EXHIBIT 10.21
FORM OF
BROKER-DEALER AGREEMENT
between
THE BANK OF NEW YORK,
as Auction Agent
and
UBS PAINEWEBBER INC.,
as Broker-Dealer
Dated as of ___________________
$_______________
COLLEGIATE FUNDING SERVICES EDUCATION LOAN TRUST I
STUDENT LOAN ASSET-BACKED NOTES
Series 200__-_ Senior Notes
Series 200__ Subordinate Notes
BROKER-DEALER AGREEMENT
THIS BROKER-DEALER AGREEMENT dated as of _______________ between THE BANK
OF NEW YORK (together with its successors and assigns, the "Auction Agent"),
U.S. BANK, NATIONAL ASSOCIATION, as trustee (the "Trustee"), under the First
Supplemental Indenture of Trust, dated as of November 1, 2000 (the "Supplemental
Indenture") which is supplemental to the Indenture of' Trust, dated November 1,
2001, between COLLEGIATE FUNDING SERVICES EDUCATION LOAN TRUST I (the "Issuer")
and the Trustee, pursuant to authority granted to it in the Auction Agent
Agreement dated as of November 1, 2000, between the Trustee and the Auction
Agent (the "Auction Agent Agreement"), and UBS PAINEWEBBER INC. (together with
its successors and assigns hereinafter referred to as "BD").
The Issuer has issued its Student Loan Asset-Backed Notes as follows:
$____________ aggregate principal amount of Series 200__-_ Senior Notes and
$_________ Series 200__ Subordinate Notes, all maturing ____________, as Auction
Rate Certificates - ARCs(R)( collectively the "ARCs").
The Supplemental Indenture provides that the interest rate on the ARCs for
each Interest Period after the Initial Interest Period shall, except under
certain conditions, equal the Auction Rate which the Auction Agent advises
results from implementation of the Auction Procedures. Pursuant to Section
2.09(a) of the Auction Agent Agreement, the Auction Agent has entered into this
Agreement.
The Auction Procedures require the participation of one or more
Broker-Dealers.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Auction Agent, as agent of the Trustee, and BD agree
as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.01. TERMS DEFINED BY REFERENCE TO THE SUPPLEMENTAL INDENTURE AND
AUCTION AGENT AGREEMENT. Capitalized terms not defined herein shall have the
respective meanings specified in or pursuant to the Supplemental Indenture and
the Auction Agent Agreement.
SECTION 1.02. TERMS DEFINED HEREIN. As used herein and in the Settlement
Procedures (as defined below), the following terms shall have the following
meanings, unless the context otherwise requires:
"Auction" shall have the meaning specified in Section 2.01 hereof.
"Auction Agent Agreement" shall mean the Auction Agent Agreement dated as
of November 1, 2001, among the Trustee, Collegiate Funding Services Education
Loan Trust I and the Auction Agent relating to the ARCs.
------------------------
(R)ARCs is a registered trdemark of USB Xxxxx Xxxxxx Inc.
"Auction Procedures" shall mean the Auction Procedures that are set forth
in Section 4 of the Supplemental Indenture.
"Authorized Officer" shall mean each Vice President, Assistant Vice
President and Assistant Treasurer of the Auction Agent assigned to its Dealing
and Trading Group and every other officer or employee of the Auction Agent
designated as an Authorized Officer for purposes of this Agreement in a
communication to BD.
"BD Officer" shall mean each officer or employee of BD designated as a "BD
Officer" for purposes of this Agreement in a communication to the Auction Agent.
"Broker-Dealer Agreement" shall mean this Agreement and any substantially
similar agreement between the Auction Agent and a Broker-Dealer.
"Owner" shall be a registered owner of any ARCs.
"Settlement Procedures" shall mean the Settlement Procedures attached
hereto as Exhibit A.
SECTION 1.03. RULES OF CONSTRUCTION. Unless the context or use indicates
another or different meaning or intent, the following rules shall apply to the
construction of this Agreement:
(a) Words importing the singular number shall include the plural number
and vice versa.
(b) The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement nor shall they
affect its meaning, construction or effect.
(c) The words "hereof," "herein," "hereto" and other words of similar
import refer to this Agreement as a whole.
(d) All references herein to a particular time of day shall be to New York
City time.
ARTICLE II
THE AUCTION
SECTION 2.01. PURPOSE; INCORPORATION BY REFERENCE OF AUCTION PROCEDURES
AND SETTLEMENT PROCEDURES.
(a) On each Auction Date, the provisions of the Auction Procedures will be
followed by the Auction Agent for the purpose of determining the Applicable ARCs
Rate for the next Interest Period. Each periodic operation of such procedures is
hereinafter referred to as an "Auction."
(b) Without prejudice to Section 3.01(a) hereof, all of the provisions
contained in the Auction Procedures and the Settlement Procedures are
incorporated herein by reference in their entirety and shall be deemed to be a
part of this Agreement to the same extent as if such provisions were fully set
forth herein.
(c) BD agrees to act as, and assumes the obligations of and limitations
and restrictions placed upon, a Broker-Dealer under this Agreement. BD
understands that other persons meeting the requirements specified in the
definition of "Broker-Dealer" contained in Section 1 of the Supplemental
Indenture may, with the prior written consent of the Market Agent, execute
Broker-Dealer Agreements and participate as Broker-Dealers in Auctions.
(d) BD and other Broker-Dealers may participate in Auctions for their own
accounts. However, the Auction Agent may by notice to BD and all other
Broker-Dealers prohibit all Broker-Dealers from submitting Bids in Auctions for
their own accounts, provided that Broker-Dealers may continue to submit Hold
Orders and Sell Orders. The Auction Agent shall have no duty or liability with
respect to monitoring or enforcing the requirements of this Section 2.01(d).
(e) BD agrees to act as, and assumes the obligations of, and limitations
and restrictions placed upon, a Broker-Dealer under this Broker-Dealer
Agreement, and to otherwise act as, and assume the obligations of and
limitations and restrictions placed upon, a Broker-Dealer under Section 4 of the
Supplemental Indenture.
SECTION 2.02. PREPARATION FOR EACH AUCTION.
(a) Not later than 10:30 a.m. on each Auction Date for the ARCs, the
Auction Agent shall advise BD by telephone of the All Hold Rate, the Maximum
Rate, One-Month LIBOR and the Applicable LIBOR-Based Rate.
(b) In the event that the Auction Date for any Auction shall be changed
after the Auction Agent has given the notice referred to in clause (vi) of
paragraph (a) of the Settlement Procedures, the Auction Agent, by such means as
the Auction Agent deems practicable, shall give notice of such change to BD not
later than the earliest of (i) 9:15 a.m. on the new Auction Date, (ii) 9:15 a.m.
on the old Auction Date and (iii) 9:15 a.m. on the next Interest Payment Date.
Thereafter, BD shall promptly notify customers of BD that BD believes are
Existing Owners of such change in the Auction Date.
(c) The Auction Agent from time to time may request BD to provide it with
the aggregate principal amounts of ARCs specifically held by each such BD as an
Existing Owner. BD shall comply with any such request, and the Auction Agent
shall keep confidential any such information, including information received as
to the identity of Existing Owners and Potential Owners in any Auction, and
shall not disclose any such information so provided to any person other than the
Trustee, the Issuer and BD, unless the failure to disclose such information
would be unlawful or if the failure to do so would expose the Auction Agent to
any loss, liability, claim or damage for which the Auction Agent shall not have
been previously adequately indemnified.
SECTION 2.03. AUCTION SCHEDULE; METHOD OF SUBMISSION OF ORDERS.
(a) The Auction Agent shall conduct Auctions for the ARCs in accordance
with the schedule set forth below. Such schedule may be changed at any time by
the Auction Agent with the consent of the Trustee, which consent shall not be
unreasonably withheld or delayed. The Auction Agent shall give notice of any
such change to BD. Such notice shall be received prior to the close of business
on the Business Day next preceding the first Auction Date on which such change
shall be effective.
Time Event
------------------------- ---------------------------------------------------
By 9:00 a.m. Auction Agent obtains One-Month LIBOR and the
Applicable LIBOR-Based Rate.
By 10:30 a.m. Auction Agent advises the Trustee and the
Broker-Dealers of the applicable All Hold Rate, the
applicable Maximum Rate, One-Month LIBOR and the
Applicable LIBOR-Based Rate.
9:30 a.m.-1:00 p.m. Auction Agent assembles information communicated to
it by Broker-Dealers as provided in Section 4(b)(i)
of the Supplemental Indenture. Submission Deadline
is 1:00 p.m.
Not earlier than 1:00 p.m. Auction Agent makes determinations pursuant to
Section 4(c)(i) of the Supplemental Indenture.
Submitted Bids and Submitted Sell Orders are
accepted and rejected in whole or in part and ARCs
are allocated as provided in Section 4(d) and (e)
of the Supplemental Indenture.
By approximately 3:00 p.m. Auction Agent advises the Trustee of results of
Auction as provided in Section 4(c)(ii) of the
Supplemental Indenture and of the Auction Rate for
the next Interest Period. Auction Agent gives
notice of Auction results as set forth in Section
2.04(a) hereof.
(b) BD shall submit Orders to the Auction Agent in writing in
substantially the form attached hereto as Exhibit B. BD shall submit separate
Orders to the Auction Agent for each Potential Owner or Existing Owner on whose
behalf BD is submitting an Order and shall not net or aggregate the Orders of
Potential Owners or Existing Owners on whose behalf BD is submitting Orders.
(c) BD shall deliver to the Auction Agent (i) a written notice,
substantially in the form attached hereto as Exhibit C, of transfers of ARCs,
made through BD by an Existing Owner to another person other than pursuant to an
Auction, and (ii) a written notice, substantially in the form attached hereto as
Exhibit D, of the failure of any ARCs to be transferred to or by any person that
purchased or sold ARCs through BD pursuant to an Auction. The Auction Agent is
not required to accept any notice delivered pursuant to the terms of the
foregoing sentence with respect to an Auction unless it is received by the
Auction Agent by 3:00 p.m. on the Business Day next preceding the applicable
Auction Date.
(d) BD agrees to handle its customers' Orders in accordance with its
duties under applicable securities laws and rules.
SECTION 2.04. NOTICES.
(a) On each Auction Date, the Auction Agent shall notify BD by telephone
of the results of the Auction as set forth in paragraph (a) of the Settlement
Procedures. If requested by BD, the Auction Agent shall as soon as practicable
on the Business Day next succeeding such Auction Date, notify BD in writing, if
previously so requested, of the disposition of all Orders submitted by BD in the
Auction held on such Auction Date.
(b) BD shall notify each Existing Owner or Potential Owner on whose behalf
BD has submitted an Order as set forth in paragraph (b) of the Settlement
Procedures and take such other action as is required of BD pursuant to the
Settlement Procedures.
(c) The Auction Agent shall deliver to BD after receipt all notices and
certificates which the Auction Agent is required to deliver to BD pursuant to
Section 2 of the Auction Agent Agreement at the times and in the manner set
forth in the Auction Agent Agreement.
SECTION 2.05. SERVICE CHARGE TO BE PAID TO BD. On each Interest Payment
Date, for the term of this Agreement, the Auction Agent shall pay to BD, from
funds the Auction Agent has received from the Issuer pursuant to Section 5(b) of
the Supplemental Indenture, a service charge for the succeeding Interest Period,
an amount equal to the product of (a) a fraction, the numerator of which is the
number Of days in each AuctiOn Period occurring during such Interest Period (or,
in the case of the initial period, the actual number of days elapsed since the
date of delivery of the ARCs) and the denominator of which is 360, times (b) the
Broker-Dealer Fee Rate, times (c) the sum of (i) the sum of the aggregate
principal amount of the ARCs that were (A) the subject of Submitted Bids of
Existing Owners submitted by BD and continued to be held as a result of such
submission and (B) the subject of Submitted Bids of Potential Owners submitted
by BD and purchased as a result of such submission and (ii) the aggregate
principal amount of the ARCs subject to valid Hold Ordei_s(determined in
accordance with Section 4(c)(i) of the Supplemental Indenture) submitted to the
Auction Agent by BD and (iii) the principal amount of the ARCs deemed to be
subject to Hold Orders by Existing Owners pursuant to Section 4(b)(iii) of the
Supplemental Indenture that were acquired by such Existing Owners through BD, in
the Auction for such Auction Period. For purposes of subclause (c)(iii) of the
foregoing sentence, if any Existing Owner who acquired ARCs through BD transfers
those ARCs to another Person other than pursuant to an Auction, then the
Broker-Dealer for the ARCs so transferred shall continue to be BD; provided,
however, that if the transfer was effected by, or if the transferee is, a
Broker-Dealer other than BD, then such Broker-Dealer shall be the Broker-Dealer
for such ARCs. If for any reason an Auction is not held on an Auction Date,
there shall be no Broker-Dealer Fee applicable with respect to such Auction
Date. The Broker-Dealer Fee Rate shall be .25 of 1% per annum.
SECTION 2.06. SETTLEMENT.
(a) If any Existing Owner on whose behalf BD has submitted a Bid or Sell
Order for ARCs that was accepted in whole or in part fails to instruct its
Participant to deliver the ARCs subject to such Bid or Sell Order against
payment therefor, BD shall instruct such Participant to deliver such ARCs
against payment therefor and BD may deliver to the Potential Owner on whose
behalf BD submitted a Bid that was accepted in whole or in part a principal
amount of the ARCs that is less than the principal amount of the ARCs specified
in such Bid to be purchased by such Potential Owner. Notwithstanding the
foregoing terms of this Section 2.06(a), any delivery or nondelivery of ARCs
which represents any departure from the results of an Auction, as determined by
the Auction Agent, shall be of no effect unless and until the Auction Agent
shall have been notified of such delivery or non-delivery in accordance with the
terms of Section 2.03(c) hereof. The Auction Agent shall have no duty or
liability with respect to monitoring or enforcing requirements of this Section
2.06(a).
(b) Neither the Auction Agent, the Trustee nor the Issuer shall have any
responsibility or liability with respect to the failure of an Existing Owner, a
Potential Owner or a
Participant or any of them to deliver ARCs or to pay for ARCs sold or purchased
pursuant to the Auction Procedures or otherwise.
ARTICLE III
THE AUCTIONAGENT
SECTION 3.01. DUTIES AND RESPONSIBILITIES.
(a) The AucTIon Agent Is acting solely as Agent for the TrusTee hereunder
and owes no fiduciary duties to any Person by reason of this Agreement.
(b) Notwithstanding Section 3.01(a) above, the Auction Agent undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement and the Auction Agent Agreement, and no implied covenants or
obligations shall be read into this Agreement against the Auction Agent by
reason of anything set forth in the Offering Memorandum or any other offering
material employed in connection with the offer and sale of the ARCs, or
otherwise.
(c) 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 or for any
error of judgment made by it in the performance of its duties under this
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
(or failing to ascertain) the pertinent facts necessary to make such judgment.
SECTION 3.02. RIGHTS OF THE AUCTION AGENT.
(a) The Auction Agent may rely and shall be protected in acting or
refraining from acting upon any communication authorized by this Agreement and
upon any written instruction, notice, request, direction, consent, report,
certificate, share certificate or other instrument, paper or document believed
by it to be genuine. The Auction Agent shall not be liable for acting upon any
telephone communication authorized by this Agreement which the Auction Agent
believes in good faith to have been given by the Trustee or by a Broker-Dealer
or by their designated agents or representatives. The Auction Agent may record
telephone communications with the Broker-Dealers.
(b) The Auction Agent may consult with counsel of its own choice, and the
advice of such counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Auction Agent shall not be required to advance, expend or risk its
own funds or otherwise incur or become exposed to financial liability in the
performance of its duties hereunder.
(d) The Auction Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents or attorneys and shall not be
responsible for any willful misconduct or negligence on the part of any agent or
attorney appointed by it with due care hereunder.
(e) The Auction Agent makes no representation as to the validity, adequacy
or accuracy of this Agreement, the Auction Agent Agreement, the ARCs or any
Offering
Memorandum or other offering material used in connection with the offer and sale
of the ARCs or otherwise.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. TERMINATION. Any party may terminate this Agreement at any
time upon five days prior notice to the other party. This Agreement shall
automatically terminate upon the delivery of certificates representing the ARCs
pursuant to Section 17(c) of the Supplemental Indenture or upon termination of
the Auction Agent Agreement.
SECTION 4.02. PARTICIPANT IN DEPOSITORY. Either (a) BD is, and shall
remain for the term of this Agreement, a member of, or Participant in, the
Depository, or (b) BD may designate a Participant to act on BDs behalf for
purposes of this Agreement. If BD wishes to designate a different Participant to
act on its behalf, BD shall give the Auction Agent at least two Business Days
prior notice thereof.
SECTION 4.03. COMMUNICATIONS. Except for (a) communications authorized to
be made by telephone pursuant to this Agreement or the Auction Procedures and
(b) communications in connection with the Auctions (other than those expressly
required to be in writing), all notices, requests and other communications to
any party hereunder shall be in writing (including facsimile or similar writing)
and shall be given to such party, addressed to it, at its address or facsimile
number set forth below:
If to BD, addressed: UBS PaineWebber Inc.
1285 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Manager, Short Term Desk
Telephone: 000-000-0000
Telecopy: 000-000-0000
If to the Auction
Agent, addressed: The Bank of New York
Corporate Trust Division
0 Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Dealing and Trading Group Auction Desk
Xxxxxx Xxxxxx
Telephone: 000-000-0000
Telecopy: 000-000-0000
or such other address or facsimile number as such party may hereafter specify
for such purpose, by notice to the other party. Each such notice, request or
communication shall be effective, when delivered at the address specified
herein. Communications shall be given on behalf of BD by a BD Officer and on
behalf of the Auction Agent by an Authorized Officer. BD may record telephone
communications with the Auction Agent.
SECTION 4.04. ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties relating to the subject matter hereof, and there
are no other representations, endorsements, promises, agreements or
understandings, oral, written or inferred, between the parties relating to the
subject matter hereof.
SECTION 4.05. BENEFITS. Nothing in this Agreement, express or implied,
shall give to any person, other than the Trustee, the Auction Agent and BD and
their respective successors and assigns, any benefit of any legal or equitable
right, remedy or claim under this Agreement.
SECTION 4.06. AMENDMENT; WAIVER.
(a) This Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by a written
instrument signed by a duly authorized representative of the party to be
charged.
(b) Failure of either party to this Agreement to exercise any right or
remedy hereunder in the event of a breach of this Agreement by the other party
shall not constitute a waiver of any such fight or remedy with respect to any
subsequent breach.
SECTION 4.07. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by, the respective successors
and permitted assigns of each of BD and the Auction Agent. This Agreement may
not be assigned by either party hereto absent the prior written consent of the
other party; provided, however, that this Agreement may be assigned by the
Auction Agent to a successor Auction Agent selected by the Trustee without the
consent of BD.
SECTION 4.08. SEVERABILITY. If any clause, provision or section of this
Agreement shall be ruled invalid or unenforceable by any court of competent
jurisdiction, the invalidity or unenforceability of such clause, provision or
section shall not affect any remaining clause, provision or section hereof.
SECTION 4.09. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
ARTICLE V
GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this BROKER-DEALER
AGREEMENT to be duly executed And delivered by their proper and duly authorized
officers as of the date first above written.
THE BANK OF NEW YORK,
as Auction Agent
By: __________________________
Its: __________________________
UBS PAINEWEBBER INC.,
as Broker-Dealer
By: __________________________
Its: First Vice President
Exhibit A to
BROKER-DEALER AGREEMENT
SETTLEMENT PROCEDURES
Capitalized terms used herein shall have the respective meanings specified
in the Supplemental Indenture and the Broker-Dealer Agreement.
(a) Not later than 3:00 p.m., New York City time, on each Auction Date if
the Applicable Interest Rate is the Auction Rate, the Auction Agent is required
to notify by telephone the Broker-Dealers that participated in the Auction held
on such Auction Date and submitted an Order on behalf of any Existing Owner or
Potential Owner of:
(i) the Auction Rate fixed for the next Interest Period;
(ii) whether there were Sufficient Bids in such Auction;
(iii) if such Broker-Dealer (a "Seller's Broker-Dealer") submitted a
Bid or a Sell Order on behalf of an Existing Owner, whether
such Bid or Sell Order was accepted or rejected, in whole or
in part, and the principal amount of ARCs, if any, to be sold
by such Existing Owner;
(iv) if such Broker-Dealer (a "Buyer's Broker-Dealer") submitted a
Bid on behalf of a Potential Owner, whether such Bid was
accepted or rejected, in whole or in part, and the principal
amount of ARCs, if any, to be purchased by such Potential
Owner;
(v) if the aggregate principal amount of ARCs to be sold by all
Existing Owners on whose behalf such Seller's Broker-Dealer
submitted Bids or Sell Orders exceeds the aggregate principal
amount of ARCs to be purchased by all Potential Owners on
whose behalf such Buyer's Broker-Dealer submitted a Bid, the
name or names of one or more other Buyer's Broker-Dealers (and
the name of the Participant, if any, of each such other
Buyer's Broker-Dealer) acting for one or more purchasers of
such excess principal amount of ARCs and the principal amount
of ARCs to be purchased from one or more Existing Owners on
whose behalf such Seller's Broker-Dealer acted by one or more
Potential Owners on whose behalf each of such other Buyer's
Broker-Dealers acted; (vi) if the principal amount of ARCs to
be purchased by all Potential Owners on whose behalf such
Buyer's Broker-Dealer submitted a Bid exceeds the aggregate
principal amount of ARCs to be sold by all Existing Owners on
whose behalf such Seller's Broker-Dealer submitted a Bid or a
Sell Order, the name or names of one or more Seller's
Broker-Dealers (and the name of the Participant, if any, of
each such Seller's Broker-Dealer) acting for one or more
sellers of such excess principal amount of ARCs and the
principal amount of ARCs to be sold to one or more Potential
Owners on whose behalf such Buyer's Broker-Dealer acted by one
or more Existing Owners on whose behalf each of such Seller's
Broker- Dealers acted;
(vii) unless previously provided, a list of all Applicable
Interest Rates and related Interest Periods (or portions
thereof) since the last Interest Payment Date; and
(viii) the Auction Date for the next succeeding Auction.
(b) On each Auction Date, each Broker-Dealer that submitted an Order on
behalf of any Existing Owner or Potential Owner shall:
(i) advise each Existing Owner and Potential Owner on whose
behalf such Broker-Dealer submitted a Bid or Sell Order in
the Auction on such Auction Date whether such Bid or Sell
Order was accepted or rejected, in whole or in part;
(ii) in the case of a Broker-Dealer that is a Buyer's
Broker-Dealer, advise each Potential Owner on whose behalf
such Broker-Dealer submitted a Bid that was accepted, in
whole or in part, to instruct such Potential Owner's
Participant to pay to such Buyer's Broker-Dealer (or its
Participant) through the Securities Depository the amount
necessary to purchase the principal amount of ARCs to be
purchased pursuant :to such Bid against receipt of such
principal amount of ARCs;
(iii) in the case of a Broker-Dealer that is a Seller's
Broker-Dealer, instruct each Existing Owner on whose behalf
such Seller's Broker-Dealer submitted a Sell Order that was
accepted, in whole or in part, or a Bid that was accepted,
in whole or in part, to instruct such Existing Owner's
Participant to deliver to such Broker-Dealer (or its
Participant) through the Securities Depository the principal
amount of ARCs to be sold pursuant to such Bid or Sell Order
against payment therefor;
(iv) advise each Existing Owner on whose behalf such
Broker-Dealer submitted an Order and each Potential Owner on
whose behalf such Broker-Dealer submitted a Bid of the
Applicable Interest Rate for the next Interest Period;
(v) advise each Existing Owner on whose behalf such
Broker-Dealer submitted an Order of the next Auction Date;
and
(vi) advise each Potential Owner on whose behalf such
Broker-Dealer submitted a Bid that was accepted, in whole or
in part, of the next Auction Date.
(c) On the basis of the information provided to it pursuant to paragraph
(a) above, each Broker-Dealer that submitted a Bid or Sell Order in an Auction
is required to allocate any funds received by it pursuant to paragraph (b)(ii)
above, and any ARCs received by it in connection with such Auction pursuant to
paragraph (b)(iii) above, among the Potential Owners, if any, on whose behalf
such Broker-Dealer submitted Bids, the Existing Owners, if any, on whose behalf
such Broker-Dealer submitted Bids or Sell Orders in such Auction, and any
Broker-Dealers identified to it by the Auction Agent following such Auction
pursuant to paragraph (a)(v) or (a)(vi) above.
(d) On each Auction Date:
(i) each Potential Owner and Existing Owner with an Order in the
Auction on such Auction Date shall instruct its Participant as
provided in (b)(ii) or (b)(iii) above, as the case may be;
(ii) each Seller's Broker-Dealer that is not a Participant of the
Securities Depository shall instruct its Participant (A) to
pay through the Securities Depository of the Existing Owner
delivering ARCs to such Broker-Dealer following such Auction
pursuant to (b)(iii) above the amount necessary, including
accrued interest, if any, to purchase such ARCs against
receipt of such ARCs, and (B) deliver such ARCs through the
Securities Depository to a Buyer's Broker-Dealer (or its
Participant) identified to such Seller's Broker-Dealer
pursuant to paragraph (a)(v) above against payment therefor;
and
(iii) each Buyer's Broker-Dealer that is not a Participant in the
Securities Depository shall instruct its Participant to (A)
pay through the Securities Depository to a Seller's
Broker-Dealer (or its Participant) identified to such Buyer's
Broker-Dealer pursuant to (a)(vi) above the amount necessary,
to purchase the ARCs to be purchased pursuant to (b)(ii) above
against receipt of such ARCs, and (B) deliver such ARCs
through the Securities Depository to the Participant of the
purchaser thereof against payment therefor.
(e) On the first Business Day of the Interest Period next following each
Auction Date:
(i) each Participant for a Bidder in the Auction on such Auction
Date referred to in (d)(i) above shall instruct the Securities
Depository to execute the transactions described under (b)(ii)
or (b)(iii) above for such Auction, and the Securities
Depository shall execute such transactions;
(ii) each Seller's Broker-Dealer or its Participant shall instruct
the Securities Depository to execute the transactions
described in (d)(ii) above for such Auction, and the
Securities Depository shall execute such transactions; and
(iii) each Buyer's Broker-Dealer or its Participant shall instruct
the Securities Depository to execute the transactions
described in (d)(iii) above for such Auction, and the
Securities Depository shall execute such transactions.
(f) If an Existing Owner selling ARCs in an Auction fails to deliver such
ARCs (by authorized book-entry), a Broker-Dealer may deliver to the Potential
Owner on behalf of which it submitted a Bid that was accepted a principal amount
of ARCs that is less than the principal amount of ARCs that otherwise was to be
purchased by such Potential Owner (but only in an Authorized Denomination). In
such event, the principal amount of ARCs to be so delivered shall be determined
solely by such Broker-Dealer (but only in Authorized Denominations). Delivery of
such lesser principal amount of ARCs shall constitute good delivery.
Notwithstanding the foregoing terms of this paragraph (f), any delivery or
nondelivery of ARCs, which shall represent any departure from the results of an
Auction, as determined by the Auction Agent, shall be of no
effect unless and until the Auction Agent shall have been notified of such
delivery or nondelivery in accordance with the provisions of the Auction Agent
and the Broker-Dealer Agreement. Neither the Trustee nor the Auction Agent will
have any responsibility or liability with respect to the failure of a Potential
Owner, Existing Owner or their respective Broker-Dealer or Participant to take
delivery of or deliver, as the case may be, the principal amount of the ARCs
purchased or sold pursuant to an Auction or otherwise.
