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SERIES 1996C SUPPLEMENTAL INDENTURE OF TRUST
BY AND BETWEEN
UNION FINANCIAL SERVICES-1, INC.
AND
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
AS TRUSTEE
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DATED AS OF NOVEMBER 1, 1996
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AUTHORIZING THE ISSUANCE OF
$316,100,000
UNION FINANCIAL SERVICES-1, INC.
TAXABLE STUDENT LOAN ASSET-BACKED NOTES
SERIES 1996C
SENIOR TREASURY RATE CLASS A-5 NOTES
SENIOR AUCTION RATE CLASS A-6 NOTES
SUBORDINATE LIBOR RATE CLASS B-3 NOTES
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TABLE OF CONTENTS
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(This Table of Contents is for convenience of reference only and is not
intended to define, limit or describe the purpose or intent of any provisions of
this Supplemental Indenture of Trust.)
Page
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PARTIES AND PREAMBLES AND RECITALS . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS AND USE OF PHRASES . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
SERIES 1996C NOTE DETAILS,
FORM OF SERIES 1996C NOTES,
REDEMPTION OF SERIES 1996C NOTES
AND USE OF PROCEEDS OF SERIES 1996C NOTES
Section 2.01. Series 1996C Note Details. . . . . . . . . . . . . . . . . . . . . . 3
Section 2.02. Redemption of the Series 1996C Notes . . . . . . . . . . . . . . . . 6
Section 2.03. Delivery of Series 1996C Notes . . . . . . . . . . . . . . . . . . . 9
Section 2.04. Trustee's Authentication Certificate . . . . . . . . . . . . . . . . 10
Section 2.05. Deposit of Series 1996C Note Proceeds. . . . . . . . . . . . . . . . 10
Section 2.06. Forms of Series 1996C Notes. . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III
AMENDMENT OF INDENTURE
Section 3.01. Amendment of Indenture . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV
GENERAL PROVISIONS
Section 4.01. Date of Execution. . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.02. Laws Governing . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.03. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.04. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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ARTICLE V
APPLICABILITY OF INDENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
TESTIMONIUM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SIGNATURES AND SEALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ACKNOWLEDGMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
APPENDIX A-- Certain Terms and Provisions of the Class 1996A-5 Senior
Treasury Rate Notes. . . . . . . . . . . . . . . . . . . . . . . . . X-0
XXXXXXXX X-- Certain Terms and Provisions of the Class 1996A-6 Senior
Auction Rate Notes . . . . . . . . . . . . . . . . . . . . . . . . . B-1
APPENDIX C-- Certain Terms and Provisions of the Class 1996B-3 Subordinate
LIBOR Rate Notes . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT A-- Form of Class 1996A-5 Senior Treasury Rate Notes . . . . . . . . . . A-1
EXHIBIT B-- Form of Class 1996A-6 Senior Auction Rate Notes. . . . . . . . . . . B-1
EXHIBIT C-- Form of Class 1996B-3 Subordinate LIBOR Rate Notes . . . . . . . . . C-1
EXHIBIT D-- Series 1996C Closing Cash Flow Projections . . . . . . . . . . . . . D-1
EXHIBIT E-- Series 1996C Closing Cash Flow Projections . . . . . . . . . . . . . E-1
EXHIBIT F-- Notice of Payment Default. . . . . . . . . . . . . . . . . . . . . . F-1
EXHIBIT G-- Notice of Cure of Payment Default. . . . . . . . . . . . . . . . . . G-1
EXHIBIT H-- Notice of Proposed Change in Length of One or More Auction
Periods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H-1
EXHIBIT I-- Notice Establishing Change in Length of One or More Auction
Periods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
EXHIBIT J-- Notice of Change in Auction Date . . . . . . . . . . . . . . . . . . J-1
EXHIBIT K-- Notice of Proposed Adjustment to Percentage Used in Determining
[Maximum Auction Rate] [All Hold Rate] [Non-Payment Rate]. . . . . . K-1
EXHIBIT L-- Notice Establishing New Percentage Used in Determining [Maximum
Auction Rate] [All Hold Rate] [Non-Payment Rate] . . . . . . . . . . L-1
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SERIES 1996C SUPPLEMENTAL INDENTURE OF TRUST
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THIS SERIES 1996C SUPPLEMENTAL INDENTURE OF TRUST (this "Supplemental
Indenture"), dated as of November 1, 1996, is by and between UNION FINANCIAL
SERVICES-1, INC., a corporation duly organized and existing under the laws of
the State of Nevada (the "Issuer"), and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association duly organized and operating
under the laws of the United States of America and authorized to exercise
corporate trust powers, with its principal place of business and corporate
trust office located in Minneapolis, Minnesota (together with its successors,
the "Trustee"), as trustee hereunder (all capitalized terms used in these
preambles, recitals and granting clauses shall have the same meanings
assigned thereto in Article I hereof);
W I T N E S S E T H:
WHEREAS, the Issuer has previously entered into a Second Amended and
Restated Indenture of Trust dated as of November 1, 1996 (as previously
supplemented and amended, the "Indenture") between the Issuer and the Trustee;
WHEREAS, the Issuer desires to enter into this Supplemental Indenture in
order to issue Additional Notes pursuant to the terms of the Indenture,
including Section 2.12 thereof;
WHEREAS, the Issuer represents that it is duly created as a corporation
under the laws of the State and that by proper action it has duly authorized
the issuance of $316,100,000 of its Taxable Student Loan Asset-Backed Notes,
Series 1996C consisting of three Subclasses, designated as Class 1996A-5
Notes (the "Class 1996A-5 Notes"), Class 1996A-6 Notes (the "Class 1996A-6
Notes") and Class 1996B-3 Notes (the "Class 1996B-3 Notes") (collectively,
the "Series 1996C Notes"), and it has by proper corporate action authorized
the execution and delivery of this Supplemental Indenture;
WHEREAS, the Series 1996C Notes constitute Additional Notes as defined in
the Indenture;
WHEREAS, the Trustee has agreed to accept the trusts herein created upon
the terms herein set forth; and
NOW, THEREFORE, it is mutually covenanted and agreed as follows:
ARTICLE I
DEFINITIONS AND USE OF PHRASES
All words and phrases defined in Article I of the Indenture shall have
the same meaning in this Supplemental Indenture, except as otherwise appears
in this Article. In addition, the following terms have the following
meanings in this Supplemental Indenture unless the context clearly requires
otherwise:
"AUTHORIZED DENOMINATIONS" means the denominations set forth in the
Appendices hereto.
"CUSTODIAN AGREEMENT" means the Custodian Agreement dated as of March 1,
1996, between the Trustee and UNIPAC Service Corporation.
"RATING AGENCY" means, collectively, Fitch Investors Service, L.P. and
Standard & Poor's Ratings Services.
"RESERVE FUND REQUIREMENT" means an amount equal to 2% of the aggregate
principal amount of the Series 1996C Notes then Outstanding.
"SELLER" means, with respect to the Financed Eligible Loans acquired from
the proceeds of the Series 1996C Notes, Union Bank and Trust Company.
"SERIES 1996C NOTES" means the Union Financial Services-1, Inc., Taxable
Student Loan Asset-Backed Notes, Series 1996C issued pursuant to the
Indenture and this Supplemental Indenture in the aggregate principal amount
of $316,100,000, consisting of Senior Treasury Rate Class 1996A-5 Notes,
Senior Auction Rate Class 1996A-6 Notes and Subordinate LIBOR Rate Class
1996B-3 Notes.
"SERVICER" means, with respect to the Financed Eligible Loans acquired
from the proceeds of the Series 1996C Notes, Union Bank and Trust Company.
"SERVICING AGREEMENT" means, collectively, the Amended and Restated
Servicing Agreement dated as of June 19, 1996, as supplemented and amended,
between the Issuer and the Servicer and the Servicing Agreement dated as of
January 1, 1995, as supplemented and amended, between the Servicer and the
Subservicer.
"STUDENT LOAN PURCHASE AGREEMENT" means that certain Loan Sale and
Commitment Agreement dated as of November 1, 1996 between the Issuer and the
Seller.
"SUBSERVICER" means UNIPAC Service Corporation, a Nebraska corporation.
"UNDERWRITER" means Xxxxx Xxxxxx Inc.
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Words importing the masculine gender include the feminine gender. Words
importing persons include firms, associations and corporations. Words
importing the singular number include the plural number and vice versa.
Additional terms are defined in the body of this Supplemental Indenture and
the Appendices hereto.
In the event that any term or provision contained herein with respect to
the Series 1996C Notes shall conflict with or be inconsistent with any term
or provision contained in the Indenture, the terms and provisions of this
Supplemental Indenture shall govern.
ARTICLE II
SERIES 1996C NOTE DETAILS,
FORM OF SERIES 1996C NOTES,
REDEMPTION OF SERIES 1996C NOTES
AND USE OF PROCEEDS OF SERIES 1996C NOTES
Section 2.01. SERIES 1996C NOTE DETAILS.
(a) The aggregate principal amount of the Series 1996C Notes which
may be initially authenticated and delivered under this Supplemental
Indenture is limited to $316,100,000 consisting of $225,000,000 of
Class 1996A-5 Notes, $75,500,000 of Class 1996A-6 Notes and $15,600,000 of
Class 1996B-3 Notes, except for Series 1996C Notes authenticated and
delivered upon transfer of, or in exchange for, or in lieu of Notes
pursuant to Sections 2.03 and 2.04 of the Indenture. The Class 1996A Notes
shall be known and designated as "Union Financial Services-1, Inc., Taxable
Student Loan Asset-Backed Notes, Class 1996A-5 Senior Treasury Rate" and
the Class 1996A-6 Notes shall be known and designated as "Union Financial
Services-1, Inc., Taxable Student Loan Asset-Backed Notes, Class 1996A-6
Senior Auction Rate" and issued as Auction Rate Securities (ARS-SM-). The
Class 1996B Notes shall be known and designated as "Union Financial
Services-1, Inc., Taxable Student Loan Asset-Backed Notes, Class 1996B-3
Subordinate LIBOR Rate." The Series 1996C Notes shall be issuable only as
fully registered notes in the Authorized Denominations. The Series 1996C
Notes of each class and subclass shall each be lettered "R" and shall be
numbered separately from 1 upwards.
The Class 1996A-5 Notes (also known as "Treasury Rate Notes") shall be
dated their Date of Issuance and shall bear interest, payable on each
Interest Payment Date, commencing December 1, 1996, except that Treasury
Rate Notes which are issued upon transfer, exchange or other replacement
shall bear interest from the most recent Interest Payment Date to which
interest has been paid, or if no interest has been paid, from the date of
the Treasury Rate Notes. The Class 1996A-5 Notes shall mature on July 1,
2005. Interest on the Treasury Rate Notes shall be computed on the basis
of a year consisting of 365 or 366 days, as applicable, and actual days
elapsed. The terms of and
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definitions related to the Treasury Rate Notes are found in Article I
hereof and Appendix A to this Supplemental Indenture.
The Class 1996A-6 Notes (also known as "Auction Rate Notes") shall be
dated their Date of Issuance and shall bear interest payable on each
Interest Payment Date, commencing November 13, 1996, except that Auction
Rate Notes issued upon transfer, exchange or other replacement shall bear
interest from the most recent Interest Payment Date to which interest has
been paid, or if no interest has been paid, from the Date of Issuance. The
Class 1996A-6 Notes shall mature on July 1, 2014. Interest on the
Class 1996A-6 Notes shall be computed on the basis of a 360-day year and
actual days elapsed. The terms of and definitions related to the Auction
Rate Notes are found in Article I hereof and Appendix B to this
Supplemental Indenture.
The Class 1996B-3 Notes (also known as "Class 1996B-3 LIBOR Rate
Notes") shall be dated their Date of Issuance and shall bear interest,
payable on each Interest Payment Date, commencing December 1, 1996, except
that Class 1996B-3 Notes which are issued upon transfer, exchange or other
replacement shall bear interest from the most recent Interest Payment Date
to which interest has been paid, or if no interest has been paid, from the
date of the Class 1996B-3 Notes. The Class 1996B-3 Notes shall mature on
July 1, 2025. Interest on the Class 1996B-3 Notes shall be computed on the
basis of a 360-day year and actual days elapse. The terms of and
definitions related to the Class 1996B-3 Notes are found in Article I
hereof and Appendix C to this Supplemental Indenture.
The principal of the Series 1996C Notes due at its Stated Maturity or
redemption in whole shall be payable at the Principal Office of the Trustee
in Minneapolis, Minnesota, or at the Principal Office of its successor in
trust upon presentation and surrender of the Series 1996C Notes. Payment
of interest and principal paid subject to a redemption on any Series 1996C
Note shall be made to the Registered Owner thereof by check or draft mailed
on the Interest Payment Date by the Trustee to the Registered Owner at his
address as it last appears on the registration books kept by the Trustee at
the close of business on the Record Date for such interest payment date,
but any such interest not so timely paid or duly provided for shall cease
to be payable to the Registered Owner thereof at the close of business on
the Record Date and shall be payable to the Registered Owner thereof at the
close of business on a special record date (a "Special Record Date") for
the payment of any such defaulted interest. Such Special Record Date shall
be fixed by the Trustee whenever moneys become available for payment of the
defaulted interest, and notice of such Special Record Date shall be given
to the Registered Owners of the Series 1996C Notes not less than 10 days
prior thereto by first-class mail to each such Registered Owner as shown on
the Trustee's registration books on the date selected by the Trustee,
stating the date of the Special Record Date and the date fixed for the
payment of such defaulted interest. Payment of interest to the Securities
Depository or its nominee shall, and at the written request addressed to
the Trustee of any other Registered Owner owning at least $1,000,000
principal amount of
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the Series 1996C Notes, payments of interest shall, be paid by wire
transfer within the United States to the bank account number filed no
later than the Record Date or Special Record Date with the Trustee
for such purpose. All payments on the Series 1996C Notes shall be made in
lawful money of the United States of America.
(b) Except as otherwise provided in this Section, the Series 1996C
Notes in the form of one global note (or, with respect to the Class 1996A-5
Notes, one global note in the original proposal amount of $200,000,000 and
one global note for the remainder of the original principal amount of such
Class) for each Stated Maturity date of each such series or subclass shall
be registered in the name of the Securities Depository or its nominee and
ownership thereof shall be maintained in book-entry form by the Securities
Depository for the account of the Agent Members. Initially, each
Series 1996C Note and each Series 1996C Note shall be registered in the
name of CEDE & Co., as the nominee of The Depository Trust Company. Except
as provided in subsection (d) of this Section, the Series 1996C Notes may
be transferred, in whole but not in part, only to the Securities Depository
or a nominee of the Securities Depository or to a successor Securities
Depository selected or approved by the Issuer or to a nominee of such
successor Securities Depository. Each global note shall bear a legend
substantially to the following effect: "Except as otherwise provided in the
Indenture, this global note may be transferred, in whole but not in part,
only to another nominee of the Securities Depository (as defined in the
Indenture) or to a successor Securities Depository or to a nominee of a
successor Securities Depository."
(c) Except as otherwise provided herein, the Issuer and the Trustee
shall have no responsibility or obligation with respect to (i) the accuracy
of the records of the Securities Depository or any Agent Member with
respect to any beneficial ownership interest in the Series 1996C Notes,
(ii) the delivery to any Agent Member, beneficial owner of the Series 1996C
Notes or other Person, other than the Securities Depository, of any notice
with respect to the Series 1996C Notes or (iii) the payment to any Agent
Member, beneficial owner of the Series 1996C Notes or other Person, other
than the Securities Depository, of any amount with respect to the principal
of or interest on the Series 1996C Notes. So long as the certificates for
the Series 1996C Notes issued under this Supplemental Indenture are not
issued pursuant to subsection (d) of this Section the Issuer and the
Trustee may treat the Securities Depository as, and deem the Securities
Depository to be, the absolute owner of the Series 1996C Notes for all
purposes whatsoever, including, without limitation, (A) the payment of
principal of and interest on such Series 1996C Notes, (B) giving notices of
redemption and other matters with respect to such Series 1996C Notes and
(C) registering transfers with respect to such Series 1996C Notes. In
connection with any notice or other communication to be provided to the
Registered Owners pursuant to this Supplemental Indenture by the Issuer or
the Trustee with respect to any consent or other action to be taken by the
Registered Owners, the Issuer or the Trustee, as the case may be, shall
establish a record date for such consent or other action and, if the
Securities Depository shall hold all of the Series 1996C Notes, give the
Securities Depository notice of such record date not less
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than fifteen (15) calendar days in advance of such record date to the
extent possible. Such notice to the Securities Depository shall be
given only when the Securities Depository is the sole Registered Owner.
(d) If at any time the Securities Depository notifies the Issuer and
the Trustee that it is unwilling or unable to continue as Securities
Depository with respect to any or all of the Series 1996C Notes or if at
any time the Securities Depository shall no longer be registered or in good
standing under the Securities Exchange Act or other applicable statute or
regulation and a successor Securities Depository is not appointed by the
Issuer within 90 days after the Issuer receives notice or becomes aware of
such condition, as the case may be, subsections (b) and (c) of this Section
shall no longer be applicable and the Issuer shall execute and the Trustee
shall authenticate and deliver certificates representing the Series 1996C
Notes as provided below. In addition, the Issuer may determine at any time
that the Series 1996C Notes shall no longer be represented by global
certificates and that the provisions of subsections (b) and (c) of this
Section shall no longer apply to the Series 1996C Notes. In such event,
the Issuer shall execute and the Trustee shall authenticate and deliver
certificates representing the Series 1996C Notes as provided below.
Certificates for the Series 1996C Notes issued in exchange for a global
certificate pursuant to this subsection shall be registered in such names
and authorized denominations as the Securities Depository, pursuant to
instructions from the Agent Members or otherwise, shall instruct in writing
the Issuer and the Trustee, and upon which written instructions the Trustee
may rely without investigation. The Trustee shall promptly deliver such
certificates representing the Series 1996C Notes to the Persons in whose
names such Notes are so registered.
Section 2.02. REDEMPTION OF THE SERIES 1996C NOTES.
(a) MANDATORY REDEMPTION.
(i) Subject to the provisions of Section 2.02(d) hereof, the
Class 1996A-5 Notes are subject to mandatory redemption by the Issuer,
in whole or in part, on any Interest Payment Date on or after April 1,
1999, at a redemption price equal to the principal amount thereof plus
interest accrued, if any, to the date of redemption thereof from
moneys in the Senior Note Redemption Account of the Note Redemption
Fund available therefor pursuant to Sections 5.06 and 5.03(j) of the
Indenture.
(ii) Subject to the provisions of Section 2.02(d) hereof, the
Class 1996A-6 Notes are subject to mandatory redemption by the Issuer,
in whole or in part, on any Interest Payment Date, at a redemption
price equal to the principal amount thereof plus interest accrued, if
any, to the date of redemption thereof (i) from moneys in the Senior
Note Redemption Account of the Note Redemption Fund available therefor
pursuant to Sections 5.06 and 5.03(j) and (ii) on the next Interest
Payment Date subsequent to February 15, 1997, to the
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extent that a balance exists in the Series 1996C Loan Account of the
Student Loan Fund, such anticipated excesses to be determined by
estimate as of 30 days prior to said Interest Payment Dates; provided,
however, that if 30 days prior to said Interest Payment Dates, the
Issuer files with the Trustee a certificate that such balances may be
invested at a rate of return until a subsequent Interest Payment Date
which, together with other available Revenues and cash balances, will
produce sufficient cash flows to permit the timely retirement of the
Series 1996C Notes, which cash flows shall not assume the refunding of
the Series 1996C Notes, and such conclusions are approved by each
Rating Agency, then such call for redemption need not be made; and
provided that the Trustee shall have received an opinion of Note
Counsel to the effect that the failure to redeem Notes as provided in
this Section 2.02(a)(ii)(A) would not cause the Notes to fail to be
characterized as indebtedness of the Issuer for federal income tax
purposes.
(iii) Subject to the provisions of Section 2.02(d) hereof,
the Class 1996B-3 Notes shall be subject to mandatory redemption by
the Issuer, in whole or in part, on any Interest Payment Date on or
after May 1, 1999, at a redemption price equal to the principal amount
thereof plus accrued interest from moneys deposited in the Subordinate
Note Redemption Account of the Note Redemption Fund available therefor
pursuant to Sections 5.06 and 5.03(j) of the Indenture.
(b) OPTIONAL REDEMPTIONS AND OPTIONAL PURCHASE.
(i) OPTIONAL REDEMPTION OF CLASS 1996A-5 NOTES. Subject to the
provisions of Section 2.02(d) hereof, the Class 1996A-5 Notes are
subject to redemption at the option of the Issuer, from funds received
by the Trustee constituting interest on Financed Eligible Loans
remaining in the Revenue Fund after all other prior required payments
have been made from the Revenue Fund, in whole or in part, on any
Interest Payment Date on or after April 1, 1999, at a redemption price
equal to the principal amount thereof being redeemed, plus interest
accrued, if any, to the date of redemption.
(ii) OPTIONAL REDEMPTION OF CLASS 1996A-6 NOTES. Subject to the
provisions of Section 2.02(d) hereof, the Class 1996A-6 Notes are
subject to redemption at the option of the Issuer, from funds received
by the Trustee constituting interest on Financed Eligible Loans
remaining in the Revenue Fund after all other prior required payments
have been made from the Revenue Fund, in whole or in part, on any
Interest Payment Date, at a redemption price equal to the principal
amount thereof being redeemed, plus interest accrued, if any, to the
date of redemption.
(iii) OPTIONAL REDEMPTION OF CLASS 1996B-3 NOTES. Subject to
the provisions of Section 2.02(d) hereof, the Class 1996B-3 Notes are
subject to
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redemption at the option of the Issuer, from funds received
by the Trustee constituting interest on Financed Eligible Loans
remaining in the Revenue Fund after all other prior required payments
have been made from the Revenue Fund, in whole or in part, on any
Interest Payment Date on or after May 1, 1999, at a redemption price
equal to the principal amount of the Class 1996B-3 Notes being
redeemed, plus interest accrued, if any, to the date of redemption.
(iv) EXTRAORDINARY OPTIONAL REDEMPTION OF SERIES 1996C NOTES.
Subject to the provisions of Section 2.02(d) hereof, the Series 1996C
Notes shall also be subject to extraordinary optional redemption, at
the option of the Issuer, from any unallocated and available moneys in
the Trust Estate, at a redemption price equal to the principal amount
of the Series 1996C Notes being redeemed, plus accrued interest to the
date of redemption, without premium in whole or in part on any
Interest Payment Date, if the Issuer reasonably determines that it is
unable to acquire Financed Eligible Loans, that the rate of return on
Financed Eligible Loans has materially decreased, or that the costs of
administering the Trust Estate have placed unreasonable burdens upon
the ability of the Issuer to perform its obligations under the
Indenture.
(v) OPTIONAL PURCHASE OF SERIES 1996C NOTES. Subject to the
provisions of Section 2.02(d) hereof, the Issuer may purchase or cause
to be purchased all of the Series 1996C Notes on any Interest Payment
Date on which the aggregate current principal balance of the
Series 1996C Notes shall be less than or equal to 10% of the initial
aggregate principal balance of the Series 1996C Notes on their Date of
Issuance, at a purchase price equal to the aggregate current principal
balance of such Series 1996C Notes, plus accrued interest on the
Series 1996C Notes through the day preceding the Interest Payment Date
on which the purchase occurs. The amount deposited pursuant to this
subsection (iv) shall be paid to the Registered Owners on the related
Interest Payment Date following the date of such deposit. All
Series 1996C Notes which are purchased pursuant to this subsection
(iv) shall be delivered by the Issuer upon such purchase to, and be
canceled by, the Trustee and be disposed of in a manner satisfactory
to the Trustee and the Issuer.
(c) NOTICE OF REDEMPTION AND PURCHASE. The Trustee shall cause
notice of any redemption or purchase to be given by mailing a copy of the
notice to the Registered Owner of any Series 1996C Notes, and the Auction
Agent in the case of the Auction Rate Notes, designated for redemption or
purchase in whole or in part, at their address as the same shall last
appear upon the registration books, in each case not less than 15 days
prior to the redemption or purchase date; provided, however, that failure
to give such notice, or any defect therein, shall not affect the validity
of any proceedings for the redemption or purchase date of such Series 1996C
Notes for which no such failure or defect occurs.
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(d) PARTIAL REDEMPTION.
(i) If less than all of the Series 1996C Notes are to be
redeemed pursuant to Section 2.02(a) or 2.02(b) hereof, the class or
subclass of Series 1996C Notes to be redeemed shall be redeemed as
directed by an Issuer Order. If less than all of the Series 1996C
Notes of any Stated Maturity of any class or subclass of the
Series 1996C Notes are to be redeemed, such Series 1996C Notes of the
same Stated Maturity to be redeemed shall be selected by lot in such
manner as the Trustee shall determine. Notwithstanding the foregoing,
the Series 1996C Notes may only be redeemed pursuant to the provisions
of Section 5.06 of the Indenture.
(ii) In case a Series 1996C Note is of a denomination larger than
$100,000, a portion of such Note ($100,000, or integral multiples
thereof) may be redeemed. Upon surrender of any Series 1996C Note for
redemption in part only, the Issuer shall execute and the Trustee
shall authenticate and deliver to the Registered Owner thereof, the
cost of which shall be paid by the Issuer, a new Series 1996C Note or
Series 1996C Notes of the same series, maturity and of authorized
denominations, in an aggregate principal amount equal to the
unredeemed portion of the Series 1996C Note surrendered.
Section 2.03. DELIVERY OF SERIES 1996C NOTES. Upon the execution and
delivery of this Supplemental Indenture, the Issuer shall execute and deliver to
the Trustee and the Trustee shall authenticate the Series 1996C Notes and
deliver them to The Depository Trust Company and as hereinafter in this Section
provided.
Prior to the delivery by the Trustee of any of the Series 1996C Notes,
there shall have been filed with or delivered to the Trustee the following:
(a) A resolution duly adopted by the Issuer, certified by the
Secretary or other Authorized Officer thereof, authorizing the execution
and delivery of this Supplemental Indenture and the issuance of the
Series 1996C Notes.
(b) Duly executed copies of this Supplemental Indenture and a
certified copy of the Indenture.
(c) The written order of the Issuer as to the delivery of the
Series 1996C Notes, signed by an Authorized Officer.
(d) A Cash Flow Certificate pursuant to Section 2.12(b)(ii) of the
Indenture.
(e) Rating letters from each Rating Agency pursuant to Section
2.12(b)(iii) of the Indenture.
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(f) An opinion of Note Counsel pursuant to Sections 2.12(b)(iv) and
(vi) of the Indenture.
Section 2.04. TRUSTEE'S AUTHENTICATION CERTIFICATE. The Trustee's
authentication certificate upon the Series 1996C Notes shall be substantially in
the forms provided in Exhibits A, B and C hereof. No Series 1996C Note shall be
secured hereby or entitled to the benefit hereof, or shall be valid or
obligatory for any purpose, unless a certificate of authentication,
substantially in such form, has been duly executed by the Trustee; and such
certificate of the Trustee upon any Series 1996C Note shall be conclusive
evidence and the only competent evidence that such Bond has been authenticated
and delivered hereunder. The Trustee's certificate of authentication shall be
deemed to have been duly executed by it if manually signed by an authorized
officer of the Trustee, but it shall not be necessary that the same person sign
the certificate of authentication on all of the Series 1996C Notes issued
hereunder.
Section 2.05. DEPOSIT OF SERIES 1996C NOTE PROCEEDS. Upon the issuance
and delivery of the Series 1996C Notes, the Trustee shall deposit the net
proceeds thereof (i.e., net of Underwriter's discount of $1,136,925.00):
(a) an amount equal to $1,459,564 shall be deposited in the Revenue
Fund;
(b) an amount equal to $1,050,000 shall be deposited to the Operating
Fund;
(c) an amount equal to $822,500 shall be deposited to the Cost of
Issuance Fund;
(d) an amount equal to $6,322,000 shall be deposited to the Reserve
Fund; and
(e) the balance of the proceeds of the Series 1996C Notes
($305,309,011) shall be deposited to the Series 1996C Loan Account of the
Student Loan Fund.
Section 2.06. FORMS OF SERIES 1996C NOTES. The Class 1996A-5 Notes and
Class 1996A-6 Notes bearing interest at a Treasury Rate shall be in
substantially the form set forth in Exhibit A hereto, with such variations,
omissions and insertions as may be necessary. The Class 1996A-6 Notes bearing
interest at an Auction Rate shall be in substantially the form set forth in
Exhibit B hereto, each with such variations, omissions and insertions as may be
necessary. The Class 1996B-3 Notes bearing interest at a LIBOR Rate shall be in
substantially the form set forth in Exhibit C hereto, each with such variations,
omissions and insertions as may be necessary.
10
ARTICLE III
AMENDMENT OF INDENTURE
Section 3.01. AMENDMENT OF INDENTURE. The Indenture is hereby amended and
supplemented hereby, as provided in Sections 2.12 and 8.01(i) and 8.01(m)
thereof, as follows:
(a) Section 5.01(a)(i) of the Indenture shall be supplemented to
create the following Accounts:
(i) a Series 1996C Loan Account;
(ii) a Series 1996C Note Account; and
(iii) a Series 1996C Recycling Account.
(b) Section 5.02 of the Indenture shall be supplemented to include
the following:
Notwithstanding anything herein to the contrary, on February
15, 1997, the Trustee shall transfer to the Note Redemption
Fund, moneys in the Series 1996C Loan Account of the Student
Loan Fund specified in Section 2.02(a)(ii) of the
Series 1996C Supplemental Indenture of Trust.
On April 1,1999, all moneys and investments remaining in the
Series 1996C Recycling Account of the Student Loan Fund
shall be transferred to the Note Redemption Fund.
(c) Section 5.03(g) of the Indenture shall be supplemented to include
the following:
(iii) to the Series 1996C Recycling Account of the
Student Loan Fund prior to April 1, 1999 and (iv) to the
Note Redemption Fund on and after April 1, 1999.
(d) Section 5.03(k) of the Indenture shall be supplemented to include
the following:
or, prior to April 1, 1999, to the Series 1996C Recycling
Account of the Student Loan Fund.
(e) Section 5.08 of the Indenture shall be supplemental to include
the following:
11
The Trustee shall deposit in the Cost of Issuance Fund on
the Date of Issuance the amounts set forth in Section
2.05(c) of the Series 1996C Supplemental Indenture of Trust.
Moneys in the Cost of Issuance Fund shall be used by the
Trustee, upon the written direction of an Authorized Officer
of the Issuer, solely for the purpose of paying costs of
issuance of the Series 1996C Notes, including without
limitation any compensation of the Underwriter not paid from
the proceeds of the Notes. If any moneys remain in the Cost
of Issuance Fund on February 1, 1997, such amounts shall be
paid by the Trustee without further direction to the Issuer.
ARTICLE IV
GENERAL PROVISIONS
Section 4.01. DATE OF EXECUTION. Although this Supplemental Indenture for
convenience and for the purpose of reference is dated as of November 1, 1996,
the actual dates of execution by the Issuer and by the Trustee are as indicated
by their respective acknowledgments hereto annexed.
Section 4.02. LAWS GOVERNING. It is the intent of the parties hereto that
this Supplemental Indenture shall in all respects be governed by the laws of the
State.
Section 4.03. SEVERABILITY. Of any covenant, agreement, waiver, or part
thereof in this Supplemental Indenture contained be forbidden by any pertinent
law or under any pertinent law be effective to render this Supplemental
Indenture invalid or unenforceable or to impair the lien hereof, then each such
covenant, agreement, waiver, or part thereof shall itself be and is hereby
declared to be wholly ineffective, and this Supplemental Indenture shall be
construed as if the same were not included herein.
Section 4.04. EXHIBITS. The terms of the Exhibits attached to this
Supplemental Indenture are incorporated herein in all particulars.
ARTICLE V
APPLICABILITY OF INDENTURE
The provisions of the Indenture are hereby ratified, approved and
confirmed, except as otherwise expressly modified by this Supplemental
Indenture. The representations, warranties and covenants contained in the
Indenture (except as expressly modified herein) are hereby reaffirmed with the
same force and effect as if fully set forth herein and made again as of the date
hereof.
12
IN WITNESS WHEREOF, the Issuer has caused this Supplemental Indenture to be
executed in its corporate name and behalf by the President, and the Trustee, to
evidence its acceptance of the trusts hereby created, has caused this
Supplemental Indenture to be executed in its corporate name and behalf, has
caused its corporate seal to be hereunto affixed by its duly authorized officer,
all in multiple counterparts, each of which shall be deemed an original, and the
Issuer and the Trustee have caused this Supplemental Indenture to be dated as of
the date herein above first shown, although actually executed on the dates shown
in the acknowledgments hereafter appearing.
[SEAL] UNION FINANCIAL SERVICES-1, INC.
By /s/ Xxxxxxx X. Xxxxxxxxxxx
---------------------------------------------
President
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as
Trustee
By /s/ Xxxxxxx Xxxxxxx
---------------------------------------------
Assistant Vice President
13
APPENDIX A
CERTAIN TERMS AND PROVISIONS OF
THE CLASS 1996A-5 SENIOR TREASURY RATE NOTES
ARTICLE I
Section 1.01. DEFINITIONS. In addition to the terms defined elsewhere in
the Indenture and this Supplemental Indenture, the following terms shall have
the following meanings with respect to the Class 1996A-5 Notes, unless the
context otherwise requires:
"AUTHORIZED DENOMINATIONS" shall mean $100,000 and any multiple thereof.
"BOND-EQUIVALENT YIELD-91-DAY T-XXXX" shall mean, in respect of any
security with a maturity of six months or less the rate for which is quoted in
THE WALL STREET JOURNAL 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.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday, holiday or
day on which banks in New York, New York, or the New York Stock Exchange, the
Trustee or the Calculation Agent, are authorized or permitted by law or
executive order to close.
"CALCULATION AGENT" shall mean any person appointed as such pursuant to
Section 2.07 hereof.
"DEPOSITORY" shall mean The Depository Trust Company or any successor
securities depository selected or approved by the Issuer.
"HOLDER" as used in this Appendix A shall mean the beneficial owner of any
Class 1996A-5 Note.
"INITIAL INTEREST PAYMENT DATE" shall mean December 1, 1996 for the Class
1996A-5 Notes.
"INITIAL INTEREST PERIOD" shall mean, for the Class 1996A-5 Notes, the
period from and including the Date of Issuance of the Class 1996A-5 Notes and
ending on November 30, 1996.
A-1
"INTEREST AMOUNT" shall mean the amount of interest distributable in
respect of each $100,000 in principal amount (taken, without rounding, to .0001
of one cent) of Class 1996A-5 Notes for any Interest Period or part thereof, as
calculated in accordance with Section 2.01 hereof.
"INTEREST PAYMENT DATE" means December 1, 1996 and the first day of each
month thereafter, and the maturity date for the Class 1996A-5 Notes, or if any
such date is not a Business Day, the next succeeding Business Day (but only for
interest accrued through the last day of the calendar month next preceding such
Interest Payment Date).
"INTEREST PERIOD" means the Initial Interest Period for the Class 1996A-5
Notes and the period beginning on the first day of each month and ending on the
last day of each month.
"MAXIMUM INTEREST RATE" shall mean the lesser of (a) 16% per annum or (b)
the maximum rate of interest permitted under State law for student loan notes of
the Issuer.
"PARTICIPANT" shall mean a member of or participant in, the Depository.
"PAYMENT DEFAULT" shall mean failure to make payment of interest on,
premium, if any, and principal of the Class 1996A-5 Notes when due, by the
Issuer.
"PERSON" means and includes, unless otherwise specified, an individual,
corporation, company, trust, estate partnership or association.
"RATE ADJUSTMENT DATE" shall mean the Initial Rate Adjustment Date for the
Class 1996A-5 Notes (November 5, 1996) and thereafter, the day immediately
following each Rate Determination Date.
"RATE DETERMINATION DATE" shall mean the Initial Rate Determination Date
for the Class 1996A-5 Notes (November 4, 1996) and thereafter, the first day of
each calendar week on which the United States Treasury conducts an auction or
other sale of United States 91-day Treasury Bills, subject to adjustment as
described in Section 2.01 hereof, if such auction or sale cases to occur.
"RECORD DATE" shall mean the Business Day immediately preceding the
Interest Payment Date.
"REDEMPTION DATE," when used with respect to any Class 1996A-5 Notes to be
redeemed, shall mean the date fixed for such redemption.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
A-2
"T-XXXX RATE" shall mean the variable rate of interest per annum,
applicable during each Interest Period after the Initial Period, equal to Bond
Equivalent Yield - 91-Day T-Xxxx, as calculated by the Calculation Agent, of
auctions of 91-day United States Treasury Bills held on the most recent Rate
Determination Date plus .56% (subject to the Maximum Interest Rate).
"T-XXXX RATE PERIOD," with respect to the Class 1996A-5 Notes, shall mean
the Interest Period, commencing on the Date of Issuance or a Rate Adjustment
Date and ending on, and including, the subsequent Rate Determination Date,
applicable to the Class 1996A-5 Notes, with respect to which, after the Initial
Period, the Interest Rate is determined pursuant to Section 2.01 hereof.
ARTICLE II
TERMS AND ISSUANCE
Section 2.01. INTEREST ON THE CLASS 1996A-5 NOTES.
(a) Interest on the Class 1996A-5 Notes shall accrue for each
Interest Period and shall be payable in arrears, on each Interest Payment
Date.
(b) The rate of interest on the Class 1996A-5 Notes for the first
Interest Period shall be 5.735%. The rate of interest on the Class 1996A-5
Notes for each subsequent Interest Period shall be determined by the
Calculation Agent on each Rate Determination Date and shall be equal to the
T-Xxxx Rate subject to the Maximum Interest Rate. Such T-Xxxx Rate shall
be calculated by the Calculation Agent and announced to the Issuer and the
Trustee in writing no later than the Business Day immediately following
each Rate Determination Date. The T-Xxxx Rate shall take effect on the
Rate Adjustment Date for such T-Xxxx Rate Period and shall be the Interest
Rate borne by the Class 1996A-5 Notes, respectively, for the T-Xxxx Rate
Period for which such determination was made.
(c) If the Calculation Agent shall fail or refuse to determine the
T-Xxxx Rate on any Rate Determination Date, the T-Xxxx Rate shall be
determined by a securities dealer appointed by the Issuer and capable, in
the reasonable judgment of the Issuer, of making such a determination in
accordance with the provisions of this Supplemental Indenture and written
notice of such determination shall be given by such securities dealer to
the Trustee.
If the United States Treasury ceases to auction or sell 91-day United
States Treasury Bills for a period of 21 consecutive days, such twenty-
first day shall be a Rate Determination Date, and the Interest Rate on the
Class 1996A-5 Notes shall be calculated by the Calculation Agent on such
Rate Determination Date to be equal to the sum of the Bond Equivalent Yield
- 91-Day T-Xxxx on the most recently auctioned United States
A-3
Treasury Bills having a maturity nearest to 91 days, plus .56% (subject to
the Maximum Interest Rate).
(d) Notwithstanding any other provision of the Class 1996A-5 Notes or
this Supplemental Indenture, interest payable on each class of the
Class 1996A-5 Notes for a T-Xxxx Rate Period shall never exceed for such
T-Xxxx Rate Period the amount of interest payable at the Maximum Interest
Rate for such T-Xxxx Rate Period.
Section 2.02. PAYMENTS. So long as the Class 1996A-5 Notes are registered
in the name of the Depository or the nominee thereof, payment of interest (other
than at maturity) and premium, if any, on, and of principal at redemption of,
the Class 1996A-5 Notes shall be made to the Depository by wire transfer
provided proper wire instructions are received. Each Holder of the Class
1996A-5 Notes, by such Holder's purchase of the Class 1996A-5 Notes, appoints
the Trustee as its agent in connection with the payment by such Holder of its
share, if any, of the amounts payable to the Calculation Agent pursuant to
Section 2.07(a) hereof.
Section 2.03. NOTICE OF PAYMENT DEFAULTS AND CURES. By 12:30 p.m. on the
Business Day immediately succeeding each Interest Payment Date, the Trustee will
determine if a Payment Default has occurred. If a Payment Default has occurred,
the Trustee shall, if the Calculation Agent is other than the Trustee, notify
the Calculation Agent by 1:00 p.m. of such Payment Default. If a Payment
Default has been cured, the Trustee shall, if the Calculation Agent is other
than the Trustee, so notify the Calculation Agent by 5:00 p.m. on the day such
Payment Default is cured.
Section 2.04. TERMINATION OF BOOK ENTRY SYSTEM. If the ownership of the
Class 1996A-5 Notes is no longer maintained in book-entry form, such Class
1996A-5 Notes may be exchanged for other Class 1996A-5 Notes, in Authorized
Denominations, and of a like aggregate principal amount, upon surrender of the
Class 1996A-5 Notes to be exchanged at the principal office of the Trustee. The
Class 1996A-5 Notes, upon surrender thereof at the principal office of the
Trustee, duly endorsed for transfer or accompanied by an assignment duly
executed by the Holder of its attorney duly authorized in writing, will be
transferred to a transferee or transferees, in the form of one or more new fully
registered Class 1996A-5 Notes, in Authorized Denomination, and of a like
aggregate principal amount having the same interest rate and bearing numbers not
previously assigned.
In all cases in which the privilege of exchanging or transferring the Class
1996A-5 Notes is exercised, the Issuer will cause to be executed and delivered
the Class 1996A-5 Notes in accordance with the provisions of the Resolution.
For every such exchange or transfer of the Class 1996A-5 Notes, the Trustee will
require payment by the Holder of any tax or other governmental charge required
to be paid with respect to such exchange or transfer. All expenses, other than
any tax or other government charge, incurred by the Trustee or the Issuer with
respect to each such transfer or exchange will be paid by the Issuer.
A-4
The Trustee will not be required to transfer any Class 1996A-5 Note during
the period of five Business Days next preceding the mailing of notice of
redemption as described herein. After giving of such notice of redemption, the
Trustee will not be required to transfer or exchange any Class 1996A-5 Note,
which Class 1996A-5 Note or portion thereof has been called for redemption.
Section 2.05. COMPUTATION OF INTEREST. The amount of interest
distributable to Holders of the Class 1996A-5 Notes in respect of each $100,000
in principal amount thereof for any Interest Period or part thereof shall be
calculated by applying the T-Xxxx Rate for such Interest Period or part thereof
to the principal amount of $100,000 multiplying such product by the actual
number of days in the Interest Period or part thereof concerned divided by 365
or 366, as applicable, and truncating the resultant figure to the nearest one
cent. Interest on the Class 1996A-5 Notes shall be computed by the Trustee on
the basis of a year consisting of 365 or 366 days, as applicable. In the event
an Interest Payment Date occurs with respect to any Interest Period on a date
other than the first day of the next Interest Period, the Trustee, after
confirming the calculation required above, shall calculate the portion of the
Interest Amount payable on such Interest Payment Date and the portion payable on
the next succeeding Interest Payment Date.
Section 2.06. NOTIFICATION OF RATES, AMOUNTS AND PAYMENT DATES.
(a) The Trustee shall determine the aggregate amount of interest
distributable on the next succeeding Interest Payment Date to the Holders
of the Class 1996A-5 Notes. So long as the ownership of the Class 1996A-5
Notes is maintained in book-entry form by the Depository, the Trustee shall
advise the Depository of each Record Date for the Class 1996A-5 Notes at
least two Business Days prior thereto.
(b) Promptly after the Date of Issuance and each Interest Payment
Date, and in any event at least 10 days prior to each Interest Payment Date
following the Initial Interest Payment Date, the Trustee shall:
(i) so long as no Payment Default has occurred and is continuing
and the ownership of the Class 1996A-5 Notes is maintained in
book-entry form by the Depository, confirm the Calculation Agent's
determination of (1) the date of such next Interest Payment Date and
(2) the amount payable to the Calculation Agent and notify the
Calculation Agent of any discrepancy therein; and
(ii) advise the Depository, so long as the ownership of the
Class 1996A-5 Notes is maintained in book-entry form by the
Depository, of the T-Xxxx Rate and the Interest Amount in respect of
the next succeeding Interest Period.
A-5
Section 2.07. CALCULATION AGENT.
(a) Xxxxx Xxxxxx Inc. shall serve as the initial Calculation Agent
for the Class 1996A-5 Notes. The Calculation Agent shall be (i) a bank or
trust company duly organized under the laws of the United States of America
or any state or territory thereof, and having a combined capital stock,
surplus and undivided profits of at least $15,000,000 or (ii) a member of
the National Association of Securities Dealers, Inc., having a
capitalization of at least $15,000,000 and, in either case, authorized by
law to perform all the duties imposed upon it hereunder. The Calculation
Agent may resign and be discharged of the duties and obligations created
hereunder by giving at least 90 days' written notice to the Issuer and the
Trustee (30 days' written notice if the Calculation Agent has not been paid
its fee for more than 30 days). The Calculation Agent may be removed at any
time by the Trustee if the Calculation Agent is an entity other than the
Trustee, acting at the direction of the Issuer or the Holders of 51% of the
aggregate principal amount of the Class 1996A-5 Notes, by an instrument
signed by the Trustee and filed with the Calculation Agent and the Issuer
upon at least 90 days' notice. If the Calculation Agent and the Trustee
are the same entity, the Calculation Agent may be removed as described
above, with the Issuer acting in lieu of the Trustee.
(b) In the event that the Calculation Agent shall resign or be
removed or dissolved, or if the property or affairs of the Calculation
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 Issuer shall use its best efforts to appoint a successor as
Calculation Agent, and the Trustee shall thereupon enter into an agreement
with such successor to perform the duties of the Calculation Agent as
described herein.
(c) The Calculation Agent (if other than the Trustee) shall be acting
as agent for the Trustee, as trustee, registrar and paying agent for the
Class 1996A-5 Notes, in connection with its duties hereunder. In the
absence of bad faith or negligence on its part, the Calculation 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 hereunder and shall
not be liable for any error of judgment made in good faith unless the
Calculation Agent shall have been negligent in ascertaining (or failing to
ascertain) the pertinent facts necessary to make such judgment.
Section 2.08. CREDIT RATINGS. The Issuer shall take all reasonable action
necessary to enable at least one nationally recognized statistical rating
organization (as that term is used in the rules and regulations of the SEC under
the Securities Exchange Act) to provide credit ratings for the Class 1996A-5
Notes.
Section 2.09. NOTICE. The Issuer shall use its best efforts to provide
the Trustee and, so long as no Payment Default has occurred and is continuing
and the ownership of the Class 1996A-5 Notes is maintained in book-entry form by
the Depository, the Calculation Agent with notice of any change in the maximum
rate permitted by law on the Class 1996A-5 Notes.
A-6
Section 2.10. NOTICE OF PAYMENT DEFAULT.
(a) If the Issuer determines that a Payment Default has occurred the
Issuer shall promptly notify the Trustee thereof.
(b) So long as the ownership of the Class 1996A-5 Notes is maintained
in book-entry form by the Depository, upon the occurrence of a Payment
Default the Trustee shall immediately send a notice thereof to the
Calculation Agent by telecopy or similar means.
(c) So long as the ownership of the Class 1996A-5 Notes is maintained
in book-entry form by the Depository, the Trustee shall immediately send
notice to the Calculation Agent by telecopy or similar means if a Payment
Default is cured.
X-0
XXXXXXXX X
CERTAIN TERMS AND PROVISIONS OF THE
CLASS 1996A-6 SENIOR AUCTION RATE NOTES
ARTICLE I
Section 1.01. DEFINITIONS. Except as provided below in this Section,
all terms which are defined in Article I of the Indenture and Article I of
this Supplemental Indenture shall have the same meanings, respectively, in
this Appendix A as such terms are given in the Indenture and Article I of
this Supplemental Indenture. In addition, the following terms shall have the
following respective meanings:
"AFTER-TAX EQUIVALENT" means the "AA" Composite Commercial Paper Rate.
"ALL HOLD RATE" means the Applicable LIBOR Rate less .20%; provided that
in no event shall the applicable All Hold Rate be greater than the applicable
Maximum Auction Rate.
"APPLICABLE LIBOR RATE" means, (a) for Auction Periods of 35 days or
less, One-Month LIBOR, (b) for Auction Periods of more than 35 days but less
than 91 days, Three-Month LIBOR, (c) for Auction Periods of more than 90 days
but less than 181 days, Six-Month LIBOR, and (d) for Auction Periods of more
than 180 days, One-Year LIBOR.
"AUCTION" means the implementation of the Auction Procedures on an
Auction Date.
"AUCTION AGENT" means the Initial Auction Agent under the Initial Auction
Agent Agreement unless and until a Substitute Auction Agent Agreement becomes
effective, after which "Auction Agent" shall mean the Substitute Auction
Agent.
"AUCTION AGENT AGREEMENT" means the Initial Auction Agent Agreement
unless and until a Substitute Auction Agent Agreement is entered into, after
which "Auction Agent Agreement" shall mean such Substitute Auction Agent
Agreement.
"AUCTION AGENT FEE" has the meaning set forth in the Auction Agent
Agreement.
"AUCTION DATE" means, initially, November 12, 1996 with respect to the
Class 1996A-6 Notes, and thereafter, the Business Day immediately preceding
the first day of each Auction Period for each respective Class, other than:
(a) each Auction Period commencing after the ownership of the
applicable Auction Rate Notes is no longer maintained in Book-entry Form by
the Securities Depository;
B-1
(b) each Auction Period commencing after and during the continuance
of a Payment Default; or
(c) each Auction Period commencing less than two Business Days after
the cure or waiver of a Payment Default.
Notwithstanding the foregoing, the Auction Date for one or more Auction Periods
may be changed pursuant to Section 2.02(h) of this Appendix B.
"AUCTION RATE NOTES" means the Class 1996A-6 Notes.
"AUCTION NOTE INTEREST RATE" means each variable rate of interest per
annum borne by an Auction Rate Note for each Auction Period and determined in
accordance with the provisions of Sections 2.01 and 2.02 hereof; provided,
however, that in the event of a Payment Default, the Auction Note Interest
Rate shall equal the applicable Non-Payment Rate; provided, further, however
that such Auction Note Interest Rate shall in no event exceed the applicable
Maximum Auction Rate.
"AUCTION PERIOD" means the Interest Period applicable to the Auction Rate
Notes during which time the Interest Rate is determined pursuant to Section
2.02(a) hereof, which Auction Period (after the Initial Period for such
Class) initially shall consist generally of seven days for the Class 1996A-6
Notes, as the same may be adjusted pursuant to Section 2.02(g) hereof.
"AUCTION PERIOD ADJUSTMENT" means an adjustment to the Auction Period as
provided in Section 2.02(g) hereof.
"AUCTION PROCEDURES" means the procedures set forth in Section 2.02(a)
hereof by which the Auction Rate is determined.
"AUCTION RATE" means the rate of interest per annum that results from
implementation of the Auction Procedures and is determined as described in
Section 2.02(a)(iii)(B) hereof.
"AUTHORIZED DENOMINATIONS" means $100,000 and any integral multiple
thereof.
"AVAILABLE AUCTION RATE NOTES" has the meaning set forth in Section
2.02(a)(iii)(A)(1) hereof.
"BID" has the meaning set forth in Section 2.02(a)(i)(A) hereof.
"BID AUCTION RATE" has the meaning set forth in Section 2.02(a)(iii)(A)
hereof.
"BIDDER" has the meaning set forth in Section 2.02(a)(i)(A) hereof.
B-2
"BOND EQUIVALENT YIELD" means, in respect of any security the rate for
which is quoted in THE WALL STREET JOURNAL on a bank discount basis, the
"bond equivalent yield" (expressed as a percentage) for such security which
appears on Telerate's United States Treasury and Money Market Composite Page
0223, rounded up to the nearest one one-hundredth of one percent.
"BOOK-ENTRY FORM" or "BOOK-ENTRY SYSTEM" means a form or system under
which (a) the beneficial right to principal and interest may be transferred
only through a book entry, (b) physical securities in registered form are
issued only to a Securities Depository or its nominee as registered owner,
with the securities "immobilized" to the custody of the Securities
Depository, and (c) the book entry is the record that identifies the owners
of beneficial interests in that principal and interest.
"BROKER-DEALER" means, 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 Issuer pursuant to Section 2.02(f) hereof and by Xxxxx Xxxxxx
Inc., if applicable, 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 November 1, 1996, among the Issuer, Bankers 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.
"BUSINESS DAY" means a day of the year on which (a) banks located in the
city in which the Principal Office of the Trustee is located are not required
or authorized to remain closed, (b) banks located in the city in which the
Principal Office of the Auction Agent, as set forth in and for purposes of
the Auction Agent Agreement, is located are not required or authorized to
remain closed and (c) The New York Stock Exchange is not closed.
"CARRY-OVER AMOUNT" means the excess, if any, of (a) the amount of
interest on an Auction Rate Note that would have accrued with respect to the
related Interest Period at the applicable Auction Rate over (b) the amount of
interest on such Auction Rate Note actually accrued with respect to such
Auction Rate Note with respect to such Interest Period based on the
applicable Maximum Auction Rate (without regard to the last two clauses of
the definition thereof) together with the unreduced portion of any such
excess from prior Interest Periods; provided that any reference to
"principal" or "interest" in this Appendix B and the Auction Rate
B-3
Notes shall not include within the meanings of such words any Carry-over
Amount or any interest accrued on any Carry-over Amount.
"CLOSING DATE" means the Date of Issuance of the Class 1996A-6 Notes
(November 1, 1996).
"COMMERCIAL PAPER DEALER" means Xxxxx Xxxxxx Inc., its successors and
assigns, and any other commercial paper dealer appointed pursuant to Section
2.02(c) of this Appendix B.
"ELIGIBLE CARRY-OVER MAKE-UP AMOUNT" means, with respect to each Interest
Period relating to the Auction Rate Notes as to which, as of the first day of
such Interest Period, there is any unpaid Carry-over Amount, an amount equal
to the lesser of (a) interest computed on the principal balance of the
Auction Rate Notes in respect to such Interest Period at a per annum rate
equal to the excess, if any, of applicable Maximum Auction Rate (without
regard to the last two clauses of the definition thereof) over the Auction
Rate, together with the unreduced portion of any such excess from prior
Interest Periods and (b) the aggregate Carry-over Amount remaining unpaid as
of the first day of such Interest Period together with interest accrued and
unpaid thereon through the end of such Interest Period.
"EXISTING OWNER" means (a) with respect to and for the purpose of dealing
with the Auction Agent in connection with an Auction, a Person who is a
Broker-Dealer listed in the Existing Owner Registry at the close of business
on the Business Day immediately preceding the Auction Date for such Auction
and (b) with respect to and for the purpose of dealing with the Broker-Dealer
in connection with an Auction, a Person who is a beneficial owner of Auction
Rate Notes.
"EXISTING OWNER REGISTRY" means the registry of Persons who are owners of
the Auction Rate Notes, maintained by the Auction Agent as provided in the
Auction Agent Agreement.
"HOLD ORDER" has the meaning set forth in Section 2.02(a)(i)(A) hereof.
"INITIAL AUCTION AGENT" means Bankers Trust Company, a New York banking
corporation, its successors and assigns.
"INITIAL AUCTION AGENT AGREEMENT" means, collectively, the Auction Agent
Agreement dated as of November 1, 1996, by and among the Issuer, the Trustee
and the Initial Auction Agent, including any amendment thereof or supplement
thereto.
"INITIAL PERIOD" means, as to Auction Rate Notes, the period commencing
on the Closing Date and continuing through the day immediately preceding the
Initial Rate Adjustment Date for such Auction Rate Notes.
"INITIAL RATE" means 5.375% for the Class 1996A-6 Notes.
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"INITIAL RATE ADJUSTMENT DATE" means, with respect to the Class 1996A-6
Notes, November 13, 1996.
"INTEREST PAYMENT DATE" means (a) so long as the Auction Rate Notes bear
interest at an Auction Note Interest Rate for an Interest Period of not
greater than 180 days, the Business Day immediately following the expiration
of the Initial Period for such Class, and each related Auction Period
thereafter and (b) if and for so long as the Auction Rate Notes bear interest
at an Auction Note Interest Rate for an Interest Period of greater than 180
days, each January 1 and July 1.
"INTEREST PERIOD" means, with respect to the Auction Rate Notes, the
Initial Period and each period commencing on an Interest Rate Adjustment Date
for such Class and ending on the day before (a) the next Interest Rate
Adjustment Date for such Class or (b) the Stated Maturity of such Class, as
applicable.
"INTEREST RATE ADJUSTMENT DATE" means the date on which an Auction Note
Interest Rate is effective, and means, with respect to the Auction Rate
Notes, the date of commencement of each Auction Period.
"INTEREST RATE DETERMINATION DATE" means, with respect to the Auction
Rate Notes, the Auction Date, or if no Auction Date is applicable to such
Class, the Business Day immediately preceding the date of commencement of an
Auction Period.
"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 the least of (a) either (i) the Applicable
LIBOR Rate plus 1.50% (if the ratings assigned by the Rating Agency to the
Auction Rate Notes are "Aa3" and "AA-," respectively, or better) or (ii) the
Applicable LIBOR Rate plus 2.50% (if any one of the ratings assigned by the
Rating Agency to the Auction Rate Notes is less than "Aa3" or "AA-,"
respectively), (b) the Net Loan Rate, (c) 18% and (d) the highest rate the
Issuer may legally pay, from time to time, as interest on the Auction Rate
Notes. For purposes of the Auction Agent and the Auction Procedures, the
ratings referred to in this definition shall be the last ratings of which the
Auction Agent has been given written notice pursuant to the Auction Agent
Agreement.
"NET LOAN RATE" means, with respect to the Auction Rate Notes, 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.
"NON-PAYMENT RATE" means One-Month LIBOR plus 1.50%.
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"ONE-MONTH LIBOR," "THREE-MONTH LIBOR," "SIX-MONTH LIBOR" or "ONE-YEAR
LIBOR," means the rate of interest per annum equal to the rate per annum at
which United States dollar deposits having a maturity of one month, three
months, six months or one year, respectively, are offered to prime banks in
the London interbank market which appear on the Reuters Screen LIBOR Page as
of approximately 11:00 a.m., London time, on the Interest Rate Determination
Date. If at least two such quotations appear, One-Month LIBOR, Three-Month
LIBOR, Six-Month LIBOR or One-Year LIBOR, respectively, will be the
arithmetic mean (rounded upwards, if necessary, to the nearest one-hundredth
of one percent) of such offered rates. If fewer than two such quotes appear,
One-Month LIBOR, Three-Month LIBOR, Six-Month LIBOR or One-Year LIBOR,
respectively, with respect to such Interest Period will be determined at
approximately 11:00 a.m., London time, on such Interest Rate Determination
Date on the basis of the rate at which deposits in United States dollars
having a maturity of one month, three months, six months or one year,
respectively, are offered to prime banks in the London interbank market by
four major banks in the London interbank market selected by (a) the Auction
Agent or (b) the Trustee, as applicable, and in a principal amount of not
less than U.S. $1,000,000 and that is representative for a single transaction
in such market at such time. The Auction Agent or the Trustee, as
applicable, will request the principal London office of each of such banks to
provide a quotation of its rate. If at least two quotations are provided,
One-Month LIBOR, Three-Month LIBOR, Six-Month LIBOR or One-Year LIBOR,
respectively, will be the arithmetic mean (rounded upwards, if necessary, to
the nearest one-hundredth of one percent) of such offered rates. If fewer
than two quotations are provided, One-Month LIBOR, Three-Month LIBOR,
Six-Month LIBOR or One-Year LIBOR, respectively, with respect to such
Interest Period will be the arithmetic mean (rounded upwards, if necessary,
to the nearest one-hundredth of one percent) of the rates quoted at
approximately 11:00 a.m., New York City time on such Interest Rate
Determination Date by three major banks in New York, New York selected by (i)
the Auction Agent or (ii) the Trustee, as applicable, for loans in United
States dollars to leading European banks having a maturity of one month,
three months, six months or one year, respectively, and in a principal amount
equal to an amount of not less than U.S. $1,000,000 and that is
representative for a single transaction in such market at such time;
provided, however, that if the banks selected as aforesaid are not quoting as
mentioned in this sentence, One-Month LIBOR, Three-Month LIBOR, Six-Month
LIBOR or One-Year LIBOR, respectively, in effect for the applicable Interest
Period will be One-Month LIBOR, Three-Month LIBOR, Six-Month LIBOR or
One-Year LIBOR, respectively, in effect for the immediately preceding
Interest Period.
"ORDER" has the meaning set forth in Section 2.02(a)(i)(A) hereof.
"PAYMENT DEFAULT" means, with respect to the Auction Rate Notes, (a) a
default in the due and punctual payment of any installment of interest on
such Auction Rate Notes, or (b) a default in the due and punctual payment of
any interest on and principal of such Auction Rate Notes at their maturity.
"POTENTIAL OWNER" means any Person (including an Existing Owner that is
(a) a Broker-Dealer when dealing with the Auction Agent and (b) a potential
beneficial owner when dealing
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with a Broker-Dealer) who may be interested in acquiring Auction Rate Notes
(or, in the case of an Existing Owner thereof, an additional principal amount
of Auction Rate Notes).
"PSA" means the Public Securities Association, its successors and assigns.
"QUARTERLY AVERAGE AUCTION RATE" means the simple average of the Auction
Rates for the Auction Dates preceding the current Auction Date by 91 days or
less, including the current Auction Date.
"QUARTERLY AVERAGE T-XXXX RATE" means the simple average of the Bond
Equivalent Yields of 91-day Treasury bills auctioned in the 91 days preceding
(but not including) the current Auction Date.
"REGULAR RECORD DATE" means the Business Day next preceding the
applicable Auction Date.
"REUTERS SCREEN LIBOR PAGE" means the display designated as page "LIBOR"
on the Reuters Monitor Money Rates Service (or such other page as may replace
the LIBOR page for the purposes of displaying London interbank offered rates
of major banks).
"S&P" means Standard & Poor's Ratings Services, a Division of The
XxXxxx-Xxxx Companies, Inc., its successors and assigns.
"SELL ORDER" has the meaning set forth in Section 2.02(a)(i)(A) hereof.
"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 2.02(a)(iii)(A)
hereof.
"SUBMITTED HOLD ORDER" has the meaning set forth in Section
2.02(a)(iii)(A) hereof.
"SUBMITTED ORDER" has the meaning set forth in Section 2.02(a)(iii)(A)
hereof.
"SUBMITTED SELL ORDER" has the meaning set forth in Section
2.02(a)(iii)(A) hereof.
"SUBSTITUTE AUCTION AGENT" means the Person with whom the Issuer and the
Trustee enter into a Substitute Auction Agent Agreement.
"SUBSTITUTE AUCTION AGENT AGREEMENT" means an auction agent agreement
containing terms substantially similar to the terms of the Initial Auction
Agent Agreement, whereby a Person having the qualifications required by
Section 2.02(e) of this Appendix B agrees with the Trustee and the Issuer to
perform the duties of the Auction Agent under this Appendix B.
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"SUFFICIENT BIDS" has the meaning set forth in Section 2.02(a)(iii)(A)
hereof.
"UNITED STATES TREASURY SECURITY RATE" means, for purposes of calculating
the Net Loan Rate applicable to the Auction Rate Notes, that rate of interest
per annum equal to the Bond Equivalent Yield on the applicable United States
Treasury securities sold at the last auction thereof that immediately
precedes the Interest Rate Adjustment Date for the Auction Rate Notes.
"VARIABLE RATE" means the variable rate of interest per annum, including
the Initial Rate, borne by each Class of Auction Rate Notes during the
Initial Period for such Class, and each Interest Period thereafter as such
rate of interest is determined in accordance with the provisions of Article II
hereof.
ARTICLE II
TERMS AND ISSUANCE
Section 2.01. AUCTION RATE NOTES. The Initial Rate Adjustment Date for
the Class 1996A-6 Notes shall be November 13, 1996.
During the Initial Period, the Auction Rate Notes shall bear interest at
the Initial Rate for such Class. Thereafter, and except with respect to an
Auction Period Adjustment, the Auction Rate Notes shall bear interest at an
Auction Note Interest Rate based on a seven-day Auction Period for the Class
1996A-6 Notes, as determined pursuant to this Section 2.01 and Section 2.02
hereof.
For the Auction Rate Notes during the Initial Period and each Auction
Period thereafter, interest at the applicable Auction Rate Notes Interest
Rate shall accrue daily and shall be computed for the actual number of days
elapsed on the basis of a year consisting of 360 days.
The Auction Note Interest Rate to be borne by the Auction Rate Notes
after such Initial Period for each Auction Period until an Auction Period
Adjustment, if any, shall be determined as described below. Each such
Auction Period after the Initial Period shall commence on and include the day
following the expiration of the immediately preceding Auction Period and
terminate on and include the fourth Business Day of the following week in the
case of the Class 1996A-6 Notes; provided, however, that in the case of the
Auction Period that immediately follows the Initial Period for the Auction
Rate Notes, such Auction Period shall commence on the Initial Rate Adjustment
Date. The Auction Note Interest Rate of the Auction Rate Notes for each
Auction Period shall be the Auction Rate in effect for such Auction Period as
determined in accordance with Section 2.02(a) hereof; provided that if, on
any Interest Rate Determination Date, an Auction is not held for any reason,
then the Auction Note Interest Rate on such Auction Rate Notes for the next
succeeding Auction Period shall be the applicable Maximum Auction Rate.
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Notwithstanding the foregoing:
(i) if the ownership of an Auction Rate Note is no longer maintained
in Book-entry Form, the Auction Note Interest Rate on the Auction Rate
Notes for any Interest Period commencing after the delivery of certificates
representing Auction Rate Notes pursuant to this Supplemental Indenture
shall equal the applicable Maximum Auction Rate on the Business Day
immediately preceding the first day of such subsequent Interest Period; or
(ii) if a Payment Default shall have occurred, the Auction Note
Interest Rate on the Auction Rate Notes for the Interest Period commencing
on or immediately after such Payment Default, and for each Interest Period
thereafter, to and including the Interest Period, if any, during which, or
commencing less than two Business Days after, such Payment Default is
cured, shall equal the applicable Non-Payment Rate on the first day of each
such Interest Period.
In accordance with Section 2.02(a)(iii)(B) hereof, the Auction Agent
shall promptly give written notice to the Trustee and the Issuer of each
Auction Note Interest Rate (unless the Auction Note Interest Rate is the
applicable Non-Payment Rate) and the Maximum Auction Rate when such rate is
not the Auction Note Interest Rate, applicable to the Auction Rate Notes.
The Trustee shall notify the Registered Owners of Auction Rate Notes of the
applicable Auction Note Interest Rate applicable to such Auction Rate Notes
for each Auction Period not later than the third Business Day of such Auction
Period.
Notwithstanding any other provision of the Auction Rate Notes or this
Supplemental Indenture and except for the occurrence of a Payment Default,
interest payable on the Auction Rate Notes for an Auction Period shall never
exceed for such Auction Period the amount of interest payable at the applicable
Maximum Auction Rate in effect for such Auction Period.
If the Auction Rate for the Auction Rate Notes is greater than the
applicable Maximum Auction Rate, then the Variable Rate applicable to such
Auction Rate Notes for that Interest Period will be the applicable Maximum
Auction Rate. If the Variable Rate applicable to such Auction Rate Notes for
any Interest Period is the applicable Maximum Auction Rate (without regard to
the last two clauses of the definition thereof), the Trustee shall determine the
Carry-over Amount, if any, with respect to such Auction Rate Notes for such
Interest Period. Such Carry-over Amount shall bear interest calculated at a
rate equal to One-Month LIBOR (as determined by the Auction Agent, provided the
Trustee has received notice of One-Month LIBOR from the Auction Agent, and if
the Trustee shall not have received such notice from the Auction Agent, then as
determined by the Trustee) from the Interest Payment Date for the Interest
Period with respect to which such Carry-over Amount was calculated, until paid.
Any payment in respect of Carry-over Amount shall be applied, first, to any
accrued interest payable thereon and, second, in reduction of such Carry-over
Amount. For purposes of this Appendix B, any reference to "principal" or
"interest" herein shall not include within the meaning of such words Carry-over
Amount or any interest accrued on any such Carry-over
B-9
Amount. Such Carry-over Amount shall be separately calculated for each
Auction Rate Note by the Trustee during such Interest Period in sufficient
time for the Trustee to give notice to each Registered Owner of such
Carry-over Amount as required in the next succeeding sentence. Not less than
four days before the Interest Payment Date for an Interest Period with
respect to which such Carry-over Amount has been calculated by the Trustee,
the Trustee shall give written notice to each Registered Owner of the
Carry-over Amount applicable to each Registered Owner's Auction Rate Note,
which written notice may accompany the payment of interest by check made to
each such Registered Owner on such Interest Payment Date or otherwise shall
be mailed on such Interest Payment Date by first-class mail, postage prepaid,
to each such Registered Owner at such Registered Owner's address as it
appears on the registration records maintained by the Registrar. Such notice
shall state, in addition to such Carry-over Amount, that, unless and until an
Auction Rate Note has been redeemed (other than by optional redemption),
after which all accrued Carry-over Amounts (and all accrued interest thereon)
that remains unpaid shall be canceled and no Carry-over Amount (and interest
accrued thereon) shall be paid with respect to an Auction Rate Note, (a) the
Carry-over Amount (and interest accrued thereon calculated at a rate equal to
One-Month LIBOR) shall be paid by the Trustee on an Auction Rate Note on the
earliest of (i) the date of defeasance of the Auction Rate Notes or (ii) the
first occurring Interest Payment Date (or on the date of any such optional
redemption) if and to the extent that (A) the Eligible Carry-over Make-Up
Amount with respect to such subsequent Interest Period is greater than zero,
and (B) moneys are available pursuant to the terms of this Appendix B in an
amount sufficient to pay all or a portion of such Carry-over Amount (and
interest accrued thereon), and (b) interest shall accrue on the Carry-over
Amount at a rate equal to One-Month LIBOR until such Carry-over Amount is
paid in full or is cancelled.
The Carry-over Amount (and interest accrued thereon) for Auction Rate
Notes shall be paid by the Trustee on Outstanding Auction Rate Notes on the
earliest of (a) the date of defeasance of any of the Auction Rate Notes or
(b) the first occurring Interest Payment Date if and to the extent that (i)
the Eligible Carry-over Make-Up Amount with respect to such Interest Period
is greater than zero, and (ii) on such Interest Payment Date there are
sufficient moneys in the Senior Interest Account of the Interest Fund to pay
all interest due on the Auction Rate Notes on such Interest Payment Date.
Any Carry-over Amount (and any interest accrued thereon) on any Auction Rate
Note which is due and payable on an Interest Payment Date, which Auction Rate
Note is to be redeemed (other than by optional redemption) on said Interest
Payment Date, shall be paid to the Registered Owner thereof on said Interest
Payment Date to the extent that moneys are available therefor in accordance
with the provisions of this Appendix B; provided, however, that any
Carry-over Amount (and any interest accrued thereon) which is not yet due and
payable on said Interest Payment Date shall be cancelled with respect to said
Auction Rate Note that is to be redeemed (other than by optional redemption)
on said Interest Payment Date and shall not be paid on any succeeding
Interest Payment Date. To the extent that any portion of the Carry-over
Amount (and any interest accrued thereon) remains unpaid after payment of a
portion thereof, such unpaid portion shall be paid in whole or in part as
required hereunder until fully paid by the Trustee on the earliest of (a) the
date of defeasance of any of the Auction Rate Notes or (b) the next occurring
Interest Payment Date or Dates, as necessary, if and to the extent that the
conditions in the second preceding sentence are satisfied.
B-10
On any Interest Payment Date on which the Trustee pays only a portion of the
Carry-over Amount (and any interest accrued thereon) on Auction Rate Notes,
the Trustee shall give written notice in the manner set forth in the
immediately preceding paragraph to the Registered Owner of such Auction Rate
Note receiving such partial payment of the Carry-over Amount remaining unpaid
on such Auction Rate Note.
The Interest Payment Date or other date on which such Carry-over Amount (or
any interest accrued thereon) for Auction Rate Notes shall be paid shall be
determined by the Trustee in accordance with the provisions of the immediately
preceding paragraph, and the Trustee shall make payment of the Carry-over Amount
(and any interest accrued thereon) in the same manner as, and from the same
Account from which, it pays interest on the Auction Rate Notes on an Interest
Payment Date. Any payment of Carry-over Amounts (and interest accrued thereon)
shall reduce the amount of Eligible Carry-Over Make-Up Amount.
In the event that the Auction Agent no longer determines, or fails to
determine, when required, the Auction Note Interest Rate with respect to Auction
Rate Notes, or, if for any reason such manner of determination shall be held to
be invalid or unenforceable, the Auction Note Interest Rate for the next
succeeding Interest Period, which Interest Period shall be an Auction Period,
for Auction Rate Notes shall be the applicable Maximum Auction Rate as
determined by the Auction Agent for such next succeeding Auction Period, and if
the Auction Agent shall fail or refuse to determine the Maximum Auction Rate,
the Maximum Auction Rate shall be determined by the securities dealer appointed
by the Issuer capable of making such a determination in accordance with the
provisions hereof and written notice of such determination shall be given by
such securities dealer to the Trustee.
Section 2.02. AUCTION RATE NOTE INTEREST RATE.
(a) DETERMINING THE AUCTION RATE NOTE INTEREST RATE. By purchasing
Auction Rate Notes, whether in an Auction or otherwise, each purchaser of
the Auction Rate Notes, or its Broker-Dealer, must agree and shall be
deemed by such purchase to have agreed (x) to participate in Auctions on
the terms described herein, (y) to have its beneficial ownership of the
Auction Rate Notes maintained at all times in Book-entry Form for the
account of its Participant, which in turn will maintain records of such
beneficial ownership and (z) to authorize such Participant to disclose to
the Auction Agent such information with respect to such beneficial
ownership as the Auction Agent may request.
So long as the ownership of Auction Rate Notes is maintained in
Book-entry Form by the Securities Depository, an Existing Owner may sell,
transfer or otherwise dispose of Auction Rate Notes only pursuant to a Bid
or Sell Order placed in an Auction or otherwise sell, transfer or dispose
of Auction Rate Notes through a Broker-Dealer, provided that, in the case
of all transfers other than pursuant to Auctions, such Existing Owner, its
Broker-Dealer or its Participant advises the Auction Agent of such
transfer.
B-11
Auctions shall be conducted on each Auction Date, if there is an
Auction Agent on such Auction Date, in the following manner:
(i) (A) Prior to the Submission Deadline on each Auction Date;
(1) each Existing Owner of Auction Rate Notes may
submit to a Broker-Dealer by telephone or otherwise any
information as to:
a. the principal amount of Outstanding Auction
Rate Notes, if any, owned by such Existing Owner which
such Existing Owner desires to continue to own without
regard to the Auction Note Interest Rate for the next
succeeding Auction Period;
b. the principal amount of Outstanding Auction
Rate Notes, if any, which such Existing Owner offers to
sell if the Auction Note Interest Rate for the next
succeeding Auction Period shall be less than the rate
per annum specified by such Existing Owner; and/or
c. the principal amount of Outstanding Auction
Rate Notes, if any, owned by such Existing Owner which
such Existing Owner offers to sell without regard to
the Auction Note Interest Rate for the next succeeding
Auction Period;
and
(2) one or more Broker-Dealers may contact Potential
Owners to determine the principal amount of Auction Rate
Notes which each Potential Owner offers to purchase, if the
Auction Note Interest Rate for the next succeeding Auction
Period shall not be less than the rate per annum specified
by such Potential Owner.
The statement of an Existing Owner or a Potential Owner referred to in
(1) or (2) of this paragraph (A) is herein referred to as an "Order," and
each Existing Owner and each Potential Owner placing an Order is herein
referred to as a "Bidder"; an Order described in clause (1)a is herein
referred to as a "Hold Order"; an Order described in clauses (1)b and (2)
is herein referred to as a "Bid"; and an Order described in clause (1)c is
herein referred to as a "Sell Order."
B-12
(B) (1) Subject to the provisions of Section 2.02(a)(ii)
hereof, a Bid by an Existing Owner shall constitute an
irrevocable offer to sell:
a. the principal amount of Outstanding Auction
Rate Notes specified in such Bid if the Auction Note
Interest Rate determined as provided in this Section
2.02(a) shall be less than the rate specified therein;
or
b. such principal amount, or a lesser principal
amount of Outstanding Auction Rate Notes to be
determined as set forth in Section 2.02(a)(iv)(A)(4)
hereof, if the Auction Note Interest Rate determined as
provided in this Section 2.02(a) shall be equal to the
rate specified therein; or
c. such principal amount, or a lesser principal
amount of Outstanding Auction Rate Notes to be
determined as set forth in Section 2.02(a)(iv)(B)(3)
hereof, if the rate specified therein shall be higher
than the applicable Maximum Auction Rate and Sufficient
Bids have not been made.
(2) Subject to the provisions of Section 2.02(a)(ii)
hereof, a Sell Order by an Existing Owner shall constitute
an irrevocable offer to sell:
a. the principal amount of Outstanding Auction
Rate Notes specified in such Sell Order; or
b. such principal amount, or a lesser principal
amount of Outstanding Auction Rate Notes set forth in
Section 2.02(a)(iv)(B)(3) hereof, if Sufficient Bids
have not been made.
(3) Subject to the provisions of Section 2.02(a)(ii)
hereof, a Bid by a Potential Owner shall constitute an
irrevocable offer to purchase:
a. the principal amount of Outstanding Auction
Rate Notes specified in such Bid if the Auction Note
Interest Rate determined as provided in this
Section 2.02(a) shall be higher than the rate specified
in such Bid; or
B-13
b. such principal amount, or a lesser principal
amount of Outstanding Auction Rate Notes set forth in
Section 2.02(a)(iv)(A)(5) hereof, if the Auction Note
Interest Rate determined as provided in this
Section 2.02(a) shall be equal to the rate specified in
such Bid.
(ii) (A) Each Broker-Dealer shall submit in writing to the
Auction Agent prior to the Submission Deadline on each Auction
Date all Orders obtained by such Broker-Dealer and shall specify
with respect to each such Order:
(1) the name of the Bidder placing such Order;
(2) the aggregate principal amount of Auction Rate
Notes that are the subject of such Order;
(3) to the extent that such Bidder is an Existing
Owner:
a. the principal amount of Auction Rate Notes,
if any, subject to any Hold Order placed by such
Existing Owner;
b. the principal amount of Auction Rate Notes,
if any, subject to any Bid placed by such Existing
Owner and the rate specified in such Bid; and
c. the principal amount of Auction Rate Notes,
if any, subject to any Sell Order placed by such
Existing Owner;
and
(4) to the extent such Bidder is a Potential Owner,
the rate specified in such Potential Owner's Bid.
(B) If any rate specified in any Bid contains more than
three figures to the right of the decimal point, the Auction
Agent shall round such rate up to the next higher one thousandth
of 1%.
(C) If an Order or Orders covering all Outstanding Auction
Rate Notes owned by an Existing Owner is not submitted to the
Auction Agent prior to the Submission Deadline, the Auction Agent
shall deem a Hold Order to have been submitted on behalf of such
Existing Owner covering the principal amount of Outstanding
Auction Rate Notes owned
B-14
by such Existing Owner and not subject to an Order submitted
to the Auction Agent.
(D) Neither the Issuer, the Trustee nor the Auction Agent
shall be responsible for any failure of a Broker-Dealer to submit
an Order to the Auction Agent on behalf of any Existing Owner or
Potential Owner.
(E) If any Existing Owner submits through a Broker-Dealer
to the Auction Agent one or more Orders covering in the aggregate
more than the principal amount of Outstanding Auction Rate Notes
owned by such Existing Owner, such Orders shall be considered
valid as follows and in the following order of priority:
(1) All Hold Orders shall be considered valid, but
only up to the aggregate principal amount of Outstanding
Auction Rate Notes owned by such Existing Owner, and if the
aggregate principal amount of Auction Rate Notes subject to
such Hold Orders exceeds the aggregate principal amount of
Auction Rate Notes owned by such Existing Owner, the
aggregate principal amount of Auction Rate Notes subject to
each such Hold Order shall be reduced pro rata so that the
aggregate principal amount of Auction Rate Notes subject to
such Hold Order equals the aggregate principal amount of
Outstanding Auction Rate Notes owned by such Existing Owner.
(2) a. Any Bid shall be considered valid up to an
amount equal to the excess of the principal amount of
Outstanding Auction Rate Notes owned by such Existing
Owner over the aggregate principal amount of Auction
Rate Notes subject to any Hold Order referred to in
clause (A) of this paragraph (v);
b. subject to subclause (1) of this clause (B),
if more than one Bid with the same rate is submitted on
behalf of such Existing Owner and the aggregate
principal amount of Outstanding Auction Rate Notes
subject to such Bids is greater than such excess, such
Bids shall be considered valid up to an amount equal to
such excess;
c. subject to subclauses (1) and (2) of this
clause (B), if more than one Bid with different rates
are submitted on behalf of such Existing Owner, such
Bids shall be considered valid first in the ascending
order of their respective rates until the highest rate
is reached at
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which such excess exists and then at such rate up to
the amount of such excess; and
d. in any such event, the amount of Outstanding
Auction Rate Notes, if any, subject to Bids not valid
under this clause (B) shall be treated as the subject
of a Bid by a Potential Owner at the rate therein
specified; and
(3) All Sell Orders shall be considered valid up to an
amount equal to the excess of the principal amount of
Outstanding Auction Rate Notes owned by such Existing Owner
over the aggregate principal amount of Auction Rate Notes
subject to Hold Orders referred to in clause (1) of this
paragraph (v) and valid Bids referred to in clause (2) of
this paragraph (E).
(F) If more than one Bid for Auction Rate Notes is
submitted on behalf of any Potential Owner, each Bid submitted
shall be a separate Bid with the rate and principal amount
therein specified.
(G) An Existing Owner that offers to purchase additional
Auction Rate Notes is, for purposes of such offer, treated as a
Potential Owner.
(H) Any Bid or Sell Order submitted by an Existing Owner
covering an aggregate principal amount of Auction Rate Notes not
equal to an Authorized Denomination shall be rejected and shall
be deemed a Hold Order. Any Bid submitted by a Potential Owner
covering an aggregate principal amount of Auction Rate Notes not
equal to an Authorized Denomination shall be rejected.
(I) Any Bid specifying a rate higher than the applicable
Maximum Auction Rate will (1) be treated as a Sell Order if
submitted by an Existing Owner and (2) not be accepted if
submitted by a Potential Owner.
(J) Any Order submitted in an Auction by a Broker-Dealer to
the Auction Agent prior to the Submission Deadline on any Auction
Date shall be irrevocable.
(iii) (A) Not earlier than the Submission Deadline on each
Auction Date, the Auction Agent shall assemble all valid Orders
submitted or deemed submitted to it by the Broker-Dealers (each
such Order as submitted or deemed submitted by a Broker-Dealer
being herein referred to individually as a "Submitted Hold
Order," a "Submitted Bid" or a
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"Submitted Sell Order," as the case may be, or as a "Submitted
Order," and collectively as "Submitted Hold Orders," "Submitted
Bids" or "Submitted Sell Orders," as the case may be, or as
"Submitted Orders") and shall determine:
(1) the excess of the total principal amount of
Outstanding Auction Rate Notes over the sum of the aggregate
principal amount of Outstanding Auction Rate Notes subject
to Submitted Hold Orders (such excess being herein referred
to as the "Available Auction Rate Notes"), and
(2) from the Submitted Orders whether:
a. the aggregate principal amount of Outstanding
Auction Rate Notes subject to Submitted Bids by
Potential Owners specifying one or more rates equal to
or lower than the applicable Maximum Auction Rate;
exceeds or is equal to the sum of:
b. the aggregate principal amount of Outstanding
Auction Rate Notes subject to Submitted Bids by
Existing Owners specifying one or more rates higher
than the applicable Maximum Auction Rate; and
c. the aggregate principal amount of Outstanding
Auction Rate Notes subject to Submitted Sell Orders;
(in the event such excess or such equality exists, other
than because all of the Outstanding Auction Rate Notes are
subject to Submitted Hold Orders, such Submitted Bids
described in subclause a. above shall be referred to
collectively as "Sufficient Bids"); and
(3) if Sufficient Bids exist, the Bid Auction Rate,
which shall be the lowest rate specified in such Submitted
Bids such that if:
a. (x) each Submitted Bid from Existing Owners
specifying such lowest rate and (y) all other Submitted
Bids from Existing Owners specifying lower rates were
rejected, thus entitling such Existing Owners to
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continue to own the principal amount of Auction Rate
Notes subject to such Submitted Bids; and
b. (x) each such Submitted Bid from Potential
Owners specifying such lowest rate and (y) all other
Submitted Bids from Potential Owners specifying lower
rates were accepted;
the result would be that such Existing Owners described in
subclause a. above would continue to own an aggregate principal
amount of Outstanding Auction Rate Notes which, when added to the
aggregate principal amount of Outstanding Auction Rate Notes to
be purchased by such Potential Owners described in subclause b.
above, would equal not less than the Available Auction Rate
Notes.
(B) Promptly after the Auction Agent has made the
determinations pursuant to Section 2.02(a)(iii)(A) hereof, the
Auction Agent shall advise the Trustee, the Broker-Dealers and
the Issuer of the Maximum Auction Rate and the All Hold Rate and
the components thereof on the Auction Date and, based on such
determinations, the Auction Rate for the next succeeding Interest
Period as follows:
(1) if Sufficient Bids exist, that the Auction Rate
for the next succeeding Interest Period shall be equal to
the Bid Auction Rate so determined;
(2) if Sufficient Bids do not exist (other than
because all of the Outstanding Auction Rate Notes are
subject to Submitted Hold Orders), that the Auction Rate for
the next succeeding Interest Period shall be equal to the
applicable Maximum Auction Rate; or
(3) if all Outstanding Auction Rate Notes are subject
to Submitted Hold Orders, that the Auction Rate for the next
succeeding Interest Period shall be equal to the applicable
All Hold Rate.
(C) Promptly after the Auction Agent has determined the
Auction Rate, the Auction Agent shall determine and advise the
Trustee of the Auction Note Interest Rate, which rate shall be
the Auction Rate; provided, however, that in no event shall the
Auction Note Interest Rate exceed the applicable Maximum Auction
Rate.
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(iv) Existing Owners shall continue to own the principal amount
of Auction Rate Notes that are subject to Submitted Hold Orders. If
Sufficient Bids have been received by the Auction Agent, the Bid
Auction Rate will be the Auction Note Interest Rate, and Submitted
Bids and Submitted Sell Orders will be accepted or rejected and the
Auction Agent will take such other action as described below in
subparagraph (A).
If the Auction Rate is greater than the applicable Maximum
Auction Rate, the Auction Note Interest Rate shall be equal to the
applicable Maximum Auction Rate. If the Auction Agent has not
received Sufficient Bids (other than because all of the Outstanding
Auction Rate Notes are subject to Submitted Hold Orders), the Auction
Note Interest Rate will be the applicable Maximum Auction Rate. In
any of the cases described above, Submitted Orders will be accepted or
rejected and the Auction Agent will take such other action as
described below in subparagraph (B).
(A) If Sufficient Bids have been made and if the applicable
Maximum Auction Rate does not apply (in which case the Auction
Note Interest Rate shall be the Bid Auction Rate), all Submitted
Sell Orders shall be accepted and, subject to the provisions of
clauses (4) and (5) of this Section 2.02(a)(iv), Submitted Bids
shall be accepted or rejected as follows in the following order
of priority, and all other Submitted Bids shall be rejected:
(1) Existing Owners' Submitted Bids specifying any
rate that is higher than the Auction Note Interest Rate
shall be accepted, thus requiring each such Existing Owner
to sell the aggregate principal amount of Auction Rate Notes
subject to such Submitted Bids;
(2) Existing Owners' Submitted Bids specifying any
rate that is lower than the Auction Note Interest Rate shall
be rejected, thus entitling each such Existing Owner to
continue to own the aggregate principal amount of Auction
Rate Notes subject to such Submitted Bids;
(3) Potential Owners' Submitted Bids specifying any
rate that is lower than the Auction Note Interest Rate shall
be accepted;
(4) Each Existing Owners' Submitted Bid specifying a
rate that is equal to the Auction Note Interest Rate shall
be rejected, thus entitling such Existing Owner to continue
to own the aggregate principal amount of Auction Rate Notes
subject to such
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Submitted Bid, unless the aggregate principal amount of
Outstanding Auction Rate Notes subject to all such
Submitted Bids shall be greater than the principal amount
of Auction Rate Notes (the "remaining principal amount")
equal to the excess of the Available Auction Rate Notes
over the aggregate principal amount of Auction Rate Notes
subject to Submitted Bids described in clauses (2) and
(3) of this Section 2.02(a)(iv)(D)(1), in which event
such Submitted Bid of such Existing Owner shall be
rejected in part, and such Existing Owner shall be
entitled to continue to own the principal amount of
Auction Rate Notes subject to such Submitted Bid, but
only in an amount equal to the aggregate principal amount
of Auction Rate Notes obtained by multiplying the
remaining principal amount by a fraction, the numerator
of which shall be the principal amount of Outstanding
Auction Rate Notes owned by such Existing Owner subject
to such Submitted Bid and the denominator of which shall
be the sum of the principal amount of Outstanding Auction
Rate Notes subject to such Submitted Bids made by all
such Existing Owners that specified a rate equal to the
Auction Note Interest Rate, subject to the provisions of
Section 2.02(a)(iv)(D) hereof; and
(5) Each Potential Owner's Submitted Bid specifying a
rate that is equal to the Auction Note Interest Rate shall
be accepted, but only in an amount equal to the principal
amount of Auction Rate Notes obtained by multiplying the
excess of the aggregate principal amount of Available
Auction Rate Notes over the aggregate principal amount of
Auction Rate Notes subject to Submitted Bids described in
clauses (2), (3) and (4) of this Section 2.02(a)(iv)(A) by a
fraction the numerator of which shall be the aggregate
principal amount of Outstanding Auction Rate Notes subject
to such Submitted Bid and the denominator of which shall be
the sum of the principal amount of Outstanding Auction Rate
Notes subject to Submitted Bids made by all such Potential
Owners that specified a rate equal to the Auction Note
Interest Rate, subject to the provisions of Section
2.02(a)(iv)(D) hereof.
(B) If Sufficient Bids have not been made (other than
because all of the Outstanding Auction Rate Notes are subject to
submitted Hold Orders), or if the applicable Maximum Auction Rate
applies, subject to the provisions of Section 2.02(a)(iv)(D)
hereof, Submitted Orders shall be accepted or rejected as follows
in the following order of priority and all other Submitted Bids
shall be rejected:
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(1) Existing Owners' Submitted Bids specifying any
rate that is equal to or lower than the Auction Note
Interest Rate shall be rejected, thus entitling such
Existing Owners to continue to own the aggregate principal
amount of Auction Rate Notes subject to such Submitted Bids;
(2) Potential Owners' Submitted Bids specifying (x)
any rate that is equal to or lower than the Auction Note
Interest Rate shall be accepted and (y) any rate that is
higher than the Auction Note Interest Rate shall be
rejected; and
(3) each Existing Owner's Submitted Bid specifying any
rate that is higher than the Auction Note Interest Rate and
the Submitted Sell Order of each Existing Owner shall be
accepted, thus entitling each Existing Owner that submitted
any such Submitted Bid or Submitted Sell Order to sell the
Auction Rate Notes subject to such Submitted Bid or
Submitted Sell Order, but in both cases only in an amount
equal to the aggregate principal amount of Auction Rate
Notes obtained by multiplying the aggregate principal amount
of Auction Rate Notes subject to Submitted Bids described in
clause (2)(x) of this Section 2.02(a)(iv)(B) by a fraction
the numerator of which shall be the aggregate principal
amount of Outstanding Auction Rate Notes owned by such
Existing Owner subject to such submitted Bid or Submitted
Sell Order and the denominator of which shall be the
aggregate principal amount of Outstanding Auction Rate Notes
subject to all such Submitted Bids and Submitted Sell
Orders.
(C) If all Auction Rate Notes are subject to Submitted Hold
Orders, all Submitted Bids shall be rejected.
(D) If, as a result of the procedures described in
paragraph (A) or (B) of this Section 2.02(a)(iv), any Existing
Owner would be entitled or required to sell, or any Potential
Owner would be entitled or required to purchase, a principal
amount of Auction Rate Notes that is not equal to an Authorized
Denomination, the Auction Agent shall, in such manner as in its
sole discretion it shall determine, round up or down the
principal amount of Auction Rate Notes to be purchased or sold by
any Existing Owner or Potential Owner so that the principal
amount of Auction Rate Notes purchased or sold by each Existing
Owner or Potential Owner shall be equal to an Authorized
Denomination.
(E) If, as a result of the procedures described in
paragraph (B) of this Section 2.02(a)(iv), any Potential Owner
would be entitled or
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required to purchase less than an Authorized Denomination
of Auction Rate Notes, the Auction Agent shall, in
such manner as in its sole discretion it shall determine,
allocate Auction Rate Notes for purchase among Potential Owners
so that only Auction Rate Notes in Authorized Denominations are
purchased by any Potential Owner, even if such allocation results
in one or more of such Potential Owners not purchasing any
Auction Rate Notes.
(v) Based on the result of each Auction, the Auction Agent shall
determine the aggregate principal amount of Auction Rate Notes to be
purchased and the aggregate principal amount of Auction Rate Notes to
be sold by Potential Owners and Existing Owners on whose behalf each
Broker-Dealer submitted Bids or Sell Orders and, with respect to each
Broker-Dealer, to the extent that such aggregate principal amount of
Auction Rate Notes to be sold differs from such aggregate principal
amount of Auction Rate Notes to be purchased, determine to which other
Broker-Dealer or Broker-Dealers acting for one or more purchasers such
Broker-Dealer shall deliver, or from which other Broker-Dealer or
Broker-Dealers acting for one or more sellers such Broker-Dealer shall
receive, as the case may be, Auction Rate Notes.
(vi) Any calculation by the Auction Agent or the Trustee, as
applicable, of the Auction Note Interest Rate, the Maximum Auction
Rate, the All Hold Rate and the Non-Payment Rate shall, in the absence
of manifest error, be binding on all other parties.
(vii) Notwithstanding anything in this Appendix A to the
contrary, (A) no Auction for the Auction Rate Notes for an Auction
Period of less than 180 days will be held on any Auction Date
hereunder on which there are insufficient moneys in the Senior
Interest Account of the Interest Fund and the Senior Redemption
Account of the Note Redemption Fund to pay, or otherwise held by the
Trustee under the Indenture and available to pay, the principal of and
interest due on the Auction Rate Notes on the Interest Payment Date
immediately following such Auction Date, and (B) no Auction will be
held on any Auction Date hereunder during the continuance of a Payment
Default. The Trustee shall promptly notify the Auction Agent of any
such occurrence.
(b) APPLICATION OF INTEREST PAYMENTS FOR THE AUCTION RATE NOTES.
(i) The Trustee shall determine not later than 2:00 p.m.,
eastern time, on the Business Day next succeeding an Interest Payment
Date, whether a Payment Default has occurred. If a Payment Default
has occurred, the Trustee shall, not later than 2:15 p.m., eastern
time, on such Business Day, send a notice thereof in substantially the
form of Exhibit F attached hereto to the Auction Agent by telecopy or
similar means and, if such Payment Default is cured, the Trustee
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shall immediately send a notice in substantially the form of Exhibit G
attached hereto to the Auction Agent by telecopy or similar means.
(ii) Not later than 2:00 p.m., eastern time, on each anniversary
of the Closing Date, the Trustee shall pay to the Auction Agent, in
immediately available funds out of amounts in the Revenue Fund, an
amount equal to the Auction Agent Fee as set forth in the Auction
Agent Agreement. Not later than 2:00 p.m., eastern time, on each
Auction Date, the Trustee shall pay to the Auction Agent, in
immediately available funds out of amounts in the Revenue Fund, an
amount equal to the Broker-Dealer Fee as calculated in the Auction
Agent Agreement. The Trustee shall, from time to time at the request
of the Auction Agent and at the direction of an Authorized Officer,
reimburse the Auction Agent for its reasonable expenses as provided in
the Auction Agent Agreement, such expenses to be paid out of amounts
in the Revenue Fund.
(c) CALCULATION OF MAXIMUM AUCTION RATE, ALL HOLD RATE AND NON-PAYMENT
RATE. The Auction Agent shall calculate the applicable Maximum
Auction Rate and All Hold Rate, as the case may be, on each Auction Date
and shall notify the Trustee and the Broker-Dealers of the applicable
Maximum Auction Rate and All Hold Rate, as the case may be, as provided in
the Auction Agent Agreement; provided, that if the ownership of the Auction
Rate Notes is no longer maintained in Book-entry Form, or if a Payment
Default has occurred, then the Trustee shall determine the applicable
Maximum Auction Rate, All Hold Rate and Non-Payment Rate for each such
Interest Period. The Market Agent shall calculate the Index (if the Index
is other than the PSA Municipal Swap Index) on each Interest Rate
Determination Date and shall notify the Trustee and the Auction Agent of
the Index prior to 9:30 a.m., eastern time, on each Interest Rate
Determination Date. If the ownership of the Auction Rate Notes is no
longer maintained in Book-entry Form by the Securities Depository, the
Trustee shall calculate the applicable Maximum Auction Rate on the Business
Day immediately preceding the first day of each Interest Period after the
delivery of certificates representing the Auction Rate Notes pursuant to
the Indenture. If a Payment Default shall have occurred, the Trustee shall
calculate the Non-Payment Rate on the Interest Rate Determination Date for
(i) each Interest Period commencing after the occurrence and during the
continuance of such Payment Default and (ii) any Interest Period commencing
less than two Business Days after the cure of any Payment Default. The
determination by the Trustee or the Auction Agent, as the case may be, of
the applicable Maximum Auction Rate, All Hold Rate and Non-Payment Rate
shall (in the absence of manifest error) be final and binding upon all
parties. If calculated or determined by the Auction Agent, the Auction
Agent shall promptly advise the Trustee of the applicable Maximum Auction
Rate and All Hold Rate. The determination by the Market Agent of the Index
shall (in the absence of manifest error) be final and binding upon all
parties.
If the Federal Reserve Bank of New York does not make available its
30-day commercial paper rate for purposes of determining the "AA" Composite
Commercial
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Paper Rate, the Auction Agent shall notify the Trustee of such
fact and the Trustee shall thereupon request that an Authorized Officer
promptly appoint at least two Commercial Paper Dealers (in addition to
Xxxxx Xxxxxx Inc.) to provide commercial paper quotes for purposes of
determining the "AA" Composite Commercial Paper Rate. Pending appointment
of both such additional Commercial Paper Dealers, Xxxxx Xxxxxx Inc. and any
other Commercial Paper Dealer appointed and serving as such shall provide
the required quotations, and such quotations shall be used for purposes of
this Appendix A. Xxxxx Xxxxxx Inc. is hereby appointed as a Commercial
Paper Dealer to provide commercial paper quotes for purposes of determining
the "AA" Composite Commercial Paper Rate as provided above.
(d) NOTIFICATION OF RATES, AMOUNTS AND PAYMENT DATES.
(i) By 12:00 noon, eastern time, on the Business Day following
each Regular Record Date, the Trustee shall determine the aggregate
amounts of interest distributable on the next succeeding Interest
Payment Date to the beneficial owners of Auction Rate Notes.
(ii) At least four days prior to any Interest Payment Date, the
Trustee shall:
(A) confirm with the Auction Agent, so long as no Payment
Default has occurred and is continuing and the ownership of the
Auction Rate Notes is maintained in Book-entry Form by the
Securities Depository, (1) the date of such next Interest Payment
Date and (2) the amount payable to the Auction Agent on the
Auction Date pursuant to Section 2.02(b)(ii) hereof;
(B) pursuant to Section 2.01 hereof, advise the Registered
Owners of a Class of Auction Rate Notes of any Carry-over Amount
accruing on such Auction Rate Notes; and
(C) advise the Securities Depository, so long as the
ownership of the Auction Rate Notes is maintained in Book-entry
Form by the Securities Depository, upon request, of the aggregate
amount of interest distributable on such next Interest Payment
Date to the beneficial owners of each Class of the Auction Rate
Notes.
If any day scheduled to be an Interest Payment Date shall be changed
after the Trustee shall have given the notice or confirmation referred to
in clause (i) of the preceding sentence, the Trustee shall, not later than
11:15 a.m., eastern time, on the Business Day next preceding the earlier of
the new Interest Payment Date or the old Interest Payment Date, by such
means as the Trustee deems practicable, give notice of such change to the
Auction Agent, so long as no Payment Default has occurred and is
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continuing and the ownership of the Auction Rate Notes is maintained in
Book-entry Form by the Securities Depository.
(e) AUCTION AGENT.
(i) Bankers Trust Company is hereby appointed as Initial Auction
Agent to serve as agent for the Issuer in connection with Auctions.
The Trustee and the Issuer will, and the Trustee is hereby directed
to, enter into the Initial Auction Agent Agreement with Bankers Trust
Company, as the Initial Auction Agent. Any Substitute Auction Agent
shall be (A) a bank, national banking association or trust company
duly organized under the laws of the United States of America or any
state or territory thereof having its principal place of business in
the Borough of Manhattan, New York, or such other location as approved
by the Trustee in writing and having a combined capital stock or
surplus of at least $50,000,000, or (B) a member of the National
Association of Securities Dealers, Inc., having a capitalization of at
least $50,000,000, and, in either case, authorized by law to perform
all the duties imposed upon it hereunder and under the Auction Agent
Agreement. The Auction Agent may at any time resign and be discharged
of the duties and obligations created by this Appendix A by giving at
least 90 days' notice to the Trustee, the Market Agent and the Issuer.
The Auction Agent may be removed at any time by the Trustee upon the
written direction of an Authorized Officer or the Registered Owners of
51% of the aggregate principal amount of the Auction Rate Notes then
Outstanding, and if by such Registered Owners, by an instrument signed
by such Registered Owners or their attorneys and filed with the
Auction Agent, the Issuer and the Trustee upon at least 90 days'
written notice. Neither resignation nor removal of the Auction Agent
pursuant to the preceding two sentences shall be effective until and
unless a Substitute Auction Agent has been appointed and has accepted
such appointment. If required by the Issuer, a Substitute Auction
Agent Agreement shall be entered into with a Substitute Auction Agent.
Notwithstanding the foregoing, the Auction Agent may terminate the
Auction Agent Agreement if, within 25 days after notifying the
Trustee, the Market Agent and the Issuer in writing that it has not
received payment of any Auction Agent Fee due it in accordance with
the terms of the Auction Agent Agreement, the Auction Agent does not
receive such payment.
(ii) If the Auction Agent shall resign or be removed or be
dissolved, or if the property or affairs of the Auction Agent shall be
taken under the control of any state or federal court or
administrative body because of bankruptcy or insolvency, or for any
other reason, the Trustee at the direction of an Authorized Officer,
shall use its best efforts to appoint a Substitute Auction Agent.
(iii) The Auction Agent is acting as agent for the Issuer in
connection with Auctions. In the absence of bad faith, negligent
failure to act or negligence
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on its part, the Auction Agent shall not be liable for any action
taken, suffered or omitted or any error of judgment made by it in
the performance of its duties under the Auction Agent Agreement and
shall not be liable for any error of judgment made in good faith
unless the Auction Agent shall have been negligent in ascertaining
(or failing to ascertain) the pertinent facts.
(f) BROKER-DEALERS.
(i) The Auction Agent will enter into a Broker-Dealer Agreement
with Xxxxx Xxxxxx Inc., as the initial Broker-Dealer. An Authorized
Officer may, from time to time, approve one or more additional persons
to serve as Broker-Dealers under Broker-Dealer Agreements and shall be
responsible for providing such Broker-Dealer Agreements to the Trustee
and the Auction Agent, 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.
(ii) Any Broker-Dealer may be removed at any time, at the request
of an Authorized Officer, but there shall, at all times, be at least
one Broker-Dealer appointed and acting as such.
(g) CHANGES IN AUCTION PERIOD OR PERIODS AND CERTAIN PERCENTAGES.
(i) While any of the Auction Rate Notes are Outstanding, the
Issuer may, from time to time, change the length of one or more
Auction Periods (an "Auction Period Adjustment"), in order to conform
with then current market practice with respect to similar securities
or to accommodate economic and financial factors that may affect or be
relevant to the length of the Auction Period and the interest rate
borne by the Auction Rate Notes. The Issuer shall not initiate an
Auction Period Adjustment unless it shall have received the written
consent of the Market Agent, which consent shall not be unreasonably
withheld, not later than nine days prior to the Auction Date for such
Auction Period. The Issuer shall initiate the Auction Period
Adjustment by giving written notice by Issuer Order to the Trustee,
the Auction Agent, the Market Agent, each Rating Agency and the
Securities Depository in substantially the form of, or containing
substantially the information contained in, Exhibit H attached hereto
at least 10 days prior to the Auction Date for such Auction Period.
(ii) Any such adjusted Auction Period shall not be less than 7
days nor more than 366 days.
(iii) An Auction Period Adjustment shall take effect only if
(A) the Trustee and the Auction Agent receive, by 11:00 a.m., eastern
time, on the Business Day before the Auction Date for the first such
Auction Period, an Issuer
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Certificate in substantially the form attached as, or containing
substantially the same information contained in, Exhibit I attached
hereto, authorizing the Auction Period Adjustment specified in such
certificate along with a copy of the written consent of the Market
Agent and, (B) Sufficient Bids exist as of the Auction on the
Auction Date for such first Auction Period. If the condition
referred to in (A) above is not met, the applicable Auction Note
Interest Rate for the next Auction Period shall be determined
pursuant to the above provisions of this Section 2.02 and the
Auction Period shall be the Auction Period determined without
reference to the proposed change. If the condition referred to in
(A) is met but the condition referred in (B) above is not met, the
applicable Auction Note Interest Rate for the next Auction Period
shall be the applicable Maximum Auction Rate and the Auction Period
shall be the Auction Period determined without reference to the
proposed change.
In connection with any Auction Period Adjustment, the Auction
Agent shall provide such further notice to such parties as is
specified in Section 2.03 of the Auction Agent Agreement.
(h) CHANGES IN THE AUCTION DATE. The Market Agent, with the written
consent of an Authorized Officer and, if applicable, upon receipt of the
opinion of Note Counsel as required below, may specify an earlier Auction
Date (but in no event more than five Business Days earlier) than the
Auction Date that would otherwise be determined in accordance with the
definition of "Auction Date" in Section 1.01 of this Appendix B with
respect to one or more specified Auction Periods in order to conform with
then current market practice with respect to similar securities or to
accommodate economic and financial factors that may affect or be relevant
to the day of the week constituting an Auction Date and the interest rate
borne on the Auction Rate Notes. The Market Agent shall deliver a written
request for consent to such change in the length of the Auction Date to the
Issuer at least 14 days prior to the effective date of such change. If the
Issuer shall have delivered such written consent to the Market Agent, the
Market Agent shall provide notice of its determination to specify an
earlier Auction Date for one or more Auction Periods by means of a written
notice delivered at least 10 days prior to the proposed changed Auction
Date to the Trustee, the Auction Agent, the Issuer, each Rating Agency and
the Securities Depository. Such notice shall be substantially in the form
of, or contain substantially the information contained in, Exhibit J
attached hereto.
In connection with any change described in this Section 2.02(h), the
Auction Agent shall provide such further notice to such parties as is
specified in Section 2.03 of the Auction Agent Agreement.
Section 2.03. ADDITIONAL PROVISIONS REGARDING THE INTEREST RATES ON THE
AUCTION RATE NOTES. The determination of a Variable Rate by the Auction Agent
or any other Person pursuant to the provisions of the applicable Section of this
Article II shall be conclusive and binding on
B-27
the Registered Owners of the Auction Rate Notes to which such Variable Rate
applies, and the Issuer and the Trustee may rely thereon for all purposes.
In no event shall the cumulative amount of interest paid or payable on the
Auction Rate Notes (including interest calculated as provided herein, plus any
other amounts that constitute interest on the Auction Rate Notes under
applicable law, which are contracted for, charged, reserved, taken or received
pursuant to the Auction Rate Notes or related documents) calculated from the
Date of Closing of the Auction Rate Notes through any subsequent day during the
term of the Auction Rate Notes or otherwise prior to payment in full of the
Auction Rate Notes exceed the amount permitted by applicable law. If the
applicable law is ever judicially interpreted so as to render usurious any
amount called for under the Auction Rate Notes or related documents or otherwise
contracted for, charged, reserved, taken or received in connection with the
Auction Rate Notes, or if the redemption or acceleration of the maturity of the
Auction Rate Notes results in payment to or receipt by the Registered Owner or
any former Registered Owner of the Auction Rate Notes of any interest in excess
of that permitted by applicable law, then, notwithstanding any provision of the
Auction Rate Notes or related documents to the contrary, all excess amounts
theretofore paid or received with respect to the Auction Rate Notes shall be
credited on the principal balance of the Auction Rate Notes (or, if the Auction
Rate Notes have been paid or would thereby be paid in full, refunded by the
recipient thereof), and the provisions of the Auction Rate Notes and related
documents shall automatically and immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without the necessity
of the execution of any new document, so as to comply with the applicable law,
but so as to permit the recovery of the fullest amount otherwise called for
under the Auction Rate Notes and under the related documents.
Section 2.04. 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 Appendix B. The Market Agent may resign and
be discharged of the duties and obligations created by this Appendix B by giving
at least 30 days notice to the Issuer and the Trustee, provided that such
resignation shall not be effective until the appointment of a successor market
agent by the Issuer and the acceptance of such appointment by such successor
market agent. The Market Agent may be replaced at the direction of the Issuer,
by an instrument signed by an Authorized Officer, filed with the Market Agent
and the Trustee at least 30 days before the effective date of such replacement,
provided that such replacement shall not be effective until the appointment of a
successor market agent by the Issuer and the acceptance of such appointment by
such successor market agent.
In the event that the Market Agent shall be removed or be dissolved, or if
the property or affairs of the Market Agent shall be taken under the control of
any state or federal court or administrative body because of bankruptcy or
insolvency, or for any other reason, and there is no Market Agent and the Issuer
shall not have appointed its successor as Market Agent, the Trustee,
notwithstanding the provisions of the first paragraph of this Section, shall be
deemed to be the Market Agent for all purposes of this Appendix B until the
appointment by the Issuer
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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.
B-29
APPENDIX C
CERTAIN TERMS AND PROVISIONS OF
THE CLASS 1996B-3 SUBORDINATE LIBOR RATE NOTES
ARTICLE I
Section 1.01. DEFINITIONS. In addition to the terms defined elsewhere in
the Indenture and this Supplemental Indenture, the following terms shall have
the following meanings with respect to the Class 1996B-3 Notes, unless the
context otherwise requires:
"APPLICABLE RATE" shall have the meaning set forth in Section 2.01(b)
hereof.
"AUTHORIZED DENOMINATIONS" shall mean $325,000 and any multiple thereof.
"BOND-EQUIVALENT YIELD" shall mean, in respect of any security with a
maturity of six months or less the rate for which is quoted in THE WALL STREET
JOURNAL 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 - (T x Q)
where "Q" refers to the per annum rate for the security quoted on a bank
discount basis and expressed as a decimal, "N" refers to 365 or 366 (days), as
the case may be, and "T" refers to the number of days to maturity.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday, holiday or
day on which banks in New York, New York, or the New York Stock Exchange, the
Trustee or the Calculation Agent, are authorized or permitted by law or
executive order to close.
"CALCULATION AGENT" shall mean any person appointed as such pursuant to
Section 2.07 hereof.
"DEPOSITORY" shall mean The Depository Trust Company or any successor
securities depository selected or approved by the Issuer.
"HOLDER" as used in this Appendix C shall mean the beneficial owner of any
Class 1996B-3 Note.
"INITIAL INTEREST PAYMENT DATE" shall mean December 1, 1996 for the Class
1996B-3 Notes.
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"INITIAL INTEREST PERIOD" shall mean, for the Class 1996B-3 Notes, the
period from and including the date of delivery of the Class 1996B-3 Notes and
ending on November 30, 1996.
"INTEREST AMOUNT" shall mean the amount of interest distributable in
respect of each $325,000 in principal amount (taken, without rounding, to .0001
of one cent) of Class 1996B-3 Notes for any Interest Period or part thereof, as
calculated in accordance with Section 2.07 hereof.
"INTEREST PAYMENT DATE" means December 1, 1996 and the first day of each
month thereafter, and the maturity date for any Class 1996B-3 Note, or if any
such date is not a Business Day, the next succeeding Business Day (but only for
interest accrued through the last day of the calendar month next preceding such
Interest Payment Date).
"INTEREST PERIOD" means the Initial Interest Period for the Class 1996B-3
Notes and the period beginning on the first day of each month and ending on the
last day of each month.
"LIBOR DETERMINATION DATE" shall mean the Business Day immediately
preceding the first day of each Interest Period.
"LIBOR-BASED RATE" shall mean One-Month LIBOR plus .48%.
"MAXIMUM INTEREST RATE" shall mean the lesser of (a) 18% per annum or (b)
the maximum rate of interest permitted under State law for student loan notes of
the Issuer.
"ONE-MONTH LIBOR" means the rate of interest per annum equal to the rate
per annum at which United States dollar deposits having a maturity of one month
are offered to prime banks in the London interbank market which appear on the
Telerate Service LIBOR Page as of approximately 11:00 a.m., London time, on the
LIBOR Determination Date. If at least two such quotations appear, One-Month
LIBOR 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 with respect to such Interest Period will be
determined at approximately 11:00 a.m., London time, on such LIBOR Determination
Date on the basis of the rate at which deposits in United States dollars having
a maturity of three months are offered to prime banks in the London interbank
market by four major banks in the London interbank market selected by (i) the
Calculation Agent (if the Calculation Agent is other than the Trustee) or (ii)
the Trustee, 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
Calculation Agent or the Trustee, as applicable, will request the principal
London office of each of such banks to provide a quotation of its rate. If at
least two quotations are provided, One-Month LIBOR 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
with respect to such Interest Period will be the arithmetic mean (rounded
upwards, if necessary, to the nearest one-hundredth of one percent) of the rates
quoted at approximately 11:00 a.m., New York City time on such LIBOR
Determination Date by three major banks in Xxx Xxxx,
X-0
Xxx Xxxx selected by (x) the Calculation Agent or (y) the Trustee, as
applicable, for loans in United States dollars to leading European banks
having a maturity of three months 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 in effect for the applicable Interest Period, will
be One-Month LIBOR in effect for the immediately preceding Interest Period.
"PARTICIPANT" shall mean a member of or participant in, the Depository.
"PAYMENT DEFAULT" shall mean failure to make payment of interest on,
premium, if any, and principal of the Class 1996B-3 Notes when due, by the
Issuer.
"PERSON" means and includes, unless otherwise specified, an individual,
corporation, company, trust, estate partnership or association.
"RECORD DATE" shall mean the Business Day immediately preceding the
Interest Payment Date.
"REDEMPTION DATE," when used with respect to any Class 1996B-3 Notes to be
redeemed, shall mean the date fixed for such redemption.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
ARTICLE II
TERMS AND ISSUANCE
Section 2.01. INTEREST ON THE CLASS 1996B-3 NOTES.
(a) Interest on the Class 1996B-3 Notes shall accrue for each
Interest Period and shall be payable in arrears, on each Interest Payment
Date.
(b) The rate of interest on the Class 1996B-3 Notes for the Initial
Interest Period shall be 5.855%. The rate of interest on the Class 1996B-3
Notes for each subsequent Interest Period shall be determined by the
Calculation Agent on the LIBOR Determination Date and shall be the
LIBOR-Based Rate.
If a Payment Default occurs, the Applicable Rate (as defined below) with
respect to the Class 1996B-3 Notes shall be the same rate per annum as if no
such Payment Default had occurred.
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The rate per annum at which interest is payable on the Class 1996B-3 Notes
for any Interest Period is herein referred to as the "Applicable Rate."
Notwithstanding anything herein to the contrary, the Applicable Rate cannot
exceed the Maximum Interest Rate.
Section 2.02. PAYMENTS. So long as the Class 1996B-3 Notes are registered
in the name of the Depository or the nominee thereof, payment of interest (other
than at maturity) and premium, if any, on, and of principal at redemption of,
the Class 1996B-3 Notes shall be made to the Depository by wire transfer
provided proper wire instructions are received. Each Holder of Class 1996B-3
Notes, by such Holder's purchase of Class 1996B-3 Notes, appoints the Trustee as
its agent in connection with the payment by such Holder of its share, if any, of
the amounts payable to the Calculation Agent pursuant to Section 2.07(a) hereof.
Section 2.03. NOTICE OF PAYMENT DEFAULTS AND CURES. By 12:30 p.m. on the
Business Day immediately succeeding each Interest Payment Date, the Trustee will
determine if a Payment Default has occurred. If a Payment Default has occurred,
the Trustee shall, if the Calculation Agent is other than the Trustee, notify
the Calculation Agent by 1:00 p.m. of such Payment Default. If a Payment
Default has been cured, the Trustee shall, if the Calculation Agent is other
than the Trustee, so notify the Calculation Agent by 5:00 p.m. on the day such
Payment Default is cured.
Section 2.04. CALCULATION OF RATES; TERMINATION OF BOOK ENTRY SYSTEM. The
Calculation Agent shall calculate the LIBOR-Based Rate on the Business Day
immediately preceding the first day of each Interest Period. The determination
by the Calculation Agent of the Applicable Rate will (in the absence of manifest
error) be final and binding upon the Owners of the Class 1996B-3 Notes and all
other parties.
If the ownership of the Class 1996B-3 Notes is no longer maintained in
book-entry form such Class 1996B-3 Notes may be exchanged for other Class
1996B-3 Notes, in Authorized Denominations, and of a like aggregate principal
amount, upon surrender of the Class 1996B-3 Notes to be exchanged at the
principal office of the Trustee. Class 1996B-3 Notes, upon surrender thereof at
the principal office of the Trustee, duly endorsed for transfer or accompanied
by an assignment duly executed by the Holder of its attorney duly authorized in
writing, will be transferred to a transferee or transferees, in the form of one
or more new fully registered Class 1996B-3 Notes, in Authorized Denomination,
and of a like aggregate principal amount having the same interest rate and
bearing numbers not previously assigned.
In all cases in which the privilege of exchanging or transferring Class
1996B-3 Notes is exercised, the Issuer will cause to be executed and delivered
Class 1996B-3 Notes in accordance with the provisions of the Resolution. For
every such exchange or transfer of Class 1996B-3 Notes, the Trustee will require
payment by the Holder of any tax or other governmental charge required to be
paid with respect to such exchange or transfer. All expenses, other than any
tax or other government charge, incurred by the Trustee or the Issuer with
respect to each such transfer or exchange will be paid by the Issuer.
C-4
The Trustee will not be required to transfer any Class 1996B-3 Note during
the period of five Business Days next preceding the mailing of notice of
redemption as described herein. After giving of such notice of redemption, the
Trustee will not be required to transfer or exchange any Class 1996B-3 Note,
which Class 1996B-3 Note or portion thereof has been called for redemption.
Section 2.05. COMPUTATION OF INTEREST. The amount of interest
distributable to Holders of Class 1996B-3 Notes in respect of each $325,000 in
principal amount thereof for any Interest Period or part thereof shall be
calculated by applying the Applicable Rate for such Interest Period or part
thereof to the principal amount of $325,000 multiplying such product by the
actual number of days in the Interest Period or part thereof concerned divided
by 360, and truncating the resultant figure to the nearest one cent. Interest
on the Class 1996B-3 Notes shall be computed by the Trustee on the basis of a
360-day year for the number of days actually elapsed. In the event an Interest
Payment Date occurs with respect to any Interest Period on a date other than the
first day of the next Interest Period, the Trustee, after confirming the
calculation required above, shall calculate the portion of the Interest Amount
payable on such Interest Payment Date and the portion payable on the next
succeeding Interest Payment Date.
Section 2.06. NOTIFICATION OF RATES, AMOUNTS AND PAYMENT DATES.
(a) The Trustee shall determine the aggregate amount of interest
distributable on the next succeeding Interest Payment Date to the Holders
of the Class 1996B-3 Notes. So long as the ownership of the Class 1996B-3
Notes is maintained in book-entry form by the Depository, the Trustee shall
advise the Depository of each Record Date for the Class 1996B-3 Notes at
least two Business Days prior thereto.
(b) Promptly after the Date of Issue and each Interest Payment Date,
and in any event at least 10 days prior to each Interest Payment Date
following the Initial Interest Payment Date, the Trustee shall:
(i) so long as no Payment Default has occurred and is continuing
and the ownership of the Class 1996B-3 Notes is maintained in
book-entry form by the Depository, confirm the Calculation Agent's
determination of (1) the date of such next Interest Payment Date and
(2) the amount payable to the Calculation Agent and notify the
Calculation Agent of any discrepancy therein; and
(ii) advise the Depository, so long as the ownership of the Class
1996B-3 Notes is maintained in book-entry form by the Depository, of
the Applicable Rate and the Interest Amount in respect of the next
succeeding Interest Period.
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Section 2.07. CALCULATION AGENT.
(a) Xxxxx Xxxxxx Inc. shall serve as the initial Calculation Agent
for the Class 1996B-3 Notes. The Calculation Agent shall be (i) a bank or
trust company duly organized under the laws of the United States of America
or any state or territory thereof, and having a combined capital stock,
surplus and undivided profits of at least $15,000,000 or (ii) a member of
the National Association of Securities Dealers, Inc., having a
capitalization of at least $15,000,000 and, in either case, authorized by
law to perform all the duties imposed upon it hereunder. The Calculation
Agent may resign and be discharged of the duties and obligations created
hereunder by giving at least 90 days' written notice to the Issuer and the
Trustee (30 days' written notice if the Calculation Agent has not been paid
its fee for more than 30 days). The Calculation Agent may be removed at any
time by the Trustee if the Calculation Agent is an entity other than the
Trustee, acting at the direction of the Issuer or the holders of 51% of the
aggregate principal amount of the Class 1996B-3 Notes, by an instrument
signed by the Trustee and filed with the Calculation Agent and the Issuer
upon at least 90 days' notice. If the Calculation Agent and the Trustee
are the same entity, the Calculation Agent may be removed as described
above, with the Issuer acting in lieu of the Trustee.
(b) In the event that the Calculation Agent shall resign or be
removed or dissolved, or if the property or affairs of the Calculation
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 Issuer shall use its best efforts to appoint a successor as
Calculation Agent, and the Trustee shall thereupon enter into an agreement
with such successor to perform the duties of the Calculation Agent as
described herein.
(c) The Calculation Agent (if other than the Trustee) shall be acting
as agent for the Trustee, as trustee, registrar and paying agent for the
Class 1996B-3 Notes, in connection with its duties hereunder. In the
absence of bad faith or negligence on its part, the Calculation 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 hereunder and shall
not be liable for any error of judgment made in good faith unless the
Calculation Agent shall have been negligent in ascertaining (or failing to
ascertain) the pertinent facts necessary to make such judgment.
Section 2.08. CREDIT RATINGS. The Issuer shall take all reasonable action
necessary to enable at least one nationally recognized statistical rating
organization (as that term is used in the rules and regulations of the SEC under
the Securities Exchange Act) to provide credit ratings for the Class 1996B-3
Notes.
Section 2.09. NOTICE. The Issuer shall use its best efforts to provide
the Trustee and, so long as no Payment Default has occurred and is continuing
and the ownership of the Class 1996B-3 Notes is maintained in book-entry form by
the Depository, the Calculation Agent with notice of any change in the maximum
rate permitted by law on the Class 1996B-3 Notes.
C-6
Section 2.10. NOTICE OF PAYMENT DEFAULT.
(a) If the Issuer determines that a Payment Default has occurred the
Issuer shall promptly notify the Trustee thereof.
(b) So long as the ownership of the Class 1996B-3 Notes is maintained
in book-entry form by the Depository, upon the occurrence of a Payment
Default the Trustee shall immediately send a notice thereof to the
Calculation Agent by telecopy or similar means.
(c) So long as the ownership of the Class 1996B-3 Notes is maintained
in book-entry form by the Depository, the Trustee shall immediately send
notice to the Calculation Agent by telecopy or similar means if a Payment
Default is cured.
C-7
EXHIBIT A
FORM OF CLASS 1996A-5 SENIOR TREASURY RATE NOTES
EXCEPT AS OTHERWISE PROVIDED IN THE INDENTURE, THIS GLOBAL NOTE MAY BE
TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE SECURITIES
DEPOSITORY (AS DEFINED HEREIN) OR TO A SUCCESSOR SECURITIES DEPOSITORY OR TO A
NOMINEE OF A SUCCESSOR SECURITIES DEPOSITORY.
UNION FINANCIAL SERVICES-1, INC.
TAXABLE STUDENT LOAN ASSET-BACKED NOTE
SENIOR CLASS 1996A-5
TREASURY RATE NOTE
REGISTERED NO. R-[1][2] REGISTERED [$200,000,000][$25,000,000]
MATURITY DATE: INTEREST RATE: ORIGINAL ISSUE DATE CUSIP NO.
July 1, 2005 Variable November 1, 1996 906619 AG6
PRINCIPAL SUM: ____________________________________________ DOLLARS
REGISTERED OWNER: CEDE & CO.
UNION FINANCIAL SERVICES-1, INC., a corporation organized under the
corporation laws of the State of Nevada (the "Issuer," which term includes any
successor corporation under the Second Amended and Restated Indenture of Trust,
dated as of November 1, 1996 (as amended, the "Indenture"), between the Issuer
and Norwest Bank Minnesota, National Association, as trustee (the "Trustee,"
which term includes any successor trustee under the Indenture)), for value
received, hereby promises to pay to the Registered Owner (stated above) or
registered assigns, the Principal Sum of (stated above), but solely from the
revenues and receipts hereinafter specified and not otherwise, on the Maturity
Date specified above (subject to the right of prior redemption hereinafter
described), upon presentation and surrender of this note at the Principal Office
of the Trustee, as paying agent, trustee, authenticating agent and registrar for
the Notes, or a duly appointed successor paying agent, and to pay interest in
arrears on said Principal Sum, but solely from the revenues and receipts
hereinafter specified and not otherwise, to the Registered Owner hereof from the
most recent Interest Payment Date to which interest has been paid hereon, until
the payment of said principal sum in full, at the T-Xxxx Rate on the first
Business Day of each month (each an "Interest Payment Date"), commencing
December 2, 1996. Such interest is payable by check or draft drawn upon the
Trustee and mailed on the Interest Payment Date to the person who is the
Registered Owner hereof on the
A-1
Record Date at the address of such Registered Owner as it appears on the
registration books (the "Note Register") maintained by the Trustee.
Any capitalized words and terms used as defined words and terms in this
note and not otherwise defined herein shall have the meanings given them in the
Indenture.
This note shall bear interest at the T-Xxxx Rate, all as determined in
Appendix A of the Indenture.
The principal of and interest on this note are payable in lawful money of
the United States of America. If the specified date for any payment of
principal or interest accrued to such specified date shall be a day other than a
Business Day then such payment may be made on the next succeeding Business Day,
with the same force and effect as if made on the specified date for such payment
without additional interest.
Interest payable on this note shall be computed on the basis of a year
consisting of 365 or 366 days, as applicable.
This note is one of a series of notes of the Issuer designated Taxable
Student Loan Asset-Backed Notes, Senior Class 1996A-5 Treasury Rate, dated
the Original Issue Date, in the aggregate original principal amount of
$225,000,000 (the "Class 1996A-5 Notes") which, together with the Issuer's
Taxable Student Loan Asset-Backed Notes, Senior Class 1996A-6 Auction Rate
Securities (ARS-SM-) issued in the aggregate principal amount of $75,500,000
(collectively, the "Class 1996A Notes") and the Issuer's Taxable Student Loan
Asset-Backed Notes, Subordinate Class 1996B-3 LIBOR Rate issued in the
aggregate principal amount of $15,600,000 (the "Class 1996B-3 Notes") have
been authorized by the Issuer under a certain resolution, and issued by the
Issuer pursuant to the Indenture. The Issuer has previously issued
$48,300,000 of its Taxable Student Loan Asset-Backed Notes, Senior Class
1996A-1 Auction Rate Securities (ARS-SM-) (the "Class 1996A-1 Notes"),
$48,300,000 of its Taxable Student Loan Asset-Backed Notes, Senior Class
1996A-2 Auction Rate Securities (ARS-SM-) (the "Class 1996A-2 Notes"),
$11,100,000 of its Taxable Student Loan Asset-Backed Notes, Subordinate Class
1996B LIBOR Rate (the "Class 1996B Notes"), $73,700,000 of its Taxable
Student Loan Asset-Backed Notes, Senior Class 1996A-3 Auction Rate Securities
(ARS-SM-) (the "Class 1996A-3 Notes"),$54,300,000 of its Taxable Student Loan
Asset-Backed Notes, Senior Class 1996A-4 Auction Rate Securities (ARS-SM-)
(the "Class 1996A-4 Notes") and $14,200,000 of its Taxable Student Loan
Asset-Backed Notes, Subordinate Class 1996B-2 LIBOR Rate (the "Class 1996B-2
Notes"). The Class 1996A-1 Notes, the Class 1996A-2 Notes, the Class 1996A-3
Notes, the Class 1996A-4 Notes and the Class 1996A Notes are collectively
referred to herein as the "Class A Notes." The Class 1996B Notes, the Class
1996B-2 Notes and the Class 1996B-3 Notes are collectively referred to herein
as the "Class B Notes." The proceeds of such notes will be used by the
Issuer, together with other moneys of the Issuer, for the purpose of
providing funds to finance the acquisition of student loans, fund a reserve
fund and to pay certain costs and expenses in connection with the issuance of
such notes. The Indenture provides for the issuance of additional notes (the
"Additional Notes") which may be secured on a parity
A-2
with or subordinate to the Class A Notes or the Class B Notes as determined
by the Issuer. The Class A Notes, the Class B Notes and any Additional Notes
are collectively referred to herein as the "Notes."
MANDATORY REDEMPTION. This note is subject to redemption by the Issuer,
in whole or in part, on any Interest Payment Date subsequent to April 1,
1999, from certain moneys in the Senior Note Redemption Account of the Note
Redemption Fund created pursuant to the Indenture at a redemption price equal
to the principal amount thereof plus accrued interest to the redemption date.
This note is also subject to mandatory redemption at a redemption price
equal to the principal amount thereof plus accrued interest on any Interest
Payment Date subsequent to April 1, 1999 when excess revenue moneys are
deposited in the Senior Note Redemption Account from the Revenue Fund.
EXTRAORDINARY OPTIONAL REDEMPTION. This note is subject to extraordinary
optional redemption, at the option of the Issuer, at a redemption price equal
to the principal amount of this note being redeemed, plus accrued interest to
the date of redemption, without premium in whole or in part on any Interest
Payment Date, if the Issuer reasonably determines that it is unable to
acquire Financed Eligible Loans, that the rate of return on Financed Eligible
Loans has materially decreased, or that the costs of administering the Trust
have placed unreasonable burdens upon the ability of the Issuer to perform
its obligations under the Indenture.
OPTIONAL REDEMPTION. This note is subject to redemption at the option of
the Issuer, in whole or in part, on any Interest Payment Date subsequent to
April 1, 1999 at a redemption price equal to the principal amount of this
note being redeemed, plus accrued interest on the date of redemption.
OPTIONAL PURCHASE. The Issuer may purchase or cause to be purchased all
of the Notes on any Interest Payment Date on which the aggregate current
principal balance of the Notes shall be less than or equal to 10% of the
initial aggregate principal balance of the Notes on the Date of Issuance, at
a purchase price equal to the aggregate current principal balance of such
Notes, plus accrued interest on the Notes through the day preceding the
Interest Payment Date on which the purchase occurs.
NOTICE OF REDEMPTION OR PURCHASE. Notice of the call for redemption or
purchase shall be given by the Trustee by mailing a copy of the notice at
least 15 days prior to the redemption or purchase date to the Registered
Owners of Notes to be redeemed or purchased in whole or in part at the
address of such Registered Owner last showing on the registration books.
Failure to give such notice or any defect therein shall not affect the
validity of any proceedings for the redemption or purchase of such Notes for
which no such failure or defect occurs. All Notes called for redemption or
purchase will cease to bear interest after the specified redemption or
purchase date, provided funds for their payment are on deposit at the place
of payment at the
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time. If less than all Notes are to be redeemed or purchased, Notes shall be
selected for redemption or purchase as provided in the Indenture.
SWAP AGREEMENTS. The Indenture provides that the Issuer may enter into
an interest rate swap or basis agreement between the Issuer and a swap
provider (a "Swap Counterparty"), as originally executed and as amended or
supplemented, or other interest rate hedge agreement between the Issuer and a
Swap Counterparty, as originally executed and as amended or supplemented, in
each case approved in writing by each of the Rating Agency, for the purpose
of converting in whole or in part the Issuer's variable interest rate
liability on all or a portion of the Notes bearing interest at a variable
rate issued on a parity therewith to a fixed rate liability or for the
purpose of converting in whole or in part the Issuer's fixed interest rate
liability on all or a portion of any Additional Notes bearing interest at a
fixed rate issued on a parity therewith or subordinate to a variable rate
liability. Payments due to a Swap Counterparty from the Issuer pursuant to
the applicable Swap Agreement (including, but not limited to, payments in
respect of an Early Termination Date, as defined in the applicable Swap
Agreement) are referred to herein as "Issuer Swap Payments."
The principal of and interest on the Class A Notes and any Additional
Notes issued on a parity with the Class A Notes and any Issuer Swap Payments
secured on a parity with the Class A Notes are payable on a superior basis to
such payments on the Class B Notes and any Additional Notes issued on a
parity with or subordinate to the Class B Notes; provided, however, that
current principal and interest may be paid on the Class B Notes and any
Additional Notes issued on a parity with or subordinate to the Class B Notes
only if all principal and interest payments due and owing at such time on the
Class A Notes and any Additional Notes issued on a parity with the Class A
Notes and any Issuer Swap Payments secured on a parity with the Class A Notes
have been previously made or provided for as provided in the Indenture.
Reference is hereby made to the Indenture, copies of which are on file in
the Principal Office of the Trustee, and to all of the provisions of which
any Registered Owner of this note by his acceptance hereof hereby assents,
for definitions of terms; the description of and the nature and extent of the
security for the Notes; the Issuer's student loan origination and acquisition
program; the revenues and other money pledged to the payment of the principal
of and interest on the Notes; the nature and extent and manner of enforcement
of the pledge; the conditions upon which the Indenture may be amended or
supplemented with or without the consent of the Registered Owners of the
Notes and any Swap Counterparty; the rights and remedies of the Registered
Owner hereof with respect hereto and thereto, including the limitations upon
the right of a Registered Owner hereof to institute any suit, action, or
proceeding in equity or at law with respect hereto and thereto; the rights,
duties, and obligations of the Issuer and the Trustee thereunder; the terms
and provisions upon which the liens, pledges, charges, trusts, and covenants
made therein may be discharged at or prior to the stated maturity or earlier
redemption of this note, and this note thereafter shall no longer be secured
by the Indenture or be deemed to be Outstanding, as defined in the Indenture,
thereunder; and for the other terms and provisions thereof.
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THE NOTES ARE LIMITED OBLIGATIONS OF THE ISSUER, PAYABLE SOLELY FROM, AND
FURTHER SECURED BY, THE TRUST ESTATE, AS DEFINED IN THE INDENTURE.
No recourse, either directly or indirectly, shall be had for the payment
of the principal of and interest on this note or any claim based hereon or in
respect hereof or of the Indenture, against the Trustee, or any incorporator,
director, officer, employee, or agent of the Issuer, but the obligation to
pay all amounts required by the Indenture securing this note and the
obligation to do and perform the covenants and acts required of the Issuer
therein and herein shall be and remain the responsibility and obligation of
said Issuer, limited as herein set forth.
Subject to the restrictions specified in the Indenture, this note is
transferable on the Note Register kept for that purpose by the Trustee, as
registrar, upon surrender of this note for transfer at the principal office
of the Trustee, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by, the Registered
Owner hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes of the same series, Stated Maturity, of authorized
denominations, bearing interest at the same rate, and for the same aggregate
principal amount will be issued to the designated transferee or transferees.
At the option of the Registered Owner, any Note may be exchanged for other
Notes in authorized denominations upon surrender of the Note to be exchanged
at the principal office of the Trustee. Upon any such presentation for
exchange, one or more new Notes of the same series, Stated Maturity, in
authorized denominations, bearing interest at the same rate, and for the same
aggregate principal amount as the Note or Notes so surrendered will be issued
to the Registered Owner of the Note or Notes so surrendered; and the Note or
Notes so surrendered shall thereupon be cancelled by the Trustee.
Notwithstanding the foregoing, so long as the ownership of the Notes is
maintained in book-entry form by The Depository Trust Company (the
"Securities Depository") or a nominee thereof, this note may be transferred
in whole but not in part only to the Securities Depository or a nominee
thereof or to a successor Securities Depository or its nominee.
The Issuer, the Trustee, and any agent of either of them shall treat the
Person in whose name this note is registered as the Registered Owner hereof
(i) on the record date for purposes of receiving timely payment of interest
hereon, and (ii) on the date of surrender of this note for purposes of
receiving payment of principal hereof at its stated maturity and (iii) for
all other purposes, whether or not this note is overdue, and neither the
Issuer, the Trustee, nor any such agent shall be affected by notice to the
contrary.
To the extent permitted by the Indenture, modifications or alterations of
the Indenture and any supplemental indenture may be made with the consent of
less than all of the Registered Owners of the Notes then outstanding or
without the consent of any of such Registered Owners (by reason of a change
in the Act or Regulation or to cure ambiguities or conflicts), but such
modification or alteration is not permitted to affect the maturity date,
Stated Maturity, amount,
A-5
Interest Payment Date, or rate of interest on any outstanding Notes or affect
the rights of the Registered Owners of less than all of the Notes outstanding.
The Registered Owner hereof shall not have the right to demand payment of
this note or any interest hereon out of funds raised or to be raised by
taxation.
Any capitalized term used herein and not otherwise defined herein shall
have the same meaning ascribed to such term in the herein defined Indenture
unless the context shall clearly indicate otherwise.
It is hereby certified and recited that all acts and things required by the
laws of the State of Nevada to happen, exist, and be performed precedent to and
in the issuance of this note, and the passage of said resolution and the
execution of said Indenture, have happened, exist and have been performed as so
required.
A-6
IN TESTIMONY WHEREOF, the Board of Directors of UNION FINANCIAL SERVICES-1,
INC. has caused the seal of the Issuer to be impressed or a facsimile thereof to
be printed hereon, and this note to be executed by the President and Secretary
of the Issuer all as of the Original Issue Date.
[SEAL] UNION FINANCIAL SERVICES-1, INC.
By
-------------------------------------
President
By
-------------------------------------
Secretary
A-7
CERTIFICATE OF AUTHENTICATION
This note is one of the Class 1996A-5 Notes designated therein and
described in the within-mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By
-----------------------------------------
Authorized Signatory
AUTHENTICATION DATE:
----------------------------
A-8
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
unto __________ (Social Security or other identifying number __________) the
within note and all rights thereunder and hereby irrevocably appoints
__________ attorney to transfer the within note on the books kept for
registration thereof, with full power of substitution in the premises.
DATED: SIGNED:
------------------- ---------------------------------------
NOTICE: The signature on this Assignment must
correspond with the name of the Registered Owner
as it appears on the face of the within note in
every particular.
Signature Guaranteed by:
-------------------------------
A Member of The New York Stock
Exchange or a State or National
Bank
A-9
EXHIBIT B
FORM OF CLASS 1996A-6 SENIOR
AUCTION RATE NOTES
EXCEPT AS OTHERWISE PROVIDED IN THE INDENTURE, THIS GLOBAL NOTE MAY BE
TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE SECURITIES
DEPOSITORY (AS DEFINED HEREIN) OR TO A SUCCESSOR SECURITIES DEPOSITORY OR TO A
NOMINEE OF A SUCCESSOR SECURITIES DEPOSITORY.
UNION FINANCIAL SERVICES-1, INC.
TAXABLE STUDENT LOAN ASSET-BACKED NOTE
SENIOR CLASS 1996A-6
AUCTION RATE SECURITIES (ARS-SM-)
REGISTERED NO. R-1 REGISTERED $75,500,000
MATURITY DATE: INTEREST RATE: ORIGINAL ISSUE DATE CUSIP NO.
July 1, 2014 Variable November 1, 1996 906619 AH4
PRINCIPAL SUM: SEVENTY-FIVE MILLION FIVE HUNDRED THOUSAND DOLLARS
REGISTERED OWNER: CEDE & CO.
UNION FINANCIAL SERVICES-1, INC., a corporation organized under the
corporation laws of the State of Nevada (the "Issuer," which term includes any
successor corporation under the Second Amended and Restated Indenture of Trust,
dated as of November 1, 1996 (as amended, the "Indenture"), between the Issuer
and Norwest Bank Minnesota, National Association, as trustee (the "Trustee,"
which term includes any successor trustee under the Indenture)) for value
received, hereby promises to pay to the Registered Owner (stated above) or
registered assigns, the Principal Sum of (stated above), but solely from the
revenues and receipts hereinafter specified and not otherwise, on the Maturity
Date specified above (subject to the right of prior redemption hereinafter
described), upon presentation and surrender of this note at the Principal Office
of the Trustee, as paying agent, trustee, authenticating agent and registrar for
the Notes, or a duly appointed successor paying agent, and to pay interest in
arrears on said Principal Sum, but solely from the revenues and receipts
hereinafter specified and not otherwise, to the Registered Owner hereof from the
most recent Interest Payment Date to which interest has been paid hereon, until
the payment of said principal sum in full.
B-1
Any capitalized words and terms used as defined words and terms in this
note and not otherwise defined herein shall have the meanings given them in the
Indenture.
This note shall initially bear interest at the rate of interest per annum
established by the Broker-Dealer for the initial Auction Period pursuant to
the Broker-Dealer Agreement, written notice of which shall be given to the
Trustee. For each Auction Period thereafter, the unpaid principal amount
hereof from time to time outstanding shall bear interest at the Auction Rate
determined in accordance with the provisions of Appendix B of the Indenture,
payable on each Interest Payment Date and on the date of payment or
redemption of principal hereof to the extent of interest accrued on the
principal then being paid or redeemed, 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 the Auction Rate established from time to time
pursuant to Appendix B of the Indenture shall be computed for the actual
number of days elapsed on the basis of a year consisting of 360 days.
This note shall bear interest at an Auction Rate based on an Auction
Period that shall, until adjusted pursuant to Appendix B of the Indenture,
generally consist of seven days, all as determined in the Indenture.
THE AUCTION PERIOD, THE AUCTION RATE, THE METHOD OF DETERMINING THE
AUCTION RATE ON THIS NOTE AND THE AUCTION PROCEDURES RELATED THERETO, AN
AUCTION PERIOD ADJUSTMENT, A CHANGE IN THE AUCTION DATE AND THE INTEREST
PAYMENT DATES WILL BE DETERMINED IN ACCORDANCE WITH THE TERMS, CONDITIONS AND
PROVISIONS OF, INCLUDING, WITHOUT LIMITATION, REQUIRED NOTICES THEREOF TO THE
EXISTING OWNERS OF THE AUCTION RATE NOTES, THE INDENTURE 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.
Such interest is payable by check or draft drawn upon the Trustee and
mailed or wire transfer on the Interest Payment Date to the person who is the
Registered Owner hereof on the Record Date at the address of such Registered
Owner as it appears on the registration books (the "Note Register")
maintained by the Trustee.
The principal of and interest on this note are payable in lawful money of
the United States of America. If the specified date for any payment of
principal or interest accrued to such specified date shall be a day other
than a Business Day then such payment may be made on the next succeeding
Business Day, with the same force and effect as if made on the specified date
for such payment without additional interest.
This note is one of a series of notes of the Issuer designated Taxable
Student Loan Asset-Backed Notes, Senior Class 1996A-6 Auction Rate Securities
(ARS-SM-), dated the Original Issue Date, in the aggregate original principal
amount of $75,500,000 (the "Class 1996A-6 Notes") which, together with the
Issuer's Taxable Student Loan Asset-Backed Notes, Senior Class 1996A-5
Treasury Rate issued in the aggregate principal amount of $225,000,000
B-2
(collectively, the "Class 1996A Notes") and the Issuer's Taxable Student Loan
Asset-Backed Notes, Subordinate Class 1996B-3 LIBOR Rate issued in the
aggregate principal amount of $15,600,000 (the "Class 1996B-3 Notes") have
been authorized by the Issuer under a certain resolution, and issued by the
Issuer pursuant to the Indenture. The proceeds of such notes will be used by
the Issuer, together with other moneys of the Issuer, for the purpose of
financing the acquisition of student loans, fund a reserve fund and to pay
certain costs and expenses in connection with the issuance of such notes.
The Issuer has previously issued $48,300,000 of its Taxable Student Loan
Asset-Backed Notes, Senior Class 1996A-1 Auction Rate Securities (ARS-SM-)
(the "Class 1996A-1 Notes"), $48,300,000 of its Taxable Student Loan
Asset-Backed Notes, Senior Class 1996A-2 Auction Rate Securities (ARS-SM-)
(the "Class 1996A-2 Notes"), $11,100,000 of its Taxable Student Loan
Asset-Backed Notes, Subordinate Class 1996B LIBOR Rate (the "Class 1996B
Notes") $73,700,000 of its Taxable Student Loan Asset-Backed Notes, Senior
Class 1996A-3 Auction Rate Securities (ARS-SM-) (the "Class 1996A-3 Notes"),
$54,300,000 of its Taxable Student Loan Asset-Backed Notes, Senior Class
1996A-4 Auction Rate Securities (ARS-SM-) (the "Class 1996A-4 Notes") and
$14,200,000 of its Taxable Student Loan Asset-Backed Notes, Subordinate Class
1996B-2 LIBOR Rate (the "Class 1996B-2 Notes"). The Class 1996A-1 Notes, the
Class 1996A-2 Notes, the Class 1996A-3 Notes, the Class 1996A-4 Notes and the
Class 1996A Notes are collectively referred to herein as the "Class A Notes."
The Class 1996B Notes, the Class 1996B-2 Notes and the Class 1996B-3 Notes
are collectively referred to herein as the "Class B Notes." The Indenture
provides for the issuance of additional notes (the "Additional Notes") which
may be secured on a parity with or subordinate to the Class A Notes and the
Class B Notes as may be determined by the Issuer. The Class A Notes and the
Class B Notes and any Additional Notes are collectively referred to herein as
the "Notes."
MANDATORY REDEMPTION. This note is subject to mandatory redemption by
the Issuer, in whole or in part, on any Interest Payment Date from certain
moneys in the Senior Note Redemption Account of the Note Redemption Fund
created pursuant to the Indenture at a redemption price equal to the
principal amount thereof plus accrued interest to the redemption date.
This note is also subject to mandatory redemption by the Issuer at a
redemption price equal to the principal amount thereof plus accrued interest,
if any, to the date of redemption thereof from moneys in the Senior Note
Redemption Account of the Note Redemption Fund on the Interest Payment Date
next succeeding February 15, 1997, to the extent that moneys remain in the
Series 1996C Loan Account of the Student Loan Fund on such date, unless, no
such mandatory redemption is needed to maintain the ratings on certain of the
Notes as provided in the Indenture.
This note is also subject to mandatory redemption at a redemption price
equal to the principal amount thereof plus accrued interest on any Interest
Payment Date when excess revenue moneys are deposited in the Senior Note
Redemption Account from the Revenue Fund.
B-3
OPTIONAL REDEMPTION. This note is subject to redemption at the option of
the Issuer, in whole or in part, on any Interest Payment Date at a redemption
price equal to the principal amount of this note being redeemed, plus accrued
interest, if any, to the redemption date.
EXTRAORDINARY OPTIONAL REDEMPTION. This note is also subject to
extraordinary optional redemption, at the option of the Issuer, at a
redemption price equal to the principal amount of this note being redeemed,
plus accrued interest to the date of redemption, without premium in whole or
in part on any Interest Payment Date, if the Issuer reasonably determines
that it is unable to acquire Financed Eligible Loans, that the rate of return
on Financed Eligible Loans has materially decreased, or that the costs of
administering the Trust have place unreasonable burdens upon the ability of
the Issuer to perform its obligations under the Indenture.
OPTIONAL PURCHASE. The Issuer may purchase or cause to be purchased all
of the Notes on any Interest Payment Date on which the aggregate current
principal balance of the Notes shall be less than or equal to 10% of the
initial aggregate principal balance of the Notes on the Date of Issuance, at
a purchase price equal to the aggregate current principal balance of such
Notes, plus accrued interest on the Notes through the day preceding the
Interest Payment Date on which the purchase occurs.
NOTICE OF REDEMPTION OR PURCHASE. Notice of the call for redemption
shall be given by the Trustee by mailing a copy of the notice at least 15
days prior to the redemption or purchase date to the Registered Owners of the
Notes to be redeemed in whole or in part at the address of such Registered
Owner last showing on the registration books. Failure to give such notice or
any defect therein shall not affect the validity of any proceedings for the
redemption or purchase of such Auction Rate Notes for which no such failure
or defect occurs. All Notes called for redemption or purchase will cease to
bear interest after the specified redemption or purchase date, provided funds
for their payment are on deposit at the place of payment at the time. If
less than all Notes are to be redeemed or purchased, Notes shall be selected
for redemption or purchase as provided in the Indenture.
SWAP AGREEMENTS. The Indenture provides that the Issuer may enter into
an interest rate swap or basis agreement between the Issuer and a swap
provider (a "Swap Counterparty"), as originally executed and as amended or
supplemented, or other interest rate hedge agreement between the Issuer and a
Swap Counterparty, as originally executed and as amended or supplemented, in
each case approved in writing by the Rating Agency, for the purpose of
converting in whole or in part the Issuer's variable interest rate liability
on all or a portion of the Notes bearing interest at a variable rate issued
on a parity therewith to a fixed rate liability or for the purpose of
converting in whole or in part the Issuer's fixed interest rate liability on
all or a portion of any Additional Notes bearing interest at a fixed rate
issued on a parity therewith to a variable rate liability. Payments due to a
Swap Counterparty from the Issuer pursuant to the applicable Swap Agreement
(including, but not limited to, payments in respect of an Early Termination
Date, as defined in the applicable Swap Agreement) are referred to herein as
"Issuer Swap Payments."
B-4
The principal of and interest on the Class A Notes and any Additional
Notes issued on a parity with the Class A Notes and any Issuer Swap Payments
secured on a parity with the Class A Notes are payable on a superior basis to
such payments on the Class B Notes and any Additional Notes issued on a
parity or subordinate to the Class B Notes; provided, however, that current
principal and interest may be paid on the Class B Notes and any Additional
Notes issued on a parity with the Class B Notes or subordinate to the Class B
Notes if all principal and interest payments due and owing at such time on
the Class A Notes and any Additional Notes issued on a parity with the Class
A Notes and any Issuer Swap Payments secured on a parity with the Class A
Notes have been previously made or provided for as provided in the Indenture.
Reference is hereby made to the Indenture, copies of which are on file in
the Principal Office of the Trustee, and to all of the provisions of which
any Registered Owner of this note by his acceptance hereof hereby assents,
for definitions of terms; the description of and the nature and extent of the
security for the Notes; the Issuer's student loan origination and acquisition
program; the revenues and other money pledged to the payment of the principal
of and interest on the Notes; the nature and extent and manner of enforcement
of the pledge; the conditions upon which the Indenture may be amended or
supplemented with or without the consent of the Registered Owners of the
Notes and any Swap Counterparty; the rights and remedies of the Registered
Owner hereof with respect hereto and thereto, including the limitations upon
the right of a Registered Owner hereof to institute any suit, action, or
proceeding in equity or at law with respect hereto and thereto; the rights,
duties, and obligations of the Issuer and the Trustee thereunder; the terms
and provisions upon which the liens, pledges, charges, trusts, and covenants
made therein may be discharged at or prior to the stated maturity or earlier
redemption of this note, and this note thereafter shall no longer be secured
by the Indenture or be deemed to be Outstanding, as defined in the Indenture,
thereunder; and for the other terms and provisions thereof.
THE NOTES ARE LIMITED OBLIGATIONS OF THE ISSUER, PAYABLE SOLELY FROM, AND
FURTHER SECURED BY, THE TRUST ESTATE, AS DEFINED IN THE INDENTURE.
No recourse, either directly or indirectly, shall be had for the payment
of the principal of and interest on this note or any claim based hereon or in
respect hereof or of the Indenture, against the Trustee, or any incorporator,
director, officer, employee, or agent of the Issuer, nor against the State of
Nevada, or any official thereof, but the obligation to pay all amounts
required by the Indenture securing this note and the obligation to do and
perform the covenants and acts required of the Issuer therein and herein
shall be and remain the responsibility and obligation of said Issuer, limited
as herein set forth.
Subject to the restrictions specified in the Indenture, this note is
transferable on the Note Register kept for that purpose by the Trustee, as
registrar, upon surrender of this note for transfer at the principal office of
the Trustee, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by, the Registered
Owner hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes of the
B-5
same series, Stated Maturity, of authorized denominations, bearing interest
at the same rate, and for the same aggregate principal amount will be issued
to the designated transferee or transferees. At the option of the Registered
Owner, any Note may be exchanged for other Notes in authorized denominations
upon surrender of the Note to be exchanged at the principal office of the
Trustee. Upon any such presentation for exchange, one or more new Notes of
the same series, Stated Maturity, in authorized denominations, bearing
interest at the same rate, and for the same aggregate principal amount as the
Note or Notes so surrendered will be issued to the Registered Owner of the
Note or Notes so surrendered; and the Note or Notes so surrendered shall
thereupon be cancelled by the Trustee.
Notwithstanding the foregoing, so long as the ownership of the Notes is
maintained in book-entry form by The Depository Trust Company (the
"Securities Depository") or a nominee thereof, this note may be transferred
in whole but not in part only to the Securities Depository or a nominee
thereof or to a successor Securities Depository or its nominee.
The Issuer, the Trustee, and any agent of either of them shall treat the
Person in whose name this note is registered as the Registered Owner hereof
(i) on the record date for purposes of receiving timely payment of interest
hereon, and (ii) on the date of surrender of this note for purposes of
receiving payment of principal hereof at its stated maturity and (iii) for
all other purposes, whether or not this note is overdue, and neither the
Issuer, the Trustee, nor any such agent shall be affected by notice to the
contrary.
To the extent permitted by the Indenture, modifications or alterations of
the Indenture and any supplemental indenture may be made with the consent of
less than all of the Registered Owners of the Notes then outstanding or
without the consent of any of such Registered Owners (by reason of a change
in the Act or Regulation or to cure ambiguities or conflicts), but such
modification or alteration is not permitted to affect the maturity date,
Stated Maturity, amount, Interest Payment Date, or rate of interest on any
outstanding Notes or affect the rights of the Registered Owners of less than
all of the Notes outstanding.
The Registered Owner hereof shall not have the right to demand payment of
this note or any interest hereon out of funds raised or to be raised by
taxation.
Any capitalized term used herein and not otherwise defined herein shall
have the same meaning ascribed to such term in the herein defined Indenture
unless the context shall clearly indicate otherwise.
It is hereby certified and recited that all acts and things required by
the laws of the State of Nevada to happen, exist, and be performed precedent
to and in the issuance of this note, and the passage of said resolution and
the execution of said Indenture, have happened, exist and have been performed
as so required.
B-6
IN TESTIMONY WHEREOF, the Board of Directors of UNION FINANCIAL
SERVICES-1, INC. has caused the seal of the Issuer to be impressed or a
facsimile thereof to be printed hereon, and this note to be executed by the
President and Secretary of the Issuer all as of the Original Issue Date.
[SEAL] UNION FINANCIAL SERVICES-1, INC.
By
--------------------------------------
President
By
--------------------------------------
Secretary
B-7
CERTIFICATE OF AUTHENTICATION
This note is one of the Class 1996A-6 Notes designated therein and
described in the within-mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By
------------------------------------------
Authorized Signatory
AUTHENTICATION DATE:
---------------------------
B-8
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
unto __________ (Social Security or other identifying number __________) the
within note and all rights thereunder and hereby irrevocably appoints
__________ attorney to transfer the within note on the books kept for
registration thereof, with full power of substitution in the premises.
DATED: SIGNED:
------------------- ----------------------------------------
NOTICE: The signature on this Assignment must
correspond with the name of the Registered Owner
as it appears on the face of the within note in
every particular.
Signature Guaranteed by:
-------------------------------
A Member of The New York Stock
Exchange or a State or National
Bank
B-9
EXHIBIT C
FORM OF CLASS 1996B-3 SUBORDINATE LIBOR RATE NOTES
EXCEPT AS OTHERWISE PROVIDED IN THE INDENTURE, THIS GLOBAL NOTE MAY BE
TRANSFERRED, IN WHOLE BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE SECURITIES
DEPOSITORY (AS DEFINED HEREIN) OR TO A SUCCESSOR SECURITIES DEPOSITORY OR TO A
NOMINEE OF A SUCCESSOR SECURITIES DEPOSITORY.
UNION FINANCIAL SERVICES-1, INC.
TAXABLE STUDENT LOAN ASSET-BACKED NOTE
SUBORDINATE CLASS 1996B-3
LIBOR RATE NOTE
REGISTERED NO. R-1 REGISTERED $15,600,000
MATURITY DATE: INTEREST RATE: ORIGINAL ISSUE DATE CUSIP NO.
July 1, 2025 Variable November 1, 1996 906619 AJ0
PRINCIPAL SUM: FIFTEEN MILLION SIX HUNDRED THOUSAND DOLLARS
REGISTERED OWNER: CEDE & CO.
UNION FINANCIAL SERVICES-1, INC., a corporation organized under the
corporation laws of the State of Nevada (the "Issuer," which term includes any
successor corporation under the Second Amended and Restated Indenture of Trust,
dated as of November 1, 1996 (as amended, the "Indenture"), between the Issuer
and Norwest Bank Minnesota, National Association, as trustee (the "Trustee,"
which term includes any successor trustee under the Indenture)), for value
received, hereby promises to pay to the Registered Owner (stated above) or
registered assigns, the Principal Sum of (stated above), but solely from the
revenues and receipts hereinafter specified and not otherwise, on the Maturity
Date specified above (subject to the right of prior redemption hereinafter
described), upon presentation and surrender of this note at the Principal Office
of the Trustee, as paying agent, trustee, authenticating agent and registrar for
the Notes, or a duly appointed successor paying agent, and to pay interest in
arrears on said Principal Sum, but solely from the revenues and receipts
hereinafter specified and not otherwise, to the Registered Owner hereof from the
most recent Interest Payment Date to which interest has been paid hereon, until
the payment of said principal sum in full, at the LIBOR-Based Rate on the first
Business Day of each month (each an "Interest Payment Date"), commencing
December 2, 1996. Such interest is payable by check or draft drawn upon the
Trustee and mailed on the Interest Payment Date to the person who is the
Registered Owner
C-1
hereof on the Record Date at the address of such Registered Owner as it
appears on the registration books (the "Note Register") maintained by the
Trustee.
Any capitalized words and terms used as defined words and terms in this
note and not otherwise defined herein shall have the meanings given them in the
Indenture.
This note shall bear interest at LIBOR-Based Rate, all as determined in
Appendix C of the Indenture.
The principal of and interest on this note are payable in lawful money of
the United States of America. If the specified date for any payment of
principal or interest accrued to such specified date shall be a day other than a
Business Day then such payment may be made on the next succeeding Business Day,
with the same force and effect as if made on the specified date for such payment
without additional interest.
Interest payable on this note shall be computed on the assumption that each
year contains 360 days and actual days elapsed.
This note is one of a series of notes of the Issuer designated Taxable
Student Loan Asset-Backed Notes, Subordinate Class 1996B-3 LIBOR Rate, dated the
Original Issue Date, in the aggregate original principal amount of $15,600,000
(the "Class 1996B-3 Notes") which, together with the Issuer's Taxable Student
Loan Asset-Backed Notes, Senior Class 1996A issued in the aggregate principal
amount of $300,500,000 (the "Class 1996A Notes") have been authorized by the
Issuer under a certain resolution, and issued by the Issuer pursuant to the
Indenture. The Issuer has previously issued $48,300,000 of its Taxable Student
Loan Asset-Backed Notes, Senior Class 1996A-1 Auction Rate Securities (ARS-SM-)
(the "Class 1996A-1 Notes"), $48,300,000 of its Taxable Student Loan
Asset-Backed Notes, Senior Class 1996A-2 Auction Rate Securities (ARS-SM-) (the
"Class 1996A-2 Notes"), $11,100,000 of its Taxable Student Loan Asset-Backed
Notes, Subordinate Class 1996B LIBOR Rate (the "Class 1996B Notes"), $73,700,000
of its Taxable Student Loan Asset-Backed Notes, Senior Class 1996A-3 Auction
Rate Securities (ARS-SM-) (the "Class 1996A-3 Notes"),$54,300,000 of its Taxable
Student Loan Asset-Backed Notes, Senior Class 1996A-4 Auction Rate Securities
(ARS-SM-) (the "Class 1996A-4 Notes") and $14,200,000 of its Taxable Student
Loan Asset-Backed Notes, Subordinate Class 1996B-2 LIBOR Rate (the
"Class 1996B-2 Notes"). The Class 1996A-1 Notes, the Class 1996A-2 Notes, the
Class 1996A-3 Notes, the Class 1996A-4 Notes and the Class 1996A Notes are
collectively referred to herein as the "Class A Notes." The Class 1996B Notes,
the Class 1996B-2 Notes and the Class 1996B-3 Notes are collectively referred to
herein as the "Class B Notes." The proceeds of such notes will be used by the
Issuer, together with other moneys of the Issuer, for the purpose of providing
funds to finance the acquisition of student loans, fund a reserve fund and to
pay certain costs and expenses in connection with the issuance of such notes.
The Indenture provides for the issuance of additional notes (the "Additional
Notes") which may be secured on a parity with or subordinate to the Class A
Notes or the Class B Notes as determined by the Issuer. The Class A Notes, the
Class B Notes and any Additional Notes are collectively referred to herein as
the "Notes."
C-2
MANDATORY REDEMPTION. This note is subject to redemption by the Issuer, in
whole or in part, on any Interest Payment Date subsequent to May 1, 1999, from
certain moneys in the Subordinate Note Redemption Account of the Note Redemption
Fund created pursuant to the Indenture at a redemption price equal to the
principal amount thereof plus accrued interest to the redemption date.
EXTRAORDINARY OPTIONAL REDEMPTION. This note is subject to extraordinary
optional redemption, at the option of the Issuer, at a redemption price equal to
the principal amount of this note being redeemed, plus accrued interest to the
date of redemption, without premium in whole or in part on any Interest Payment
Date, if the Issuer reasonably determines that it is unable to acquire Financed
Eligible Loans, that the rate of return on Financed Eligible Loans has
materially decreased, or that the costs of administering the Trust have placed
unreasonable burdens upon the ability of the Issuer to perform its obligations
under the Indenture.
OPTIONAL REDEMPTION. This note is subject to redemption at the option of
the Issuer, in whole or in part, on any Interest Payment Date subsequent to
May 1, 1999 at a redemption price equal to the principal amount of this note
being redeemed, plus accrued interest on the date of redemption.
OPTIONAL PURCHASE. The Issuer may purchase or cause to be purchased all of
the Notes on any Interest Payment Date on which the aggregate current principal
balance of the Notes shall be less than or equal to 10% of the initial aggregate
principal balance of the Notes on the Date of Issuance, at a purchase price
equal to the aggregate current principal balance of such Notes, plus accrued
interest on the Notes through the day preceding the Interest Payment Date on
which the purchase occurs.
NOTICE OF REDEMPTION OR PURCHASE. Notice of the call for redemption or
purchase shall be given by the Trustee by mailing a copy of the notice at least
15 days prior to the redemption or purchase date to the Registered Owners of
Notes to be redeemed or purchased in whole or in part at the address of such
Registered Owner last showing on the registration books. Failure to give such
notice or any defect therein shall not affect the validity of any proceedings
for the redemption or purchase of such Notes for which no such failure or defect
occurs. All Notes called for redemption or purchase will cease to bear interest
after the specified redemption or purchase date, provided funds for their
payment are on deposit at the place of payment at the time. If less than all
Notes are to be redeemed or purchased, Notes shall be selected for redemption or
purchase as provided in the Indenture.
SWAP AGREEMENTS. The Indenture provides that the Issuer may enter into an
interest rate swap or basis agreement between the Issuer and a swap provider (a
"Swap Counterparty"), as originally executed and as amended or supplemented, or
other interest rate hedge agreement between the Issuer and a Swap Counterparty,
as originally executed and as amended or supplemented, in each case approved in
writing by each of the Rating Agency, for the purpose of converting in whole or
in part the Issuer's variable interest rate liability on all or a portion of the
Notes bearing interest at a variable rate issued on a parity therewith to a
fixed rate
C-3
liability or for the purpose of converting in whole or in part the Issuer's
fixed interest rate liability on all or a portion of any Additional Notes
bearing interest at a fixed rate issued on a parity therewith or subordinate
to a variable rate liability. Payments due to a Swap Counterparty from the
Issuer pursuant to the applicable Swap Agreement (including, but not limited
to, payments in respect of an Early Termination Date, as defined in the
applicable Swap Agreement) are referred to herein as "Issuer Swap Payments."
The principal of and interest on the Class A Notes and any Additional Notes
issued on a parity with the Class A Notes and any Issuer Swap Payments secured
on a parity with the Class A Notes are payable on a superior basis to such
payments on the Class B Notes and any Additional Notes issued on a parity with
or subordinate to the Class B Notes; provided, however, that current principal
and interest may be paid on the Class B Notes and any Additional Notes issued on
a parity with or subordinate to the Class B Notes only if all principal and
interest payments due and owing at such time on the Class A Notes and any
Additional Notes issued on a parity with the Class A Notes and any Issuer Swap
Payments secured on a parity with the Class A Notes have been previously made or
provided for as provided in the Indenture.
Reference is hereby made to the Indenture, copies of which are on file in
the Principal Office of the Trustee, and to all of the provisions of which any
Registered Owner of this note by his acceptance hereof hereby assents, for
definitions of terms; the description of and the nature and extent of the
security for the Notes; the Issuer's student loan origination and acquisition
program; the revenues and other money pledged to the payment of the principal of
and interest on the Notes; the nature and extent and manner of enforcement of
the pledge; the conditions upon which the Indenture may be amended or
supplemented with or without the consent of the Registered Owners of the Notes
and any Swap Counterparty; the rights and remedies of the Registered Owner
hereof with respect hereto and thereto, including the limitations upon the right
of a Registered Owner hereof to institute any suit, action, or proceeding in
equity or at law with respect hereto and thereto; the rights, duties, and
obligations of the Issuer and the Trustee thereunder; the terms and provisions
upon which the liens, pledges, charges, trusts, and covenants made therein may
be discharged at or prior to the stated maturity or earlier redemption of this
note, and this note thereafter shall no longer be secured by the Indenture or be
deemed to be Outstanding, as defined in the Indenture, thereunder; and for the
other terms and provisions thereof.
THE NOTES ARE LIMITED OBLIGATIONS OF THE ISSUER, PAYABLE SOLELY FROM, AND
FURTHER SECURED BY, THE TRUST ESTATE, AS DEFINED IN THE INDENTURE.
No recourse, either directly or indirectly, shall be had for the payment of
the principal of and interest on this note or any claim based hereon or in
respect hereof or of the Indenture, against the Trustee, or any incorporator,
director, officer, employee, or agent of the Issuer, but the obligation to pay
all amounts required by the Indenture securing this note and the obligation
C-4
to do and perform the covenants and acts required of the Issuer therein and
herein shall be and remain the responsibility and obligation of said Issuer,
limited as herein set forth.
Subject to the restrictions specified in the Indenture, this note is
transferable on the Note Register kept for that purpose by the Trustee, as
regist rar, upon surrender of this note for transfer at the principal office
of the Trustee, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by, the Registered
Owner hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes of the same series, Stated Maturity, of authorized
denominations, bearing interest at the same rate, and for the same aggregate
principal amount will be issued to the designated transferee or transferees.
At the option of the Registered Owner, any Note may be exchanged for other
Notes in authorized denominations upon surrender of the Note to be exchanged
at the principal office of the Trustee. Upon any such presentation for
exchange, one or more new Notes of the same series, Stated Maturity, in
authorized denominations, bearing interest at the same rate, and for the same
aggregate principal amount as the Note or Notes so surrendered will be issued
to the Registered Owner of the Note or Notes so surrendered; and the Note or
Notes so surrendered shall thereupon be cancelled by the Trustee.
Notwithstanding the foregoing, so long as the ownership of the Notes is
maintained in book-entry form by The Depository Trust Company (the "Securities
Depository") or a nominee thereof, this note may be transferred in whole but not
in part only to the Securities Depository or a nominee thereof or to a successor
Securities Depository or its nominee.
The Issuer, the Trustee, and any agent of either of them shall treat the
Person in whose name this note is registered as the Registered Owner hereof
(i) on the record date for purposes of receiving timely payment of interest
hereon, and (ii) on the date of surrender of this note for purposes of receiving
payment of principal hereof at its stated maturity and (iii) for all other
purposes, whether or not this note is overdue, and neither the Issuer, the
Trustee, nor any such agent shall be affected by notice to the contrary.
To the extent permitted by the Indenture, modifications or alterations of
the Indenture and any supplemental indenture may be made with the consent of
less than all of the Registered Owners of the Notes then outstanding or without
the consent of any of such Registered Owners (by reason of a change in the Act
or Regulation or to cure ambiguities or conflicts), but such modification or
alteration is not permitted to affect the maturity date, Stated Maturity,
amount, Interest Payment Date, or rate of interest on any outstanding Notes or
affect the rights of the Registered Owners of less than all of the Notes
outstanding.
The Registered Owner hereof shall not have the right to demand payment of
this note or any interest hereon out of funds raised or to be raised by
taxation.
Any capitalized term used herein and not otherwise defined herein shall
have the same meaning ascribed to such term in the herein defined Indenture
unless the context shall clearly indicate otherwise.
C-5
It is hereby certified and recited that all acts and things required by the
laws of the State of Nevada to happen, exist, and be performed precedent to and
in the issuance of this note, and the passage of said resolution and the
execution of said Indenture, have happened, exist and have been performed as so
required.
C-6
IN TESTIMONY WHEREOF, the Board of Directors of UNION FINANCIAL SERVICES-1,
INC. has caused the seal of the Issuer to be impressed or a facsimile thereof to
be printed hereon, and this note to be executed by the President and Secretary
of the Issuer all as of the Original Issue Date.
[SEAL] UNION FINANCIAL SERVICES-1, INC.
By
--------------------------------
President
By
--------------------------------
Secretary
C-7
CERTIFICATE OF AUTHENTICATION
This note is one of the Class 1996B-3 Notes designated therein and
described in the within-mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By
--------------------------------
Authorized Signatory
AUTHENTICATION DATE:
-------------------------
C-8
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
unto __________ (Social Security or other identifying number __________) the
within note and all rights thereunder and hereby irrevocably appoints __________
attorney to transfer the within note on the books kept for registration thereof,
with full power of substitution in the premises.
DATED: SIGNED:
---------------- ----------------------------------------
NOTICE: The signature on this Assignment must
correspond with the name of the Registered Owner
as it appears on the face of the within note in
every particular.
Signature Guaranteed by:
--------------------------------
A Member of The New York Stock
Exchange or a State or National
Bank
C-9
EXHIBIT D
SERIES 1996C CLOSING CASH FLOW PROJECTIONS
D-1
EXHIBIT E
SERIES 1996C CLOSING CASH FLOW PROJECTIONS
E-1
EXHIBIT F
NOTICE OF PAYMENT DEFAULT
UNION FINANCIAL SERVICES-1, INC.
TAXABLE STUDENT LOAN ASSET-BACKED NOTES
CLASS 1996A-6
AUCTION RATE NOTES
NOTICE IS HEREBY GIVEN that a Payment Default has occurred and is
continuing with respect to the Auction Rate Notes identified above. The next
Auction for the Auction Rate Notes will not be held. The Auction Rate for
the Auction Rate Notes for the next succeeding Interest Period shall be the
Non-Payment Rate.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as
Trustee
Dated: By
-------------------- ---------------------------------------------
F-1
EXHIBIT G
NOTICE OF CURE OF PAYMENT DEFAULT
UNION FINANCIAL SERVICES-1, INC.
TAXABLE STUDENT LOAN ASSET-BACKED NOTES
CLASS 1996A-6
AUCTION RATE NOTES
NOTICE IS HEREBY GIVEN that a Payment Default with respect to the Auction
Rate Notes identified above has been waived or cured. The next Interest Payment
Date is __________________________ and the Auction Date is ____________________.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as
Trustee
Dated: By
-------------------- ----------------------------------------------
G-1
EXHIBIT H
NOTICE OF PROPOSED CHANGE IN LENGTH
OF ONE OR MORE AUCTION PERIODS
UNION FINANCIAL SERVICES-1, INC.
TAXABLE STUDENT LOAN ASSET-BACKED NOTES
CLASS 1996A-6
AUCTION RATE NOTES
Notice is hereby given that the Issuer proposes to change the length of one
or more Auction Periods pursuant to the Second Amended and Restated Indenture of
Trust, as amended (the "Indenture") as follows:
1. The change shall take effect on _______________, the Interest Rate
Adjustment Date for the next Auction Period (the "Effective Date").
2. The Auction Period Adjustment in Paragraph 1 shall take place only if
(a) the Trustee and the Auction Agent receive, by 11:00 a.m., eastern time, on
the Business Day before the Auction Date for the Auction Period commencing on
the Effective Date, a certificate from the Issuer, as required by the Indenture
authorizing the change in length of one or more Auction Periods and (b)
Sufficient Bids exist on the Auction Date for the Auction Period commencing on
the Effective Date.
3. If the condition referred to in (a) above is not met, the Auction Rate
for the Auction Period commencing on the Effective Date will be determined
pursuant to the Auction Procedures and the Auction Period shall be the Auction
Period determined without reference to the proposed change. If the condition
referred to in (a) is met but the condition referred to in (b) above is not met,
the Auction Rate for the Auction Period commencing on the Effective Date shall
be the Maximum Rate and the Auction Period shall be the Auction Period
determined without reference to the proposed change.
4. It is hereby represented, upon advice of the Auction Agent for the
Class 1996A-6 Notes described herein, that there were Sufficient Bids for such
Class 1996A-6 Notes at the Auction immediately preceding the date of this
Notice.
H-1
5. Terms not defined in this Notice shall have the meanings set forth in
the Indenture entered into in connection with the Class 1996A-6 Notes.
UNION FINANCIAL SERVICES-1, INC.
Dated: By
-------------------- ----------------------------------------------
H-2
EXHIBIT I
NOTICE ESTABLISHING CHANGE IN LENGTH
OF ONE OR MORE AUCTION PERIODS
UNION FINANCIAL SERVICES-1, INC.
TAXABLE STUDENT LOAN ASSET-BACKED NOTES
CLASS 1996A-6
AUCTION RATE NOTES
Notice is hereby given that the Issuer hereby establishes new lengths for
one or more Auction Periods pursuant to the Second Amended and Restated
Indenture of Trust, as amended:
1. The change shall take effect on _______________, the Interest Rate
Adjustment Date for the next Auction Period (the "Effective Date").
2. For the Auction Period commencing on the Effective Date, the Interest
Rate Adjustment Date shall be _______________, or the next succeeding Business
Day if such date is not a Business Day.
3. For Auction Periods occurring after the Auction Period commencing on
the Effective Date, the Interest Rate Adjustment Date shall be
[_______________(date) and every ______________(number) ______________(day of
week) thereafter] [every ______________(number) ______________(day of week)
after the date set forth in paragraph 2 above], or the next Business Day if any
such day is not a Business Day; provided, however, that the length of subsequent
Auction Periods shall be subject to further change hereafter as provided in the
Indenture of Trust.
4. The changes described in paragraphs 2 and 3 above shall take place
only upon delivery of this Notice and the satisfaction of other conditions set
forth in the Indenture of Trust and our prior notice dated _______________
regarding the proposed change.
5. Terms not defined in this Notice shall have the meanings set forth
in the Indenture of Trust relating to the Class 1996A-6 Notes.
UNION FINANCIAL SERVICES-1, INC.
Dated: By
-------------------- --------------------------------------
I-1
EXHIBIT J
NOTICE OF CHANGE IN AUCTION DATE
UNION FINANCIAL SERVICES-1, INC.
TAXABLE STUDENT LOAN ASSET-BACKED NOTES
CLASS 1996A-6
AUCTION RATE NOTES
Notice is hereby given by [ ], as Market Agent for the
Auction Rate Notes, that with respect to the Auction Rate Notes, the Auction
Date is hereby changed as follows:
1. With respect to Class 1996A-6 Notes, the definition of "Auction Date"
shall be deemed amended by substituting "_______________(number) Business Day"
in the second line thereof and by substituting "_______________(number) Business
Days" for "two Business Days" in subsection (d) thereof.
2. This change shall take effect on _______________ which shall be the
Auction Date for the Auction Period commencing on _______________.
3. The Auction Date for the Class 1996A-6 Notes shall be subject to
further change hereafter as provided in the Indenture of Trust.
4. Terms not defined in this Notice shall have the meaning set forth in
the Second Amended and Restated Indenture of Trust, as amended relating to the
Class 1996A-6 Notes.
Xxxxx Xxxxxx Inc., as Market Agent
Dated: By
-------------------- ----------------------------------
J-1
EXHIBIT K
NOTICE OF PROPOSED ADJUSTMENT TO PERCENTAGE
USED IN DETERMINING [MAXIMUM AUCTION RATE]
[ALL HOLD RATE] [NON-PAYMENT RATE]
UNION FINANCIAL SERVICES-1, INC.
TAXABLE STUDENT LOAN ASSET-BACKED NOTES
CLASS 1996A-6
AUCTION RATE NOTES
Notice is hereby given that the Market Agent hereby proposes to change the
[percentage] [Applicable Percentage] used in determining the [Maximum Auction
Rate] [All Hold Rate] [Non-Payment Rate] with respect to the captioned Auction
Rate Notes pursuant to the Second Amended and Restated Indenture of Trust, as
amended (the "Indenture") relating to such Auction Rate Notes:
1. The change shall take effect on the date of commencement of the next
Auction Period (the "Effective Date").
2. For the Auction Period commencing on the Effective Date, and each
Auction Period thereafter, it is proposed that the percentage used in
determining the [Maximum Auction Rate] [All Hold Rate] [Non-Payment Rate] shall
be ____________________.
3. The adjustment to the percentage used in determining the [Maximum
Auction Rate] [All Hold Rate] [Non-Payment Rate] in paragraph 2 above shall take
place only if (A) the Trustee, the Auction Agent and the Market Agent receive,
by 11:00 a.m., eastern time, on the Business Day immediately preceding the
Effective Date, an Issuer Certificate authorizing the adjustment of such
percentage as specified in such Certificate, together with a copy of the Issuer
consent thereto and the opinion of Note Counsel as required by the Indenture;
and (B) the Trustee and the Issuer have received written confirmation from each
of the Rating Agencies then rating the Auction Rate Notes that such proposed
adjustment will not adversely affect its ratings then applicable to any of the
Auction Rate Notes.
4. If any of the conditions referred to in paragraph 3(A) and (B) above
are not met, the existing percentage used to determine the [Maximum Auction
Rate] [All Hold Rate] [Non-Payment Rate] shall remain in effect, and the rate of
interest on the captioned Auction Rate Notes for the next succeeding Interest
Period shall be determined in accordance with the Auction Procedures.
Terms used herein have the meanings set forth in the Indenture.
Xxxxx Xxxxxx Inc., as Market Agent
Dated: By
--------------------- -----------------------------------------
K-1
EXHIBIT L
NOTICE ESTABLISHING NEW PERCENTAGE USED IN DETERMINING
[MAXIMUM AUCTION RATE] [ALL HOLD RATE] [NON-PAYMENT RATE]
UNION FINANCIAL SERVICES-1, INC.
TAXABLE STUDENT LOAN ASSET-BACKED NOTES
CLASS 1996A-6
AUCTION RATE NOTES
Notice is hereby given that the Issuer hereby establishes a new
[percentage] [Applicable Percentage] to be used in determining the [Maximum
Auction Rate] [All Hold Rate] [Non-Payment Rate] with respect to the captioned
Auction Rate Notes pursuant to the Second Amended and Restated Indenture of
Trust, as amended (the "Indenture") relating to such Auction Rate Notes:
1. The change shall take effect on ______________________, the
commencement of the next Auction Period (the "Effective Date").
2. For the Auction Period commencing on the Effective Date, and each
Auction Period thereafter, the percentage used in determining the [Maximum
Auction Rate] [All Hold Rate] [Non-Payment Rate] shall be ____________________.
3. The change described in paragraph 2 above shall take place only upon
delivery of this Notice and the satisfaction of other conditions set forth in
the Indenture and the Market Agent's prior notice dated ___________________
regarding the proposed change.
Terms used herein have the meanings set forth in the Indenture.
UNION FINANCIAL SERVICES-1, INC.
Dated: By
----------------------- --------------------------------------
L-1
