Exhibit 4.2
FIRST TERMS SUPPLEMENT
TO THE
TRUST AGREEMENT
DATED AS OF MAY 15, 1998
between
EMT CORP.
as Issuer
and
NBD Bank, N.A.
as Trustee
Dated as of May 15, 1998
Securing
$350,000,000
STUDENT LOAN ASSET-BACKED NOTES
AUCTION RATE SECURITIES
1998 SENIOR SERIES A-1 through A-4
1998 SENIOR SUBORDINATE SERIES B
TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS..............................................1
ARTICLE II. AUTHORIZATION, TERMS AND ISSUANCE........................9
Section 2.1 Authorization of 1998 Notes...........................9
Section 2.2 Purposes..............................................9
Section 2.3 Terms of 1998 Notes Generally.........................9
Section 2.4 1998 Notes...........................................10
Section 2.5 Series Interest Rate.................................14
Section 2.6 Additional Provisions Regarding the Series Interest
Rates on the 1998 Notes............................. 26
Section 2.7 Qualifications of Market Agent.......................27
ARTICLE III. DISTRIBUTIONS...........................................27
Section 3.1 Distributions of Interest and Principal..............27
Section 3.2 Selection of Notes to Receive Payments of Principal..28
ARTICLE IV. MISCELLANEOUS...........................................29
Section 4.1 Authority for This First Terms Supplement............29
Section 4.2 Counterparts.........................................29
Section 4.3 First Terms Supplement Constitutes a Security
Agreement............................................29
Section 4.4 Governing Law........................................29
Section 4.5 Ratification of Trust Agreement......................29
Section 4.6 Recycling Period.....................................29
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FIRST TERMS SUPPLEMENT, dated as of May 15, 1998, between EMT
Corp., an Indiana corporation (the "Issuer") acting through KEYBANK INDIANA,
N.A, not in its individual capacity but solely as eligible lender trustee (the
"Eligible Lender Trustee") pursuant to a certain trust agreement dated as of May
15, 1998, by and between the Issuer and the Eligible Lender Trustee (the
"Eligible Lender Trust Agreement"), and NBD Bank N.A. a national banking
association, duly established, existing and authorized to accept and execute
trusts of the character herein set out under and by virtue of the laws of the
United States of America, with its designated trust office in Indianapolis,
Indiana, (the "Trustee"), as Trustee under a Trust Agreement dated as of May 15,
1998 by and between the Issuer and such Trustee (the "Trust Agreement").
PRELIMINARY STATEMENT
Section 2.1 and 7.1 of the Trust Agreement provides, among other
things, that the Issuer and the Trustee may enter into an instrument
constituting a Supplemental Trust Agreement supplemental to the Trust Agreement
for the purpose of authorizing one or more Series of Notes and to specify
certain terms of such Series of Notes. The Issuer has duly authorized the
execution and delivery of several Series of Senior and Senior Subordinate Notes
in an aggregate principal amount not to exceed $350,000,000 to be known as the
Issuer's Student Loan Asset-Backed Notes, Auction Rate Securities, 1998 Senior
Series A-1 in the aggregate principal amount of $82,000,000 (the "Series A-1
Notes"); 1998 Senior Series A-2 in the aggregate principal amount of $80,000,000
(the "Series A-2 Notes"); 1998 Senior Series A-3 in the aggregate principal
amount of $80,000,000 (the "Series A-3 Notes"); 1998 Senior Series A-4 in the
aggregate principal amount of $80,000,000 (the "'Series A-4 Notes"); and 1998
Senior Subordinate Series B in the aggregate principal amount of $28,000,000
(the "Subordinate Series B Notes"). The Series A- 1 Notes, the Series A-2 Notes,
the Series A-3 Notes and the Series A-4 Notes are sometimes referred to herein
as the "Senior 1998 Notes" ,and, together with the Subordinate Series B Notes
are sometimes referred to herein as the "1998 Notes." The Issuer and the Trustee
are executing and delivering this First Terms Supplement as the initial
Supplemental Trust Agreement in order to provide for the 1998 Notes.
ARTICLE I.
DEFINITIONS
"All Hold Rate" means the Applicable LIBOR Rate less .20%
"Applicable LIBOR Rate" means, with respect to the Notes (i) for
Auction Periods of 35 days or less, One-Month LIBOR, (ii) for Auction Periods of
more than 35 days but less than 91 days, Three-Month LIBOR, (iii) for Auction
Periods of more than 90 days but less than 181 days, Six-Month LIBOR, and (iv)
for Auction Periods of more than 180 days, One-Year LIBOR. As used in this
definition and otherwise herein, the terms One-Month LIBOR, Three-Month LIBOR,
Six-Month LIBOR or One-Year LIBOR mean the rate of interest per annum equal to
the rate per annum at which United States dollar deposits having a maturity of
one-month, three months, six months or one year, respectively, are offered to
prime banks in the London interbank market which appear on the Reuters Screen
LIBOR page as of approximately 11:00 a.m., London time, on the Series Rate
Determination Date. If at least two such quotations appear, One Month LIBOR,
Three-Month LIBOR, Six-Month LIBOR or One-Year LIBOR ,respectively, will be the
arithmetic mean (rounded upwards, if necessary, to the nearest one-hundredth of
one percent) of such offered rates. If fewer than two such quotes appear, One
Month LIBOR, Three Month LIBOR, Six-Month LIBOR OR One-Year LIBOR, respectively,
with respect to such Series Interest Period will be determined at approximately
11:00 a.m., London time, on such Series Rate Determination Date on the basis of
the rate at which deposits in United States dollars having a maturity of one
month, three months, six months or one year, respectively, are offered to prime
banks in the London interbank market by four major banks in the London interbank
market selected by the Auction Agent or the Trustee, as applicable, and in a
principal amount of not less than U.S. $1,000,000 and that is representative for
a single transaction in such market at such time. The Auction Agent or the
Trustee, as applicable, are to request the principal London office of each of
such banks to provide a quotation of its rate. If at least two quotations are
provided, One-Month LIBOR, Three-Month LIBOR, Six-Month LIBOR or One-Year LIBOR,
respectively, will be the arithmetic mean (rounded upwards, if necessary, to the
nearest one-hundredth of one percent) of such offered rates. If fewer than two
quotations are provided, One-Month LIBOR, Three-Month LIBOR, Six-Month LIBOR or
One-Year LIBOR, respectively, with respect to such Series Interest Period will
be the arithmetic mean (rounded upwards, if necessary, to the nearest
one-hundredth of one percent) of the rates quoted at approximately 11:00 a.m.,
New York City time on such Determination Date by three major banks in New York,
New York selected by the Auction Agent or the Trustee, as applicable, for loans
in United States dollars to leading European banks having a maturity of one
month, three months, six months or one year, respectively, and in a principal
amount equal to an amount of not less than U.S. $1,000,000 and that is
representative for a single transaction in such market at such time; provided,
however, that if the banks selected as aforesaid are not quoting as mentioned in
this sentence, One Month LIBOR, Three-Month LIBOR, Six-Month LIBOR or One-Year
LIBOR, respectively, in effect for the applicable Series Interest Period will be
One-Month LIBOR, Three-Month LIBOR, Six-Month LIBOR or One-Year LIBOR,
respectively, in effect for the immediately preceding Series Interest Period.
"AUCTION" means the implementation of the Auction Procedures on an
Auction Date.
"AUCTION AGENCY AGREEMENT" means the initial Auction Agent Agreement
unless and until a substitute Auction Agency Agreement is entered into after
which "Auction Agency Agreement" shall mean such substitute Auction Agency
Agreement.
"AUCTION AGENT" means IBJ Xxxxxxxx Bank & Trust Company, a New York
banking corporation, its successors and assigns, as the initial Auction Agent
under the initial Auction Agent Agreement unless and until a substitute Auction
Agent Agreement becomes effective, after which "Auction Agent" shall mean the
substitute Auction Agent.
"AUCTION AGENT FEE" has the meaning set forth in the Auction Agent
Agreement.
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"AUCTION AGENT FEE RATE" has the meaning set forth in the Auction Agent
Agreement.
"AUCTION DATE" means, initially, July 1, 1998 with respect to the
Series A-1 Notes; July 8, 1998 with respect to the Series A-2 Notes, July 15,
1998 with respect to the Series A-3 Notes, July 22, 1998 with respect to the
Series A-4 Notes and June 1, 1999 with respect to the Subordinate Series B Notes
and thereafter, the Business Day immediately preceding the first day of each
Auction Period for each respective Series, other than:
(a) with respect to any Series of Notes each Auction
Period commencing after the ownership of such Series
of Notes is no longer maintained in Book-Entry Form
by the Securities Depository;
(b) each Auction Period commencing after an during the
continuance of an Event of Default; or
(c) each Auction Period commencing less than two Business
Days after the cure or waiver of a Event of Default.
Notwithstanding the foregoing, the Auction Date for one or more Auction Periods
may be changed pursuant to Section 2.5.6 of this Terms Supplement.
"AUCTION PERIOD" means, with respect to each Series of 1998 Notes, the
Series Interest Period applicable to such Series of Notes during which time the
related Series Interest Rate is determined pursuant to Section 2.5.1 hereof,
which Auction Period (after the Initial Period for such Series) initially shall
consist generally of 28 days for the Series X-0, X-0, X-0 and A 4 Notes and
approximately one year for the Subordinate Series B Notes, as the same may be
adjusted pursuant to Section 2.5.6 hereof.
"AUCTION PERIOD ADJUSTMENT" means an adjustment to the Auction Period
as provided in Section 2.5.6 hereof.
"AUCTION PROCEDURES" means the procedures set forth in Section 2.5.1
hereof by which the Auction Rate is determined.
"AUCTION RATE" means the rate of interest per annum that results from
implementation of the Auction Procedures and is determined as described in
Section 2.5.1(c)(ii) hereof.
"AUTHORIZED DENOMINATIONS" means, with respect to any Series of 1998
Notes, $50,000 and integral multiples of $50,000 in excess thereof.
"AVAILABLE 1998 NOTES" has the meaning set forth in Section 2.5.1
(c)(i)(A) hereof.
"BID" has the meaning set forth in Section 2.5.1 (a)(i) hereof.
"BID AUCTION RATE" has the meaning set forth in Section 2.5.1 (c)(i)
hereof.
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"BIDDER" has the meaning set forth in Section 2.5.1 (a)(i) hereof.
"BOND EQUIVALENT YIELD - 91-DAY T-XXXX" means, in respect of any
security with a maturity of six months or less the rate for which is quoted in
The Wall Street Journal (Eastern Edition) on a bank discount basis, a yield
(expressed as a percentage) calculated in accordance with the following formula
and rounded up to the nearest one one-hundredth of one percent:
Bond Equivalent Yield = Q x N x 100
---------------
360 - (91 x Q)
where "Q" refers to the per annum rate for the security quoted on a bank
discount basis and expressed as a decimal, and "N" refers to 365 or 366 (days),
as the case may be.
"BOND EQUIVALENT YIELD" means, in respect of any security, the "bond
equivalent yield" the rate for which is quoted in THE WALL STREET JOURNAL on a
bank discount basis a yield (expressed as a percentage) for such security which
appears on Telerate United States Treasury and Money Market Composite Page 0223,
rounded up to the nearest one one-hundredth of one percent.
"BOOK ENTRY FORM" or "BOOK-ENTRY SYSTEM" means a form or system under
which (i) the beneficial right to principal and interest may be transferred only
through a book entry, (ii) physical securities in registered form are issued
only to a Securities Depository or its nominee as registered owner, with the
securities immobilized to the custody of the Securities Depository, and (iii)
the book entry is the record that identifies the owners of beneficial interests
in that principal and interest.
"BROKER-DEALER" means Xxxxx Xxxxxx Inc. or any other broker or dealer
(each as defined in the Securities Exchange Act of 1934, as amended), commercial
bank or other entity permitted by law to perform the functions required of a
Broker-Dealer set forth in the Auction Procedures that (a) is a Participant (or
an affiliate of a Participant), (b) has been appointed as such by the Trustee
pursuant to Section 2.5.5 hereof or the Issuer pursuant to the Trust Agreement
and (c) has entered into a Broker-Dealer Agreement that is in effect on the date
of reference.
"BROKER-DEALER AGREEMENT" means each agreement between the Auction
Agent and a Broker-Dealer, and approved by the Issuer, pursuant to which the
Broker Dealer agrees to participate in Auctions as set forth in the Auction
Procedures. As from time to time, amended or supplemented. Each Broker-Dealer
Agreement shall be in substantially the form of the Broker-Dealer Agreement
dated as of May 15, 1998 between IBJ Xxxxxxxx Bank & Trust Company, as Auction
Agent, and Xxxxx Xxxxxx Inc., as Broker-Dealer.
"BROKER-DEALER FEE" has the meaning set forth in the Auction Agent
Agreement.
"BROKER DEALER FEE RATE" has the meaning set forth in the Auction Agent
Agreement.
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"BUSINESS DAY" means any day on which the New York Stock Exchange is
open for trading and any day other than a Saturday, a Sunday or a day on which
banking institutions or trust companies in New York or Indiana are authorized or
obligated by law, regulation or executive order to remain closed.
"CLOSING DATE" means, with respect to the 1998 Notes, June 4, 1998, the
date of initial issuance and delivery of the 1998 Notes hereunder.
"EXISTING NOTE OWNER" means (i) with respect to and for the purpose of
dealing with the Auction Agent in connection with an Auction, a Person who is a
Broker Dealer listed in the Existing Note Owner Registry at the close of
business on the Business Day immediately preceding such Auction and (ii) with
respect to and for the purpose of dealing with the Broker-Dealer in connection
with an Auction, a Person who is a beneficial owner of Notes.
"EXISTING NOTE OWNER REGISTRY" means the registry of Persons who are
owners of the Notes, maintained by the Auction Agent as provided in the Auction
Agent Agreement.
"FINAL MATURITY DATE" means December 1, 2030, with respect to the
Series A-1 Notes; December 1, 2030, with respect to the Series A-2 Notes;
December 1, 2030, with respect to the Series A-3 Notes; December 1, 2030, with
respect to the Series A-4 Notes; and December 1, 2030 with respect to the
Subordinate Series B Notes.
"FIRST TERMS SUPPLEMENT" means this First Term Supplement, as from time
to time amended or supplemented.
"HOLD ORDER" has the meaning set forth in Section 2.5.1 (a)(i) hereof.
"INTEREST RATE" means, with respect to a Series of 1998 Notes, the rate
of interest per annum borne by such Series as of the time referred to,
including, without limitation, the related Series Initial Rate and the related
Series Interest Rate.
"LIBOR DETERMINATION DATE" means the Business Day prior to the
commencement of each Interest Period.
"LONDON BANKING DAY" means any Business Day on which dealings in
deposits in United States dollars are transacted in the London interbank market.
"MARKET AGENT" means Xxxxx Xxxxxx Inc., New York, New York, in such
capacity hereunder, or any successor to it in such capacity hereunder.
"MAXIMUM AUCTION RATE" means, with respect to a Series of Notes, (i)
for Auction Periods of 35 days or less, either (A) One-Month LIBOR plus 1.50%
(if both ratings assigned by the Rating Agencies to the Series of Notes are
"AAA" or better) or (B) One-Month LIBOR plus 2.50% (if both of the ratings
assigned by the Rating Agencies to the Series of Notes are "Aa3" or "AA-" or
better) or (C) One-Month LIBOR plus 3.50% (if any one of the ratings assigned by
the Rating Agencies to the Series of Notes is less than "AA-") or (ii) for
Auction Periods of greater than 35 days either (X) the greater of the Applicable
LIBOR Rate plus 1.50% (if both of the ratings assigned by the Rating Agencies to
the Series of Notes are "AAA" or
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better) or (Y) the greater of the Applicable LIBOR Rate, plus 2.50% (if both
ratings assigned by the Rating Agencies to the Series of Notes, are "Aa3" or
"AA-" or better) or (Z) the greater of the Applicable LIBOR Rate plus 3.50% (if
any one of the ratings assigned by the Rating Agencies to the Series of Notes is
less than "AA-"). For purposes of the Auction Agent and the Auction Procedures,
the ratings referred to in this definition shall be the last ratings of which
the Auction Agent has been given notice pursuant to the Auction Agent Agreement.
"NET LOAN RATE" means the rate of interest per annum (rounded to the
next highest one one-hundredth of one percent) equal to the applicable United
States Treasury Security Rate, plus 1.50%. For auction periods of 180 days or
less, the applicable United States Treasury Security Rate is for 91-day United
States Treasury securities, and for auction periods of more than 180 days the
applicable United States Treasury Security rate is for one-year United States
Treasury securities.
"NINETY-ONE DAY UNITED STATES TREASURY XXXX RATE" means that rate of
interest per annum equal to the Bond Equivalent Yield 91-Day T-Xxxx on the 91
Day United States Treasury Bills sold at the last auction thereof that
immediately precedes the Series Rate Adjustment Date for the Series of 1998
Notes to which the Net Loan Rate applies.
"NON-PAYMENT RATE" means One-Month LIBOR plus 1.50%.
"NOTE OWNERS" AUCTION RATE INTEREST CARRYOVER" means, as to any Series
of Notes, with respect to any Series Interest Period for which the Series
Interest Rate for such Series Interest Period is the Net Loan Rate the amount
equal to the excess, if any, of (a) the amount of interest on such Series of
Notes that would have accrued in respect of the related Series Interest Period
had interest been calculated based on the applicable Auction Rate over (b) the
amount of interest on such Series of Notes actually accrued in respect of such
Series Interest Period at the Net Loan Rate, together with the unpaid portion of
any such excess from prior Series Interest Periods (and interest accrued
thereon, to the extent permitted by law, at the applicable rate calculated based
on One-Month LIBOR); provided, however, that, with respect to any Series of
Notes, on the related Final Maturity Date, the portion of the Note Owners'
Auction Rate Interest Carryover allocable to such Series of Notes will be equal
to the lesser of (i) the portion allocable to such Series of Notes of the Note
Owners' Auction Rate Interest Carryover on such date determined as described
above and (ii) the amount of funds, if any, required and available to be
distributed with respect to such Series of Notes on such date pursuant to
Section 5.3(B). EIGHTH of the Trust Agreement.
"NOTICE OF FEE RATE CHANGE" means a notice of a change in the Auction
Agent Fee Rate or the Broker-Dealer Fee Rate substantially in the form of
Exhibit E to the Auction Agent Agreement.
"ORDER" has the meaning set forth in Section 2.5.1 (a)(i) hereof.
"PAYMENT DEFAULT" means, with respect to any Series of 1998 Notes, a
default in the due and punctual payment of interest on or principal of a 1998
Note of such Series on the related Series Payment Date or Final Maturity Date,
as applicable.
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"RECORD DATE" means with respect to a Series of 1998 Notes the close of
business on the Business Day immediately preceding the related Note Interest
Payment Date.
"SELL ORDER" has the meaning set forth in Section 2.5.1 (a)(i) hereof.
"SERIES INITIAL PERIOD" means, as to a Series of 1998 Notes, the period
commencing on the Closing Date and continuing through the day immediately
preceding the Series Initial Rate Adjustment Date for such Series.
"SERIES INITIAL RATE" means 5.68% per annum for the Series A-1 Notes,
5.68% per annum for the Series A-2 Notes, 5.68% per annum for the Series A-3
Notes, 5.68% per annum for the Series A-4 Notes and 6.00% per annum for the
Subordinate Series B Notes.
"SERIES INITIAL RATE ADJUSTMENT DATE" means (i) with respect to the
Series A-1 Notes, July 1, 1998, (ii) with respect to the Series A-2 Notes, July
8, 1998, (iii) with respect to the Series A-3 Notes, July 15, 1998 (iv) with
respect to the Series A-4 Notes, July 22, 1998 and (v) with respect to the
Subordinate Series B Notes, June 1, 1999.
"SERIES INTEREST PERIOD" means, with respect to a Series of 1998 Notes,
the applicable Series Initial Period and each period commencing on a Series Rate
Adjustment Date for such Series and ending on the day before (i) the next Series
Rate Adjustment Date for such Series or (ii) the Final Maturity Date of such
Series, as applicable.
"SERIES INTEREST RATE" means each variable rate of interest per annum
borne by a Series of the 1998 Notes for each Auction Period and determined in
accordance with the provisions of Sections 2.4 and 2.5 hereof; provided,
however, that in the event of a Payment Default the Series Interest Rate shall
equal the Non-Payment Rate; provided, further, however, that such Series
Interest Rate shall in no event exceed the Series Interest Rate Limitation.
"SERIES INTEREST RATE LIMITATION" means, with respect to each Series of
1998 Notes, a rate equal to 17.0% per annum.
"SERIES PAYMENT DATE" means the day immediately following each Auction
Date for such Series and on the maturity or redemption date thereof, provided,
however, that interest on the Subordinate Series B Notes will be payable on the
day following each Auction Date for the Subordinate Series B Notes, on each
December 1, commencing December 1, 1998, and on the maturity or redemption date
thereof, or if any such day is not a Business Day, the next succeeding Business
Day (but only for interest accrued during such Series Interest Period).
"SERIES RATE ADJUSTMENT DATE" means the date on which a Series Interest
Rate is effective, and means, with respect to a Series of 1998 Notes, the date
of commencement of each Auction Period.
"SERIES RATE DETERMINATION DATE" means, with respect to a Series of
1998 Notes, the Auction Date, or if no Auction Date is applicable to such
Series, the Business Day immediately preceding the date of commencement of an
Auction Period.
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"SUBMISSION DEADLINE" means 12:30 p.m., eastern time, on any Auction
Date or such other time on any Auction Date by which Broker-Dealers are required
to submit Orders to the Auction Agent as specified by the Auction Agent from
time to time.
"SUBMITTED BID" has the meaning set forth in Section 2.5.1 (c)(i)
hereof.
"SUBMITTED HOLD ORDER" has the meaning set forth in Section 2.5.1
(c)(i) hereof.
"SUBMITTED ORDER" has the meaning set forth in Section 2.5 (c)(i)
hereof.
"SUBMITTED SELL ORDER" has the meaning set forth in Section 2.5.1
(c)(i) hereof.
"SUFFICIENT BIDS" has the meaning set forth in Section 2.5.1 (c)(i)
hereof.
"TELERATE PAGE 3750" means the display page so designated on the Dow
Xxxxx Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
"TRUST AGREEMENT" means the Trust Agreement dated as of May 15, 1998
between the Issuer and the Trustee.
"UNITED STATES TREASURY SECURITY RATE" means, for purposes of
calculating the Net Loan Rate applicable to the particular Notes, that rate of
interest per annum equal to the Bond Equivalent Yield on the applicable United
States Treasury Securities sold at the last auction thereof, that immediately
precedes the Series Rate Adjustment Date for such Notes.
ARTICLE II
AUTHORIZATION, TERMS AND ISSUANCE
SECTION 2.1 AUTHORIZATION OF 1998 NOTES. There is hereby
authorized the borrowing of funds, and to evidence such borrowing there are
hereby authorized four Series of Senior Notes, designated (i) the "EMT Corp.
Student Loan Asset-Backed Notes, Auction Rate Securities, 1998 Senior Series
A-1" in the aggregate principal amount of $82,000,000, (ii) the "EMT Corp.
Student Loan Asset-Backed Notes Auction Rate Securities, 1998 Series A-2" in the
aggregate principal amount of $80,000,000, (iii) the "EMT Corp. Student Loan
Asset-Backed Notes Auction Rate Securities, 1998 Senior Series A-3" in the
aggregate principal amount of $80,000,000, and (iv) the "EMT Corp. Student Loan
Asset-Backed Notes, Auction Rate Securities, 1998 Senior Series A-4" in the
aggregate principal amount of $80,000,000, and one Series of Subordinate Notes
designated the "EMT Corp. Student Loan Asset-Backed Notes, Auction Rate
Securities, 1998 Senior Subordinate Series B" in the aggregate principal amount
of $28,000,000.
SECTION 2.2 PURPOSES. The 1998 Notes are authorized to finance
the acquisition by the Issuer of Loans and to make deposits to the trust
Accounts required hereby.
SECTION 2.3 TERMS OF 1998 NOTES GENERALLY. The 1998 Notes
shall be issued in fully registered form in substantially the form set forth in
Exhibit A hereof, with such
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variations, omissions and insertions as may be required by the circumstances, as
may be required or permitted by the Trust Agreement and this First Terms
Supplement, or be consistent with the Trust Agreement and this First Terms
Supplement and necessary or appropriate to conform to the rules and requirements
of any governmental authority or any usage or requirement of law with respect
thereto.
The 1998 Notes may be issued only in Authorized Denominations.
The 1998 Notes shall be dated as of the Closing Date. Each Series of Notes shall
mature on its Final Maturity Date. The Series A-1 Notes shall be numbered
consecutively from 1 upwards with the prefix A-1 preceding each number. The
Series A-2 Notes shall be numbered consecutively from 1 upwards with the prefix
A-2- preceding each number. The Series A-3 Notes shall be numbered consecutively
from 1 upwards with the prefix A-3 preceding each number. The Series A-4 Notes
shall be numbered consecutively from 1 upwards with the prefix A-4- preceding
each number. The Subordinate Series B Notes shall be numbered from 1 upwards
with the prefix B- preceding each number. The 1998 Notes shall be issued to a
Securities Depository for use in a Book-Entry System in accordance with the
provisions of Section 2.7 of the Trust Agreement.
Interest on each 1998 Note shall accrue on the Outstanding
Amount of such 1998 Note until such 1998 Note has been paid in full or payment
has been duly provided for, as the case may be, and shall accrue from the later
of the initial date thereof, or the most recent Note Interest Payment Date to
which interest has been paid or duly provided for. Each 1998 Note shall bear
interest at an interest rate determined in accordance with the provisions and
subject to the limitations set forth herein, and interest on each Series of
1998 Notes shall be paid for the related Series Initial Period and each Series
Interest Period for such Series thereafter, on each applicable Series Payment
Date.
Principal will be paid to the then Outstanding Series of 1998
Notes on each applicable Series Payment Date as set forth in Section 3.1 hereof.
The Notes are subject to redemption, in whole or in part, at the option of the
Issuer, on the applicable Series Payment Date at a price of par plus accrued
interest, upon not less than ten days prior written notice to the Owners of such
Notes.
SECTION 2.4 1998 NOTES. During the related Series Initial
Period, each Series shall bear interest at the Series Initial Rate for such
Series. Thereafter, except with respect to an Auction Period Adjustment, the
1998 Notes (other than the Subordinate Series B Notes) shall bear interest at a
Series Interest Rate based on a 28-day Auction Period and, with respect to the
Subordinate Series B Notes, at a Series Interest Rate based on an Auction Period
of approximately one year, as determined pursuant to this Section 2.4.
For each Series of 1998 Notes during the Series Initial Period
for such Series and each Auction Period thereafter interest at the Series
Interest Rate shall accrue daily and shall be computed for the actual number of
days elapsed on the basis of a year consisting of 360 days.
The Series Interest Rate to be borne by each Series of 1998
Notes (other than the Subordinate Series B Notes) after such Series Initial
Period for each Auction Period prior to an Auction Period Adjustment, if any,
shall be determined as herein described. Each such Auction Period shall commence
on and include the day following the expiration of the immediately
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preceding Auction Period and terminate on and include the Auction Date for the
next succeeding Auction Period, subject to adjustment as described below;
provided, however, that in the case of the Auction Period that immediately
follows the Series Initial Period for a Series of 1998 Notes, such Auction
Period shall commence on the Series Initial Rate Adjustment Date for such
Series.
The Series Interest Rate on each Series of 1998 Notes for each
Auction Period shall be the lesser of the (i) Net Loan Rate in effect for such
Auction Period and (ii) the Auction Rate in effect for such Auction Period as
determined in accordance with Section 2.5.1 hereof; provided, however, that such
Series Interest Rate shall in no event exceed the Series Interest Rate
Limitation, and further provided, that if on any Series Rate Determination Date
an Auction is not held for any reason, then the Series Interest Rate on such
Series of 1998 Notes for the next succeeding Auction Period shall be the Net
Loan Rate.
Notwithstanding the foregoing:
(a) if the ownership of a Series of 1998 Notes is no longer
maintained in Book Entry Form, the Series Interest Rate on the 1998 Notes of
such Series for any Series Interest Period commencing after the delivery of
certificates representing 1998 Notes of such Series, pursuant to Section 2.1.5
of the Trust Agreement, shall equal the lesser of (i) the Maximum Auction Rate
and (ii) the Net Loan Rate on the Business Day immediately preceding the first
day of such subsequent Series Interest Period; or
(b) if a Payment Default shall have occurred, the Series
Interest Rate on each Series of 1998 Notes of the Series Interest Period for
such Series commencing on or immediately after such Payment Default, and for
each Series Interest Period thereafter, to and including the Series Interest
Period, if any, during which or commencing less than two Business Days after,
such Payment Default is cured in accordance with this First Terms Supplement
shall equal the applicable Non-Payment Rate on the first day of each such Series
Interest Period.
In accordance with Section 2.5.1 (c) (ii) hereof, the Auction
Agent shall promptly give written notice to the Trustee of each Series Interest
Rate (unless the Series Interest Rate is the Non-Payment Rate) and either the
Auction Rate or the Net Loan Rate, as the case may be, when such rate is not the
Series Interest Rate, applicable to each Series of 1998 Notes. The Trustee shall
notify the Note Owners of 1998 Notes of the Series Interest Rate applicable to
each such Series of 1998 Notes for each Auction Period on the second Business
Day of such Auction Period.
Notwithstanding any other provision of the 1998 Notes or this
First Terms Supplement and except for the occurrence of a Payment Default,
interest payable on each 1998 Note for an Auction Period shall never exceed for
such Auction Period the amount of interest payable at the Net Loan Rate (subject
to the Series Interest Rate Limitation) in effect for such Auction Period.
If the Auction Rate for a Series of 1998 Notes is greater than
the Net Loan Rate, then the Series Interest Rate applicable to such Series of
1998 Notes for that Series Interest Period will be the Net Loan Rate. If the
Series Interest Rate applicable to such Series of 1998 Notes for any Series
Interest Period is the Net Loan Rate, the Trustee shall determine the Note
10
Owners' Auction Rate Interest Carryover, if any, with respect to such 1998 Notes
for such Series Interest Period. Such determination of the Note Owners' Auction
Rate Interest Carryover shall be made separately for each Series of 1998 Notes.
Note Owners' Auction Rate Interest Carryover shall bear interest calculated at a
rate equal to One-Month LIBOR (as determined by the Auction Agent, provided the
Trustee has received notice of One-Month LIBOR from the Auction Agent and if the
Trustee shall not have received such notice from the Auction Agent, then as
determined by the Trustee) from the Series Payment Date for the Series Interest
Period with respect to which such Note Owners' Auction Rate Interest Carryover
was calculated, until paid. For purposes of this First Terms Supplement any
reference to "principal" or "interest" herein shall not include within the
meaning of such words Note Owners' Auction Rate Interest Carryover or any
interest accrued on any such Note Owners' Auction Rate Interest Carryover. Such
Note Owners' Auction Rate Interest Carryover shall be separately calculated for
each 1998 Note of such Series by the Trustee during such Series Interest Period
in sufficient time for the Trustee to give notice to each Note Owner of such
Note Owners' Auction Rate Interest Carryover as required in the next succeeding
sentence. On the Series Payment Date for a Series Interest Period, with respect
to which such Note Owners' Auction Rate Interest Carryover for a Series of 1998
Notes has been calculated by the Trustee, the Trustee shall give written notice
to each Note Owner of the applicable Series of the Note Owners' Auction Rate
Interest Carryover applicable to each Note Owner's 1998 Note of such Series,
which written notice may be included in any other written statement sent by the
Trustee to such Note Owner and shall be mailed on such Series Payment Date by
first-class mail, postage prepaid, to each such Note Owner at such Note Owner's
address as it appears on the registration books maintained by the Registrar.
Such notice shall state in addition to such Note Owners' Auction Rate Interest
Carryover that unless and until a 1998 Note of such Series has been paid in full
or has been deemed no longer Outstanding (after which all accrued Note Owners'
Auction Rate Interest Carryover (and all accrued interest thereon) that remains
unpaid shall be cancelled and no Note Owners' Auction Rate Interest Carryover
(and interest accrued thereon) shall be paid with respect to a 1998 Note of such
Series), (i) the Note Owners Auction Rate Interest Carryover (and interest
accrued thereon calculated at a rate equal to One-Month LIBOR) shall be paid by
the Trustee on a 1998 Note of such Series on the first occurring Series Payment
Date for such Series for a subsequent Series Interest Period if and to the
extent that (1) during such Series Interest Period no additional Note Owners'
Auction Rate Interest Carryover is accruing on such Series of 1998 Notes and (2)
moneys are available pursuant to the terms of this First Terms Supplement in an
amount sufficient to pay all or a portion of such Note Owners' Auction Rate
Interest Carryover and (ii) interest shall accrue on the Note Owners' Auction
Rate Interest Carryover at a rate equal to One-Month LIBOR until such Note
Owners' Auction Rate Interest Carryover is paid in full or is cancelled.
Subject to the payment priorities set forth in Section 5.3(B)
of the Trust Agreement, the Note Owners' Auction Rate Interest Carryover for a
Series of 1998 Notes shall be paid by the Trustee on Outstanding 1998 Notes of
such Series on the Series Payment Date for such Series following the first
occurring Series Payment Date, for a subsequent Series Interest Period if and to
the extent that (i) during such Series Interest Period no additional Note
Owners' Auction Rate Interest Carryover is accruing on such Series of 1998 Notes
and (ii) moneys are available pursuant to the terms of this First Terms
Supplement in an amount sufficient to pay all or a portion of such Note Owners'
Auction Rate Interest Carryover. Any Note Owners' Auction Rate Interest
Carryover (and any interest accrued thereon) on any 1998 Note which is due and
11
payable on a Series Payment Date on which such 1998 Note is to be paid in full
or deemed no longer Outstanding under this First Terms Supplement on said Series
Payment Date, shall be paid to the Note Owner thereof on said Series Payment
Date to the extent that moneys are available therefor in accordance with the
provisions of this First Terms Supplement; provided, however, that any Note
Owners' Auction Rate Interest Carryover (and any interest accrued thereon) which
is not yet due and payable on said Series Payment Date shall be cancelled with
respect to said 1998 Note that is to be paid in full or deemed no longer
OUTSTANDING UNDER THIS First Terms Supplement on said Series Payment Date and
shall not be paid on any succeeding Series Payment Date. To the extent that any
portion of the Note Owners' Auction Rate Interest Carryover for a Series of 1998
Notes remains unpaid after payment of a portion thereof, such unpaid portion of
the Note Owners' Auction Rate Interest Carryover shall be paid in whole or in
part as required hereunder until fully paid by the Trustee on the next occurring
Series Payment Date or Dates as necessary for a subsequent Series Interest
Period or Periods, for such Series if, and to the extent, that the conditions in
the second preceding sentence are satisfied. On any Series Payment Date on which
the Trustee pays only a portion of the Note Owners' Auction Rate Interest
Carryover on a 1998 Note of such Series, the Trustee shall give written notice
in the manner set forth in the immediately preceding paragraph to the Note Owner
of such 1998 Note receiving such partial payment of the Note Owners Auction Rate
Interest Carryover remaining unpaid on such 1998 Note.
The Note Interest Payment Date in such subsequent Series
Interest Period on which such Note Owners' Auction Rate Interest Carryover for a
Series of 1998 Notes shall be paid shall be determined by the Trustee in
accordance with the provisions of the immediately preceding paragraph, and the
Trustee shall make payment of the Note Owners Auction Rate Interest Carryover in
the same manner as, and from the same Account, from which it pays interest on
the 1998 Notes on a Series Payment Date.
In the event that the Auction Agent no longer determines, or
fails to determine, when required, the Series Interest Rate with respect to a
Series of 1998 Notes or, if for any reason, such manner of determination shall
be held to be invalid or unenforceable, the Series Interest Rate for the next
succeeding Series Interest Period, which Period shall be an Auction Period for
such Series of 1998 Notes shall be the Net Loan Rate as determined by the
Trustee (which is responsible for notifying the Auction Agent of such Net Loan
Rate) for such next succeeding Auction Period.
SECTION 2.5 SERIES INTEREST RATE.
SECTION 2.5.1 DETERMINING THE INTEREST RATE.
By purchasing 1998 Notes, whether in an Auction or otherwise,
each purchaser of the 1998 Notes, or its Broker-Dealer, must agree and shall be
deemed by such purchase to have agreed (i) to participate in Auctions on the
terms described herein, (ii) to have its beneficial ownership of the 1998 Notes
maintained at all times in Book Entry Form for the account of its Participant,
which in turn will maintain records of such beneficial ownership and (iii) to
authorize such Participant to disclose to the Auction Agent such information
with respect to such beneficial ownership as the Auction Agent may request.
12
So long as the ownership of a Series of 1998 Notes is
maintained in Book-Entry Form, an Existing Note Owner may sell, transfer or
otherwise dispose of 1998 Notes of such Series only, pursuant to a Bid or Sell
Order placed in an Auction or otherwise sell, transfer or dispose of 1998 Notes
through a Broker-Dealer, provided that, in the case of all transfers other than
pursuant to Auctions, such Existing Note Owner its Broker-Dealer or its
Participant advises the Auction Agent of such transfer. Auctions shall be
conducted on each Auction Date, if there is an Auction Agent on such Auction
Date, in the following manner (such procedures to be applicable separately to
each Series of the 1998 Notes):
(a) (i) Prior to the Submission Deadline on each Auction Date
relating to a Series of 1998 Notes:
(A) each Existing Note Owner of the applicable Series of
1998 Notes may submit to a Broker-Dealer by telephone or otherwise
any information as to:
(1) the principal amount of Outstanding 1998
Notes of such Series, if any, owned by such Existing Note
Owner which such Existing Note Owner desires to continue to
own without regard to the Series Interest Rate for the next
succeeding Auction Period;
(2) the principal amount of Outstanding 1998
Notes of such Series, if any, which such Existing Note Owner
offers to sell if the Series Interest Rate for the next
succeeding Auction Period shall be less than the rate per
annum specified by such Existing Note Owner; and/or
(3) the principal amount of Outstanding 1998
Notes of such Series, if any, owned by such Existing Note
Owner which such Existing Note Owner offers to sell without
regard to the Series Interest Rate for the next succeeding
Auction Period;
and
(B) one or more Broker-Dealers may contact potential Note Owners
to determine the principal amount of 1998 Notes of such Series, which
each potential Note Owner offers to purchase, if the Series Interest
Rate for the next succeeding Auction Period shall not be less than the
rate per annum specified by such potential Note Owner.
The statement of an Existing Note Owner or a potential Note
Owner referred to in (A) or (B) of this paragraph (i) is herein referred to as
an "Order," and each Existing Note Owner and each potential Note Owner placing
an Order is herein referred to as a "Bidder"; an order described in clause
(A)(1) is herein referred to as a "Hold Order"; an Order described in clauses
(A)(2) and (B) is herein referred to as a "Bid"; and an Order described in
clause (A)(3) is herein referred to as a "Sell Order."
(ii) (A) Subject to the provisions of Section 2.5.1 (b) hereof,
a Bid by an Existing Note Owner shall constitute an irrevocable offer to
sell:
13
(1) the principal amount of Outstanding 1998
Notes specified in such Bid if the Series Interest Rate
determined as provided in this Section 2.5.1 shall be less
than the rate specified therein; or
(2) such principal amount, or a lesser
principal amount of Outstanding 1998 Notes to be determined as
set forth in Section 2.5.l(d)(i)(D) hereof, if the Series
Interest Rate determined as provided in this Section 2.5.1
shall be equal to the rate specified therein; or
(3) such principal amount, or a lesser
principal amount of Outstanding 1998 Notes to be determined as
set forth in Section 2.5.1 (d)(n)(C) hereof, if the rate
specified therein shall be higher than the Series Interest
Rate and Sufficient Bids have not been made.
(B) Subject to the provisions of Section 2.5.1 (b) hereof, a
Sell Order by an Existing Note Owner shall constitute an irrevocable
offer to sell:
(1) the principal amount of Outstanding 1998
Notes specified in such Sell Order; or
(2) such principal amount, or a lesser
principal amount of Outstanding 1998 Notes set forth in
Section 2.5.1 (d)(ii)(C) hereof, if Sufficient Bids have not
been made.
(C) Subject to the provisions of Section 2.5.1 (b) hereof, a Bid
by a potential Note Owner shall constitute an irrevocable offer to
purchase:
(1) the principal amount of Outstanding 1998
Notes specified in such Bid if the Series Interest Rate
determined as provided in this Section 2.5.1 shall be higher
than the rate specified in such Bid; or
(2) such principal amount or a lesser
principal amount of Outstanding 1998 Notes set forth in
Section 2.5.1 (d)(i)(E) hereof, if the Series Interest Rate
determined as provided in this Section 2.5.1 shall be equal to
the rate specified in such Bid.
(b) (i) Each Broker-Dealer shall submit in writing to the
Auction Agent prior to the Submission Deadline of each Auction Date all
Orders obtained by such Broker-Dealer and shall specify with respect to
each such Order:
(A) the name of the Bidder placing such Order;
(B) the aggregate principal amount and Series of 1998 Notes that
are the subject of such Order;
(C) to the extent that such Bidder is an Existing Note Owner:
14
(1) the principal amount and Series of 1998
Notes, if any, subject to any Hold Order placed by such
Existing Note Owner;
(2) the principal amount and Series of 1998
Notes, if any, subject to any Bid placed by such Existing Note
Owner and the rate specified in such Bid; and
(3) the principal amount and Series of 1998
Notes, if any, subject to any Sell Order placed by such
Existing Note Owner;
and
(D) (i) to the extent such Bidder is a potential Note Owner,
the rate specified in such potential Note Owner's Bid.
(ii) If any rate specified in any Bid contains more than
three figures to the right of the decimal point, the Auction Agent
shall round such rate up to the next higher one-thousandth (.001) of
one percent.
(iii) If an Order or orders covering all Outstanding 1998
Notes of the applicable Series owned by an Existing Note Owner is not
submitted to the Auction Agent prior to the Submission Deadline, the
Auction Agent shall deem a Hold Order to have been submitted on behalf
of such Existing Note Owner covering the principal amount of
Outstanding 1998 Notes owned by such Existing Note Owner and not
subject to an Order submitted to the Auction Agent.
(iv) None of the Issuer, the Trustee nor the Auction Agent shall
be responsible for a failure of a Broker-Dealer to submit an Order to
the Auction Agent on behalf of any Existing Note Owner or potential Note
Owner.
(v) If any Existing Note Owner submits through a
Broker-Dealer to the Auction Agent one or more Orders covering in the
aggregate more than the principal amount of the Series of Outstanding
1998 Notes owned by such Existing Note Owner, such Orders shall be
considered valid as follows and in the following order of priority:
(A) All Hold Orders shall be considered valid, but only up
to the aggregate principal amount of the Series of Outstanding 1998
Notes owned by such Existing Note Owner, and if the aggregate
principal amount of the Series of 1998 Notes subject to such Hold
Orders exceeds the aggregate principal amount of the Series of 1998
Notes owned by such Existing Note Owner, the aggregate principal
amount of the Series of Notes subject to each such Hold Order shall be
reduced pro rata so that the aggregate principal amount of the Series
of 1998 Notes subject to such Hold Order equals the aggregate
principal amount of the Series of Outstanding 1998 Notes owned by such
Existing Note Owner.
(B) (1) any Bid shall be considered valid up to an amount
equal to the excess of the principal amount of the Series of
Outstanding 1998.
15
Notes owned by such Existing Note Owner over the aggregate principal
amount of the Series of 1998 Notes subject to any Hold Order referred
to in clause (A) of this paragraph (v);
(2) subject to subclause (1) of this clause (B), if more than
one Bid with the same rate is submitted on behalf of such Existing
Note Owner and the aggregate principal amount of the Series of
Outstanding 1998 Notes subject to such Bids is greater than such
excess such Bids shall be considered valid up to an amount equal to
such excess;
(3) subject to subclauses (1) and (2) of this clause (B), if
more than one Bid with different rates are submitted on behalf of such
Existing Note Owner such Bids shall be considered valid first in the
ascending order of their respective rates until the highest rate is
reached at which such excess exists and then at such rate up to the
amount of such excess; and
(4) in any such event the amount of Outstanding 1998 Notes
if any subject to Bids not valid under tins clause (B) shall be
treated as the subject of a Bid by a potential Note Owner at the rate
therein specified; and
(C) All Sell Orders shall be considered valid up to an amount equal to
the excess of the principal amount of the Series of Outstanding 1998 Notes
owned by such Existing Note Owner over the aggregate principal amount of
the Series of 1998 Notes subject to Hold Orders referred to in clause (A)
of this paragraph (v) and valid Bids referred to in clause (B) of this
paragraph (v).
(vi) If more than one Bid for a Series of 1998 Notes is submitted on
behalf of any potential Note Owner, each Bid submitted shall be a separate
Bid with the rate and principal amount therein specified.
(vii) An Existing Note Owner of a Series of 1998 Notes that offers to
purchase additional 1998 Notes of the same Series is, for purposes of such
offer treated as a potential Note Owner.
(viii) Any Bid or Sell Order submitted by an Existing Note Owner
covering an aggregate principal amount of 1998 Notes not equal to an
Authorized Denomination shall be rejected and shall be deemed a Hold Order
Any Bid submitted by a potential Note Owner covering an aggregate principal
amount of 1998 Notes not equal to an Authorized Denomination shall be
rejected.
(ix) Any Bid specifying a rate higher than the Maximum Auction Rate
will (a) be treated as a Sell Order if submitted by an Existing Note Owner
and (b) not be accepted if submitted by a potential Note Owner.
(x) Any Bid submitted by an Existing Note Owner or a potential Note
Owner specifying a rate lower than the All Hold Rate shall be treated as a
Bid specifying the All Hold Rate.
16
(xi) Any Order submitted in an Auction by Broker-Dealer to the Auction
Agent at the Submission Deadline on an Auction Date shall be irrevocable.
(c) (i) Not earlier than the Submission Deadline on each Auction Date, the
Auction Agent shall assemble all valid Orders submitted or deemed submitted to
it by the Broker-Dealers (each such Order as submitted or deemed submitted by a
Broker-Dealer being herein referred to individually as a "Submitted Hold Order,"
a "Submitted Bid" or a "Submitted Sell Order," as the case may be or as a
"Submitted Order," and collectively as "Submitted Hold Orders," "Submitted Bids"
or "Submitted Sell Orders," as the case may be, or as "Submitted Orders") and
shall determine for the applicable Series of 1998 Notes:
(A) the excess of the total principal amount of Outstanding
1998 Notes of such Series over the sum of the aggregate principal
amount of Outstanding 1998 Notes of such Series subject to Submitted
Hold Orders (such excess being herein referred to as the "Available
1998 Notes" of such Series), and
(B) from the Submitted Orders whether:
(1) the aggregate principal amount of Outstanding
1998 Notes of such Series subject to Submitted Bids by
potential Note Owners specifying one or more rates equal to
or lower than the Maximum Auction Rate;
exceeds or is equal to the sum of:
(2) the aggregate principal amount of Outstanding
1998 Notes of such Series subject to Submitted Bids by
Existing Note Owners specifying one or more rates higher
than the Maximum Auction Rate; and
(3) the aggregate principal amount of Outstanding
1998 Notes of such Series subject to submitted Sell Orders;
(in the event such excess or such equality exists other than because
all of the Outstanding 1998 Notes of such Series are subject to
Submitted Hold Orders such Submitted Bids described in subclause (1)
above shall be referred to collectively as "Sufficient Bids"; and
(C) if Sufficient Bids exist the "Bid Auction Rate" which
shall be the lowest rate specified in such Submitted Bids such that if:
(1) (x) each Submitted Bid from Existing Note
Owners specifying such lowest rate and (y) all other
Submitted Bids from Existing Note Owners specifying lower
rates were rejected thus entitling such Existing Note Owners
to continue to own the principal amount of 1998 Notes
subject to such Submitted Bids; and
(2) (x) each such Submitted Bid from potential
Note Owners specifying such lowest rate and (y) all other
Submitted Bids from potential Note Owners specifying lower
rates were accepted;
17
the result would be that such Existing Note Owners described in
subclause (1) above would continue to own an aggregate principal
amount of Outstanding 1998 Notes of the applicable Series which when
added to the aggregate principal amount of Outstanding 1998 Notes of
such Series to be purchased by such potential Note Owners described in
subclause (2) above, would equal not less than the Available 1998
Notes of such Series.
(ii) Promptly after the Auction Agent has made the
determinations pursuant to Section 2.5.1 (c)(i) hereof, the Auction
Agent shall advise the Trustee of the Net Loan Rate the Maximum Auction
Rate, and the All Hold Rate and the components thereof on the Auction
Date and, based on such determinations, the Auction Rate for the next
succeeding Series Interest Period for such Series of 1998 Notes as
follows:
(A) if Sufficient Bids exist, that the Auction Rate for the next
succeeding Series Interest Period for such Series shall be equal to the
Bid Auction Rate so determined;
(B) if Sufficient Bids do not exist (other than because all of
the Outstanding 1998 Notes of such Series are subject to Submitted Hold
Orders), that the Auction Rate for the next succeeding Series Interest
Period shall be equal to the Maximum Auction Rate, or
(C) if all Outstanding 1998 Notes of such Series are subject to
Submitted Hold Orders, that the Auction Rate for the next succeeding
Series Interest Period shall be equal to the All Hold Rate.
(iii) Promptly after the Auction Agent has determined the
Auction Rate, the Auction Agent shall determine and advise the Trustee
of the applicable Series Interest Rate, which rate shall be the lesser
of (a) the Auction Rate and (b) the Net Loan Rate; provided, however,
that in no event shall the Series Interest Rate exceed the Series
Interest Rate Limitation.
(d) Existing Note Owners of the applicable Series shall continue to own
the principal amount of 1998 Notes of such Series that are subject to Submitted
Hold Orders. IF the Net Loan Rate is equal to or greater than the Bid Auction
Rate and if Sufficient Bids have been received by the Auction Agent, the Bid
Auction Rate will be the Series Interest Rate and Submitted Bids and Submitted
Sell Orders will be accepted or rejected and the auction Agent will take such
other action as described below in subparagraph (i).
If the Net Loan Rate is less than the Auction Rate, the Net Loan Rate
will be the Series Interest Rate. If the Auction Rate and the Net Loan Rate are
both greater than the Series Interest Rate Limitation, the Series Interest Rate
shall be equal to the Series Interest Rate Limitation. If the Auction Agent has
not received Sufficient Bids (other than because all of the Outstanding 1998
Notes are subject to Submitted Hold Orders), the Series Interest Rate will be
the lesser of the Maximum Auction Rate and the Net Loan Rate. In any of the
cases described above, Submitted Orders will be accepted or rejected and the
Auction Agent will take such other action as described below in subparagraph
(ii).
18
(i) if Sufficient Bids have been made and the Net Loan Rate is
equal to or greater than the Bid Auction Rate (in which case the Series
Interest Rate shall be the Bid Auction Rate), all Submitted Sell Orders
shall be accepted and, subject to the provisions of paragraphs (iv) and
(v) of this Section 2.5.1 (d), Submitted Bids shall be accepted or
rejected as follows in the following order of priority, and all other
Submitted Bids shall be rejected:
(A) Existing Note Owners' Submitted Bids specifying any rate
that is higher than the Series Interest Rate shall be accepted, thus
requiring each such Existing Note Owner to sell the aggregate principal
amount of 1998 Notes subject to such Submitted Bids;
(B) Existing Note Owners' Submitted Bids specifying any rate
that is lower than the Series Interest Rate shall be rejected, thus
entitling each such Existing Note Owner to continue to own the aggregate
principal amount of 1998 Notes subject to such Submitted Bids;
(C) Potential Note Owners' Submitted Bids specifying any rate
that is lower than the Series Interest Rate shall be accepted;
(D) Each Existing Note Owners' Submitted Bid specifying a rate
that is equal to the Series Interest Rate shall be rejected, thus
entitling such Existing Note Owner to continue to own the aggregate
principal amount of 1998 Notes subject to such Submitted Bid, unless the
aggregate principal amount of Outstanding 1998 Notes subject to all such
Submitted Bids shall be greater than the principal amount of 1998 Notes
of the applicable Series (the "remaining principal amount") equal to the
excess of the Available 1998 Notes of such Series over the aggregate
principal amount of 1998 Notes of such Series subject to Submitted Bids
described in clauses (B) and (C) of this Section 2.5.1 (d) (i), in which
event such Submitted Bid of such Existing Note Owner shall be rejected
in part, and such Existing Note Owner shall be entitled to continue to
own the principal amount of 1998 Notes subject to such Submitted Bid,
but only in an amount equal to the aggregate principal amount of 1998
Notes of such Series obtained by multiplying the remaining principal
amount by a fraction, the numerator of which shall be the principal
amount of Outstanding 1998 Notes of such Series owned by such Existing
Note Owner subject to such Submitted Bid and the denominator of which
shall be the sum of the principal amount of Outstanding 1998 Notes of
such Series subject to such Submitted Bids made by all such Existing
Note Owners that specified a rate equal to the Series Interest Rate; and
(E) Each potential Note Owner's Submitted Bid specifying a rate
that is equal to the Series Interest Rate shall be accepted, but only in
an amount equal to the principal amount of 1998 Notes of the applicable
Series obtained by multiplying the excess of the aggregate principal
amount of Available 1998 Notes of such Series over the aggregate
principal amount of 1998 Notes of such Series subject to Submitted Bids
described in clauses (B), (C) and (D) of this Section 2.5.1 (d) (i) by a
fraction the numerator of which shall be the aggregate principal amount
of Outstanding 1998 Notes of such Series subject to such Submitted Bid
and the denominator of which shall be the
19
sum of the principal amount of Outstanding 1998 Notes of such Series
subject to Submitted Bids made by all such potential Note Owners that
specified a rate equal to the Series Interest Rate.
(ii) If Sufficient Bids have not been made (other than because
all of the Outstanding 1998 Notes of the applicable Series are subject
to submitted Hold Orders), or if the Net Loan Rate is less than the Bid
Auction Rate (in which case the Series Interest Rate shall be the Net
Loan Rate), or if the Series Interest Rate Limitation applies, subject
to the provisions of Section 2.5.1 (d)(iv) hereof, Submitted Orders
shall be accepted or rejected as follows in the following order of
priority and all other Submitted Bids shall be rejected:
(A) Existing Note Owners' Submitted Bids specifying any rate
that is equal to or lower than the Series Interest Rate shall be
rejected, thus entitling such Existing Note Owners to continue to own
the aggregate principal amount of 1998 Notes subject to such Submitted
Bids;
(B) Potential Note Owners' Submitted Bids specifying (1) any
rate that is equal to or lower than the Series Interest Rate shall be
accepted and (2) any rate that is higher than the Series Interest Rate
shall be rejected; and
(C) each Existing Note Owner's Submitted Bid specifying any rate
that is higher than the Series Interest Rate and the Submitted Sell
Order of each Existing Note Owner shall be accepted, thus entitling each
Existing Note Owner that submitted any such Submitted Bid or Submitted
Sell Order to sell the 1998 Notes subject to such Submitted Bid or
Submitted Sell Order, but in both cases only in an amount equal to the
aggregate principal amount of 1998 Notes of the applicable Series
obtained by multiplying the aggregate principal amount of 1998 Notes
subject to Submitted Bids described in clause (B) of this Section 2.5.1
(d) (ii) by a fraction the numerator of which shall be the aggregate
principal amount of Outstanding 1998 Notes of such Series owned by such
Existing Note Owner subject to such submitted Bid or Submitted Sell
Order and the denominator of which shall be the aggregate principal
amount of Outstanding 1998 Notes of such Series subject to all such
Submitted Bids and Submitted Sell Orders.
(iii) If all Outstanding 1998 Notes of such Series are subject
to Submitted Hold Orders all Submitted Bids shall be rejected.
(iv) If, as a result of the procedures described in paragraph
(i) or (ii) of this Section 2.5.l(d), any Existing Note Owner would be
entitled or required to sell, or any potential Note Owner would be
entitled or required to purchase, a principal amount of 1998 Notes of
the applicable Series that is not equal to an Authorized Denomination,
the Auction Agent shall, in such manner as in its sole discretion it
shall determine, round up or down the principal amount of 1998 Notes to
be purchased or sold by any Existing Note Owner or potential Note Owner
so that the principal amount of 1998 Notes purchased or sold by each
Existing Note Owner or potential Note Owner shall be equal to an
Authorized Denomination or an integral multiple of $50,000 in excess
thereof.
20
(v) If, as a result of the procedures described in paragraph
(ii) of this Section 2.5.l(d), any potential Note Owner would be
entitled or required to purchase less than an Authorized Denomination of
1998 Notes of the applicable Series, the Auction Agent shall, in such
manner as in its sole discretion it shall determine, allocate 1998 Notes
of such Series for purchase among potential Note Owners so that only
1998 Notes in Authorized Denominations or integral multiples of $50,000
in excess thereof are purchased by any potential Note Owner, even if
such allocation results in one or more of such potential Note Owners not
purchasing an 1998 Notes.
(e) Based on the result of each Auction, the Auction Agent shall
determine the aggregate principal amount of 1998 Notes of the applicable
Series to be purchased and the aggregate principal amount of 1998 Notes
of the applicable Series to be sold by potential Note Owners and
Existing Note Owners on whose behalf each Broker-Dealer submitted Bids
or Sell Orders and, with respect to each Broker Dealer, to the extent
that such aggregate principal amount of 1998 Notes to be sold differs
from such aggregate principal amount of 1998 Notes to be purchased,
determine to which other Broker Dealer or Broker Dealers acting for one
or more purchasers such Broker-Dealer shall deliver, or from which other
Broker-Dealer or Broker-Dealers acting for one or more sellers such
Broker-Dealer shall receive, as the case may be, 1998 Notes.
(f) Any calculation by the Auction Agent or the Trustee, as applicable,
of the Series Interest Rate, One-Month LIBOR, Three-Month LIBOR, the Maximum
Auction Rate, the All Hold Rate, the Net Loan Rate and the Non-Payment Rate
shall, in the absence of manifest error, be binding on all other parties.
(g) PAYMENT DEFAULTS The Trustee shall determine not later than 2:00
p.m., eastern time, on the Business Day next succeeding a Note Interest Payment
Date, whether a Payment Default has occurred. If a Payment Default has occurred,
the Trustee shall, not later than 2:15 p.m., eastern time, on such Business Day,
send a notice thereof in substantially the form of Exhibit B attached hereto to
the Auction Agent, by telecopy or similar means and, if such Payment Default is
cured, the Trustee shall immediately send a notice in substantially the form of
Exhibit C attached hereto to the Auction Agent by telecopy or similar means.
SECTION 2.5.2. CALCULATION OF MAXIMUM AUCTION RATE, ALL HOLD RATE, NET
LOAN RATE, ONE-MONTH LIBOR, THREE-MONTH LIBOR AND NON-PAYMENT RATE. The Issuer
shall calculate the Net Loan Rate and inform the Auction Agent thereof in
writing no later than the Business Day preceding each Auction Date. The Auction
Agent shall calculate the Net Loan Rate, the Maximum Auction Rate, the All Hold
Rate and One-Month LIBOR or Three-Month LIBOR, as the case may be, on each
Auction Date and shall notify the Trustee and the Eligible Lender Trustee and
the Broker-Dealers of the Net Loan Rate, the Maximum Auction Rate, the All Hold
Rate and One-Month LIBOR or Three-Month LIBOR, as the case may be, as provided
in the Auction Agent Agreement. If the ownership of the 1998 Notes is no longer
maintained in Book Entry Form by the Securities Depository, the Trustee shall
calculate the Maximum Auction Rate, and the Issuer will report to the Trustee in
writing the Net Loan Rate, on the Business Day immediately preceding the first
day of each Series Interest Period commencing after the delivery of certificates
representing the 1998 Notes pursuant to Section 2.1.5 of the Trust Agreement. If
a Payment Default shall have occurred, the Trustee shall calculate the Non-
21
Payment Rate on the Series Rate Determination Date for (i) each Series Interest
Period commencing after the occurrence and during the continuance of such
Payment Default and (ii) any Series Interest Period commencing less than two
Business Days after the cure of any Payment Default. The Auction Agent shall
determine One-Month LIBOR or Three-Month LIBOR, as applicable, for each Series
Interest Period other than the Series Initial Interest Period; provided, that if
the ownership of the 1998 Notes is no longer maintained in Book-Entry Form, or
if a Payment Default has occurred, then the Trustee shall determine One-Month
LIBOR or Three-Month LIBOR, as applicable, for each such Series Interest Period.
The determination by the Trustee or the Auction Agent, as the case may be, of
One-Month LIBOR or Three-Month LIBOR, as applicable, shall (in the absence of
manifest error) be final and binding upon all parties. If calculated or
determined by the Auction Agent, the Auction Agent shall promptly advise the
Trustee and the Issuer of One-Month LIBOR or Three-Month LIBOR, as applicable.
SECTION 2.5.3. NOTIFICATION OF RATES, AMOUNTS AND NOTE INTEREST PAYMENT
DATES.
(a) [Reserved]
(b) Promptly after the Closing Date and after the beginning of each
subsequent Series Interest Period, and in any event at least 10 days prior to
any Series Payment Date, as the case may be, the Trustee shall confirm with the
Auction Agent, so long as no Payment Default has occurred and is continuing and
the ownership of the 1998 Notes is maintained in Book-Entry Form by the
Securities Depository, (1) the date of such next Note Interest Payment Date and
(2) the amount payable to the Auction Agent on the Auction Date pursuant to
Section 2.5.2(b) hereof.
If any day scheduled to be a Series Payment Date shall be changed after
the Trustee shall have given the notice or confirmation referred to in the
preceding sentence, the Trustee shall, not later than 9:15 a.m., eastern time,
on the Business Day next preceding the earlier of the new Series Payment Date or
the old Series Payment Date, by such means as the Trustee deems practicable,
give notice of such change to the Auction Agent, so long as no Payment Default
has occurred and is continuing and the ownership of the 1998 Notes is maintained
in Book-Entry Form by the Securities Depository.
SECTION 2.5.4. AUCTION AGENT.
(a) IBJ Xxxxxxxx Bank & Trust Company is hereby appointed as Initial
Auction Agent to serve as agent for the Issuer in connection with Auctions. The
Trustee and the Issuer will, and the Trustee is hereby directed, to enter into
the initial Auction Agent Agreement with IBJ Xxxxxxxx Bank & Trust Company as
the initial Auction Agent. Any substitute Auction Agent shall be (i) a bank,
national banking association or trust company duly organized under the laws of
the United States of America or any state or territory thereof having its
principal place of business in the Borough of Manhattan, New York, or such other
location as approved by the Trustee and the Market Agent in writing and having a
combined capital stock or surplus of at least $50,000,000, or (ii) a member of
the National Association of Securities Dealers, Inc. having a capitalization of
at least $50,000,000, and, in either case, authorized by law to perform all the
duties imposed upon it hereunder and under the Auction Agent Agreement. The
Auction
22
Agent may at any time resign and be discharged of the duties and obligations
created by this First Terms Supplement by giving at least 90 days, notice to the
Trustee, the Issuer the Market Agent. The Auction Agent may be removed at any
time by the Trustee upon the written direction of the Note Owners of 66-2/3% of
the aggregate principal amount of the 1998 Notes (and any subsequently issued
Series of Notes, but in no event less than 66-2/3% of the aggregate principal
amount of any Senior Notes) then outstanding, by an instrument signed by such
Note Owners or their attorneys and filed with the Auction Agent, the Issuer, the
Market Agent and the Trustee upon at least 90 days, notice. Neither resignation
nor removal of the Auction Agent pursuant to the preceding two sentences shall
be effective until and unless a Substitute Auction Agent has been appointed and
has accepted such appointment. If required by the Issuer or the Market Agent,
with the Trustee's consent, a substitute Auction Agent Agreement shall be
entered into with a substitute Auction Agent. Notwithstanding the foregoing, the
Auction Agent may terminate the Auction Agent Agreement if, within 25 days after
notifying the Trustee, the Issuer and the Market Agent in writing that it has
not received payment of any Auction Agent Fee due it in accordance with the
terms of the Auction Agent Agreement, the Auction Agent does not receive such
payment.
(b) If the Auction Agent shall resign or be removed or be dissolved, or
if the property or affairs of the Auction Agent shall be taken under the control
of any state or federal court or administrative body because of bankruptcy or
insolvency, or for any other reason, the Trustee, at the direction of the Issuer
(after receipt of a certificate from the Market Agent confirming that any
proposed Substitute Auction Agent meets the requirements described in the
immediately preceding paragraph), shall use its best efforts to appoint a
substitute Auction Agent.
(c) The Auction Agent is acting as agent for the Issuer in connection
with Auctions. In the absence of bad faith or negligence on its part the Auction
Agent shall not be liable for any action taken suffered or omitted in good faith
or for any error of judgment made by it in the performance of its duties under
the Auction Agent Agreement. The Auction Agent shall not be liable for any error
of judgment made in good faith unless the Auction Agent shall have been
negligent in ascertaining the pertinent facts.
(d) In the event of a change in the Auction Agent Fee Rate pursuant to
of the Auction Agent Agreement, the Auction Agent shall give a Notice of Fee
Rate Change to the Trustee and the Issuer in accordance with the Auction Agent
Agreement.
SECTION 2.5.5. BROKER-DEALERS.
(a) The Auction Agent will enter into a Broker-Dealer Agreement with
Xxxxx Xxxxxx Inc., as the initial Broker-Dealer. An Authorized Officer of the
Issuer may, from time to time, approve one or more additional persons to serve
as Broker-Dealers under Broker-Dealer Agreements and shall be responsible for
providing such Broker-Dealer Agreements to the Trustee and the Auction Agent,
provided, however that while Xxxxx Xxxxxx Inc. is serving as a Broker-Dealer,
Xxxxx Xxxxxx Inc. shall have the right to consent to the approval of any
additional Broker-Dealers, which consent will not be unreasonably withheld. The
Auction Agent shall have entered into a Broker-Dealer Agreement with each
Broker-Dealer prior to the participation of any such Broker-Dealer in any
Auction.
23
(b) Any Broker-Dealer may be removed at any time, at the request of an
Authorized Officer of the Issuer, but there shall, at all times, be at least one
Broker-Dealer appointed and acting as such.
SECTION 2.5.6. CHANGES IN AUCTION PERIOD OR PERIODS.
(a) While any of the 1998 Notes are Outstanding, the Issuer may, from
time to time, convert the length of one or more Auction Periods (an "Auction
Period Adjustment"), in order to conform with then current market practice with
respect to similar securities or to accommodate economic and financial factors
that may affect or be relevant to the length of the Auction Period and the
Series Interest Rate borne by the 1998 Notes. The Issuer shall not initiate an
Auction Period Adjustment unless it shall have received the written consent of
the Market Agent, which consent shall not be unreasonably withheld, not less
than three days nor more than 20 days prior to the effective date of an Auction
Period Adjustment. The Issuer shall initiate the Auction Period Adjustment by
giving written notice by Issuer Order to the Trustee, the Auction Agent, the
Market Agent and the Securities Depository in substantially the form of, or
containing substantially the information contained in, Exhibit D to this First
Terms Supplement at least 10 days prior to the Auction Date for such Auction
Period.
(b) Any such adjusted Auction Period shall not be less than 7 days nor
more than 365 days.
(c) An Auction Period Adjustment shall take effect only if (A) the
Trustee and the Auction Agent receive, by 11:00 a.m., eastern time, on the
Business Day before the Auction Date for the first such Auction Period, an
Issuer's Certificate in substantially the form attached as, or containing
substantially the same information contained in, Exhibit E to this First Terms
Supplement, authorizing the Auction Period Adjustment specified in such
certificate along with a copy of the written consent of the Market Agent
described above in subparagraph (a) above and (B) Sufficient Bids exist as of
the Auction on the Auction Date for such first Auction Period. If the condition
referred to in (A) above is not met, the Series Interest Rate for the next
Auction Period shall be determined pursuant to the above provisions of this
Section 2.5 and the Auction Period shall be the Auction Period determined
without reference to the proposed change. If the condition referred to in (A) is
met but the condition referred to in (B) above is not met, the Series Interest
Rate for the next Auction Period shall be the lesser of the Maximum Auction Rate
and the Net Loan Rate and the Auction Period shall be the Auction Period
determined without reference to the proposed change.
In connection with any Auction Period Adjustment the Auction Agent shall
provide such further notice to such parties as is specified in Section 2.5 of
the Auction Agent Agreement.
SECTION 2.5.7. CHANGES IN THE AUCTION DATE. The Market Agent, with the
written consent of an Authorized Officer of the Issuer, may specify an earlier
Auction Date (but in no event more than five Business Days earlier) than the
Auction Date that would otherwise be determined in accordance with the
definition of "Auction Date" in Section 1.1 of this First Terms Supplement with
respect to one or more specified Auction Periods in order to conform with then
current market practice with respect to similar securities or to accommodate
economic and
24
financial factors that may affect or be relevant to the day of the week
constituting an Auction Date and the Series Interest Rate borne on the 1998
Notes. The Market Agent shall deliver a written request for consent to such
change in the Auction Date to the Issuer not less than three days nor more than
20 days prior to the effective date of such change together with a certificate
demonstrating the need for change in reliance on such factors. The Market Agent
shall provide notice of its determination to specify an earlier Auction Date for
one or more Auction Periods by means of a written notice delivered at least 10
days prior to the proposed changed Auction Date to the Trustee, the Auction
Agent, the Issuer an the Securities Depository. Such notice shall be
substantially in the form of, or contain substantially the information'
contained in Exhibit F to this First Terms Supplement.
In connection with any change described in this Section 2.5.7 the
Auction Agent shall provide such further notice to such parties as is specified
in Section 2.5 of the Auction Agent Agreement.
SECTION 2.6. ADDITIONAL PROVISIONS REGARDING THE SERIES INTEREST RATES
ON THE 1998 NOTES. The determination of a Series Interest Rate by the Auction
Agent or any other Person pursuant to the provisions of the applicable Section
of this Article II shall be conclusive and binding on the Note Owners of the
Series of 1998 Notes to which such Series Interest Rate applies, and the Issuer
and the Trustee may rely thereon for all purposes.
In no event shall the cumulative amount of interest paid or payable on a
Series of 1998 Notes (including interest calculated as provided herein, plus any
other amounts that constitute interest on the 1998 Notes of such Series under
applicable law, which are contracted for, charged, reserved, taken or received
pursuant to the 1998 Notes of such Series or related documents) calculated from
the date of issuance of the 1998 Notes of such Series through any subsequent day
during the term of the 1998 Notes of such Series or otherwise prior to payment
in full of the 1998 Notes of such Series exceed the amount permitted by
applicable law. If the applicable law is ever judicially interpreted so as to
render usurious any amount called for under the 1998 Notes of such Series or
related documents or otherwise contracted for, charged, reserved, taken or
received in connection with the 1998 Notes of such Series, or if the
acceleration of the maturity of the 1998 Notes of such Series results in payment
to or receipt by the Note Owner or any former Note Owner of the 1998 Notes of
such Series of any interest in excess of that permitted by applicable law, then,
notwithstanding any provision of the 1998 Notes of such Series or related
documents to the contrary, all excess amounts theretofore paid or received with
respect to the 1998 Notes of such Series shall be credited on the principal
balance of the 1998 Notes of such Series (or, if the 1998 Notes of such Series
have been paid or would thereby be paid in full refunded by the recipient
thereof), and the provisions of the 1998 Notes of such Series and related
documents shall automatically and immediately be deemed paid and the amounts
thereafter collectible hereunder and thereunder reduced, without the necessity
of the execution of any new document, so as to comply with the applicable law,
but so as to permit the recovery of the fullest amount otherwise called for
under the 1998 Notes of such Series and under the related documents.
SECTION 2.7. QUALIFICATIONS OF MARKET AGENT. The Market Agent shall be a
member of the National Association of Securities Dealers, Inc., have a
capitalization of at least $50,000,000 and be authorized by law to perform all
the duties imposed upon it by this First
25
Terms Supplement. The Market Agent may resign and be discharged of the duties
and obligation created by this First Terms Supplement by giving at least 30
days' notice to the Issuer and the Trustee, provided that such resignation shall
not be effective until the appointment of a successor market agent by the Issuer
and the acceptance of such appointment by such successor market agent. The
Market Agent may be replaced at the direction of the Issuer by an instrument
signed by an Authorized Officer of the Issuer, filed with the Market Agent and
the Trustee at least 30 days before the effective date of such replacement,
provided that such replacement shall not be effective until the appointment of a
successor Market Agent by the Issuer and the acceptance of such appointment by
such successor Market Agent.
In the event that the Market Agent shall be removed or be dissolved, or
if the property or affairs of the Market Agent shall be taken under the control
of any state or federal court or administrative body because of bankruptcy or
insolvency, or for any other reason, and there is no Market Agent and the Issuer
shall not have appointed its successor as Market Agent, the Trustee,
notwithstanding the provisions of the first paragraph of this Section, shall be
deemed to be the Market Agent for all purposes of this First Terms Supplement
until the appointment by the Issuer of the successor Market Agent. Nothing in
this Section shall be construed as conferring on the Trustee additional duties
other than as set forth herein.
ARTICLE III.
DISTRIBUTIONS
SECTION 3.1. DISTRIBUTIONS OF INTEREST AND PRINCIPAL. The Trustee shall
make distributions from and to the several Trust Accounts in the manner provided
for in the Trust Agreement.
On the first Business Day of each calendar quarter after January 1, 2003
( or such later date to which the Recycling Period is extended upon receipt of a
Rating Confirmation), the Issuer shall determine the amounts on deposit in the
Revenue Account and the Loan Account which will be available for distribution
after payment of the amounts required to be paid in Section 5.3(B)(FIRST)
through (EIGHTH) of the Trust Agreement, and shall apply such remaining amounts
as follows and in the following order of priority (subject to any Supplemental
Trust Agreement with respect to Additional Notes providing for a priority for
such Additional Notes):
(i) to pay principal on 1998 Senior Series A-1 Notes, in
integral multiples of $50,000;
(ii) to pay principal on 1998 Senior Series A-2 Notes,
in integral multiples of $50,000;
(iii) to pay principal on 1998 Senior Notes A-3 Notes,
in integral multiples of $50,000;
(iv) to pay principal on 1998 Senior Series A-4 Notes,
in integral multiples of $50,000; and
26
(v) to pay principal on 1998 Senior Subordinate Series B
Notes, in integral multiples of $50,000.
The Issuer shall notify the Trustee (not later than 30 days, or such lesser
period as the Trustee shall determine to be acceptable, prior to the applicable
Series Payment Date) of the amount that will be applied to the payment of
principal of each Series of Notes and the Series Payment Dates occurring during
such calendar quarter on which such principal shall be paid.
SECTION 3.2. SELECTION OF NOTES TO RECEIVE PAYMENTS OF PRINCIPAL. With
respect to the Series of Notes entitled to receive payments of principal, the
specific Notes of such Series that will receive payments of principal on each
applicable Note Interest Payment Date will be selected no later than 15 days
prior to the related Series Payment Date by the Securities Depository, pursuant
to the Note Depository Agreement entered into with respect to the 1998 Notes, by
lot in such manner as the Securities Depository in its discretion may determine
and which may provide for the selection for payment of principal in minimum
denominations of $50,000, and integral multiples in excess thereof.
Notice of the specific Notes to receive payments of principal is to be
given by the Trustee by first-class mail, postage prepaid, mailed not less than
15 days but no more than 30 days before the applicable Note Interest Payment
Date at the address of the applicable Note Owner appearing on the registration
books. Any defect in or failure to give such mailed notice shall not affect the
validity of proceedings for the payment of any other Notes not affected by such
failure or defect. All notices of payment are to state: (i) the applicable
Series Payment Date; (ii) the amount of principal to be paid, and (iii) the
specific Notes of such Series to be paid.
The Trustee shall notify in writing, substantially in the form of
Exhibit D to the Auction Agent Agreement, the Auction Agent when any notice of
principal payment of Notes is sent to the Securities Depository not later than
11:00 a.m., on the date such notice is sent.
ARTICLE IV.
MISCELLANEOUS
SECTION 4.1. AUTHORITY FOR THIS FIRST TERMS SUPPLEMENT. This First Terms
Supplement is adopted pursuant to the provisions of the Trust Agreement.
SECTION 4.2. COUNTERPARTS. This First Term Supplement may be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
SECTION 4.3. FIRST TERMS SUPPLEMENT CONSTITUTES A SECURITY AGREEMENT.
This First Terms Supplement constitutes a security agreement for the purposes of
the Uniform Commercial Code.
SECTION 4.4. GOVERNING LAW. This First Terms Supplement shall be
governed by and construed in accordance with the laws of the State of Indiana.
27
SECTION 4.5. RATIFICATION OF TRUST AGREEMENT. As supplemented by this
First Terms Supplement, the Trust Agreement is in all respects ratified and
confirmed, and the Trust Agreement as so supplemented by this First Terms
Supplement shall be read, taken and construed as one and the same instrument.
Each addition to and amendment of the Trust Agreement contained herein is solely
for purposes of the 1998 Notes, and shall have no effect on any other Series of
Notes issued pursuant to the Trust Agreement. If any term of this First Terms
Supplement conflicts with any term of the Trust Agreement, this First Terms
Supplement shall control for purposes of the 1998 Notes.
SECTION 4.6. RECYCLING PERIOD. Absent receipt of Rating Confirmations
permitting otherwise, during the Recycling Period, amounts representing the
proceeds of the 1998 Notes shall only be applied to the financing of Eligible
Loans with the following characteristics:
(1) the percentage of recycled Loans that are
consolidation Loans shall not exceed 20%;
(2) the percentage of recycled Loans that are made to
students of two-year schools or proprietary schools shall not
exceed 10%; and
(3) the percentage of recycled Loans that are
unsubsidized Xxxxxxxx loans not in repayment status shall not
exceed 10%.
28
IN WITNESS WHEREOF, the parties hereto have caused this First Terms
Supplement to be duly executed as of the day and year first above written.
EMT CORP.
By:/s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Treasurer
NBD Bank, N.A, is not in its individual capacity
but solely as Trustee,
By:/s/ Xxxxx Xxxxx
-------------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
29
EXHIBIT A
[FORM OF 1998 NOTES]
EMT CORP.
STUDENT LOAN ASSET - BACKED NOTES
AUCTION RATE SECURITIES
[1998 SENIOR SERIES A- ]
1998 SENIOR SUBORDINATE SERIES B]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER (AS DEFINED BELOW)
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") OR ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS
NOTE, AGREES THAT THIS NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS AND (1) TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WHICH
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A OR TO AN INSTITUTIONAL "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(A)(1), (2),(3) OR (7) OF REGULATION D PROMULGATED UNDER THE
ACT, OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT.
THIS NOTE IS NOT GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY.
NO A-_-_ $_____________
A-1
FINAL
MATURITY DATED INTEREST
SERIES DATE DATE RATE CUSIP
------ ---- ---- ---- -----
December 1, June 4, 1998 auction rate as
2030 herein provided
REGISTERED NOTE OWNER: CEDE & CO.
-----------------------------------------------------
PRINCIPAL AMOUNT:
------------------------------------------------------------
A-2
EMT Corp., an Indiana corporation (the "Issuer"), for value
received, promises to pay, from the sources herein described, to the registered
Note Owner identified above, or registered assigns, upon presentation and
surrender hereof at the designated Trust Office of NBD Bank, N.A., as Trustee,
or at the designated office of any successor, the Principal Amount identified
above on the Final Maturity Date identified above, and to pay to the registered
Note Owner hereof, interest and principal hereon in lawful money of the United
States of America at the Series Interest Rate on the dates as provided herein.
Unless otherwise defined in this 1998 Note, capitalized terms used in this 1998
Note shall have the respective meanings given to such terms in the Trust
Agreement dated as of May 15, 1998, as supplemented by the First Terms
Supplement dated as of May 15,1998, (the "First Terms Supplement" and, together,
the "Trust Agreement") between the Issuer and such Trustee.
This 1998 Note is one of a duly authorized issue of notes of
the Issuer designated as "EMT Corp. Student Loan Asset-Backed Notes, Auction
Rate Securities, [1998 Senior Series A-_] OR [1998 SENIOR SUBORDINATE SERIES B]"
(herein referred to by specific Series as the 1998 Series Notes" and
collectively with certain other Notes issued simultaneously therewith, as the
"1998 Notes"), in the aggregate principal amount of $ issued under the Trust
Agreement. The 1998 Notes are issued to finance the acquisition of Loans and to
make certain deposits to the trust Accounts.
The Trust Agreement provides for the issuance, from time to
time, under the conditions, limitations and restrictions set forth therein, of
additional notes, for the purpose of providing additional funds for the
financing of Loans (said additional notes, together with 1998 Notes, being
collectively referred to herein as the "Notes").
The Notes are secured under the Trust Agreement which,
together with certain other documents, assigns to the Trustee for the benefit of
the Note Owners (and certain others, as their interest may appear) all the
rights and remedies of the Issuer under certain Loans and rights under various
contracts providing for the issuance, guarantee and servicing of such Loans.
Reference is hereby made to the Trust Agreement for the provisions, among
others, with respect to the custody and application of the proceeds of the
Notes, definitions of certain capitalized terms used in this 1998 Note, the
nature and the extent of the liens and security of the Trust Agreement, the
collection and disposition of revenues, the funds charged with and pledged to
the payment of the principal of and the interest on the Notes, the terms and
conditions under which additional Notes may be issued, the rights, duties and
immunities of the Trustee, the rights of the registered owners of the Notes and
the rights and obligations of the Issuer. By the acceptance of this 1998 Note,
the registered owner hereof assents to all of the provisions of the Trust
Agreement.
The unpaid principal amount hereof from time to time
outstanding shall bear interest at a Series Interest Rate, as described below,
payable on each applicable Series Payment Date to the extent of interest accrued
on the principal then outstanding, such interest to accrue from the later of the
date hereof or the date through which interest has been paid or duly provided
for. Interest at a Series Interest Rate established pursuant to the First Terms
Supplement shall be computed for the actual number of days elapsed on the basis
of a year consisting of 360 days.
A-3
During the Series Initial Period, this 1998 Note shall bear
interest at the Series Initial Rate for the 1998 Notes of this Series.
Thereafter until an Auction Period Adjustment, if any, this 1998 Note shall bear
interest at a Series Interest Rate based on an Auction Period that shall, until
adjusted pursuant to the First Terms Supplement, generally consist of 28 days
[OR -approximately one year for Series B Notes], all as determined in the First
Terms Supplement.
The Series Interest Rate to be borne by this 1998 Note after
the Series Initial Period for each Auction Period, if any, or, an Auction Period
Adjustment, if any shall be the lesser of (i) the Net Loan Rate in effect for
such Auction Period and (ii) the Auction Rate determined in accordance with the
applicable provisions of the First Terms Supplement.
In no event shall the Series Interest Rate on this 1998 Note
exceed 17.0% per annum.
The Series Interest Period, including, without limitation, an
Auction Period, the applicable Series Interest Rate the method of determining
the applicable Series Interest Rate on each of the 1998 Notes and the Auction
Procedures related thereto, including, without limitation, required notices
thereof to the Note Owners or Existing Note Owners of the 1998 Notes an Auction
Period Adjustment, a change in the Auction Date and the Note Interest Payment
Dates will be determined in accordance with the terms, conditions and provisions
of the First Terms Supplement and the Auction Agent Agreement, to which terms,
conditions and provisions specific reference is hereby made, and all of which
terms, conditions and provisions are hereby specifically incorporated herein by
reference.
If the Auction Rate for the 1998 Notes is greater than the Net
Loan Rate, then the Series Interest Rate applicable to the 1998 Notes for that
Series Interest Period will be the Net Loan Rate. If the Series Interest Rate
applicable to the 1998 Notes for any Series Interest Period is the Net Loan
Rate, the Trustee shall determine the Note Owners' Auction Rate Interest
Carryover, if any, with respect to the 1998 Notes for such Series Interest
Period. Such Note Owners' Auction Rate Interest Carryover shall bear interest
calculated at a rate equal to One-Month LIBOR from the Note Interest Payment
Date for each Series Interest Period with respect to which such Note Owners'
Auction Rate Interest Carryover was calculated until paid. For purposes of this
1998 Note, any reference to "principal" or "interest" herein shall not include
within the meaning of such words Note Owners' Auction Rate Interest Carryover or
any interest accrued on any such Note Owners' Auction Rate Interest Carryover.
Such Note Owners' Auction Rate Interest Carryover shall be separately calculated
for each 1998 Note by the Trustee during such Series Interest Period in
sufficient time for the Trustee to give notice to each Note Owner of such Note
Owners Auction Rate Interest Carryover as required in the next succeeding
sentence. On the Note Interest Payment Date for a Series Interest Period with
respect to which such Note Owners Auction Rate Interest Carryover has been
calculated by the Trustee, the Trustee shall give written notice to each Note
Owner of the Note Owners' Auction Rate Interest Carryover applicable to such
Note Owner's 1998 Note, which written notice may accompany the payment of
interest by check made to each such Note Owner on such Note Interest Payment
Date or otherwise shall be mailed on such Note Interest Payment Date by first
class, mail postage prepaid, to each such Note Owner at such Note Owner's
address as it appears on the registration books maintained by the Registrar.
Such notice shall state, in addition to such Note Owners' Auction Rate Interest
Carryover, that unless and until a 1998 Note has been paid in full or has
A-4
been deemed no longer outstanding under the First Terms Supplement (after which
no Note Owners' Auction Rate Interest Carryover (and all accrued interest
thereon) shall be paid with respect to a 1998 Note), (i) the Note Owners'
Auction Rate Interest Carryover (and interest accrued thereon calculated on the
basis of One-Month LIBOR) shall be paid by the Trustee on a 1998 Note on the
first occurring Note Interest Payment Date for a subsequent Series Interest
Period if and to the extent that (1) during such Series Interest Period no
additional Note Owners' Auction Rate Interest Carryover is accruing on the 1998
Notes and (2) moneys are available on such Note Interest Payment Date pursuant
to the terms of the Trust Agreement in an amount sufficient to pay all or a
portion of such Note Owners' Auction Rate Interest Carryover and (ii) interest
shall accrue on the Note Owners' Auction Rate Interest Carryover at a rate equal
to One-Month LIBOR until such Note Owners' Auction Rate Interest Carryover is
paid in full or is cancelled.
The Note Owners' Auction Rate Interest Carryover for the 1998
Notes shall be paid by the Trustee on Outstanding 1998 Notes on the first
occurring Series Payment Date for a subsequent Series Interest Period if and to
the extent that (i) during such Series Interest Period, no additional Note
Owners' Auction Rate Interest Carryover is accruing on the 1998 Notes and (ii)
on such Series Payment Date there are sufficient moneys available pursuant to
the terms of the First Terms Supplement to pay all or a portion of the Note
Owners' Auction Rate Interest Carryover due on the 1998 Notes on such Series
Payment Date. Any Note Owners' Auction Rate Interest Carryover (and any interest
accrued thereon) on any 1998 Note which is due and payable on any Series Payment
Date, on which such 1998 Note is deemed no longer Outstanding under the Trust
Agreement on said Series Payment Date, shall be paid to the Note Owner thereof
on the next Series Payment Date to the extent that moneys are available therefor
in accordance with the Trust Agreement; provided, however, that any Note Owners'
Auction Rate Interest Carryover (and any interest accrued thereon) which is not
yet due and payable on said Series Payment Date shall be cancelled with respect
to said 1998 Note that is to be deemed no longer Outstanding under the Trust
Agreement on said Series Payment Date and shall not be paid on any succeeding
Series Payment Date. To the extent that any portion of the Note Owners' Auction
Rate Interest Carryover remains unpaid after payment of a portion thereof, such
unpaid portion of the Note Owners' Auction Rate Interest Carryover shall be paid
in whole or in part until fully paid by the Trustee on the next occurring Series
Payment Date or Dates, as necessary, for a subsequent Series Interest Period or
Periods, if and to the extent that the conditions in the immediately preceding
sentence are satisfied.
The Series Payment Date in such subsequent Series Interest
Period on which such Note Owners Auction Rate Interest Carryover for the 1998
Notes shall be paid shall be determined by the Trustee in accordance with the
provisions of the immediately preceding paragraph and the Trustee shall make
payment of the Note Owners' Auction Rate Interest Carryover in the same manner
as and from the same account from which it pays interest on the 1998 Notes on a
Series Payment Date as provided for in the Trust Agreement.
The principal of and interest on the 1998 Notes and Note
Owners' Auction Rate Interest Carryover on the 1998 Notes (and interest accrued
thereon), if any, are special limited obligations of the Issuer, payable solely
from certain revenues derived by the Issuer from certain assets of the Issuer,
including certain notes evidencing Loans.
A-5
Distributions of principal will made on each Series Payment
Date to the respective Series of Notes in the manner described in the Trust
Agreement. The Notes are subject to redemption in whole or in part at the option
of the Issuer on the applicable Series Payment Date at a price of par plus
accrued interest, upon not less than ten days prior written notice to the Owners
of such Notes.
FAILURE TO PAY PRINCIPAL OF OR INTEREST ON A SENIOR
SUBORDINATE NOTE WHEN DUE SHALL NOT GIVE RISE TO AN EVENT OF DEFAULT IF ALL
PAYMENTS OF PRINCIPAL OF AND INTEREST ON OUTSTANDING SENIOR NOTES HAVE BEEN
MADE.
If an Event of Default as defined in the Trust Agreement
occurs, the principal of and interest on all Notes issued under the Trust
Agreement may be declared due and payable upon the conditions and in the manner
and with the effect provided in the Trust Agreement. The Trust Agreement and the
rights and obligations of the Issuer, the Trustee and the Note Owner hereof may
be modified or amended in the manner and subject to the conditions set forth in
the Trust Agreement.
The Note Owner of this 1998 Note shall have no right to
enforce the provisions of the Trust Agreement or to institute action to enforce
the covenants therein, or to take any action with respect to any Event of
Default under the Trust Agreement, or to institute, appear in or defend any suit
or other proceeding with respect thereto, except as provided in the Trust
Agreement.
The transfer of this 1998 Note may be registered only upon
surrender hereof to the Trustee together with an assignment duly executed by the
registered owner or its attorney or legal representative in such form as shall
be satisfactory to the Trustee. Upon any such registration of transfer of this
1998 Note and subject to the payment of any fees and charges as provided by the
Trust Agreement, the Issuer shall execute and the Trustee shall authenticate and
deliver in exchange for this 1998 Note a new 1998 Note or Notes registered in
the name of the transferee, in any denomination or denominations authorized by
the Trust Agreement, of the same maturity and Series and in an aggregate
principal amount equal to the unredeemed principal amount of this 1998 Note and
bearing the same interest as this 1998 Note.
In any case where the date fixed for the payment of principal
of or interest on this 1998 Note shall not be a Business Day, then payment of
such principal or interest need not be made on such date but may be made on the
next succeeding Business Day with the same force and effect as if made on the
date fixed for the payment thereof.
It is hereby certified, recited and declared that all acts,
conditions and things required to have happened, to exist and to have been
performed precedent to and in the execution an delivery of the Trust Agreement
and issuance of this 1998 Note have happened, do exist and have been performed
in due time form and manner as required by law.
This 1998 Note shall not be valid or become obligatory for any
purpose or be entitled to any security or benefit under the Trust Agreement
until the certificate of authentication hereon shall have been manually signed
by the Trustee.
A-6
IN WITNESS WHEREOF, the Issuer has caused this 1998 Note to be
executed in its name by the manual or facsimile signature of an Authorized
Officer and the manual or facsimile signature of its Secretary, and has caused
its corporate seal or a facsimile thereof to be hereto affixed.
EMT CORP., as Issuer
By:
---------------------------------------
Xxxxxxx X Xxxxxx
Treasurer
(SEAL)
Attest:
------------------------------------------------
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This Note is one of the 1998 Notes designated in and issued
under the provisions of the within mentioned Trust Agreement.
NDB Bank, N.A.
Indianapolis, Indiana, as
Trustee
By:
---------------------------------------
Authorized Representative
Date of Authentication
---------------------------------------
A-7
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto _______________________________ ,the within Note and irrevocably
appoints ______________________________________________, attorney-in-fact, to
transfer the within Note on the books kept for registration thereof, with full
power of substitution in the premises.
Dated:
----------------------- --------------------------------------
NOTICE: The signature to this Signature Guaranteed:
assignment must correspond with the
name as it appears upon the face of the --------------------------------------
within Note in every particular, without
any alteration whatsoever.
Name and Address:
-------------------------
Tax Identification Number or
Social Security Number(s):
-----------------------------------------
END OF FORM OF 1998 NOTE
A-8
EXHIBIT B
EMT CORP.
STUDENT LOAN ASSET-BACKED NOTES,
AUCTION RATE SECURITIES
[1998 SENIOR SERIES A-_]
[1998 SENIOR SUBORDINATE SERIES B]
NOTICE OF PAYMENT DEFAULT
-------------------------
NOTICE IS HEREBY GIVEN that an Event of Default has occurred
and is continuing with respect to the Notes identified above. The next Auction
for the 1998 Notes will not be held. The Auction Rate for the 1998 Notes for the
next succeeding Series Interest Period shall be the Non-Payment Rate.
---------------------------------
as Trustee
Dated: By:
------------------------------
Name:
Title:
B-1
EXHIBIT C
EMT CORP.
STUDENT LOAN ASSET-BACKED NOTES,
AUCTION RATE SECURITIES
[1998 SENIOR SERIES A-_]
[1998 SENIOR SUBORDINATE SERIES B]
NOTICE OF CURE OF PAYMENT DEFAULT
---------------------------------
NOTICE IS HEREBY GIVEN that an Event of Default with respect
to the Notes identified above has been waived or cured. The next Series Payment
Date is _________________and the next Auction Date is _______________________.
--------------------------------------
as Trustee
Dated: By:
----------------------------------
Name:
Title:
C-1
EXHIBIT D
EMT CORP.
STUDENT LOAN ASSET-BACKED NOTES,
AUCTION RATE SECURITIES
[1998 SENIOR SERIES A- ]
[1998 SENIOR SUBORDINATE SERIES B]
NOTICE OF PROPOSED AUCTION PERIOD ADJUSTMENT
--------------------------------------------
Notice is hereby given that the Issuer proposes to change the
length of one or more Auction Periods pursuant to the First Terms Supplement to
the Trust Agreement as follows:
1. The change shall take effect on the Series Payment Date for
the current Auction Period and the date of commencement of the next Auction
Period (the "Effective Date").
2. The Auction Period Adjustment in Paragraph 1 shall take
place only if (A) the Trustee and the Auction Agent receive by 11:00 a.m.,
eastern time, on the Business Day before the Auction Date for the Auction Period
commencing on the Effective Date, a certificate from the Market Agent, as
required by the First Terms Supplement authorizing the change in length of one
or more Auction Periods and (B) Sufficient Bids exist on the Auction Date for
the Auction Period commencing on the Effective Date.
3. If the condition referred to in (A) above is not met, the
Auction Rate for the Auction Period commencing on the Effective Date will be
determined pursuant to the Auction Procedures and the Auction Period shall be
the Auction Period determined without reference to the proposed change. If the
condition referred to in (A) is met but the condition referred to in (B) above
is not met, the Auction Rate for the Auction Period commencing on the Effective
Date shall be the Maximum Auction Rate and the Auction Period shall be the
Auction Period determined without reference to the proposed change.
4. It is hereby represented, upon advice of the Auction Agent
for the Notes described herein, that there were Sufficient Bids for such Notes
at the Auction immediately preceding the date of this Notice.
D-1
5. Terms not defined in this Notice shall have the meanings
set forth in the First Terms Supplement entered into in connection with the
captioned Notes.
EMT CORP., as Issuer
Dated: By:
-------------------------------------
D-2
EXHIBIT E
EMT CORP.
STUDENT LOAN ASSET-BACKED NOTES,
AUCTION RATE SECURITIES
[1998 SENIOR SERIES A- ]
[1998 SENIOR SUBORDINATE SERIES B]
NOTICE ESTABLISHING AUCTION PERIOD ADJUSTMENT
---------------------------------------------
Notice is hereby given that the Issuer hereby establishes new
lengths for one or more Auction Periods pursuant to the First Terms Supplement
to the Trust Agreement:
1. The change shall take effect on _________________________,
the Series Payment Date for the current Auction Period and the date of
commencement of the next Auction Period (the "Effective Date").
2. For the Auction Period commencing on the Effective Date,
the Note Interest Payment Date shall be_______________________________________,
or the next succeeding Business Day if such date is not a Business Day.
3. For Auction Periods occurring after the Auction Period the
Note Interest Payment Dates shall be [_______________ (date) and every (number)
____________ (day of week) thereafter] [every_______________ (number) ________
(day of week) after the date set forth in paragraph 2 above], or the next
Business Day if any such day is not a Business Day; provided, however, that the
length of subsequent Auction Periods shall be subject to further change
hereafter as provided in Section 2.5.7 of the First Terms Supplement.
4. The changes described in paragraphs 2 and 3 above shall
take place only upon delivery of this Notice and the satisfaction of other
conditions set forth in the First Terms Supplement and our prior notice dated
___________________ regarding the proposed change.
5. Terms not defined in this Notice shall have the meanings
set forth in the First Terms Supplement relating to the captioned Notes.
EMT CORP.
By:
--------------------------------
Dated: By:
E-1
EXHIBIT F
EMT CORP.
STUDENT LOAN ASSET-BACKED NOTES,
AUCTION RATE SECURITIES
[1998 SENIOR SERIES A- ]
[1998 SENIOR SUBORDINATE SERIES B]
NOTICE OF CHANGE IN AUCTION DATE
--------------------------------
Notice is hereby given by XXXXX XXXXXX INC., as Market Agent
for the captioned Notes, that with respect to the captioned Notes, the Auction
Date is hereby changed as follows:
1. With respect to 1998 of the captioned Notes, the definition
of "Auction Date" shall be deemed amended by substituting " ___________ (number)
Business Day" in the second line thereof.
2. This change shall take effect on ____________________
which shall be the Auction Date for the Auction Period commencing on __________.
3. The Auction Date for the captioned Notes shall be subject
to further change hereafter as provided in the First Terms Supplement.
4. Terms not defined in this Notice shall have the meanings
set forth in the First Terms Supplement relating to the captioned Notes.
XXXXX XXXXXX INC., as Market Agent
Dated: By:
--------------------------------
Name:
Title:
F-1
