consent of the parties hereto.
(b) BD
agrees
to act as, and assumes the obligations of, and limitations and restrictions
placed upon, a Broker-Dealer under this Broker-Dealer Agreement. BD
understands that other Persons meeting the requirements specified in the
definition of “Broker-Dealer” contained in the Auction Procedures may execute
Broker-Dealer Agreements and participate as Broker-Dealers in
Auctions.
(c) BD
and
other Broker-Dealers may participate in Auctions for their own
accounts. The Corporation may, however, by notice to BD and all other
Broker-Dealers, prohibit all of the Broker-Dealers from submitting Bids in
Auctions for their own accounts, provided that Broker-Dealers may continue
to
submit Hold Orders and Sell Orders. Notwithstanding the foregoing, if
BD is an affiliate of the Corporation it may not submit Bids to purchase Bonds
in Auctions for its own account, but may submit Hold Orders and
Sell Orders in Auctions with respect to Bonds otherwise acquired for its own
account. The Auction Agent shall be under no duty or liability with
respect to monitoring compliance with this Section 2.1(c).
2.2 Preparation
for Each Auction.
(a) Not
later
than 3:00 P.M. on the Business Day preceding each Auction Date, the Auction
Agent shall notify BD of any change in the aggregate principal amount of the
Bonds, as of the opening of business on such day by delivering a notice to
BD by
Electronic Means or other communication acceptable to the parties.
(b) In
the
event the Auction Date for any Auction shall be changed pursuant to Section
2.09(c) of the Auction Procedures after the Auction Agent has given notice
of
such Auction Date pursuant to Section 2.06 of the Auction Procedures, the
Auction Agent, by such means as the Auction Agent deems practicable, shall
promptly give notice of such change to BD. Thereafter, BD shall use
its best efforts to promptly notify its customers who are Existing Owners and
Potential Owners of which it is aware of such change in the Auction
Date.
2.3 Securities
Depository Participant Numbers and Reconciliations.
The
Auction Agent may, but shall have no duty to, request, from time to time, BD
to
provide it with a list of the number of Units and affiliated Securities
Depository participant numbers for customers BD believes are Existing
Owners. BD shall comply with any such request, and the Auction Agent
shall keep confidential any such information, including information received
as
to the identity of Bidders in any Auction, and shall not disclose any such
information so provided to any person other than the Trustee, the Corporation,
the Issuer and their respective agents, provided that the Auction Agent reserves
the right, and is authorized, to disclose any such information if required
to do
so by rule or regulation, or as confidential information to its internal and
external accountants, auditors and counsel, its regulators and examiners, and
any other person if the Auction Agent has been advised by its counsel that
it
may be unlawful to fail to disclose or the Auction Agent may be liable for
a
failure to effect such disclosure, or if it is ordered to do so pursuant to
a
subpoena, civil investigative demand or similar demand by a court of competent
jurisdiction or regulatory, judicial, quasi judicial agency or authority having
the authority to mandate such disclosures; provided, further, however, that
the
Auction Agent may refrain from making requested disclosures if in its sole
discretion it receives satisfactory indemnity therefor for any actual or
potential loss, claim, damage, liability or expense.
If
any of
the Corporation, the BD or the Trustee requests that the Auction Agent reconcile
the number of Units for which a Broker-Dealer is listed as the Broker-Dealer
in
the Existing Owner Registry maintained by the Auction Agent pursuant to Section
2.2(a) of the Auction Agreement with the records of the Broker-Dealers, the
Auction Agent may, but shall not be required to, perform such reconciliation
with the consent of the Corporation. Any such reconciliation shall be based
upon
information provided by the Broker-Dealers and/or the Securities
Depository. If the Auction Agent requires information from the
Securities Depository in order to perform such reconciliation, the Corporation
or the Trustee shall request such information from the Securities Depository
or
authorize the Auction Agent to request and obtain such information from the
Securities Depository. The fees for services rendered and expenses
(including any charges of the Securities Depository) incurred by the Auction
Agent in performing any such reconciliation shall be paid by the
Issuer. If as a result of any such reconciliation a discrepancy is
discovered between the records of the Broker-Dealers and the Existing Owner
Registry maintained by the Auction Agent pursuant to Section 2.2(a) of the
Auction Agreement, such Existing Owner Registry shall be adjusted to conform
to
the records of the Broker-Dealers. If as a result of such
reconciliation it is discovered that there are Units for which no Broker-Dealer
has made known to the Auction Agent a Securities Depository participant account,
such Units will be reflected in the Existing Owner Registry maintained by the
Auction Agent pursuant to Section 2.2.(a) of the Auction Agreement as belonging
to the lead underwriter/Broker-Dealer. The result of any
reconciliation shall be final and binding upon the Corporation, the
Broker-Dealers, the Trustee and the Auction Agent, absent manifest error; and,
in no event, shall the Auction Agent incur any liability for any determination
or adjustment made in connection with any reconciliation hereunder.
2.4 Transfers.
BD
shall
deliver to the Auction Agent a notice, in a form reasonably acceptable to the
Auction Agent, of transfers of Bonds made through BD by an Existing Owner to
another Person other than pursuant to an Auction. The Auction Agent
is not required to accept any notice delivered pursuant to the terms of the
foregoing sentence with respect to an Auction unless it is received by the
Auction Agent by 11:00 a.m. on the applicable Auction Date.
Notwithstanding
the provisions of Section 2.6(a) hereof, any delivery or non-delivery of Bonds
which represents any departure from the results of an Auction, as determined
by
the Auction Agent, shall be of no effect unless and until the Auction Agent
shall have been notified of such delivery or non-delivery in accordance with
the
terms of this Section 2.4.
2.5 Compensation.
(a) The
Broker-Dealer Fee Rate shall equal 0.20 of 1% per annum for the first year
of
this agreement and 0.15 of 1% per annum thereafter. The Broker-Dealer
Fee for the Bonds shall be paid by the Auction Agent solely from moneys received
from the Issuer or the Trustee pursuant to this Section 2.5 or Section 3.5
of
the Auction Agreement and represents compensation for the services of the BD
in
facilitating Auctions for the benefit of the beneficial owners of the
Bonds. The Broker-Dealer Fee rate may be adjusted from time to time
with the approval of the Corporation upon a written request of the
Broker-Dealers delivered to the Corporation.
(b) While
the
Bonds are in an Auction Period other than a daily Auction Period on each
Interest Payment Date following each Auction Date, each Broker-Dealer shall
be
entitled to receive an amount equal to the product of (x) the Broker-Dealer
Fee
Rate multiplied by (y)(A) if an Auction was held on such Auction Date, the
sum
of the aggregate principal amount of Bonds that were (1) the subject of a valid
Hold Order of an Existing Owner submitted by such Broker-Dealer, (2) the subject
of a Submitted Bid of an Existing Owner submitted by such Broker-Dealer and
continued to be held by such Existing Owner as a result of such Auction, (3)
the
subject of a Submitted Bid of a Potential Owner submitted by such Broker-Dealer
and were purchased by such Potential Owner as a result of such Auction and
(4)
deemed to be the subject of a Hold Order by an Existing Owner that were acquired
by such Existing Owner from such Broker-Dealer or (B) if an Auction was not
held
on such Auction Date, the aggregate principal amount of Outstanding Bonds that
were acquired by an Existing Owner through such Broker-Dealer, multiplied by
(z)
a fraction, the numerator of which is (i) if the Auction Period is 180 days
or
less, the actual number of days in the Auction Period next succeeding such
Auction Date or (ii) if the Auction Period is more than 180 days, the number
of
days in the Auction Period next succeeding such Auction Date calculated on
the
basis of twelve 30 day months in a year, and in either case the denominator
of
which is 360.
If
the
Bonds are in a daily Auction Period each Broker-Dealer shall be entitled to
receive on each Interest Payment Date an amount equal to the sum calculated
for
each Auction Period in the preceding month of the product of (x) the
Broker-Dealer Fee Rate multiplied by (y) the aggregate principal amount of
Bonds
for each Auction Period that were (1) the subject of a valid Hold Order
submitted by such Broker-Dealer, (2) the subject of a Submitted Bid of an
Existing Owner submitted by such Broker-Dealer and continued to be held by
such
Existing Owner as a result of such Auction, (3) the subject of a Submitted
Bid
of a Potential Owner submitted by such Broker-Dealer and were purchased by
such
Potential Owner as a result of such Auction, (4) deemed to be the subject of
a
Hold Order by an Existing Owner that were acquired by such Existing Owner from
such Broker-Dealer and (5) if an Auction was not held for any Auction Period,
the aggregate principal amount of Outstanding Bonds that were acquired by an
Existing Owner through such Broker-Dealer, multiplied by (z) a fraction, the
numerator of which is the number of days in the Auction Period and denominator
of which is 360.
The
Broker-Dealer Fee (the “Broker-Dealer Fee”) shall be calculated as set forth in
this Section 2.5 by the Auction Agent, which shall be conclusive absent manifest
error. Such amounts shall be communicated by the Auction Agent to the
Corporation and the Trustee by 4:00 P.M., New York City time, on the Business
Day immediately preceding each Interest Payment Date. On or before
10:00 A.M. on each Interest Payment Date, the Issuer shall pay to the Trustee
the Broker-Dealer Fee. By noon on each Interest Payment Date, the
Trustee shall deliver to the Auction Agent the amount constituting the
Broker-Dealer Fee, by wire transfer of immediately available funds to such
account as the Auction Agent may designate. The amount constituting
the Broker-Dealer Fee shall be held by the Auction Agent on behalf of the
Broker-Dealer and, immediately upon receipt of such fee, the Auction Agent
shall
deliver such fee to the Broker-Dealer pursuant to the written instructions
of
the Broker-Dealer. If any Existing Owner who acquired Bonds through a
Broker-Dealer transfers any such Bonds to another Person other than through
an
Auction, the Broker-Dealer for the Bonds so transferred shall continue to be
the
Broker-Dealer with respect to such Bonds, provided, however, that if the
transfer was effected by, or if the transferee is, another Person who has met
the requirements specified in the definition of “Broker-Dealer” and executed a
Broker-Dealer Agreement, such Person shall be the Broker-Dealer for such
Bonds.
2.6 Settlement.
(a) If
any
Existing Owner on whose behalf BD has submitted a Bid or Sell Order that was
accepted in whole or in part fails to instruct its Participant to deliver the
Bonds subject to such Bid or Sell Order against payment therefor, BD shall
instruct such Participant to deliver such Bonds against payment therefor and
BD
may deliver to the Potential Owner on whose behalf BD submitted a Bid that
was
accepted in whole or in part a principal amount of the Bonds that is less than
the principal amount of the Bonds specified in such Bid to be purchased by
such
Potential Owner.
(b) The
Auction Agent, the Trustee, the Corporation and the Issuer shall have no
responsibility or liability with respect to the failure of an Existing Owner,
a
Potential Owner or its respective Participant to deliver Bonds or to pay for
Bonds sold or purchased pursuant to the Auction Procedures or
otherwise.
(c) The
Auction Agent shall have no duty or liability with respect to enforcement of
this Section 2.6.
SECTION
3. THE
AUCTION AGENT.
3.1 Duties
and Responsibilities of the Auction Agent.
(a) The
Auction Agent is acting solely as non-fiduciary agent for the Trustee and owes
no duties, fiduciary or otherwise, to any other Person by reason of this
Broker-Dealer Agreement except as expressly set forth herein or in the Auction
Agreement, and no implied duties, fiduciary or otherwise, shall be read into
this Broker-Dealer Agreement against the Auction Agent.
(b) The
Auction Agent undertakes to perform such duties and only such duties as are
specifically set forth in the Broker-Dealer Agreement or expressly incorporated
herein by reference pursuant to Section 2.1(a) hereof and no implied covenants
or obligations shall be read into this Broker-Dealer Agreement against the
Auction Agent.
(c) In
the
absence of willful misconduct or gross negligence on its part, as determined
by
a court of competent jurisdiction, the Auction Agent,
whether acting directly or through agents or attorneys as provided in Section
3.2(d) hereof, shall not be liable for any action taken, suffered, or omitted
or
for any error of judgment made by it in the performance of its duties
hereunder. The Auction Agent shall not be liable for any error of
judgment made in good faith unless the Auction Agent shall have been grossly
negligent in ascertaining (or failing to ascertain) the pertinent facts
necessary to make such judgment, as determined by a court of competent
jurisdiction.
(d) The
Auction Agent shall not be responsible or liable for any failure or delay in
the
performance of its obligations under this Broker-Dealer Agreement arising out
of
or caused, directly or indirectly, by circumstances beyond its reasonable
control, including without limitation: acts of God; earthquakes; fires; floods;
wars; civil or military disturbances; sabotage; acts of terrorism; epidemics;
riots; interruptions, loss or malfunctions of utilities, computer (hardware
or
software) or communications service; accidents; labor disputes; or acts of
civil
or military authority or governmental actions; it being understood that the
Auction Agent shall use commercially reasonable efforts which are consistent
with accepted practices in the banking industry to resume performance as soon
as
practicable under the circumstances.
(e) The
Auction Agent shall not be (i) required to and does not make any representations
nor have any responsibilities as to the validity, accuracy, value or genuineness
of any signatures or endorsements, except with respect to itself, on any
document delivered pursuant to or as contemplated by this Broker-Dealer
Agreement; (ii) obligated to take any legal action hereunder that might, in
its judgment, involve any expense or liability, unless it has been furnished
with indemnity satisfactory to the Auction Agent; or (iii) responsible for
or
liable in any respect on account of the identity, authority or rights of any
Person executing or delivering or purporting to execute or deliver any document
under this Broker-Dealer Agreement or the Auction Agreement except with respect
to its own individuals executing or delivering this Broker-Dealer Agreement
or
the Auction Agreement.
(f) Anything
in this Broker-Dealer Agreement to the contrary notwithstanding, in no event
shall the Auction Agent be liable for special, indirect, punitive or
consequential damage (or loss) of any kind whatsoever (including but not limited
to lost profits), even if the Auction Agent has been advised of the likelihood
of such damage (or loss) regardless of the form of action.
3.2 Rights
of the Auction Agent.
(a) The
Auction Agent may conclusively rely on and shall be fully protected in acting
or
refraining from acting upon any communication authorized hereby and upon any
written instruction, notice, request, direction, consent, report, certificate,
security certificate or other instrument, paper, document or communication
reasonably believed by it to be genuine. The Auction Agent shall not
be liable for acting, or refraining from action, upon any communication made
by
telephone, Electronic Means or other means acceptable to the parties and
authorized hereby which the Auction Agent believes (or has no reason not to
believe) to have been given by the Trustee, a Broker-Dealer, the Corporation,
the Issuer or the Securities Depository. The Auction Agent may record
telephone communications with the Trustee, the Issuer, the Corporation or
BD.
(b) The
Auction Agent may consult with counsel of its choice, and the advice of such
counsel shall be full and complete authorization and protection in respect
of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The
Auction Agent shall not be required to advance, expend or risk its own funds
or
otherwise incur or become exposed to financial liability in the performance
of
its duties hereunder.
(d) The
Auction Agent may perform its duties and exercise its rights hereunder either
directly or by or through agents or attorneys and shall not be responsible
for
any misconduct or negligence on the part of, or for the supervision of, any
agent or attorney appointed by it with due care hereunder.
(e) The
Auction Agent shall have no obligation to monitor, or liability in respect
of,
the registration or exemption therefrom of the Bonds (or any beneficial
ownership interest therein) under any federal or state securities laws or in
respect of any transfer of the Bonds (or any beneficial ownership interest
therein) pursuant to the terms of this Broker-Dealer Agreement, the Auction
Agreement, the Indenture, any other document contemplated by any thereof, or
otherwise, including, but not limited to, compliance with any such laws in
regards to any such registration, exemption or transfer.
(f) (i)
Any
corporation or other entity into which the Auction Agent may be merged or
converted or with which it may be consolidated, (ii) any corporation or other
entity resulting from any merger, conversion or consolidation to which the
Auction Agent may be a party or (iii) any corporation or other entity succeeding
to all or substantially all of the auction agent business of the Auction Agent
shall be the successor of the Auction Agent hereunder without the execution
or
filing of any paper with any party hereto or any further act on the part of
any
of the parties hereto, except where any instrument of transfer or assignment
is
required by law to effect such succession, anything hereunder to the contrary
notwithstanding.
3.3 Auction
Agent’s Disclaimer.
The
Auction Agent makes no representations as to, and shall have no liability with
respect to, the correctness of the recitals in, or the validity with respect
to
parties other than the Auction Agent, the accuracy or adequacy of this
Broker-Dealer Agreement, the Auction Agreement, the Indenture, the Bonds or
the
Prospectus, as hereinafter defined, or any other offering material used in
connection with the offer and sale of the Bonds or any other agreement or
instrument executed in connection with the transactions contemplated herein
or
in any thereof.
SECTION
4. FURNISHING
OF INFORMATION AND OFFERING MATERIALS; INDEMNIFICATION.
4.1 Furnishing
of Information.
The
Corporation agrees to furnish, or cause to be furnished, BD with as many copies
as BD may reasonably request, of the official statement relating to the Bonds
(the “Prospectus”) as the same may be supplemented or amended from time to time,
and such other information with respect to the Corporation and its properties,
the Indenture, and the Bonds as BD shall reasonably request from time to
time.
4.2 Supplements
and Amendments to Prospectus.
If
at any
time during the term of this Broker-Dealer Agreement any event or condition
known to the Corporation relating to or affecting the Issuer or its properties,
the Bonds, the Indenture, or the documents or transactions contemplated thereby,
shall occur which, in the reasonable judgment of the Corporation or the
Broker-Dealer, might affect the accuracy, correctness or completeness of any
statement of a material fact contained in the Prospectus, as it shall have
been
supplemented or amended from time to time pursuant to this Section or included
in any report or notice filed by the Issuer (each, a “Disclosure Statement”)
pursuant to the undertaking entered into by the Issuer pursuant to the
requirements of Rule 15c2-12 of the Securities and Exchange Commission (the
“Continuing Disclosure Undertaking”) which in the reasonable judgment of the
Corporation, or BD might result in the Prospectus, as so supplemented or
amended, containing any untrue, incorrect or misleading statement
of material fact or omitting to state a material fact necessary in
order to make the statements contained therein, in light of the circumstances
under which they were made, not misleading, then:
(a) the
Corporation and the Issuer (as to events or conditions relating to itself and
otherwise of which it becomes aware) shall promptly notify BD of the
circumstances and details of such event;
(b) if,
in
the opinion of BD, such event or condition requires the preparation and
publication of an amendment or supplement to the Prospectus, the Corporation
at
its expense shall promptly prepare or cause to be prepared an appropriate
amendment or supplement thereto, in a form and manner approved by BD, so that
the statements in the Prospectus, as so amended or supplemented, will not
contain any untrue, incorrect or misleading statement of a material fact or
omit
to state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading; and
(c) the
Corporation and the Issuer shall take all necessary action to approve such
supplement or amendment.
4.3 Additional
Information.
Without
limiting the foregoing, the Corporation shall notify BD of:
(a) any
replacement of the Trustee under the Indenture;
(b) Any
Event
of Default under the Indenture provided such Event of Default relates to the
Corporation, or any other default which, with notice or lapse of time or both,
would constitute such an Event of Default;
(c) the
publication of notice of redemption or purchase of the Bonds, together with
a
copy of such notice (which notice shall be provided to BD no later than the
date
of publication of such notice); and
(d) the
occurrence of any of the following events with respect to the Bonds; (i)
principal and interest payment delinquencies; (ii) non payment related defaults;
(iii) unscheduled draws on debt service reserves; (iv) unscheduled draws on
credit enhancements; (v) substitution of credit provider or liquidity provider,
or their failure to perform; (vi) adverse tax opinions; (vii) modifications
to
rights of security holders; (viii) bond calls; (ix) defeasance; (x)
release, substitution, or sale of property securing repayment of the securities;
(xi) rating changes (including any announcement that any of the Bonds,
Corporation or Issuer has been put on credit watch); and (xii) failure of the
Corporation to provide “annual financial information” in accordance
with Rule 15c2-12(b)(5)(i)(D) under the Securities Exchange Act.
4.4 Indemnification
and Contribution.
(a) To
the
extent, if any, that a court of competent jurisdiction would enforce such
agreement as not contrary to law or public policy, the Issuer agrees to
indemnify and hold harmless BD and each person, if any, who controls (as such
term is defined in Section 15 of the Securities Act of 1933, as amended (the
“1933 Act”)) BD against any and all losses, claims, damages, expenses, and
liabilities whatsoever arising out of any violation of this Broker-Dealer
Agreement by the Corporation, including any untrue statement or alleged untrue
statement in the Prospectus and the Disclosure Statement of a material fact
or
any omission or alleged omission of any material fact necessary to make the
statements therein, at the time and in light of the circumstances under which
they were made, not misleading, including, without limiting the generality
of
the foregoing, the aggregate amount paid in settlement of any litigation
commenced or threatened or of any claim whatsoever based upon any such untrue
statement or omission or alleged untrue statement or omission, including without
limitation the reasonable costs and expenses (including fees and expenses of
counsel) of investigating, preparing for or defending itself, if such settlement
is effected with the written consent of the Corporation. In each case
the indemnification for any such settlement or expense shall be made promptly
by
the Issuer as the costs of such settlement or expenses are incurred by
BD. In case any claim should be made or action brought against any of
BD or any controlling person (as aforesaid) based upon a violation of this
Broker-Dealer Agreement by the Corporation, in respect of which indemnity may
be
sought against the Issuer, BD or such controlling person shall promptly notify
the Corporation in writing setting forth the particulars of such claim or action
(provided that failure to so notify the Corporation shall not preclude BD from
seeking indemnification unless the Corporation is materially prejudiced by
such
failure to notify) and the Issuer shall assume the defense thereof, including
the retaining of counsel and the payment of all expenses. BD or any
such controlling person shall have the right to retain separate counsel in
any
such action and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at BD’s expense or the expense of such controlling
person unless the retaining of such counsel has been specifically authorized
in
writing by the Corporation, the Issuer has failed to assume the defense and
employ counsel or counsel retained by the Corporation has advised BD that the
representation of the two parties would constitute a conflict.
(b) If
for
any reason indemnification is unavailable to BD or insufficient to hold BD
harmless in connection with this Broker-Dealer Agreement, then the Issuer shall
contribute to the amount paid or payable by BD as a result of any loss, claim,
damage or liability or action in respect thereof (including such legal or other
expenses) in such proportion as is appropriate to reflect the relative benefits
received by the Issuer on the one hand and BD on the other hand from the sale
of
the Bonds (as described in the next sentence) or, if such allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect
not
only such relative benefits but also the relative fault of the Issuer on the
one
hand and BD on the other as well as any other relevant equitable
considerations. For this purpose the relative benefits received by
Issuer on the one hand and BD on the other shall be deemed to be in the same
proportion as the principal amount of the Bonds sold bears to one year’s
compensation, at the rate applicable at the time of such loss, claim, damage
or
liability or action, received by BD pursuant to Section 2.5
above. The Issuer agrees with BD that it would not be just and
equitable if contribution pursuant to this provision were determined by pro
rata
allocation or by any other method of allocation that does not take account
of
the equitable considerations referred to above. The reimbursement,
indemnity and contribution obligations of the Issuer under this subsection
shall
be in addition to any liability which the Issuer may otherwise have, shall
extend upon the same terms and conditions to the officers, members, partners,
employees an controlling persons (if any) of BD and shall be binding upon and
inure to the benefit of any successors and assigns of the Corporation and
BD.
(c) The
Issuer shall not, without the prior written consent of BD, 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 (i) includes an unconditional release of BD from all
liability arising out of such claim, action, suit or proceeding and (ii) does
not include a statement as to, or an admission of fault, culpability or a
failure to act by or on behalf of BD.
SECTION
5. MISCELLANEOUS.
5.1 Termination. BD
may resign at any time, upon five Business Days’ notice to the Auction Agent;
provided, however, that BD may suspend its duties hereunder immediately if
it
determines, in its reasonable judgment, that for any reason, including, without
limitation, (a) a pending or proposed change in applicable tax laws, (b) a
material adverse change in the financial condition of the Issuer or the
Corporation, (c) hostilities involving the United States, (d) a down-rating
of
the Bonds, or (e) an imposition of material restrictions on the Bonds or similar
obligations, it is not advisable to attempt to Auction the Bonds. The
Auction Agent upon the written direction of the Corporation, with the consent
of
the Issuer, which shall not be unreasonably withheld or delayed, may terminate
this Broker-Dealer Agreement at any time on five Business Days’ notice to the
other parties hereto; and provided that this Broker-Dealer Agreement shall
terminate upon the resignation or removal of the BD pursuant to this Section
5.1
or termination of the Auction Agreement.
5.2 Participant. BD
is and for the term of this Broker-Dealer Agreement shall remain a member of,
a
participant in, or an affiliate of such a member or participant in Securities
Depository; and will give the Auction Agent, each other Broker-Dealer, the
Corporation and the Trustee two Business Days’ notice if it ceases to be so or
if it changes its participation or affiliation to a different Securities
Depository.
5.3 Communications. Except
for communications authorized to be made by Electronic Means or other
communication acceptable to the parties pursuant to this Broker-Dealer Agreement
or the Auction Procedures all notices, requests and other communications to
any
party hereunder shall be in writing (which may be by facsimile) and shall be
given to such party, addressed to it, at its address, facsimile number or e-mail
address set forth below and, where appropriate, reference the particular Auction
to which such notice relates:
|
If
to BD addressed:
|
Citigroup
Global Markets Inc.
|
|
000
Xxxxxxxxx Xxxxxx, 0xx
Xxxxx,
|
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
|
Attention:
Student Loan Group
|
|
|
Telephone
Number: (000) 000-0000
|
|
|
Facsimile:
(000) 000-0000
|
|
|
If
to the Auction Agent addressed:
|
The
Bank of New York
|
|
000
Xxxxxxx Xxxxxx
|
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
|
Attention:
Corporate Trust Department – Dealing & Trading
Group
|
|
|
Telephone
Number: (000) 000-0000
|
|
|
Facsimile:
(000) 000-0000
|
|
|
If
to the Issuer addressed:
|
|
|
c/o
Wilmington Trust Company
|
|
|
Xxxxxx
Square North, 0000 Xxxxx Xxxxxx Xxxxxx
|
|
|
Xxxxxxxxxx,
Xxxxxxxx 00000
|
|
|
Attention:
Corporate Trust Administration
|
|
|
Telephone
Number: (000) 000-0000
|
|
|
Facsimile:
(000) 000-0000
|
|
|
If
to the Corporation addressed:
|
First
Marblehead Data Services, Inc.
|
|
The
Prudential Tower, 000 Xxxxxxxx Xxxxxx, 00xx Xxxxx Xxxxxx, Xxxxxxxxxxxxx
00000-0000
|
|
|
Attention:
Xxxxxxx Xxxxxxxxxxx, President & Treasurer
|
|
|
Telephone
Number: (000) 000-0000
|
|
|
Facsimile:
(000) 000-0000
|
|
|
Email:
xxxxxxxxxxxx@xxxxxxxxxxxxxxx.xxx
|
or
such
other address, telephone, facsimile number or e-mail address as such party
may
hereafter specify for such purpose by notice to the other party. Each
such notice, request or communication shall be effective when delivered at
the
address specified herein. Communications shall be given on behalf of
BD by a BD Officer and on behalf of the Auction Agent by an Authorized
Officer.
5.4 Recording
of Conversations. BD may record telephone communications with
the Issuer, the Corporation, the Trustee, or the Auction Agent, or all of
them.
5.5 Entire
Agreement. This Broker-Dealer Agreement, and the other
agreements and instruments executed and delivered in connection with the
issuance of the Bonds, contain the entire agreement between the parties relating
to the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or inferred,
between the parties relating to the subject matter hereof.
5.6 Benefits;
Successors and Assigns. This Broker-Dealer Agreement shall be
binding upon, inure to the benefit of, and be enforceable by, the respective
successors and assigns of BD, the Auction Agent and the
Corporation. Except as provided in Section 3.2(f) hereof, this
Broker-Dealer Agreement may not be assigned by any party hereto absent the
prior
written consent of the other parties; provided, however, that: (a) the
Broker-Dealer Agreement may be assigned by the Auction Agent to a successor
Auction Agent selected by the Corporation without the consent of BD and BD
may
assign its rights and obligations hereunder to an affiliate of BD or to an
entity succeeding to the business of BD. Nothing in this
Broker-Dealer Agreement, express or implied, shall give to any person, other
than the Auction Agent and BD and their respective successors and assigns,
any
benefit of any legal or equitable right, remedy or claim under this
Broker-Dealer Agreement, other than the rights expressly granted to the Issuer
herein.
5.7 Amendment;
Waiver.
(a) This
Broker-Dealer Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by a written
instrument signed by a duly authorized representative of the parties
hereto.
(b) Failure
of any party to this Broker-Dealer Agreement to exercise any right or remedy
hereunder in the event of a breach of this Broker-Dealer Agreement by any other
party shall not constitute a waiver of any such right or remedy with respect
to
any subsequent breach.
(c) Notwithstanding
anything herein to the contrary, the Auction Agent may, but shall have no
obligation to execute any amendment or waiver which affects its rights, powers,
immunities or indemnities hereunder.
5.8 Severability. If
any clause, provision or section of this Broker-Dealer Agreement shall be ruled
invalid or unenforceable by any court of competent jurisdiction, the invalidity
or unenforceability of such clause, provision or section shall not affect any
of
the remaining clauses, provisions or sections hereof.
5.9 Execution
in Counterparts. This Broker-Dealer Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
5.10 Governing
Law; Jurisdiction; Waiver of Trial by Jury.
(a) This
Broker-Dealer Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to agreements made and to be
performed in said State, without giving effect to principles of choice of law
or
conflicts of law thereof (other than sections 5-1401 and 5-1402 of the New
York
General Obligations Law).
(b) The
parties agree that all actions and proceedings arising out of this Broker-Dealer
Agreement or any of the transactions contemplated hereby shall be brought in
a
New York State Court or United States District Court, in each case, in the
County of New York and, in connection with any such action or proceeding, submit
to the jurisdiction of, and venue in, such County.
(c) Each
party to this Broker-Dealer Agreement hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any
suit,
action or proceeding arising out of or relating to this Broker-Dealer Agreement
in any court referred to in Section 5.10(b) hereof. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action
or
proceeding in any such court.
(d) Each
party to this Broker-Dealer Agreement irrevocably consents to service of process
in the manner provided for notices in Section 5.3 hereof. Nothing in
this Broker-Dealer Agreement will affect the right of any party to this
Broker-Dealer Agreement to serve process in any other manner permitted by
law.
(e) EACH
PARTY TO THIS BROKER-DEALER AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT IT
MAY
HAVE TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THE
INDENTURE, THIS BROKER-DEALER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY (WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE). EACH
PARTY HERETO ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED
TO ENTER INTO THIS BROKER-DEALER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.
5.11 No
Implied Duties.
Nothing
contained in this Broker-Dealer Agreement, the Auction Procedures or the Auction
Agreement shall be deemed to imply any duties, covenants or obligations on
the
part of the Corporation not otherwise expressly set forth herein or
therein.
IN
WITNESS WHEREOF, the parties hereto have caused this Broker-Dealer Agreement to be duly executed and
delivered
by their proper and duly authorized officers as of the date first above
written.
|
THE
BANK OF NEW
YORK,
as
Auction
Agent
|
|
|
By: /s/
Xxxxx X.
Xxxx
|
|
|
Authorized
Signatory
|
|
|
CITIGROUP
GLOBAL MARKETS
INC.,
as
Broker-Dealer
|
|
|
By: /s/
Xxxxx
Xxxxxxxxx
|
|
|
Authorized
Signatory
|
|
|
FIRST
MARBLEHEAD DATA SERVICES,
INC.
|
|
|
By: /s/
Xxxxxxx
Xxxxxxxxxxx
|
|
|
Authorized
Signatory
|
The
Issuer hereby acknowledges and
agrees to its obligations under Section 4.2 hereof
By:
Wilmington Trust
Company,
not
in its individual
capacity
but
solely as Owner
Trustee
By:
/s/
J. Xxxxxxxxxxx
Xxxxxx
Name:
J. Xxxxxxxxxxx Xxxxxx
Title: Financial
Services Officer
EXHIBIT
A
AUCTION
PROCEDURES
Unless
otherwise provided herein, the provisions of this Exhibit A shall apply
separately to the Class A-2-AR Notes and the Class A-3-AR Notes, each
constituting Auction Rate Notes (“Auction Rate Notes”).
TABLE
OF CONTENTS
|
|
Definitions
|
|
ARTICLE
II
|
Auction
Procedures
|
|
Section
2.01.
|
Orders
by Existing Owners and Potential Owners
|
|
Section
2.02.
|
Submission
of Orders by Broker-Dealers to Auction Agent
|
|
Section
2.03.
|
Treatment
of Orders by the Auction Agent
|
|
Section
2.04.
|
Determination
of Auction Period Rate
|
|
Section
2.05.
|
Allocation
of Notes
|
|
Section
2.06.
|
Notice
of Auction Period Rate
|
|
Section
2.07.
|
Index
|
|
Section
2.08.
|
Miscellaneous
Provisions Regarding Auctions
|
|
Section
2.09.
|
Changes
in Auction Period or Auction Date
|
Both
the
Definitions in Article I and the Auction Procedures in Article II are subject
to
modification or amendment pursuant to Schedule I. In the event of any
conflict between Article I or Article II and Schedule I, Schedule I shall
prevail. Any reference herein to “Series” such as “a Series of Notes”
or “Notes of a Series” shall not apply if there is only one Series of
Notes.
ARTICLE
I
Definitions
In
addition to the words and terms otherwise defined in the Authorizing Document,
the following words and terms as used in this Exhibit A (hereinafter
“this Exhibit”) and elsewhere in the Authorizing Document have the following
meanings with respect to Notes in an ARS Rate Period unless the context or
use
indicates another or different meaning or intent or the definition has been
changed, modified or expanded in Schedule I:
“Agent
Member” means a member of, or participant in, the Securities Depository
who shall act on behalf of a Bidder.
“All
Hold Rate” has the meaning set forth in Schedule I.
“ARS
Conversion Date” means with respect to Notes, the date on which the
Notes of such Series convert from an interest rate period other than an ARS
Rate
Period and begin to bear interest at the Auction Period Rate.
“ARS
Rate Period” means, for each Series of Notes, any period of time
commencing on the day following the Initial Period and ending on the earlier
of
the Conversion Date or the day preceding the final maturity date of such
Notes.
“Auction”
means each periodic implementation of the Auction Procedures.
“Auction
Agent” means the Person appointed as Auction Agent in accordance with
the Auction Agreement. The Auction Agent shall initially be the party
named in Schedule I.
“Auction
Agreement” means an agreement between the Auction Agent and the
Indenture Trustee pursuant to which the Auction Agent agrees to follow the
procedures specified in this Exhibit with respect to the Notes while such
Notes bear interest at the Auction Period Rate, as such agreement may from
time
to time be amended or supplemented.
“Auction
Date” means with respect to any Series of Notes:
(a)
Daily Auction Period. If the Notes are in a daily Auction Period,
each Business Day unless such day is the Business Day prior to the conversion
from a daily Auction Period to another Auction Period,
(b)
Flexible Auction Period. If the Notes are in a Flexible Auction
Period, the last Business Day of the Flexible Auction Period, and
(c)
Other Auction Periods. If the Notes are in any other Auction Period,
the Business Day next preceding each Interest Payment Date for such Notes
(whether or not an Auction shall be conducted on such date);
provided,
however, that the last Auction Date with respect to the Notes in an Auction
Period other than a daily Auction Period or Flexible Auction Period shall be
the
earlier of (i) the Business Day next preceding the Interest Payment Date
next preceding the Conversion Date for the Notes and (ii) the Business Day
next preceding the Interest Payment Date next preceding the final maturity
date
for the Notes; and
provided,
further, that if the Notes are in a daily Auction Period, the last
Auction Date shall be the earlier of (x) the second Business Day next
preceding the Conversion Date for the Notes and (y) the Business Day next
preceding the final maturity date for the Notes. The last Business
Day of a Flexible Auction Period shall be the Auction Date for the Auction
Period which begins on the next succeeding Business Day, if any. On
the second Business Day preceding the conversion from a daily Auction Period
to
another Auction Period, there shall be an Auction for the last daily Auction
Period. On the Business Day preceding the conversion from a daily
Auction Period to another Auction Period, there shall be one Auction for the
first Auction Period following the conversion.
The
first Auction Date for each Series
of Notes is set forth in Schedule I.
“Auction
Desk” means the business unit of a Broker-Dealer that fulfills the
responsibilities of the Broker-Dealer under a Broker-Dealer Agreement, including
soliciting Bids for the Notes, and units of the Broker-Dealer which are not
separated from such business unit by information controls appropriate to
control, limit and monitor the inappropriate dissemination and use of
information about Bids.
“Auction
Period” means with respect to each Series of Notes:
(a) Flexible
Auction Period. A Flexible Auction Period;
(b) Daily
Auction Period. With respect to a Series of Notes in a daily
Auction Period, a period beginning on each Business Day and extending to but
not
including the next succeeding Business Day unless such Business Day is the
second Business Day preceding the conversion from a daily Auction Period to
another Auction Period, in which case the daily Auction Period shall extend
to,
but not include, the next Interest Payment Date;
(c) Seven
day Auction Period. With respect to a Series of Notes
in a seven-day Auction Period, if Auctions generally are conducted on the day
of
the week specified in column A of the table below, a period of generally seven
days beginning on the day of the week specified in column B of the table below
(or the day following the last day of the prior Auction Period if the prior
Auction Period does not end on the day of the week specified in column C of
the
table below) and ending on the day of the week specified in column C of the
table below in the next succeeding week (unless such day is not followed by
a
Business Day, in which case on the next succeeding day which is followed by
a
Business Day):
|
(A)
|
(B)
|
(C)
|
|
When
Auctions Occur on this day
|
Auction
Period Generally Begins this day
|
Auction
Periods Generally End this day
|
|
Friday
|
Monday
|
Sunday
|
|
Monday
|
Tuesday
|
Monday
|
|
Tuesday
|
Wednesday
|
Tuesday
|
|
Wednesday
|
Thursday
|
Wednesday
|
|
Thursday
|
Friday
|
Thursday
|
(d) 28-day
Auction Period. With respect to a Series of Notes in a 28-day
Auction Period, if Auctions generally are conducted on the day of the week
specified in column A of the table above, a period of generally 28 days
beginning on the day of the week specified in column B of the table above (or
the day following the last day of the prior Auction Period if the prior Auction
Period does not end on the day of the week specified in column C of the table
above) and ending on the same day of the week specified in column C of the
table
above four weeks later (unless such day is not followed by a Business Day,
in
which case on the next succeeding day which is followed by a Business
Day).
(e) 35-day
Auction Period. With respect to a Series of Notes in a 35-day
Auction Period, if Auctions generally are conducted on the day of the week
specified in column A of the table above, a period of generally 35 days
beginning on the day of the week specified in column B of the table above (or
the day following the last day of the prior Auction Period if the prior Auction
Period does not end on the day of the week specified in column C of the table
above) and ending on the day of the week specified in column C of the table
above five weeks later (unless such day is not followed by a Business Day,
in
which case on the next succeeding day which is followed by a Business
Day).
(f) Three-month
Auction Period. With respect to a Series of Notes in a
three-month Auction Period, a period of generally three months (or shorter
period upon a conversion from another Auction Period) beginning on the day
following the last day of the prior Auction Period and ending on the calendar
day immediately preceding the first Business Day of the month that is the third
calendar month following the beginning date of such Auction Period;
and
(g) Six-month
Auction Period. With respect to a Series of Notes in a six-month
Auction Period, a period of generally six months (or shorter period upon a
conversion from another Auction Period) beginning on the day following the
last
day of the prior Auction Period and ending on the next succeeding date set
forth
in Schedule I;
Provided,
however, that if there is a conversion of a Series of Notes with Auctions
generally conducted on the day of the week specified in column A of the table
above, (i) from a daily Auction Period to a seven-day Auction Period, the next
Auction Period shall begin on the date of the conversion (i.e. the Interest
Payment Date for the prior Auction Period) and shall end on the next succeeding
day of the week specified in column C of the table above (unless such day is
not
followed by a Business Day, in which case on the next succeeding day which
is
followed by a Business Day), (ii) from a daily Auction Period to a 28-day
Auction Period, the next Auction Period shall begin on the date of the
conversion (i.e., the Interest Payment Date for the prior Auction Period) and
shall end of the day of the week specified in column C of the table above
(unless such day is not followed by a Business Day, in which case on the next
succeeding day which is followed by a Business Day) which is more than 21 days
but not more than 28 days from such date of conversion, and (iii) from a daily
Auction Period to a 35-day Auction Period, the next Auction Period shall begin
on the date of the conversion (i.e. the Interest Payment Date for the prior
Auction Period) and shall end on the day of the week specified in column C
of
the table above (unless such day is not followed by a Business Day, in which
case on the next succeeding day which is followed by a Business Day) which
is
more than 28 days but no more than 35 days from such date of
conversion.
Notwithstanding
the foregoing, if an Auction is for an Auction Period of more than seven days
and the Auction Rate on such Auction Date is the Maximum Rate as the result
of a
lack of Sufficient Clearing Bids, the Auction Period shall automatically convert
to a seven-day Auction Period. On the following Auction Date, the
Auction shall be conducted for an Auction Period of the same length as the
Auction Period prior to such automatic conversion. If such Auction is
successful, the Auction Period shall revert to the length prior to the automatic
conversion, and, if such Auction is not successful, the Auction Period shall
be
another seven-day period.
“Auction
Period Rate” means the Auction Rate or any other rate of interest to be
borne by the Notes during each Auction Period determined in accordance with
Section 2.04 of this Exhibit; provided, however, in no event may the Auction
Period Rate exceed the Maximum Rate.
“Auction
Procedures” means the procedures for conducting Auctions for Notes
during an ARS Rate Period set forth in this Exhibit.
“Auction
Rate” means for each Series of Notes for each Auction Period,
(i) if Sufficient Clearing Bids exist, the Winning Bid Rate, provided,
however, if all of the Notes are the subject of Submitted Hold Orders, the
All
Hold Rate for such Series of Notes and (ii) if Sufficient Clearing Bids do
not exist, the Maximum Rate for such Series of Notes.
“Authorized
Denominations” means $25,000, or such other amount specified in
Schedule I, and integral multiples thereof so long as the Notes bear interest
at
the Auction Period Rate, notwithstanding anything else in the Authorizing
Document to the contrary.
“Authorizing
Document” has the meaning set forth in Schedule I.
“Available
Notes” means, for each Series of Notes on each Auction Date, the number
of Units of Notes that are not the subject of Submitted Hold
Orders.
“Bid”
has the meaning specified in subsection (a) of Section 2.01 of this
Exhibit.
“Bidder”
means each Existing Owner and Potential Owner who places an Order.
“Notes”
has the meaning set forth in Schedule I.
“Broker-Dealer”
means any entity that is permitted by law to perform the function required
of a
Broker-Dealer described in this Exhibit, that is a member of, or a direct
participant in, the Securities Depository, that has been selected by the
Corporation and that is a party to a Broker-Dealer Agreement with the Auction
Agent and the Corporation. The “Broker-Dealer of record” with respect
to any Note is the Broker-Dealer which placed the Order for such Note or whom
the Existing Owner of such Note has designated as its Broker-Dealer with respect
to such Note, in each case as reflected in the records of the Auction
Agent.
“Broker-Dealer
Agreement” means an agreement among the Auction Agent, the Corporation
and a Broker-Dealer pursuant to which such Broker-Dealer agrees to follow the
procedures described in this Exhibit, as such agreement may from to time be
amended or supplemented.
“Broker-Dealer
Deadline” means, with respect to an Order, the internal deadline
established by the Broker-Dealer through which the Order was placed after which
it will not accept Orders or any change in any Order previously placed with
such
Broker-Dealer; provided, however, that nothing shall prevent the Broker-Dealer
from correcting Clerical Errors by the Broker-Dealer with respect to Orders
from
Bidders after the Broker-Dealer Deadline pursuant to the
provisions herein. Any Broker-Dealer may change the time or
times of its Broker-Dealer Deadline as it relates to such Broker-Dealer by
giving notice not less than two Business Days prior to the date such change
is
to take effect to Bidders who place Orders through such
Broker-Dealer.
“Business
Day” in addition to any other definition of “Business Day” included in
the Authorizing Document, while Notes bear interest at the Auction Period Rate,
the term Business Day shall not include Saturdays, Sundays, days on which the
New York Stock Exchange or its successor is not open for business, days on
which
the Federal Reserve Bank of New York is not open for business, days
on which banking institutions or trust companies located in the state in which
the operations of the Auction Agent are conducted are authorized or required
to
be closed by law, regulation or executive order of the state in which the
Auction Agent conducts operations with respect to the Notes.
“Clerical
Error” means a clerical error in the processing of an Order, and
includes, but is not limited to, the following: (i) a transmission error,
including but not limited to, an Order sent to the wrong address or number,
failure to transmit certain pages or illegible transmission, (ii) failure to
transmit an Order received from one or more Existing Owners or Potential Owners
(including Orders from the Broker-Dealer which were not originated by the
Auction Desk) prior to the Broker-Dealer Deadline or generated by the
Broker-Dealer’s Auction Desk for its own account prior to the Submission
Deadline or (iii) a typographical error. Determining whether an error
is a “Clerical Error” is within the reasonable judgment of the Broker-Dealer,
provided that the Broker-Dealer has a record of the correct Order that shows
it
was so received or so generated prior to the Broker-Dealer Deadline or
the Submission Deadline, as applicable.
“Conversion
Date” means the date on which any Series of the Notes begin to bear
interest at a rate which is determined other than by means of the Auction
Procedures.
“Corporation”
has the meaning set forth in Schedule I.
“Electronic
Means” means, facsimile transmission, email transmission or other
similar electronic means of communication providing evidence of transmission,
including a telephone communication confirmed by any other method set forth
in
this definition.
“Error
Correction Deadline” means one hour after the Auction Agent completes
the dissemination of the results of the Auction to Broker-Dealers without regard
to the time of receipt of such results by any Broker-Dealer; provided, however,
in no event shall the Error Correction Deadline extend past 4:00 p.m., New
York
City time, unless the Auction Agent experiences technological failure or force
majeure in disseminating the Auction results which causes a delay in
dissemination past 3:00 p.m., New York City time.
“Existing
Owner” means a Person who is the beneficial owner of Notes; provided,
however, that for purposes of conducting an Auction, the Auction Agent may
consider a Broker-Dealer acting on behalf of its customer as an Existing
Owner.
“Flexible
Auction Period” means with respect to a Series of Notes,
(a) any
period of 182 days or less which is divisible by seven and which begins on
an
Interest Payment Date and ends (i) in the case of a Series of Notes with
Auctions generally conducted on Fridays, on a Sunday unless such Sunday is
not
followed by a Business Day, in which case on the next succeeding day which
is
followed by a Business Day, (ii) in the case of a Series of Notes with
Auctions generally conducted on Mondays, on a Monday unless such Monday is
not
followed by a Business Day, in which case on the next succeeding day which
is
followed by a Business Day, (iii) in the case of a Series of Notes with
Auctions generally conducted on Tuesdays, on a Tuesday unless such Tuesday
is
not followed by a Business Day, in which case on the next succeeding day which
is followed by a Business Day, (iv) in the case of a Series of Notes with
Auctions generally conducted on Wednesdays, on a Wednesday unless such Wednesday
is not followed by a Business Day, in which case on the next succeeding day
which is followed by a Business Day, and (v) in the case of a Series of
Notes with Auctions generally conducted on Thursdays, on a Thursday unless
such
Thursday is not followed by a Business Day, in which case on the next succeeding
day which is followed by a Business Day or
(b) any
period which is longer than 182 days which begins on an Interest Payment Date
and ends not later than the final scheduled maturity date of such Series of
Notes.
“Hold
Order” means an Order to hold the Notes as provided in Section 2.01(a)
of this Exhibit or such an Order deemed to have been submitted as provided
in
Section 2.01(c) of this Exhibit.
“Index”
has the meaning set forth in Schedule I.
“Initial
Period” has the meaning set forth in Schedule I.
“Initial
Period Rate” has the meaning set forth in Schedule I.
“Interest
Payment Date” with respect to Notes of a Series bearing interest at
Auction Period Rates, means, notwithstanding anything else in the Authorizing
Document to the contrary, the first Interest Payment Date for such Series of
Notes as set forth in Schedule I and thereafter (unless changed by Schedule
I) (a) when used with respect to any Auction Period other than a
daily Auction Period or a Flexible Auction Period, the Business Day immediately
following such Auction Period, (b) when used with respect to a daily
Auction Period, the first Business Day of the month immediately succeeding
such
Auction Period, (c) when used with respect to a Flexible Auction Period of
(i) seven or more but fewer than 183 days, the Business Day immediately
following such Flexible Auction Period, or (ii) 183 or more days, each
semiannual date on which interest on the Notes would be payable if such Notes
bore interest at a fixed rate of interest and on the Business Day immediately
following such Flexible Auction Period, and (d) the date when the final
payment of principal of the Notes of such Series becomes due and payable
(whether at stated maturity, upon redemption or acceleration, or
otherwise).
“Order”
means a Hold Order, Bid or Sell Order.
“Potential
Owner” means any Person, including any Existing Owner, who may be
interested in acquiring a beneficial interest in the Notes in addition to the
Notes currently owned by such Person, if any; provided, however, that for
purposes of conducting an Auction, the Auction Agent may consider a
Broker-Dealer acting on behalf of its customer as a Potential
Owner.
“Record
Date” means, notwithstanding anything else in the Authorizing Document,
while the Notes bear interest at the Auction Period Rate, the Business Day
immediately preceding an Interest Payment Date.
“Schedule
I” means Schedule I to this Exhibit.
“Securities
Depository” means, notwithstanding anything else in the Authorizing
Document to the contrary, The Depository Trust Company and its successors and
assigns or any other securities depository selected by the
Corporation.
“Sell
Order” has the meaning specified in subsection (a) of Section 2.01 of
this Exhibit.
“Submission
Deadline” means, unless changed by Schedule I, 1:00 p.m., New York City
time, on each Auction Date not in a daily Auction Period and 11:00 a.m., New
York City time, on each Auction Date in a daily Auction Period, or such other
time on such date as shall be specified from time to time by the Auction Agent
if directed in writing by the Indenture Trustee or the Corporation pursuant
to
the Auction Agreement as the time by which Broker-Dealers are required to submit
Orders to the Auction Agent. Notwithstanding the foregoing, the
Auction Agent will follow the Securities Industry and Financial Markets
Association’s Early Market Close Recommendations for shortened trading days for
the bond markets (the “SIFMA Recommendation”) unless the Auction Agent is
instructed otherwise in writing by the Indenture Trustee or the
Corporation. In the event of a SIFMA Recommendation with respect to
an Auction Date, the Submission Deadline will be 11:30 a.m., instead of 1:00
p.m., New York City time.
“Submitted
Bid” has the meaning specified in subsection (b) of Section 2.04 of
this Exhibit.
“Submitted
Hold Order” has the meaning specified in subsection (b) of Section 2.04
of this Exhibit.
“Submitted
Order” has the meaning specified in subsection (b) of Section 2.04 of
this Exhibit.
“Submitted
Sell Order” has the meaning specified in subsection (b) of Section 2.04
of this Exhibit.
“Sufficient
Clearing Bids” means for each Series of Notes, an Auction for which the
number of Units of such Notes that are the subject of Submitted Bids by
Potential Owners specifying one or more rates not higher than the Maximum Rate
is not less than the number of Units of such Notes that are the subject of
Submitted Sell Orders and of Submitted Bids by Existing Owners specifying rates
higher than the Maximum Rate.
“Units”
has the meaning set forth in Section 2.02(a)(iii) of this Exhibit.
“Winning
Bid Rate” means for each Series of Notes, the lowest rate specified in
any Submitted Bid of such Series which if calculated by the Auction Agent as
the
Auction Rate would cause the number of Units of such Notes that are the subject
of Submitted Bids specifying a rate not greater than such rate to be not less
than the number of Units of Available Notes of such Series.
ARTICLE
II
Auction
Procedures
Section
2.01. Orders by Existing Owners and Potential
Owners. (a) Prior to the Broker-Dealer Deadline for each
Series of Notes on each Auction Date:
(i) each
Existing Owner may submit to a Broker-Dealer, in writing or by such other method
as shall be reasonably acceptable to such Broker-Dealer, one or more Orders
as
to:
(A) the
principal amount of Notes, if any, held by such Existing Owner which such
Existing Owner commits to continue to hold for the next succeeding Auction
Period without regard to the Auction Rate for such Auction Period,
(B) the
principal amount of Notes, if any, held by such Existing Owner which such
Existing Owner commits to continue to hold for the next succeeding Auction
Period if the Auction Rate for the next succeeding Auction Period is not less
than the rate per annum specified in such Order (and if the Auction Rate is
less
than such specified rate, the effect of the Order shall be as set forth in
paragraph (b)(i)(A) of this Section), and/or
(C) the
principal amount of Notes, if any, held by such Existing Owner which such
Existing Owner offers to sell on the first Business Day of the next succeeding
Auction Period (or on the same day in the case of a daily Auction Period)
without regard to the Auction Rate for the next succeeding Auction Period;
and
(ii) each
Potential Owner may submit to a Broker-Dealer, in writing or by such other
method as shall be reasonably acceptable to such Broker-Dealer, an Order as
to
the principal amount of Notes, which each such Potential Owner offers to
purchase if the Auction Rate for the next succeeding Auction Period is not
less
than the rate per annum then specified by such Potential Owner.
For
the
purposes of the Auction Procedures an Order containing the information referred
to in clause (i)(A) above is referred to as a “Hold Order,” an Order containing
the information referred to in clause (i)(B) or (ii) above is referred to as
a
“Bid,” and an Order containing the information referred to in clause (i)(C)
above is referred to as a “Sell Order.”
No
Auction Desk of a Broker-Dealer shall accept as an Order a submission (whether
received from an Existing Owner or a Potential Owner or generated by the
Broker-Dealer for its own account) which does not conform to the
requirements of the Auction Procedures, including, but not limited to,
submissions which are not in Authorized Denominations, specify a rate which
contains more than three figures to the right of the decimal point or specify
an
amount greater than the amount of Outstanding Notes. No Auction Desk
of a Broker-Dealer shall accept a Bid or Sell Order which is conditioned on
being filled in whole or a Bid which does not specify a specific interest
rate.
(b) (i) A
Bid by an Existing Owner shall constitute an offer to sell on the first Business
Day of the next succeeding Auction Period (or the same day in the
case of a daily Auction Period):
(A) the
principal amount of Notes specified in such Bid if the Auction Rate for the
next
succeeding Auction Period shall be less than the rate specified in such Bid;
or
(B) such
principal amount or a lesser principal amount of Notes to be determined as
described in subsection (a)(v) of Section 2.05 hereof if the Auction Rate for
the next succeeding Auction Period shall be equal to such specified rate;
or
(C) a
lesser principal amount of Notes to be determined as described in subsection
(b)(iv) of Section 2.05 hereof if such specified rate shall be higher than
the
Maximum Rate and Sufficient Clearing Bids do not exist.
(ii) A
Sell Order by an Existing Owner shall constitute an offer to sell:
(A) the
principal amount of Notes specified in such Sell Order; or
(B) such
principal amount or a lesser principal amount of Notes as described in
subsection (b)(iv) of Section 2.05 hereof if Sufficient Clearing Bids do not
exist.
(iii) A
Bid by a Potential Owner shall constitute an offer to purchase:
(A) the
principal amount of Notes specified in such Bid if the Auction Rate for the
next
succeeding Auction Period shall be higher than the rate specified therein;
or
(B) such
principal amount or a lesser principal amount of Notes as described in
subsection (a)(vi) of Section 2.05 hereof if the Auction Rate for the next
succeeding Auction Period shall be equal to such specified rate.
(c) Anything
herein to the contrary notwithstanding:
(i) If
an Order or Orders covering all of the Notes of a particular Series
held by an Existing Owner is not submitted to the Broker-Dealer of record for
such Existing Owner prior to the Broker-Dealer Deadline, such Broker-Dealer
shall deem a Hold Order to have been submitted on behalf of such Existing Owner
covering the principal amount of Notes held by such Existing Owner and not
subject to Orders submitted to such Broker-Dealer; provided, however, that
if
there is a conversion from one Auction Period to a longer Auction Period and
Orders have not been submitted to such Broker-Dealer prior to the Broker-Dealer
Deadline covering the aggregate principal amount of Notes of a particular Series
to be converted held by such Existing Owner, such Broker-Dealer shall deem
a
Sell Order to have been submitted on behalf of such Existing Owner covering
the
principal amount of Notes to be converted held by such Existing Owner not
subject to Orders submitted to such Broker-Dealer.
(ii) for
purposes of any Auction, any Order by any Existing Owner or Potential Owner
shall be revocable until the Broker-Dealer Deadline, and after the Broker-Dealer
Deadline, all such Orders shall be irrevocable, except as provided in Sections
2.02(e)(ii) and 2.02(f); and
(iii) for
purposes of any Auction other than during a daily Auction Period, any Notes
sold
or purchased pursuant to subsection (b)(i), (ii) or (iii) above shall be sold
or
purchased at a price equal to 100% of the principal amount thereof; provided
that, for purposes of any Auction during a daily Auction Period, such sale
or
purchase price shall be 100% of the principal amount thereof plus accrued
interest to the date of sale or purchase.
Section
2.02. Submission of Orders
by Broker-Dealers to Auction Agent.
(a) Each
Broker-Dealer shall submit to the Auction Agent in writing, or by such
Electronic Means as shall be reasonably acceptable to the Auction Agent, prior
to the Submission Deadline on each Auction Date for Notes of a Series, all
Orders with respect to Notes of such Series accepted by such Broker-Dealer
in
accordance with Section 2.01 above and specifying with respect to each Order
or
aggregation of Orders pursuant to Section 2.02(b) below:
(i) the
name of the Broker-Dealer;
(ii) the
number of Bidders placing Orders, if requested by the Auction
Agent;
(iii) the
aggregate number of Units of Notes of such Series, if any, that are the subject
of such Order, where each Unit is equal to the principal amount of the minimum
Authorized Denomination of the Notes;
(iv) to
the extent that such Bidder is an Existing Owner:
(A) the
number of Units of Notes of such Series, if any, subject to any Hold Order
placed by such Existing Owner;
(B) the
number of Units of Notes of such Series, if any, subject to any Bid placed
by
such Existing Owner and the rate specified in such Bid; and
(C) the
number of Units of Notes of such Series, if any, subject to any Sell Order
placed by such Existing Owner; and
(v) to
the extent such Bidder is a Potential Owner, the rate specified in such
Bid.
(b) If
more than one Bid is submitted to a Broker-Dealer on behalf of any single
Potential Owner, the Broker-Dealer shall aggregate each Bid on behalf of such
Potential Owner submitted with the same rate and consider such Bids as a single
Bid and shall consider each Bid submitted with a different rate a separate
Bid
with the rate and the number of Units of Notes specified therein.
A
Broker-Dealer may aggregate the Orders of different Potential Owners with those
of other Potential Owners on whose behalf the Broker-Dealer is submitting Orders
and may aggregate the Orders of different Existing Owners with other Existing
Owners on whose behalf the Broker-Dealer is submitting Orders; provided,
however, Bids may only be aggregated if the interest rates on the Bids are
the
same.
(c) None
of the Issuer, the Corporation, the Indenture Trustee or the Auction Agent
shall
be responsible for the failure of any Broker-Dealer to submit an Order to the
Auction Agent on behalf of any Existing Owner or Potential Owner.
(d) Nothing
contained herein shall preclude a Broker-Dealer from placing an Order for some
or all of the Notes for its own account.
(e) Until
the Submission Deadline, a Broker-Dealer may withdraw or modify any Order
previously submitted to the Auction Agent (i) for any reason if the Order was
generated by the Auction Desk of the Broker-Dealer for the account of the
Broker-Dealer or (ii) to correct a Clerical Error in the case of any other
Order, including Orders from the Broker-Dealer which were not originated by
the
Auction Desk.
(f) After
the Submission Deadline and prior to the Error Correction Deadline, a
Broker-Dealer may:
(i) submit
to the Auction Agent an Order received from an Existing Owner, Potential Owner
or a Broker-Dealer which is not an Order originated by the Auction Desk, in
each
case prior to the Broker-Dealer Deadline, or an Order generated by the
Broker-Dealer’s Auction Desk for its own account prior to the Submission
Deadline (provided that in each case the Broker-Dealer has a record of such
Order and the time when such Order was received or generated) and not submitted
to the Auction Agent prior to the Submission Deadline as a result of (A) an
event of force majeure or a technological failure which made delivery prior
to
the Submission Deadline impossible or, under the conditions then prevailing,
impracticable or (B) a Clerical Error on the part of the Broker-Dealer;
or
(ii) modify
or withdraw an Order received from an Existing Owner or Potential Owner or
generated by the Broker-Dealer (whether generated by the Broker-Dealer’s Auction
Desk or elsewhere within the Broker-Dealer) for its own account and submitted
to
the Auction Agent prior to the Submission Deadline or pursuant to clause (i)
above, if the Broker-Dealer determines that such Order contained a Clerical
Error on the part of the Broker-Dealer.
In
the event a Broker-Dealer makes a
submission, modification or withdrawal pursuant to this Section 2.02(f) and
the
Auction Agent has already run the Auction, the Auction Agent shall rerun the
Auction, taking into account such submission, modification or
withdrawal. Each submission, modification or withdrawal of an Order
submitted pursuant to this Section 2.02(f) by a Broker-Dealer after the
Submission Deadline and prior to the Error Correction Deadline shall constitute
a representation by the Broker-Dealer that (A) in the case of a newly submitted
Order or portion thereof or revised Order, the failure to submit such Order
prior to the Submission Deadline resulted from an event described in clause
(i)
above and such Order was received from an Existing Owner or Potential Owner
or
is an Order received from the Broker-Dealer that was not originated by the
Auction Desk, in each case, prior to the Broker-Dealer Deadline, or generated
internally by such Broker-Dealer’s Auction Desk for its own account prior to the
Submission Deadline or (B) in the case of a modified or withdrawn Order, such
Order was received from an Existing Owner, a Potential Owner or the
Broker-Dealer which was not originated by the Auction Desk prior to the
Broker-Dealer Deadline, or generated internally by such Broker-Dealer’s Auction
Desk for its own account prior to the Submission Deadline and such Order as
submitted to the Auction Agent contained a Clerical Error on the part of the
Broker-Dealer and that such Order has been modified or withdrawn solely to
effect a correction of such Clerical Error, and in the case of either (A) or
(B), as applicable, the Broker-Dealer has a record of such Order and the time
when such Order was received or generated. The Auction Agent shall be
entitled to rely conclusively (and shall have no liability for relying) on
such
representation for any and all purposes of the Auction Procedures.
(g) If
after the Auction Agent announces the results of an Auction, a Broker-Dealer
becomes aware that an error was made by the Auction Agent, the Broker-Dealer
shall communicate such awareness to the Auction Agent prior to 5:00 p.m. New
York City time on the Auction Date (or 2:00 pm. New York City time in the case
of Notes in a daily Auction Period). If the Auction Agent determines
there has been such an error (as a result of either a communication
from a Broker-Dealer or its own discovery) prior to 3:00 p.m. New York City
time
on the first day of the Auction Period with respect to
which such Auction was conducted, the Auction Agent shall correct the error
and
notify each Broker-Dealer that submitted Bids or held a position in Notes in
such Auction of the corrected results.
(h) Nothing
contained herein shall preclude the Auction Agent from:
(i) advising
a Broker-Dealer prior to the Submission Deadline that it has not received
Sufficient Clearing Bids for the Notes; provided, however, that if the Auction
Agent so advises any Broker-Dealer, it shall so advise all Broker-Dealers;
or
(ii) verifying
the Orders of a Broker-Dealer prior to or after the Submission Deadline;
provided, however, that if the Auction Agent verifies the Orders of any
Broker-Dealer, it shall verify the Orders of all Broker-Dealers requesting
such
verification.
Section
2.03. Treatment of
Orders by the Auction Agent. Anything herein to the contrary
notwithstanding:
(a) If
the Auction Agent receives an Order which does not conform to the requirements
of the Auction Procedures, the Auction Agent may contact the Broker-Dealer
submitting such Order until one hour after the Submission Deadline and inform
such Broker-Dealer that it may resubmit such Order so that it conforms to the
requirements of the Auction Procedures. Upon being so informed, such
Broker-Dealer may correct and resubmit to the Auction Agent any such Order
that,
solely as a result of a Clerical Error on the part of such Broker-Dealer, did
not conform to the requirements of the Auction Procedures when previously
submitted to the Auction Agent. Any such resubmission by a
Broker-Dealer shall constitute a representation by such Broker-Dealer that
the
failure of such Order to have so conformed was solely as a result of a Clerical
Error on the part of such Broker-Dealer. If the Auction Agent has not
received a corrected conforming Order within one hour and fifteen minutes of
the
Submission Deadline, the Auction Agent shall, if and to the extent applicable,
adjust or apply such Order, as the case may be, in conformity with
the provisions of subsections (b), (c) or (d) of this Section 2.03 and, if
the
Auction Agent is unable to so adjust or apply such Order, the Auction Agent
shall reject such Order.
(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
highest one thousandth of one percent (0.001%).
(c) If
one or more Orders covering in the aggregate more than the number of Units
of
Outstanding Notes of a particular Series are submitted by a
Broker-Dealer to the Auction Agent, such Orders shall be considered valid in
the
following order of priority:
(i) all
Hold Orders shall be considered Hold Orders, but only up to and including in
the
aggregate the number of Units of Notes of such Series for which such
Broker-Dealer is the Broker-Dealer of record;
(ii) (A) any
Bid of a Broker-Dealer shall be considered valid as a Bid of an Existing Owner
up to and including the excess of the number of Units of Notes of such Series
for which such Broker-Dealer is the Broker-Dealer of record over the number
of
Units of the Notes of such Series subject to Hold Orders referred to in clause
(i) above;
(B) subject
to clause (A) above, all Bids of a Broker-Dealer with the same rate shall be
aggregated and considered a single Bid of an Existing Owner up to and including
the excess of the number of Units of Notes of such Series for which such
Broker-Dealer is the Broker-Dealer of record over the number of Units of Notes
of such Series for which such Broker-Dealer is the Broker-Dealer of record
subject to Hold Orders referred to in clause (i) above;
(C) subject
to clause (A) above, if more than one Bid with different rates is submitted
by a
Broker-Dealer, such Bids shall be considered Bids of an Existing Owner in the
ascending order of their respective rates up to the amount of the excess of
the
number of Units of Notes of such Series for which such Broker-Dealer is the
Broker-Dealer of record over the number of Units of Notes of such Series for
which such Broker-Dealer is the Broker-Dealer of record subject to Hold Orders
referred to in clause (i) above; and
(D) the
number of Units, if any, of such Notes of such Series subject to Bids not
considered to be Bids for which such Broker-Dealer is the Broker-Dealer of
record under this clause (ii) shall be treated as the subject of a Bid by a
Potential Owner;
(iii) all
Sell Orders shall be considered Sell Orders, but only up to and including the
number of Units of Notes of such Series equal to the excess of the number of
Units of Notes of such Series for which such Broker-Dealer is the Broker-Dealer
of record over the sum of the number of Units of the Notes of such Series
considered to be subject to Hold Orders pursuant to clause (i) above and the
number of Units of Notes of such Series considered to be subject to Bids for
which such Broker-Dealer is the Broker-Dealer of record pursuant to clause
(ii)
above.
(d) If
any Order is for other than an integral number of Units, then the Auction Agent
shall round the amount down to the nearest number of whole Units, and the
Auction Agent shall conduct the Auction Procedures as if such Order had been
submitted in such number of Units.
(e)
For purposes of any Auction other than during a daily Auction Period, if an
Auction Agent has been notified by the Indenture Trustee, Issuer or Corporation
that any portion of an Order by a Broker-Dealer relates to a Note which has
been
called for redemption on or prior to the Interest Payment Date next succeeding
such Auction, the Order shall be invalid with respect to such portion and the
Auction Agent shall conduct the Auction Procedures as if such portion of such
Order had not been submitted.
(f)
For purposes of any Auction other than during a daily Auction Period, no portion
of a Note which the Auction Agent has been notified by the Indenture Trustee,
Issuer or Corporation has been called for redemption on or prior to the Interest
Payment Date next succeeding such Auction shall be included in the calculation
of Available Notes for such Auction.
(g) If
an Order or Orders covering all of the Notes of a particular
Series is not submitted by a Broker-Dealer of record prior to the
Submission Deadline, the Auction Agent shall deem a Hold Order to have been
submitted on behalf of such Broker-Dealer covering the number of Units of Notes
for which such Broker-Dealer is the Broker-Dealer of record and not subject
to
Orders submitted to the Auction Agent; provided, however, that if there is
a
conversion from one Auction Period to a longer Auction Period and Orders have
not been submitted by such Broker-Dealer prior to the Submission Deadline
covering the number of Units of Notes of a particular Series to be converted
for
which such Broker-Dealer is the Broker-Dealer of record, the Auction Agent
shall
deem a Sell Order to have been submitted on behalf of such Broker-Dealer
covering the number of Units of Notes to be converted for which such
Broker-Dealer is the Broker-Dealer of record not subject to Orders submitted
by
such Broker-Dealer.
Section
2.04. Determination
of Auction Period Rate. (a) If
requested
by the Indenture Trustee or a Broker-Dealer, not later than 10:30 a.m., New
York
City time (or such other time as may be agreed to by the Auction Agent and
all
Broker-Dealers), on each Auction Date for each Series of Notes, the Auction
Agent shall advise such Broker-Dealer (and thereafter confirm to the Indenture
Trustee, if requested) of the All Hold Rate, the Index and, if the
Maximum Rate is not a fixed interest rate, the Maximum Rate. Such
advice, and confirmation, shall be made by telephone or other Electronic Means
acceptable to the Auction Agent.
(b) Promptly
after the Submission Deadline for each Series of Notes on each Auction Date,
the
Auction Agent shall assemble all Orders submitted or deemed submitted to it
by
the Broker-Dealers (each such Order as submitted or deemed submitted by a
Broker-Dealer being hereinafter referred to as a “Submitted Hold Order,” a
“Submitted Bid” or a “Submitted Sell Order,” as the case may be, and
collectively as a “Submitted Order”) and shall determine (i) the Available
Notes, (ii) whether there are Sufficient Clearing Bids, and (iii) the
Auction Rate.
(c) In
the event the Auction Agent shall fail to calculate or, for any reason, fails
to
provide the Auction Rate on the Auction Date, for any Auction Period (i) if
the preceding Auction Period was a period of 35 days or less, (A) a new Auction
Period shall be established for the same length of time as
the preceding Auction Period, if the failure to make such calculation
was because there was not at the time a duly appointed and acting Auction Agent
or Broker-Dealer, and the Auction Period Rate for the new Auction Period shall
be the percentage of the Index set forth in Schedule I under “Determination of
Auction Period Rate” if the Index is ascertainable on such date (by the Auction
Agent, if there is at the time an Auction Agent, or the Indenture Trustee,
if at
the time there is no Auction Agent) or, (B) if the failure to make such
calculation was for any other reason or if the Index is not ascertainable on
such date, the prior Auction Period shall be extended to the seventh day
following the day that would have been the last day of the preceding Auction
Period (or if such seventh day is not followed by a Business Day then to the
next succeeding day that is followed by a Business Day) and the
Auction Period Rate for the period as so extended shall be the same as the
Auction Period Rate for the Auction Period prior to the extension, and
(ii) if the preceding Auction Period was a period of greater than 35 days,
(A) a new Auction Period shall be established for a period that ends on the
seventh day following the day that was the last day of the preceding Auction
Period, (or if such seventh day is not followed by a Business Day then to the
next succeeding day which is followed by a Business Day) if the failure to
make
such calculation was because there was not at the time a duly appointed and
acting Auction Agent or Broker-Dealer, and the Auction Period Rate for the
new
Auction Period shall be the percentage of the Index set forth in Schedule I
under “Determination of Auction Period Rate” if the Index is
ascertainable on such date (by the Auction Agent, if there is at the time an
Auction Agent, or the Indenture Trustee, if at the time there is no Auction
Agent) or, (B) if the failure to make such calculation was for any other reason
or if the Index is not ascertainable on such date, the prior Auction Period
shall be extended to the seventh day following the day that would have been
the
last day of the preceding Auction Period (or if such seventh day is not followed
by a Business Day then to the next succeeding day that is followed
by a Business Day) and the Auction Period Rate for the period as so
extended shall be the same as the Auction Period Rate for the Auction Period
prior to the extension. In the event a new Auction Period is
established as set forth in clause (ii) (A) above, an Auction shall be held
on
the last Business Day of the new Auction Period to determine an Auction Rate
for
an Auction Period beginning on the Business Day immediately following the last
day of the new Auction Period and ending on the date on which the Auction Period
otherwise would have ended had there been no new Auction Period or Auction
Periods subsequent to the last Auction Period for which a Winning Bid Rate
had
been determined. In the event an Auction Period is extended as set
forth in clause (i) (B) or (ii) (B) above, an Auction shall be held on the
last Business Day of the Auction Period as so extended to determine an Auction
Rate for an Auction Period beginning on the Business Day immediately following
the last day of the extended Auction Period and ending on the date on which
the
Auction Period otherwise would have ended had there been no extension of the
prior Auction Period.
Notwithstanding
the foregoing, neither new nor extended Auction Periods shall total more than
35
days in the aggregate. If at the end of the 35 days the Auction Agent
fails to calculate or provide the Auction Rate, or there is not at the time
a
duly appointed and acting Auction Agent or Broker-Dealer, the Auction Period
Rate shall be the Maximum Rate.
(d) In
the event of a failed conversion from an Auction Period to any other period
or
in the event of a failure to change the length of the current Auction Period
due
to the lack of Sufficient Clearing Bids at the Auction on the Auction Date
for
the first new Auction Period, the Auction Period Rate for the next Auction
Period shall be the Maximum Rate and the Auction Period shall be a seven-day
Auction Period.
(e) If
the Notes are no longer maintained in book-entry-only form by the Securities
Depository, then the Auctions shall cease and the Auction Period Rate shall
be
the Maximum Rate.
Section
2.05. Allocation of
Notes.
(a) In
the event of Sufficient Clearing Bids for a Series of Notes, subject to the
further provisions of subsections (c) and (d) below, Submitted Orders for each
Series of Notes shall be accepted or rejected as follows in the following order
of priority:
(i) the
Submitted Hold Order of each Existing Owner shall be accepted, thus requiring
each such Existing Owner to continue to hold the Notes that are the subject
of
such Submitted Hold Order;
(ii) the
Submitted Sell Order of each Existing Owner shall be accepted and the Submitted
Bid of each Existing Owner specifying any rate that is higher than the Winning
Bid Rate shall be rejected, thus requiring each such Existing Owner to sell
the
Notes that are the subject of such Submitted Sell Order or Submitted
Bid;
(iii) the
Submitted Bid of each Existing Owner specifying any rate that is lower than
the
Winning Bid Rate shall be accepted, thus requiring each such Existing Owner
to
continue to hold the Notes that are the subject of such Submitted
Bid;
(iv) the
Submitted Bid of each Potential Owner specifying any rate that is lower than
the
Winning Bid Rate shall be accepted, thus requiring each such Potential Owner
to
purchase the Notes that are the subject of such Submitted Bid;
(v) the
Submitted Bid of each Existing Owner specifying a rate that is equal to the
Winning Bid Rate shall be accepted, thus requiring each such Existing Owner
to
continue to hold the Notes that are the subject of such Submitted Bid, but
only
up to and including the number of Units of Notes obtained by multiplying
(A) the aggregate number of Units of Outstanding Notes which are not the
subject of Submitted Hold Orders described in clause (i) above or of Submitted
Bids described in clauses (iii) or (iv) above by (B) a fraction the
numerator of which shall be the number of Units of Outstanding Notes held by
such Existing Owner subject to such Submitted Bid and the denominator of which
shall be the aggregate number of Units of Outstanding Notes subject to such
Submitted Bids made by all such Existing Owners that specified a rate equal
to
the Winning Bid Rate, and the remainder, if any, of such Submitted Bid shall
be
rejected, thus requiring each such Existing Owner to sell any excess amount
of
Notes;
(vi) the
Submitted Bid of each Potential Owner specifying a rate that is equal to the
Winning Bid Rate shall be accepted, thus requiring each such Potential Owner
to
purchase the Notes that are the subject of such Submitted Bid, but only in
an
amount equal to the number of Units of Notes obtained by multiplying
(A) the aggregate number of Units of Outstanding Notes which are not the
subject of Submitted Hold Orders described in clause (i) above or of Submitted
Bids described in clauses (iii), (iv) or (v) above by (B) a fraction the
numerator of which shall be the number of Units of Outstanding Notes subject
to
such Submitted Bid and the denominator of which shall be the sum of the
aggregate number of Units of Outstanding Notes subject to such Submitted Bids
made by all such Potential Owners that specified a rate equal to the Winning
Bid
Rate, and the remainder of such Submitted Bid shall be rejected;
and
(vii) the
Submitted Bid of each Potential Owner specifying any rate that is higher than
the Winning Bid Rate shall be rejected.
(b) In
the event there are not Sufficient Clearing Bids for a Series of Notes,
Submitted Orders for each Series of Notes shall be accepted or rejected as
follows in the following order of priority:
(i) the
Submitted Hold Order of each Existing Owner shall be accepted, thus requiring
each such Existing Owner to continue to hold the Notes that are the subject
of
such Submitted Hold Order;
(ii) the
Submitted Bid of each Existing Owner specifying any rate that is not higher
than
the Maximum Rate shall be accepted, thus requiring each such Existing Owner
to
continue to hold the Notes that are the subject of such Submitted
Bid;
(iii) the
Submitted Bid of each Potential Owner specifying any rate that is not higher
than the Maximum Rate shall be accepted, thus requiring each such Potential
Owner to purchase the Notes that are the subject of such Submitted
Bid;
(iv) the
Submitted Sell Orders of each Existing Owner shall be accepted as Submitted
Sell
Orders and the Submitted Bids of each Existing Owner specifying any rate that
is
higher than the Maximum Rate shall be deemed to be and shall be accepted as
Submitted Sell Orders, in both cases only up to and including the number of
Units of Notes obtained by multiplying (A) the aggregate number of Units of
Notes subject to Submitted Bids described in clause (iii) of this subsection
(b)
by (B) a fraction the numerator of which shall be the number of Units of
Outstanding Notes held by such Existing Owner subject to such Submitted Sell
Order or such Submitted Bid deemed to be a Submitted Sell Order and the
denominator of which shall be the number of Units of Outstanding Notes subject
to all such Submitted Sell Orders and such Submitted Bids deemed to be Submitted
Sell Orders, and the remainder of each such Submitted Sell Order or Submitted
Bid shall be deemed to be and shall be accepted as a Hold Order and each such
Existing Owner shall be required to continue to hold such excess amount of
Notes; and
(v) the
Submitted Bid of each Potential Owner specifying any rate that is higher than
the Maximum Rate shall be rejected.
(c) If,
as a result of the undertakings described in Section 2.05(a) or (b) above,
any
Existing Owner or Potential Owner would be required to purchase or sell an
aggregate principal amount of the Notes that is not an integral multiple of
an
Authorized Denomination on any Auction Date, the Auction Agent shall by lot,
in
such manner as it shall determine in its sole discretion, round up or down
the
principal amount of the Notes to be purchased or sold by any Existing Owner
or
Potential Owner on such Auction Date so that the aggregate principal amount
of
the Notes purchased or sold by each Existing Owner or Potential Owner on such
Auction Date shall be an integral multiple of such Authorized Denomination,
even
if such allocation results in one or more of such Existing Owners or Potential
Owners not purchasing or selling any Notes on such Auction Date.
(d) If,
as a result of the undertakings described in Section 2.05(a) above, any
Potential Owner would be required to purchase less than an Authorized
Denomination in principal amount of the Notes on any Auction Date, the Auction
Agent shall by lot, in such manner as it shall determine in its sole discretion,
allocate the Notes for purchase among Potential owners so that the principal
amount of the Notes purchased on such Auction Date by any Potential Owner shall
be an integral multiple of such Authorized Denomination, even if such allocation
results in one or more of such potential Owners not purchasing the Notes on
such
Auction Date.
Section
2.06. Notice of Auction
Period Rate. (a) On
each
Auction Date, the Auction Agent shall notify each Broker-Dealer that
participated in the Auction held on such Auction Date by Electronic Means
acceptable to the Auction Agent and the applicable Broker-Dealer of the
following, with respect to each Series of Notes for which an Auction was held
on
such Auction Date:
(i) the
Auction Period Rate determined on such Auction Date for the succeeding Auction
Period;
(ii) whether
Sufficient Clearing Bids existed for the determination of the Winning Bid
Rate;
(iii) if
such Broker-Dealer submitted a Bid or a Sell Order on behalf of an Existing
Owner, whether such Bid or Sell Order was accepted or rejected and the number
of
Units of Notes, if any, to be sold by such Existing Owner;
(iv) if
such Broker-Dealer submitted a Bid on behalf of a Potential Owner, whether
such
Bid was accepted or rejected and the number of Units of Notes, if any, to be
purchased by such Potential Owner;
(v) if
the aggregate number of Units of the Notes to be sold by all Existing Owners
on
whose behalf such Broker-Dealer submitted Bids or Sell Orders is different
from
the aggregate number of Units of Notes to be purchased by all Potential Owners
on whose behalf such Broker-Dealer submitted a Bid, the name or names of one
or
more Broker-Dealers (and the Agent Member, if any, of each such other
Broker-Dealer) and the number of Units of Notes to be (A) purchased from
one or more Existing Owners on whose behalf such other Broker-Dealers submitted
Bids or Sell Orders or (B) sold to one or more Potential Owners on whose
behalf such Broker-Dealer submitted Bids;
(vi) the
amount of dividend or interest payable per Unit on each Interest Payment Date
with respect to such Auction Period; and
(vii) the
immediately succeeding Auction Date.
(b) On
each Auction Date, with respect to each Series of Notes for which an Auction
was
held on such Auction Date, each Broker-Dealer that submitted an Order on behalf
of any Existing Owner or Potential Owner shall: (i) if requested by an
Existing Owner or a Potential Owner, advise such Existing Owner or Potential
Owner on whose behalf such Broker-Dealer submitted an Order as to (A) the
Auction Period Rate determined on such Auction Date, (B) whether any Bid or
Sell Order submitted on behalf of such Owner was accepted or rejected and
(C) the immediately succeeding Auction Date; (ii) instruct each
Potential Owner on whose behalf such Broker-Dealer submitted a Bid that was
accepted, in whole or in part, to instruct such Potential Owner’s Agent Member
to pay to such Broker-Dealer (or its Agent Member) through the Securities
Depository the amount necessary to purchase the number of Units of Notes to
be
purchased pursuant to such Bid (including, with respect to the Notes in a daily
Auction Period, accrued interest if the purchase date is not an Interest Payment
Date for such Note) against receipt of such Notes; and (iii) instruct each
Existing Owner on whose behalf such Broker-Dealer submitted a Sell Order that
was accepted or a Bid that was rejected in whole or in part, to instruct such
Existing Owner’s Agent Member to deliver to such Broker-Dealer (or its Agent
Member) through the Securities Depository the number of Units of Notes to be
sold pursuant to such Bid or Sell Order against payment therefor.
(c) The
Auction Agent shall give notice of the Auction Rate to the Corporation, Issuer
and Trustee by mutually acceptable Electronic Means and the Indenture Trustee
shall promptly give notice of such Auction Rate to the Securities
Depository.
Section
2.07. Index.
(a) If
for any reason on any Auction Date the Index shall not be determined as provided
in Schedule I, the Index shall be the Index for the Auction Period ending on
such Auction Date.
(b) The
determination of the Index as provided in Schedule I and herein shall be
conclusive and binding upon the Issuer, the Corporation, the Indenture Trustee,
the Broker-Dealers, the Auction Agent and the Owners of the Notes.
Section
2.08. Miscellaneous Provisions
Regarding Auctions.
(a) In
this Exhibit, each reference to the purchase, sale or holding of Notes shall
refer to beneficial interests in Notes, unless the context clearly requires
otherwise.
(b) During
an ARS Rate Period with respect to each Series of Notes, the provisions of
the
Authorizing Document and the definitions contained therein and described in
this
Exhibit, including without limitation the definitions of All Hold Rate, Index,
Interest Payment Date, Maximum Rate, Auction Period Rate and Auction Rate,
may
be amended pursuant to the Authorizing Document by obtaining the consent of
the
owners of all affected Outstanding Notes bearing interest at the Auction Period
Rate as follows. If on the first Auction Date occurring at least 20
days after the date on which the Indenture Trustee mailed notice of such
proposed amendment to the registered owners of the affected Outstanding Notes
as
required by the Authorizing Document, (i) the Auction Period Rate which is
determined on such date is the Winning Bid Rate or the All Hold Rate and
(ii) there is delivered to the Corporation and the Indenture Trustee an
opinion of Note Counsel to the effect that such amendment shall not adversely
affect the validity of the Notes or any exemption from federal income taxation
to which the interest on the Notes would otherwise be entitled, the proposed
amendment shall be deemed to have been consented to by the registered owners
of
all affected Outstanding Notes bearing interest at an Auction Period
Rate.
(c) If
the Securities Depository notifies the Issuer that it is unwilling or unable
to
continue as registered owner of the Notes or if at any time the Securities
Depository shall no longer be registered or in good standing under the Exchange
Act, or other applicable statute or regulation and a successor to the 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, the
Auctions shall cease and the Issuer shall execute and the Indenture Trustee
shall authenticate and deliver certificates representing the
Notes. Such Notes shall be registered in such names and Authorized
Denominations as the Securities Depository, pursuant to instructions from the
Agent Members or otherwise, shall instruct the Issuer and the Indenture
Trustee.
During
an
ARS Rate Period, so long as the ownership of the Notes is maintained in
book-entry form by the Securities Depository, an Existing Owner or a beneficial
owner may sell, transfer or otherwise dispose of a Note only pursuant to a
Bid
or Sell Order in accordance with the Auction Procedures or to or through a
Broker-Dealer, provided that (i) in the case of all transfers other than
pursuant to Auctions, such Existing Owner or its Broker-Dealer or its Agent
Member advises the Auction Agent of such transfer and (ii) a sale, transfer
or other disposition of Notes from a customer of a Broker-Dealer who is listed
on the records of that Broker-Dealer as the holder of such Notes to that
Broker-Dealer or another customer of that Broker-Dealer shall not be deemed
to
be a sale, transfer or other disposition for purposes of this paragraph if
such
Broker-Dealer remains the Existing Owner of the Notes so sold, transferred
or
disposed of immediately after such sale, transfer or disposition.
(d) Unless
specifically provided otherwise in Schedule I, the Auction Agent shall continue
to implement the Auction Procedures notwithstanding the occurrence of an Event
of Default under the Indenture.
Section
2.09. Changes in Auction Period
or Auction Date.
(a) Changes
in Auction Period.
(i)
During any ARS Rate Period, the Corporation, may, from time to time on the
Interest Payment Date immediately following the end of any Auction Period,
change the length of the Auction Period with respect to all of the Notes of
a
Series among daily, seven-days, 28-days, 35-days, three months, six months
or a
Flexible Auction Period in order 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 such Notes. The Corporation shall initiate the
change in the length of the Auction Period by giving written notice to the
Issuer, the Indenture Trustee, the Auction Agent, the Broker-Dealers and the
Securities Depository that the Auction Period shall change if the conditions
described herein are satisfied and the proposed effective date of the change,
at
least 10 Business Days prior to the Auction Date for such Auction
Period.
(ii) Any
such changed Auction Period shall be for a period of one day, seven-days,
28-days, 35-days, three months, six months or a Flexible Auction Period and
shall be for all of the Notes of such Series.
(iii) The
change in length of the Auction Period shall take effect only if Sufficient
Clearing Bids exist at the Auction on the Auction Date for such new Auction
Period. For purposes of the Auction for such new Auction Period only,
except to the extent any Existing Owner submits an Order with respect to such
Notes of any Series, each Existing Owner shall be deemed to have submitted
Sell
Orders with respect to all of its Notes of such Series if the change is to
a
longer Auction Period and a Hold Order if the change is to a shorter Auction
Period. If there are not Sufficient Clearing Bids for the first
Auction Period, the Auction Rate for the new Auction Period shall be the Maximum
Rate, and the Auction Period shall be a seven-day Auction Period.
(b) Changes
in Auction Date. During any ARS Rate Period, the Auction Agent,
at the direction of the Corporation, may specify an earlier or later Auction
Date (but in no event more than five Business Days earlier or later) than the
Auction Date that would otherwise be determined in accordance with the
definition of “Auction Date” 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 by the
Notes. The Auction Agent shall provide notice of the Corporation’s
direction to specify an earlier Auction Date for an Auction Period by means
of a
written notice delivered at least 45 days prior to the proposed changed Auction
Date to the Indenture Trustee, the Issuer, the Corporation and the
Broker-Dealers with a copy to the Securities
Depository. In the event the Auction Agent is instructed to specify
an earlier Auction Date, the days of the week on which an Auction Period begins
and ends, the day of the week on which a Flexible Auction Period ends and the
Interest Payment Date relating to a Flexible Auction Period shall be adjusted
accordingly.
(c) Changes
Resulting from Unscheduled Holidays. If, in the opinion of the
Auction Agent and the Broker-Dealers, there is insufficient notice of an
unscheduled holiday to allow the efficient implementation of the Auction
Procedures set forth herein, the Auction Agent and the Broker-Dealers may,
as
they deem appropriate, set a different Auction Date and adjust any Interest
Payment Dates and Auction Periods affected by such unscheduled
holiday. In the event that there is not agreement among the
Broker-Dealers, the Auction Agent shall set the different Auction Date and
make
such adjustments as directed by the Broker-Dealer for a majority of the
outstanding Units (based on the number of Units for which a Broker-Dealer is
listed as the Broker-Dealer in the Existing Owner Registry maintained by the
Auction Agent pursuant to Section 2.2(a) of the Auction Agreement), and, if
there is not a majority so directing, the Auction Date shall be moved to the
next succeeding Business Day following the scheduled Auction Date, and the
Interest Payment Date and the Auction Period shall be adjusted
accordingly.
SCHEDULE
I
to
AUCTION
PROCEDURES
In
the event of any conflict between this Schedule I and Exhibit A, this Schedule
I
shall prevail.
Definitions
“All
Hold Rate” means,
as of any Auction Date, 90% of the Index in effect on such Auction
Date.
“Applicable
Margin”
means (A) 1.50%, provided that the Notes are rated at least “Aa3” and
“AA-” by Moody’s and S&P, respectively, (B) 2.50%, provided that the Notes
are rated below “Aa3” and “AA-“ but at least “A3” and “A-” by Moody’s and
S&P, respectively, or (C) 3.50%, provided that the Notes are rated below
“A3” and “A-” by Moody’s and S&P, respectively,
“Auction
Agent” shall
initially be The Bank of New York.
“Auction
Agent Fee”
shall mean the fee to be paid to the Auction Agent for the services rendered
by
it under the Auction Agreement and the Broker-Dealer Agreements.
“Auction
Date” shall
include as part of the definition the first Auction Date which shall be October
9, 2007 for the Class A-2-AR-1 Notes, October 9, 2007 for the Class A-2-AR-2
Notes, October 9, 2007 for the Class A-2-AR-3 Notes, October 9, 2007 for the
Class A-2-AR-4 Notes, October 11, 2007, for the Class A-3-AR-1 Notes, October
16, 2007, for the Class A-3-AR-2 Notes, October 11, 2007, for the Class A-3-AR-3
Notes, October 16, 2007, for the Class A-3-AR-4 Notes, October 11, 2007, for
the
Class A-3-AR-5 Notes, October 16, 2007, for the Class A-3-AR-6 Notes and October
16, 2007, for the Class A-3-AR-7 Notes.
“Auction
Rate Notes” shall mean the Class A-2-AR Notes and the Class A-3-AR
Notes.
“Authorized
Denomination” means $25,000.
“Authorizing
Document”
means the Indenture.
“Notes”
means the
Auction Rate Notes.
“Notes”
means the
Auction Rate Notes.
“Broker-Dealer
Fee”
shall mean the fee to be paid to a Broker-Dealer for the services rendered
by a
Broker-Dealer under a Broker-Dealer Agreement.
“Carry-over
Amount” shall mean the excess, if any, of (a) the amount of interest on
a Class of Auction Rate Note that would have accrued with respect to the related
Auction Period at the Auction Rate (if an Auction is not held for any reason,
the Auction Rate shall be deemed to be the Maximum Rate for purposes of this
definition) over (b) the amount of interest on such Class of Auction Rate Note
with respect to such Class of Auction Rate Note, with respect to such Auction
Period based on the least of the Maximum Auction Rate, the Maximum Interest
Rate, or the maximum interest rate permitted by law, together with the unpaid
portion of any such excess from prior Auction Periods; provided that any
reference to “principal” or “interest” in the Indenture, and in 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.
“Corporation”
means
the Issuer.
“Index”
means
on any
Auction Date with respect to Notes in any Auction Period of 35 days or less,
One-Month LIBOR. The Index with respect to Notes in any Auction Period of more
than 35 days shall be the rate on United States Treasury Securities having
a
maturity which most closely approximates the length of the Auction Period as
last published in The Wall Street Journal or such other source as may be
mutually agreed upon by the Issuer and the Broker-Dealers. If either
rate is unavailable, the Index shall be an index or rate agreed to by all
Broker-Dealers and consented to by the Corporation and the
Issuer. For the purpose of this definition an Auction Period of 35
days or less means a 35-day Auction Period or shorter Auction Period, i.e.
a
35-day Auction Period which is extended because of a holiday would still be
considered an Auction Period of 35 days or less.
“Initial
Period” means the period from the Closing Date to but not including the
first Interest Payment Date with respect to the Auction Rate Notes.
“Initial
Period Rate” means 6.50%.
“Interest
Payment Date”
includes the first Interest Payment Date which shall be October 10,
2007, for the Class A-2-AR-1 Notes, October 10, 2007, for the Class A-2-AR-2
Notes, October 10, 2007, for the Class A-2-AR-3 Notes, October 10, 2007, for
the
Class A-2-AR-4 Notes, October 12, 2007, for the Class A-3-AR-1 Notes, October
17, 2007, for the Class A-3-AR-2 Notes, October 12, 2007, for the Class A-3-AR-3
Notes, October 17, 2007, for the Class A-3-AR-4 Notes, October 12, 2007, for
the
Class A-3-AR-5 Notes, October 17, 2007, for the Class A-3-AR-6 Notes and October
17, 2007, for the Class A-3-AR-7 Notes.
“Issuer”
means
The
National Collegiate Student Loan Trust 2007-3.
“Maximum
Auction Rate”
means the One-Month LIBOR plus the Applicable Margin
“Maximum
Interest Rate” means 17%.
“Maximum
Rate” means the least of (i) the Maximum Auction
Rate; (ii) the Maximum Interest Rate; and (iii) the maximum interest rate
permitted by applicable law.
“Notes”
means the Auction Rate Notes.
“One-Month
LIBOR” shall mean the offered rate (rounded up to the next highest one
one thousandth of one percent (0.001%)) for deposits in U.S. dollars for a
one-month period which appears on the Reuters Screen LIBOR01 (or such other
page
as may replace that page on that service or such other service or services
as
may be nominated by the British Bankers’ Association for the purpose of
displaying London interbank offered rates for U.S. dollar deposits) at
approximately 11:00 a.m., London time, on such date, or if such date is not
a
date on which dealings in U.S. dollars are transacted in the London interbank
market, then on the next preceding day on which such dealings were transacted
in
such market.
Auction
Procedures
Determination
of Auction Period
Rate. The percentage of the Index in Section 2.04(c) is
100%.
Notwithstanding
any of the other provisions of the Auction Procedures, for purposes of enabling
the calculation by the Trustee of the Carry-over Amount, Orders otherwise
satisfying the requirements of the Auction Procedures shall not be rejected
by
either the Broker-Dealers or the Auction Agent because the specified rate
in the
Order exceeds the Maximum Auction Rate; provided, however, that Orders that
specify a rate in excess of the Maximum Interest Rate or (if lower and the
Broker-Dealer or Auction Agent, respectively, has been so notified by the
Issuer
or the Trustee) the maximum rate permitted by law shall (i) be treated as
a Sell
Order if submitted by an Existing Owner and (ii) not be accepted if submitted
by
a Potential Owner, in each case by each of the Broker-Dealers and the Auction
Agent. In connection with the Trustee's calculation of the Carry-over Amount,
the Auction Agent shall calculate the Auction Rate without regard to the
Maximum
Auction Rate. If the Auction Rate as so calculated exceeds the Maximum Auction
Rate, the Auction Agent shall report this excess to the Trustee and the
Broker-Dealers on the Auction Date. The Auction Period Rate determined as
a
result of the Auction shall not exceed the Maximum Rate. The Carry-over Amount
shall not be taken into account in calculating the Auction Period
Rate.
