Exhibit 4.3
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2002 Series A1&B1
Supplemental Indenture of Trust
by and between
Education Funding Capital Trust-I
and
Fifth Third Bank,
as Indenture Trustee
and
Fifth Third Bank,
as Trust Eligible Lender Trustee
Authorizing the Issuance of
$1,023,000,000
Education Funding Capital Trust-I
Auction Rate Education Loan Backed Notes
2002 Series A1&B1
Dated as of [_______ __,] 2003
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Education Funding Capital Trust-I
Reconciliation and tie between Trust Indenture Act of 1939 and Indenture of
Trust dated as of May 1, 2002, as amended.
Trust Indenture Indenture
Act Section Section
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Section 310(a)(1)&(2)........................................... 6.22
(a)(3) .............................................. N/A
(a)(4) .............................................. 6.08
(a)(5) .............................................. 6.22
(b) .............................................. 6.20
(c) .............................................. N/A
Section 311(a) .............................................. 6.25
(b) .............................................. 6.25
(c) .............................................. N/A
Section 312(a) .............................................. 8.14
(b) .............................................. 8.14
(c) .............................................. 8.14
Section 313(a) ............................................. 11.04
(b) ............................................. 11.04
(c) .............................................. 3.17
(d) .............................................. 3.17
Section 314(a)(1)-(3)........................................... 3.17
(a)(4) .............................................. 3.18
(b) .............................................. 3.09
(c) ............................................. 11.06(a)
(d) ............................................. 11.06 (c)(e)
(e) ............................................. 11.06 (a)
(f) ............................................. 11.06 (k)
Section 315(a) .............................................. 6.01(a), 6.06
(b) .............................................. 7.04
(c) .............................................. 6.01(b)
(d)(1)(2)............................................ 6.06
(d)(3) .............................................. 5.11
(e) .............................................. 8.18
Section 316(a)(1)(A)............................................ 5.11
(a)(1)(B)............................................ 5.14
(a)(2) .............................................. N/A
(b) .............................................. 5.12
(c) .............................................. N/A
Section 317(a)(1) .............................................. 3.19
(a)(2) .............................................. 6.24
(b) .............................................. 4.11
Section 318(a) .............................................. 8.07
----------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture. Attention should also be directed to Section 318(c) of
the 1939 Act, which provides that the provisions of Sections 310 to and
including 317 of the 1939 Act are a part of and govern every qualified
indenture, whether or not physically contained therein.
Table of Contents
Article I
Definitions and Use of Phrases
Article II
2002 Series A1&B1 Note Details,
Form of 2002 Series A1&B1 Notes,
And Redemption of 2002 Series A1&B1Notes
Section 2.01 2002 Series A1&B1 Note Details..................................9
Section 2.02 Redemption of the 2002 Series A1&B1 Notes......................12
Section 2.03 Delivery of 2002 Series A1&B1 Notes............................13
Section 2.04 Trustee's Authentication Certificate...........................14
Section 2.05 No Proceed From Issuance of 2002 Series A1&B1 Notes............14
Section 2.06 Excess Reserve Fund Amounts....................................14
Section 2.07 Forms of 2002 Series A1&B1 Notes...............................14
Section 2.08 Regarding Acquisition Fund.....................................14
Article III
General Provisions
Section 3.01 Date of Execution..............................................14
Section 3.02 Laws Governing.................................................14
Section 3.03 Severability...................................................15
Section 3.04 Exhibits and Appendices........................................15
Article IV
Amendment and Ratification of Indenture
Section 4.01 Previous Amendments to Indenture...............................15
Section 4.02 Amendment and Restatement of Section 6.17 of Indenture.........15
Section 4.03 Amendment and Restatement of Section 6.25 of Indenture.........15
Section 4.04 Addition of Section 8.18 of Indenture..........................15
Section 4.05 Amendment and Restatement of Section 11.04 of Indenture........16
Section 4.06 Addition of Section 11.05 of Indenture.........................16
Section 4.07 Addition of Section 11.06 of Indenture.........................19
Section 4.08 Ratification of Indenture......................................19
Section 4.09 Ratification of Supplemental Indentures........................19
Appendix A Certain Terms and Provisions of the Auction Rate Notes
Exhibit A-1 Form of Series A1 Notes
Exhibit A-2 Form of Series B1 Notes
Exhibit B 2002 Series A1&B1 Notes Closing Cash Flow Projections
Exhibit C Notice of Payment Default
Exhibit D Notice of Cure of Payment Default
Exhibit E Notice of Proposed Change in Length of One or More Auction Periods
Exhibit F Notice Establishing Change in Length of One or More Auction Periods
Exhibit G Notice of Change In Auction Date - ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co.
2002 Series A1&B1 Supplemental Indenture of Trust
This 2002 Series A1&B1 Supplemental Indenture of Trust (this "Supplemental
Indenture") dated as of [ ,] 2003 is by and between Education Funding
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Capital Trust-I, a Delaware business trust (the "Issuer"), Fifth Third Bank, a
banking corporation organized under the laws of the State of Ohio, as indenture
trustee (the "Indenture Trustee"), and Fifth Third Bank, a banking corporation
organized under the laws of the State of Ohio, as Trust Eligible Lender Trustee
(the "Trust Eligible Lender Trustee"). All capitalized terms used in these
preambles, recitals and granting clauses shall have the same meanings assigned
thereto in Article I hereof.
W I T N E S S E T H:
Whereas, the Issuer has previously entered into an Indenture of Trust dated
as of May 1, 2002 (the "Indenture"), among the Issuer, the Indenture Trustee and
the Trust Eligible Lender Trustee, as supplemented by the 2002-1 Series A&B
Supplemental Indenture of Trust, dated as of May 1, 2002 (the "2002-1 Series A&B
Supplemental Indenture"), as supplemented and amended by the 2002-2 Series A&B
Supplemental Indenture of Trust, dated as of August 1, 2002 (the "2002-2 Series
A&B Supplemental Indenture"), and supplemented and amended by the Third
Supplemental Indenture of Trust, dated as of (the "Third Supplemental
--------
Indenture");
Whereas, the Issuer desires to enter into this Supplemental Indenture to
issue Notes pursuant to the terms of the Indenture, including Section 1.08
thereof, and to amend and restate certain sections of the Indenture and to add
additional sections to the Indenture;
Whereas, the Issuer desires to modify, amend and supplement the Indenture
to permit the qualification hereof and thereof under the Trust Indenture Act and
to permit the qualification of the Notes for sale under the securities laws of
the United States of America and any of the states of the United States of
America;
Whereas, the Issuer previously issued $525,000,000 of its Auction Rate
Education Loan Backed Notes, 2002-1 Series A&B (the "2002-1 Series A&B Notes"),
consisting of seven classes designated as 2002-1 Series A and one class
designated as 2002-1 Series B and issued $500,000,000 of its Auction Rate
Education Loan Backed Notes, 2002-2 Series A&B (the "2002-2 Series A&B Notes"),
consisting of six classes designated as 2002-2 Series A and one class designated
as 2002-2 Series B;
Whereas, the 2002-1 Series A&B Notes and the 2002-2 Series A&B Notes are
Unregistered Notes;
Whereas, the Issuer has determined to offer to exchange Registered Notes
for the Unregistered Notes;
Whereas, the Issuer represents that it is duly created as a business trust
under the laws of the State of Delaware and, in connection with the Exchange
Offer, has by proper action duly
authorized the issuance of $1,023,000,000 of its Auction Rate Education Loan
Backed Notes, 2002 Series A1&B1 (the "2002 Series A1&B1 Notes"), consisting of
thirteen classes designated as Series 2002 A1 (the "Series A1 Notes") and two
classes designated as Series 2002 B1 (the "Series B1 Notes")(collectively the
"Registered Notes"), and it has by proper action authorized the execution and
delivery of this Supplemental Indenture;
Whereas, the 2002 Series A1&B1 Notes constitute Notes as defined in the
Indenture;
Whereas, in connection with the consummation of the Exchange Offer, the
Issuer, the Trust Eligible Lender Trustee and the Indenture Trustee are
executing and delivering this Supplemental Indenture in order to (i) provide for
the issuance of the Registered Notes and the terms upon which the Registered
Notes will be issued and Outstanding upon consummation of the Exchange Offer,
and (ii) to confirm the issuance of the Unregistered Notes and the terms upon
which the Unregistered Notes have been issued and will remain Outstanding upon
the consummation of the Exchange Offer; and
Whereas, the Indenture Trustee has agreed to accept the trusts herein
created upon the terms herein set forth.
Now, Therefore, it is mutually covenanted and agreed as follows:
Article I
Definitions and Use of Phrases
All words and phrases defined in Appendix A 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" shall mean $50,000 and any integral multiple
thereof for the 2002 Series A1&B1 Notes.
"Date of Issuance" shall mean, with respect to the 2002 Series A1&B1 Notes,
[ ,] 2003.
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"Exchange Agent" shall mean Fifth Third Bank, Corporate Trust Department as
agent for the Issuer in connection with the Exchange Offer.
"Exchange Offer" shall mean the offer of the Issuer to exchange each Series
of the Unregistered Notes for like Series of the Registered Notes.
"Exchange Offer Registration Statement" shall mean the registration
statement (together with all amendments and exhibits thereto) filed by the
Issuer with the Commission under the Securities Act of 1933 (the "Securities
Act") and declared effective by the Commission on
[ ,] 2003 whereby, pursuant to the Exchange Offer, all or part of the
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Unregistered Notes of a Series are exchanged for Registered Notes of the same
Series.
"Rating Agency" shall mean, collectively, Fitch, Moody's, and S&P.
"Record Date" shall mean, with respect to each Payment Date, the Business
Day immediately preceding such Payment Date.
"Registered Notes" shall mean, with respect to any Notes, Notes which are
registered under the Securities Act.
"Required Parity Percentage" shall mean 100.5% so long as any 2002 Series
A1&B1 Notes are Outstanding; provided, however, that the Required Parity
Percentage may be reduced upon receipt of a Rating Confirmation.
"Required Senior Parity Percentage" shall mean 105% so long as any 2002
Series A1&B1 Notes are Outstanding; provided, however, that the Required Senior
Parity Percentage may be reduced upon receipt of a Rating Confirmation.
"Reserve Fund Requirement" shall mean 0.5% of the 2002 Series A1&B1 Notes
Outstanding and any Unregistered Notes Outstanding; provided, however, that so
long as any Registered Notes or Unregistered Notes remain Outstanding there
shall be at least $600,000 on deposit in the Reserve Fund. Further, such
percentages and amounts may be changed upon satisfaction of the Rating Agency
Condition.
"Series A Notes" shall mean, collectively, the Series A-1 Notes, the Series
A-2 Notes, the Series A-3 Notes, the Series A-4 Notes, the Series A-5 Notes, the
Series A-6 Notes, the Series A-7 Notes, the Series A-8 Notes, the Series A-9
Notes, the Series A-10 Notes, the Series A-11 Notes, the Series A-12 Notes, and
the Series A-13 Notes.
"Series B Notes" shall mean, collectively, the Series B-1 Notes and the
Series B-2 Notes.
"Series B-1 Notes" shall mean the $33,700,000 Education Funding Capital
Trust-I, Auction Rate Education Loan Backed Notes, Series ▇▇▇▇ ▇-▇, issued
pursuant to the 2002-1 Series A&B Supplemental Indenture.
"Series B-2 Notes" shall mean the $32,000,000 Education Funding Capital
Trust-I, Auction Rate Education Loan Backed Notes, Series ▇▇▇▇ ▇-▇, issued
pursuant to the 2002-2 Series A&B Supplemental Indenture.
"Series A1 Notes" shall mean, collectively, the Series A1-1 Notes, the
Series A1-2 Notes, the Series A1-3 Notes, the Series A1-4 Notes, the Series A1-5
Notes, the Series A1-6 Notes, the Series A1-7 Notes, the Series A1-8 Notes, the
Series A1-9 Notes, the Series A1-10 Notes, the Series A1-11 Notes, the Series
A1-12 Notes, and the Series A1-13 Notes, which Series A1 Notes are designated as
"Senior Notes" for all purposes of the Indenture and this Supplemental
Indenture.
"Series A1-1 Notes" shall mean the $75,000,000 Education Funding Capital
Trust-I, Auction Rate Education Loan Backed Notes, Series 2002 A1-1.
"Series A1-2 Notes" shall mean the $75,000,000 Education Funding Capital
Trust-I, Auction Rate Education Loan Backed Notes, Series 2002 A1-2.
"Series A1-3 Notes" shall mean the $75,000,000 Education Funding Capital
Trust-I, Auction Rate Education Loan Backed Notes, Series 2002 A1-3.
"Series A1-4 Notes" shall mean the $67,800,000 Education Funding Capital
Trust-I, Auction Rate Education Loan Backed Notes, Series 2002 A1-4.
"Series A1-5 Notes" shall mean the $64,500,000 Education Funding Capital
Trust-I, Auction Rate Education Loan Backed Notes, Series 2002 A1-5.
"Series A1-6 Notes" shall mean the $66,000,000 Education Funding Capital
Trust-I, Auction Rate Education Loan Backed Notes, Series 2002 A1-6.
"Series A1-7 Notes" shall mean the $66,000,000 Education Funding Capital
Trust-I, Auction Rate Education Loan Backed Notes, Series 2002 A1-7.
"Series A1-8 Notes" shall mean the $78,000,000 Education Funding Capital
Trust-I, Auction Rate Education Loan Backed Notes, Series 2002 A1-8.
"Series A1-9 Notes" shall mean the $78,000,000 Education Funding Capital
Trust-I, Auction Rate Education Loan Backed Notes, Series 2002 A1-9.
"Series A1-10 Notes" shall mean the $78,000,000 Education Funding Capital
Trust-I, Auction Rate Education Loan Backed Notes, Series 2002 A1-10.
"Series A1-11 Notes" shall mean the $78,000,000 Education Funding Capital
Trust-I, Auction Rate Education Loan Backed Notes, Series 2002 A1-11.
"Series A1-12 Notes" shall mean the $78,000,000 Education Funding Capital
Trust-I, Auction Rate Education Loan Backed Notes, Series 2002 A1-12.
"Series A1-13 Notes" shall mean the $78,000,000 Education Funding Capital
Trust-I, Auction Rate Education Loan Backed Notes, Series 2002 A1-13.
"Series B1 Notes" shall mean, collectively, the Series B1-1 Notes and the
Series B1-2 Notes, which Notes are designated as "Subordinate Notes" for all
purposes of the Indenture and this Supplemental Indenture.
"Series B1-1 Notes" shall mean the $33,700,000 Education Funding Capital
Trust-I, Auction Rate Education Loan Backed Notes, Series 2002 B1-1.
"Series B1-2 Notes" shall mean the $32,000,000 Education Funding Capital
Trust-I, Auction Rate Education Loan Backed Notes, Series 2002 B1-2.
"Servicing Agreement" shall mean, collectively, (i) the Servicing Agreement
dated as of May 1, 2002, as supplemented and amended from time to time, between
the Issuer and the Servicer, and (ii) the Subservicing Agreement.
"Subservicer" shall mean Great Lakes Educational Loan Services, Inc., its
successors and assigns and, subject to the Rating Agency Condition, any other
subservicer designated pursuant to the Servicing Agreement.
"Subservicing Agreement" shall mean the Subservicing Agreement dated as of
May 1, 2002, as supplemented and amended from time to time, between the Servicer
and the Subservicer and, subject to the Rating Agency Condition, any other
subservicer designated pursuant to the Servicing Agreement.
"2002 Series A1&B1 Notes" shall mean, collectively, the Education Funding
Capital Trust - I, Auction Rate Education Loan Backed Notes, Series A1 Notes and
Series B1 Notes issued pursuant to this Supplemental Indenture in the aggregate
principal amount of $1,023,000,000.
"Unregistered Notes" shall mean Notes issued under the 2002-1 Series A&B
Supplemental Indenture and the 2002-2 Series A&B Supplemental Indenture which
are not registered under the Securities Act.
The following terms shall have the meaning given in the 2002-1 Series A&B
Supplemental Indenture: "Series A-1 Notes," "Series A-2 Notes," "Series A-3
Notes," "Series A-4 Notes," "Series A-5 Notes," "Series A-6 Notes" and "Series
A-7 Notes."
The following terms shall have the meaning given in the 2002-2 Series A&B
Supplemental Indenture: "Series A-8 Notes," "Series A-9 Notes," "Series A-10
Notes," "Series A-11 Notes," "Series A-12 Notes" and "Series A-13 Notes."
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. Capitalized terms not otherwise defined herein, shall have the meaning
given in the Indenture.
In the event that any term or provision contained herein with respect to
the 2002 Series A1&B1 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
2002 Series A1&B1 Note Details,
Form of 2002 Series A1&B1 Notes,
And Redemption of 2002 Series A1&B1 NOTES
Section 2.01 2002 Series A1&B1 Note Details. In connection with the
consummation of the Exchange Offer, there is authorized under this Supplemental
Indenture the issuance by the Issuer of the following Registered Notes to be
exchanged for the Unregistered Notes of the same Series and of the aggregate
principal amount that have been properly tendered and accepted by the Exchange
Agent. The aggregate principal amount of the 2002 Series A1&B1 Notes that may be
initially authenticated and delivered under this Supplemental Indenture is
limited to, and shall be individually issued in fifteen (15) separate series
consisting of $75,000,000 of Series A1-1 Notes, $75,000,000 of Series A1-2
Notes, $75,000,000 of Series A1-3 Notes, $67,800,000 of Series A1-4 Notes,
$64,500,000 of Series A1-5 Notes, $66,000,000 of Series A1-6 Notes, $66,000,000
of Series A1-7 Notes, $78,000,000 of Series A1-8 Notes, $78,000,000 of Series
A1-9 Notes, $78,000,000 of Series A1-10 Notes, $78,000,000 of Series A1-11
Notes, $78,000,000 of Series A1-12 Notes, $78,000,000 of Series A1-13 Notes,
$33,700,000 of Series B1-1 Notes and $32,000,000 of Series B1-2 Notes, except
for 2002 Series A1&B1 Notes authenticated and delivered upon transfer of, or in
exchange for, or in lieu of Notes pursuant to Section 1.03 of the Indenture. The
2002 Series A1&B1 Notes shall be issuable only as fully registered notes in the
Authorized Denominations. The Series A1 Notes shall be designated "Series 2002
A1-1," the "Series 2002 A1-2," "Series 2002 A1-3," the "Series 2002 A1-4," the
"Series 2002 A1-5," "Series 2002 A1-6," the "Series 2002 A1-7," the "Series 2002
A1-8," "Series 2002 A1-9," the "Series 2002 A1-10," the "Series 2002 A1-11,"
"Series 2002 A1-12," and the "Series 2002 A1-13" and the Notes of each Series
shall be numbered separately from 1 upwards. The Series B1 Notes shall be
designated "Series 2002 B1-1" and "Series 2002 B1-2" and shall be numbered
separately from 1 upwards.
The Series A1 Notes and Series B1 Notes may be exchanged for Series A Notes
and Series B Notes, respectively, validly tendered and not validly withdrawn,
pursuant to Exchange Offer and the Exchange Registration Statement, as follows:
Series A-1 Notes for Series A1-1 Notes;
Series A-2 Notes for Series A1-2 Notes;
Series A-3 Notes for Series A1-3 Notes;
Series A-4 Notes for Series A1-4 Notes;
Series A-5 Notes for Series A1-5 Notes;
Series A-6 Notes for Series A1-6 Notes;
Series A-7 Notes for Series A1-7 Notes;
Series A-8 Notes for Series A1-8 Notes;
Series A-9 Notes for Series A1-9 Notes;
Series A-10 Notes for Series A1-10 Notes;
Series A-11 Notes for Series A1-11 Notes;
Series A-12 Notes for Series A1-12 Notes;
Series A-13 Notes for Series A1-13 Notes;
Series B-1 Notes for Series B1-1 Notes; and
Series B-2 Notes for Series B1-2 Notes.
The 2002 Series A1&B1 Notes (collectively, the "Auction Rate Notes") shall
be dated their Date of Issuance and shall bear interest from the most recent
Payment Date (as defined in Appendix A to this Supplemental Indenture) to which
interest has been paid on the Unregistered Notes of the Series for which the
Registered Notes of the same Series are exchanged. The 2002 Series A1&B1 Notes
shall mature on June 1, 2042. Interest on the Auction Rate Notes shall be
computed on the basis of a 360-day year and actual days elapsed. The terms of
and definitions related to the Auction Rate Notes are found in Article I hereof
and Appendix A to this Supplemental Indenture. No premium payments shall be paid
on the 2002 Series A1&B1 Notes issued under this Supplemental Indenture.
The principal of the 2002 Series A1&B1 Notes due at its Stated Maturity or
redemption in whole shall be payable at the Corporate Trust Office of the
Indenture Trustee, or such other location as directed by the Indenture Trustee,
or at the principal office of its successor in trust upon presentation and
surrender of the 2002 Series A1&B1 Notes. Payment of interest and principal paid
subject to a redemption on any 2002 Series A1&B1 Note shall be made to the
Noteholder thereof by check or draft mailed on the Payment Date by the Indenture
Trustee to the Noteholder at his address as it last appears on the registration
books kept by the Indenture Trustee at the close of business on the Record Date
for such Payment Date, but any such interest not so timely paid or duly provided
for shall cease to be payable to the Noteholder thereof at the close of business
on the Record Date and shall be payable to the Noteholder 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
Indenture Trustee whenever moneys become available for payment of the defaulted
interest, and notice of such Special Record Date shall be given to the
Noteholders of the 2002 Series A1&B1 Notes not less than ten (10) days prior
thereto by first-class mail to each such Noteholder as shown on the Indenture
Trustee's registration books on the date selected by the Indenture 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 Indenture Trustee
of any other Noteholder owning at least $1,000,000 principal amount of the 2002
Series A1&B1 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 Indenture Trustee for such purpose. All payments
on the 2002 Series A1&B1 Notes shall be made in lawful money of the United
States of America.
(a) Except as otherwise provided in this Section, the Series A1 Notes and
Series B1 Notes in the form of one global note for each Series 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 A1 Note and Series B1
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 A1 Notes and Series B1 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."
(b) Except as otherwise provided herein, the Issuer and the Indenture
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 A1 Notes and Series
B1 Notes, (ii) the delivery to any Agent Member, beneficial owner of the Series
A1 Notes and Series B1 Notes or other Person, other than the Securities
Depository, of any notice with respect to the Series A1 Notes and Series B1
Notes or (iii) the payment to any Agent Member, beneficial owner of the Series
A1 Notes and Series B1 Notes or other Person, other than the Securities
Depository, of any amount with respect to the principal of or interest on the
Series A1 Notes and Series B1 Notes. So long as the certificates for the Series
A1 Notes and Series B1 Notes issued under this Supplemental Indenture are not
issued pursuant to subsection (c) of this Section the Issuer and the Indenture
Trustee may treat the Securities Depository as, and deem the Securities
Depository to be, the absolute owner of the Series A1 Notes and Series B1 Notes
for all purposes whatsoever, including, without limitation, (A) the payment of
principal of and interest on such Series A1 Notes and Series B1 Notes, (B)
giving notices of redemption and other matters with respect to such Series A1
Notes and Series B1 Notes and (C) registering transfers with respect to such
Series A1 Notes and Series B1 Notes. In connection with any notice or other
communication to be provided to the Noteholders pursuant to this Supplemental
Indenture by the Issuer or the Indenture Trustee with respect to any consent or
other action to be taken by the Noteholders, the Issuer or the Indenture
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 A1
Notes and Series B1 Notes, give the Securities Depository notice of such record
date not less than 15 calendar days in advance of such record date to the extent
possible. Such notice to the Securities Depository shall be given only when the
Securities Depository is the sole Noteholder.
(c) If at any time the Securities Depository notifies the Issuer and the
Indenture Trustee that it is unwilling or unable to continue as Securities
Depository with respect to any or all of the Series A1 Notes and Series B1 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 (a) and (b) of this Section shall no
longer be applicable and the Issuer shall execute and the Indenture Trustee
shall authenticate and deliver certificates representing the Series A1 Notes and
Series B1 Notes as provided below. In addition, the Issuer may determine at any
time that the Series A1 Notes and Series B1 Notes shall no longer be represented
by global certificates and that the provisions of subsections (a) and (b) of
this Section shall no longer apply to the Series A1 Notes and Series B1 Notes.
In such event, the Issuer shall execute and the Indenture Trustee shall
authenticate and deliver certificates representing the Series A1 Notes and
Series B1 Notes as provided below. Certificates for the Series A1 Notes and
Series B1 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 to the Issuer and the Indenture Trustee,
and upon which written
instructions the Indenture Trustee may rely without investigation. The Indenture
Trustee shall promptly deliver such certificates representing the Series A1
Notes and Series B1 Notes to the Persons in whose names such Notes are so
registered.
Section 2.02 Redemption of the 2002 Series A1&B1 Notes.
(a) Mandatory Redemption. If on any Determination Date the Parity
Percentage is not equal to at least the Required Parity Percentage, the 2002
Series A1&B1 Notes are subject to mandatory redemption, in whole or in part, on
any interest Payment Date from Revenues on deposit in the Principal Fund;
provided, however, that during any Revolving Period, upon Issuer Order, after
any transfer to the Operating Fund in respect of Program Expenses and after the
transfers required by Sections 4.03(b)(i) through (v) of the Indenture, moneys
remaining on deposit in the Revenue Fund shall be transferred to the Acquisition
Fund and used for the acquisition or origination of other Student Loans.
The 2002 Series A1&B1 Notes are also subject to mandatory redemption, in
whole or in part, on any interest Payment Date, from Revenues representing
Recoveries of Principal on deposit in the Principal Fund or from Revenues
transferred to the Principal Fund pursuant to Section 4.03(b)(ix) of the
Indenture. Series B1 Notes shall be redeemed only to the extent that after such
payment the Senior Parity Percentage shall not be less than the Required Senior
Parity Percentage.
(b) Optional Redemption of 2002 Series A1&B1 Notes. The 2002 Series A1&B1
Notes are subject to redemption, in whole or in part, at the option of the
Issuer on any regularly scheduled interest Payment Date. Carryover amounts and
interest on the carryover amounts will be paid prior to any optional redemption
of 2002 Series A1&B1 Notes. To the extent funds are available in the Interest
Fund to pay carryover amounts and interest on carryover amounts on any Payment
Date, such funds will be allocated first to pay carryover amounts and interest
on carryover amounts on 2002 Series A1&B1 Notes subject to mandatory redemption
on such Payment Date. Any carryover amount and interest on the carryover amount
not paid on the date a 2002 Series A1&B1 Note is redeemed pursuant to mandatory
redemption will be cancelled and not paid on that Note on any subsequent date.
(c) Redemption Price. Any 2002 Series A1&B1 Notes redeemed pursuant to
Section 2.02(a) or (b) hereof shall be redeemed at a price equal to the
principal balance of such Notes plus accrued interest to the date of redemption.
(d) Limitation of Redemption of Series B1 Notes. The Series B1 Notes that
are otherwise subject to optional or mandatory redemption shall be redeemed only
if, as of the date of selection of Series B1 Notes for redemption and after
giving effect to such redemption, the Senior Parity Percentage will be equal to
at least the Required Senior Parity Percentage, and the Parity Percentage will
be equal to at least the Required Parity Percentage.
(e) Redemption of Additional Series of Notes. The Issuer shall determine in
a Supplemental Indenture the redemption provisions applicable to additional
series of notes issued under such Supplemental Indenture. The Issuer may
determine to redeem such additional series of notes before redeeming the 2002
Series A1&B1 Notes.
(f) Notice of Redemption. The Indenture Trustee shall cause notice of any
redemption to be given by mailing a copy of the notice by first-class mail to
the Auction Agent and the Noteholder of any 2002 Series A1&B1 Notes designated
for redemption in whole or in part, at their address as the same shall last
appear upon the registration books, in each case not less than 12 days prior to
the redemption date; provided, however, that failure to give such notice, or any
defect therein, shall not affect the validity of any proceedings for the
redemption of such 2002 Series A1&B1 Notes for which no such failure or defect
occurs.
(g) Partial Redemption. If less than all of the 2002 Series A1&B1 Notes are
to be redeemed or purchased pursuant to Section 2.02(a) or (b) hereof, the
Series of Notes to be redeemed shall be determined by the Issuer; provided,
however, in the absence of any direction by the Issuer, the Series of Notes to
be redeemed shall be selected first from the Series B1 Notes to the extent
permitted hereby and, thereafter, in descending numerical order of the series
designation; provided, however, that the Issuer shall not direct the Indenture
Trustee to redeem any Series of Notes prior to the expiration of the Initial
Period (as defined in Appendix A to this Supplemental Indenture) applicable to
that Series. If less than all Outstanding Notes of any Series of 2002 Series
A1&B1 Notes are to be redeemed, the particular Notes of that Series to be
redeemed will be determined by lot in such manner as the Indenture Trustee shall
determine. In case a 2002 Series A1&B1 Note is of a denomination larger than an
Authorized Denomination, a portion of such Note (in an Authorized Denomination)
may be redeemed. Upon surrender of any 2002 Series A1&B1 Note for redemption in
part only, the Issuer shall execute and the Indenture Trustee shall authenticate
and deliver to the Noteholder thereof, the cost of which shall be paid by the
Issuer, a new 2002 Series A1&B1 Note or 2002 Series A1&B1 Notes of the same
Series, maturity and of Authorized Denominations, in an aggregate principal
amount equal to the unredeemed portion of the 2002 Series A1&B1 Note
surrendered.
Section 2.03 Delivery of 2002 Series A1&B1 Notes. Upon the execution and
delivery of this Supplemental Indenture, the Issuer shall execute and deliver to
the Indenture Trustee and the Indenture Trustee shall authenticate the 2002
Series A1&B1 Notes and deliver the 2002 Series A1&B1 Notes to The Depository
Trust Company; provided, however, prior to the delivery by the Indenture Trustee
of any of the 2002 Series A1&B1 Notes, there shall have been filed with or
delivered to the Indenture Trustee the following:
(a) An Issuer Order authorizing the execution and delivery of this
Supplemental Indenture and the issuance of the 2002 Series A1&B1 Notes.
(b) Duly executed copies of this Supplemental Indenture and a copy of
the Indenture.
(c) Rating letters from each Rating Agency confirming (i) that the
Series A Notes have been rated "AAA" by Fitch, "Aaa" by ▇▇▇▇▇'▇ and "AAA"
by S&P and (ii) that the Series B Notes have been rated not lower than "A"
by Fitch, "A3" by ▇▇▇▇▇'▇ and "A" by S&P.
Section 2.04 Trustee's Authentication Certificate. The Indenture Trustee's
authentication certificate upon the 2002 Series A1&B1 Notes shall be
substantially in the forms provided in Exhibits A-1 and A-2 hereto. No 2002
Series A1&B1 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
Indenture Trustee at the written direction of the Issuer; and such certificate
of the Indenture Trustee upon any 2002 Series A1&B1 Note shall be conclusive
evidence and the only competent evidence that such Note has been authenticated
and delivered hereunder. The Indenture Trustee's certificate of authentication
shall be deemed to have been duly executed by it if manually signed by an
authorized officer of the Indenture Trustee, but it shall not be necessary that
the same person sign the certificate of authentication on all of the 2002 Series
A1&B1 Notes issued hereunder.
Section 2.05 No Proceeds From Issuance of 2002 Series A1&B1 Notes. The
Issuer will not receive any proceeds upon the issuance and delivery of the 2002
Series A1&B1 Notes.
Section 2.06 Excess Reserve Fund Amounts. On any date on which the amount
on deposit in the Reserve Fund exceeds the Reserve Fund Requirement, the
Indenture Trustee, at the direction of the Administrator, shall transfer such
excess from the Reserve Fund to the Revenue Fund for application on the next
Payment Date.
Section 2.07 Forms of 2002 Series A1&B1 Notes. The 2002 Series A1&B1 Notes
shall be in substantially the form set forth in Exhibits A-1 and A-2 hereto,
each with such variations, omissions and insertions as may be necessary.
Section 2.08 Regarding Acquisition Fund. The Indenture Trustee shall have
transferred to the Revenue Fund all moneys remaining in the Acquisition Fund
immediately after December 31, 2002; provided, however, that the transfer of
such moneys may be delayed upon receipt of a Rating Confirmation with respect to
such delay.
Article III
General Provisions
Section 3.01 Date of Execution. This Supplemental Indenture for convenience
and for the purpose of reference is dated as of , 2003.
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Section 3.02 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 of Ohio.
Section 3.03 Severability. If 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 3.04 Exhibits and Appendices. The terms of each Exhibit and
Appendix attached to this Supplemental Indenture are incorporated herein in all
particulars.
Article IV
Amendment and Ratification of Indenture
Section 4.01 Previous Amendments to Indenture. The sections of the
Indenture and Appendix A amended and restated by Article IV of the 2002-2 Series
A&B Supplemental Indenture are hereby ratified, approved and confirmed, and
included herein by reference.
Section 4.02 Amendment to Section 6.17 of Indenture. Section 6.17 of the
Indenture shall is hereby amended to include the following:
Standard & Poor's
Corporate & Government Ratings
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Managing Director
Section 4.03 Addition of Section 6.25 of Indenture. A new Section 6.25
shall be added to the Indenture and shall read as follows:
"Section 6.25 Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with Section 311(a) of the Trust Indenture Act,
excluding any creditor relationship listed in Section 311(b) of the Trust
Indenture Act. An Indenture Trustee who has resigned or been removed shall be
subject to Section 311(a) of the Trust Indenture Act to the extent indicated."
Section 4.04 Addition of Section 8.18 of Indenture. A new Section 8.18
shall be added to the Indenture and shall read as follows:
"Section 8.18 Undertaking for Costs. The Issuer and the Indenture Trustee
agree, and each Noteholder by acceptance of an Note shall be deemed to have
agreed, that any court may, in its discretion, require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may, in its
discretion, assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 8.18 shall not apply to (i) any suit
instituted by the Indenture Trustee, (ii) any suit instituted by any
Noteholder, or group thereof, in each case holding in the aggregate more
than ten percent (10%) of the Outstanding principal amount of the Notes or
(iii) any suit instituted by any Noteholder for the enforcement of the
payment of the principal of, premium, if any, or interest on any Note in
accordance with Section 5.12 hereof."
Section 4.05 Amendment to Section 11.04 of Indenture. Section 11.04 of the
Indenture is hereby amended by adding a paragraph to the end of that section and
shall read as follows:
"Within sixty (60) days after each April 15 of each year commencing
with the April 15 following the first issuance of Notes under this
Supplemental Indenture, if required by Section 313(a) of the Trust
Indenture Act, the Indenture Trustee shall transmit, pursuant to Section
313(c) of the Trust Indenture Act, a brief report dated as of such April 15
with respect to any of the events specified in such Section 313(a) which
may have occurred since the later of the immediately preceding April 15 or
the date of this Indenture. The Indenture Trustee shall transmit the
reports required by Section 313(a) of the Trust Indenture Act at the time
specified therein. Reports pursuant to this Section 7.10 shall be
transmitted in the manner and to the Persons required by Sections 313(c)
and 313(d) of the Trust Indenture Act."
Section 4.06 Addition of Section 11.05 of Indenture. A new Section 11.05
shall be added to the Indenture and shall read as follows:
"Section 11.05 Compliance Certificates and Opinions.
(a) Except as otherwise specifically provided in the Indenture or in
this Supplemental Indenture, upon any application or request by the Issuer
to the Indenture Trustee to take any action under any provision of this
Indenture, including, without limitation, any action relating to
authentication and delivery of any Notes, the release or the release and
substitution of property subject to the lien and security interest of the
Indenture or in this Supplemental Indenture or the satisfaction and
discharge of the Indenture or in this Supplemental Indenture, the Issuer
shall furnish (i) a Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have
been complied with, (ii) an opinion of counsel stating that in the opinion
of such counsel all such conditions precedent, if any, have been complied
with and (iii) if required by the Trust Indenture Act, a certificate from a
firm of independent certified public accountants meeting the applicable
requirements of this Section 11.05, except that, in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of the Indenture or in this
Supplemental Indenture, no additional certificate or opinion need be
furnished. Every certificate or opinion with respect to compliance with a
condition or covenant provided for in the Indenture shall include: (i) a
statement that each signatory of such certificate or opinion has read or
has caused to be read such covenant or condition and the definitions herein
relating thereto; (ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; (iii) a statement that,
in the opinion of each such signatory, such signatory has made such
examination or investigation as is necessary to enable such signatory to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and (iv) a statement as to whether, in the opinion
of each such signatory, such condition or covenant has been complied with.
(b) Prior to the deposit of any property or securities with the
Indenture Trustee that is to be made the basis for the release of any
property subject to the lien created by the Indenture, the Issuer shall, in
addition to any obligation imposed in Section 11.05(a) or elsewhere in the
Indenture or in this Supplemental Indenture, furnish to the Indenture
Trustee (1) a Certificate certifying or stating the opinion of each person
signing such Certificate as to the fair value (within 90 days of such
deposit) to the Issuer of the property or securities to be so deposited,
(2) an opinion of counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording and
filing of the Indenture and any other requisite documents, and with respect
to the execution and filing of any financing statements and continuation
statements, as are necessary to perfect and make effective the lien and
security interest in favor of the Indenture Trustee, for the benefit of the
Indenture Trustee, created by the Indenture or in this Supplemental
Indenture in the property or securities to be so deposited, and reciting
the details of such action, or stating that, in the opinion of such
counsel, no such action is necessary to make such lien and security
interest effective, and (3) evidence that each of the Rating Agencies then
rating any Outstanding Notes have confirmed that such action will not
result in a reduction, qualification or withdrawal of the then-current
rating of any of the Notes.
(c) Whenever the Issuer is required to furnish to the Indenture
Trustee a Certificate certifying or stating the opinion of any signer
thereof as to the matters described in paragraph (b) above, the Issuer
shall also furnish to the Indenture Trustee an Independent Certificate as
to the same matters, if the fair value to the Issuer of the property to be
so deposited and of all other such property made the basis of any such
withdrawal or release since the commencement of the then-current fiscal
year of the Issuer, as set forth in the certificates delivered pursuant to
paragraph (b) above and this paragraph (c), is ten percent (10%) or more of
the Outstanding principal amount of the Notes, but such a certificate need
not be furnished with respect to any property so deposited, if the fair
value thereof set forth in the related Certificate is less than $25,000 or
less than one percent (1%) of the Outstanding Amount of the Notes.
(d) Other than with respect to any release described in clause (1) or
(2) of paragraph (f) below, whenever any property or securities are to be
released from the lien created by the Indenture, the Issuer shall also
furnish to the Indenture Trustee a Certificate certifying or stating the
opinion of each person signing such Certificate as to the fair value
(within 90 days of such release) of the property or securities proposed to
be released and stating that in the opinion of such person the proposed
release will not impair the security created by this Indenture in
contravention of the provisions hereof.
(e) Whenever the Issuer is required to furnish to the Indenture
Trustee a Certificate certifying or stating the opinion of any signer
thereof as to the matters described in paragraph (d) above, the Issuer
shall also furnish to the Indenture Trustee an Independent Certificate as
to the same matters, if the fair value to the Issuer of the property
or securities or of all other property or securities (other than property
described in clauses (1) and (2) of paragraph (f) below) released from the
lien created by the Indenture since the commencement of the then-current
fiscal year of the Issuer, as set forth in the certificates delivered
pursuant to paragraph (d) above and this paragraph (e), equals ten percent
(10%) or more of the Outstanding Amount of the Notes, but such a
certificate need not be furnished with respect to any release of property
or securities, if the fair value thereof set forth in the related
Certificate is less than $25,000 or less than one percent (1%) of the
Outstanding Amount of the Notes.
(f) Notwithstanding any other provision of this Section 11.05, the
Issuer may, without compliance with the other provisions of this Section
11.05, (1) collect, liquidate, sell or otherwise dispose of Financed
Student Loans as and to the extent permitted or required by the Indenture,
including, without limitation, Section 5.2 thereof, and the Servicing
Agreement, and (2) make cash payments out of the Funds and Accounts as and
to the extent permitted or required by the Indenture.
(g) In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one
such Person, or that they be so certified or covered by only one document,
but one such Person may certify or give an opinion with respect to some
matters and one or more other such Persons as to other matters, and any
such Person may certify or give an opinion as to such matters in one or
several documents.
(h) Any certificate or opinion of an Authorized Officer may be based,
insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such Officer knows or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such Certificate or opinion of counsel
may be based, insofar as it relates to factual matters, upon a certificate
or opinion of, or representations by, an officer or officer of any Servicer
or the Issuer, stating that the information with respect to such factual
matters is in the possession of such Servicer or the Issuer, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
(i) Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
(j) Whenever in the Indenture or in this Supplemental Indenture, in
connection with any application or certificate or report to the Indenture
Trustee, it is provided that the Issuer shall deliver any document as a
condition of granting such application, or as evidence of the Issuer's
compliance with any term hereof, it is intended that the truth and
accuracy, at the time of the granting of such application or at the
effective date of such certificate or report, as the case may be, of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to
the sufficiency of such certificate or report. The foregoing, shall not,
however,
be construed to affect the Indenture Trustee's right to rely upon the truth
and accuracy of any statement or opinion contained in any such document as
provided in Article VI hereof.
(k) Nothing in this Section 11.05 shall be construed either as
requiring the inclusion in the Indenture or in this Supplemental Indenture
of provisions that the Issuer shall furnish to the Indenture Trustee any
other evidence of compliance with the conditions and covenants provided for
in the Indenture or in this Supplemental Indenture than the evidence
specified in this Section 11.05, or as preventing the inclusion of such
provisions in the Indenture or in this Supplemental Indenture, if the
parties hereto agree."
Section 4.07 Addition of Section 11.06 of Indenture. A new Section 11.06
shall be added to the Indenture and shall read as follows:
"Section 11.06 Incorporation by Reference of Trust Indenture Act.
Whenever the Indenture or this Supplemental Indenture refers to a provision
of the Trust Indenture Act, the provision is incorporated by reference in
and made a part of this Indenture. The following terms used in the Trust
Indenture Act shall have the following meanings insofar as such terms are
incorporated into this Indenture pursuant to this Section 11.06.
"Commission" shall mean the Commission.
"indenture securities" shall mean the Notes issued and Outstanding
under this Indenture.
"indenture security holder" shall mean a Noteholder.
"indenture to be qualified" shall mean the Indenture.
"indenture trustee" or "institutional trustee" shall mean the
Indenture Trustee.
"obligor" on the indenture securities shall mean the Issuer.
All other terms from the Trust Indenture Act used in this Indenture
that are defined by the Trust Indenture Act, defined by reference in the
Trust Indenture Act to another statute or defined by Commission rule shall
have the meaning assigned to them by such definition in the Trust Indenture
Act."
Section 4.08 Ratification 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.
Section 4.09 Ratification of Supplemental Indentures. The provisions of the
2002-1 Series A&B Supplemental Indenture and the 2002-2 Series A&B Supplemental
Indenture are hereby ratified, approved and confirmed as to any Unregistered
Notes that are not exchanged pursuant to the Exchange Offer and remain
Outstanding. The provisions of the Third Supplemental Indenture are hereby
ratified, approved and confirmed.
In Witness Whereof, the Issuer has caused this Supplemental Indenture to be
executed in its name and on its behalf by the Co-Owner Trustee; the Indenture
Trustee, to evidence its acceptance of the trusts hereby created, has caused
this Supplemental Indenture to be executed in its name and behalf; and the Trust
Eligible Lender Trustee, to evidence its acceptance of the trusts hereby
created, has caused this Supplemental Indenture to be executed in its name and
behalf, all in multiple counterparts, each of which shall be deemed an original,
and the Issuer, the Indenture Trustee and the Trust Eligible Lender 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.
Education Funding Capital Trust-I,
By Fifth Third Bank, not in its
individual capacity, but solely as
Co-Owner Trustee on behalf of the
Trust
By:
------------------------------------
Name:
Title:
Fifth Third Bank, not in its individual
capacity but solely as Indenture Trustee
By:
-------------------------------------------
Name:
Title:
Fifth Third Bank, not in its individual
capacity but solely as Trust Eligible
Lender Trustee
By:
-------------------------------------------
Name:
Title:
Appendix A
Certain Terms and Provisions of
the Auction Rate Notes
Article I
Definitions
Except as provided below in this Section, all terms that are defined in
Appendix A 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:
"All Hold Rate" shall mean the Applicable LIBOR Rate less .20%; provided,
that in no event shall the applicable All Hold Rate be greater than the
applicable Maximum 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" shall mean the implementation of the Auction Procedures on an
Auction Date.
"Auction Agent" shall mean 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" shall mean 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" shall mean (a) initially, with respect to the Series A1-1
Notes, February 11, 2003; with respect to the Series A1-2 Notes, May 13, 2003;
with respect to the Series A1-3 Notes, May 20, 2003; and with respect to the
Series A1-4 Notes, August 19, 2003, and (b) upon expiration of the Initial
Period with respect to the Series A1-1 Notes, the Series A1-2 Notes, the Series
A1-3 Notes and the Series A1-4 Notes, and for all other Series of Notes, the
Business Day immediately preceding the first day of each Auction Period for each
respective Series, 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;
A-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 A.
"Auction Note Interest Rate" shall mean each variable rate of interest per
annum borne by Auction Rate Notes for each Auction Period and determined in
accordance with the provisions of Sections 2.01 and 2.02 of this Appendix A;
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
lesser of the Net Loan Rate and the Maximum Rate.
"Auction Period" shall mean the Interest Period applicable to each Series
of Auction Rate Notes during which time the Auction Note Interest Rate for such
Series is determined pursuant to Section 2.02(a) of this Appendix A, which
Auction Period shall begin on an Interest Rate Adjustment Date and initially
shall consist generally of 28 days for the Auction Rate Notes, as the same may
be adjusted pursuant to Section 2.02(g) of this Appendix A.
"Auction Period Adjustment" shall mean an adjustment to the Auction Period
as provided in Section 2.02(g) of this Appendix A.
"Auction Procedures" shall mean the procedures set forth in Section 2.02(a)
of this Appendix A by which the Auction Rate is determined.
"Auction Rate" shall mean 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) of this Appendix A.
"Auction Rate Notes" shall mean, collectively, the Series A1-1 Notes, the
Series A1-2 Notes, the Series A1-3 Notes, the Series A1-4 Notes, the Series A1-5
Notes, the Series A1-6 Notes, the Series A1-7 Notes, Series A1-8 Notes, the
Series A1-9 Notes, the Series A1-10 Notes, the Series A1-11 Notes, the Series
A1-12 Notes, the Series A1-13 Notes, the Series B1-1 Notes, and the Series B1-2
Notes.
"Authorized Denominations" shall mean $50,000 and any integral multiple
thereof.
"Available Auction Rate Notes" has the meaning set forth in Section
2.02(a)(iii)(A)(1) of this Appendix A.
"Bid" has the meaning set forth in Section 2.02(a)(i)(A) of this Appendix
A.
"Bid Auction Rate" has the meaning set forth in Section 2.02(a)(iii)(A) of
this Appendix A.
A-2
"Bidder" has the meaning set forth in Section 2.02(a)(i)(A) of this
Appendix A.
"Book-entry Form" or "Book-entry System" shall mean 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 Noteholder, 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-Dealers" shall mean ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co., with respect to the
Series A1-1 Notes through the Series A1-11 Notes and the Series B1-1 Notes and
the Series B1-2 Notes, and shall mean ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney, Inc., with respect
to the Series A1-12 Notes and the Series A1-13 Notes, and 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) of this Appendix A, and (c) has
entered into a Broker-Dealer Agreement that is in effect on the date of
reference.
"Broker-Dealer Agreements" shall mean the agreements between the Auction
Agent and the Broker-Dealers, and approved by the Issuer, pursuant to which the
Broker-Dealers agree to participate in Auctions as set forth in the Auction
Procedures, as from time to time amended or supplemented. The Broker-Dealer
Agreements shall be in substantially the form of each Broker-Dealer Agreement
dated as of [ , 2003], among the Issuer, the Auction Agent, and each
--------- ---
respective Broker-Dealer.
"Broker-Dealer Fee" has the meaning set forth in the Auction Agent
Agreement.
"Business Day" shall mean any day other than a Saturday, Sunday, holiday or
day on which banks located in the City of New York, New York, or the New York
Stock Exchange, the Indenture Trustee or the Auction Agent, are authorized or
permitted by law or executive order to close or such other date as may be agreed
to in writing by the Auction Agent, the Broker-Dealers and the Issuer.
"Cap Rate" shall mean, with respect to any Interest Period applicable to
the Auction Rate Notes, the lesser of (i) the applicable Maximum Rate and (ii)
the Net Loan Rate in effect for such Interest Period.
"Carry-over Amount" shall mean, for any Interest Period during which
interest is calculated at the Net Loan Rate, 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 lesser of (i) the applicable Auction Rate
and (ii) the Maximum 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 Net Loan Rate, together with the unreduced
portion of any such excess from prior Interest Periods; provided that any
reference to "principal" or "interest" in the Indenture
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and the Auction Rate Notes shall not include within the meanings of such words
any Carry-over Amount or any interest accrued on any Carry-over Amount.
"Effective Interest Rate" shall mean, with respect to any Financed Student
Loan, the interest rate per annum payable by the borrower as of the last day of
the calendar quarter borne by such Financed Student Loan after giving effect to
any reduction in such interest rate pursuant to borrower incentives, (a) less
all accrued rebate fees on such Financed Student Loan constituting Consolidation
Loans paid during such calendar quarter expressed as a percentage per annum and
(b) plus all accrued Interest Benefit Payments and Special Allowance Payments
applicable to such Financed Student Loan during such calendar quarter expressed
as a percentage per annum.
"Eligible Carry-over Make-up Amount" shall mean, 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 the Net Loan Rate 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.
"Exchange Date" shall mean the Date of Issuance of the Series A1 Notes and
the Series B1 Notes, pursuant to the Exchange Offer and the Exchange Offer
Registration Statement [ , 2003].
-------- --
"Existing Owner" shall mean (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-Dealers in
connection with an Auction, a Person who is a beneficial owner of Auction Rate
Notes.
"Existing Owner Registry" shall mean 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) of this
Appendix A.
"Initial Auction Agent" shall mean Deutsche Bank Trust Company Americas, a
New York banking corporation, and its successors and assigns.
"Initial Auction Agent Agreement" shall mean the Auction Agent Agreement
dated as of [ , 2003], by and among the Issuer, the Indenture Trustee
-------- --
and the Initial Auction Agent, including any amendment thereof or supplement
thereto.
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"Initial Payment Dates" shall mean, with respect to the Series A1-1 Notes,
February 12, 2003; with respect to the Series A1-2 Notes, May 14, 2003; with
respect to the Series A1-3 Notes, May 21, 2003; with respect to the Series A1-4
Notes, August 20, 2003.
"Initial Period" shall mean, with respect to the Series A1-1 Notes, the
Series A1-2 Notes, the Series A1-3 Notes and the Series A1-4 Notes, the period
commencing on May 22, 2002 and continuing through the day immediately preceding
the Initial Rate Adjustment Date for such Notes.
"Initial Rate" shall mean 2.58% for the Series A1-1 Notes, 2.93% for the
Series A1-2 Notes, 2.86% for the Series A1-3 Notes, and 3.25% for the Series
A1-4 Notes.
"Initial Rate Adjustment Date" shall mean, with respect to the Series A1-1
Notes, February 12, 2003; with respect to the Series A1-2 Notes, May 14, 2003;
with respect to the Series A1-3 Notes, May 21, 2003; and, with respect to the
Series A1-4 Notes, August 20, 2003.
"Interest Period" shall mean, with respect to the Series A1-1 Notes, the
Series A1-2 Notes, the Series A1-3 Notes and the Series A1-4 Notes, the Initial
Period and, with respect to each Series of Auction Rate Notes, each period
commencing on an Interest Rate Adjustment Date for such Series and ending on and
including the day before (a) the next Interest Rate Adjustment Date for such
Series or (b) the Stated Maturity of such Series, as applicable.
"Interest Rate Adjustment Date" shall mean the date on which an Auction
Note Interest Rate is effective, and shall mean, with respect to the Auction
Rate Notes, the date of commencement of each Auction Period.
"Interest Rate Determination Date" shall mean, with respect to the Auction
Rate Notes, the Auction Date, or if no Auction Date is applicable to such
Series, the Business Day immediately preceding the date of commencement of an
Auction Period.
"Market Agent" shall mean ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co., and its successors and
assigns.
"Market Agent Agreement" shall mean the Market Agent Agreement dated as of
[ , 2003] among the Market Agent, the Issuer and the Indenture
-------- --
Trustee, as the same may be amended from time to time.
"Maximum Rate" means the least of (a) either (i) the Applicable LIBOR Rate
plus 1.50% (if the ratings assigned by Fitch, ▇▇▇▇▇'▇ and S&P to the Auction
Rate Notes are "AAA," "Aaa" and "AAA," respectively, or better) or (ii) the
Applicable LIBOR Rate plus 2.50% (if any one of the ratings assigned by Fitch,
▇▇▇▇▇'▇ and S&P to the Auction Rate Notes is less than "AAA," "Aaa" and "AAA,"
respectively, and greater than or equal to "A-," "A3" and "A-," respectively),
or (iii) the Applicable LIBOR Rate plus 3.50% (if any one of the ratings
assigned by Fitch, ▇▇▇▇▇'▇ and S&P to the Auction Rate Notes is less than "A-,"
"A3" and "A-," respectively), and (b) 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
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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" shall mean, with respect to any Interest Period applicable
to the Auction Rate Notes, the rate of interest per annum (rounded to the next
highest one-hundredth of one percent) equal to (a) the weighted average
Effective Interest Rate of the Financed Student Loans for the calendar quarter
immediately preceding such Interest Period, as determined by the Administrator
on the last day of such calendar quarter, less (b) the Program Expense
Percentage, as determined by the Administrator on the last day of each calendar
year. In making the determinations in (a) and (b) of this definition of "Net
Loan Rate," the Administrator shall take into account as an increase to such Net
Loan Rate the receipt of any Counterparty Derivative Payment and as a decrease
to such Net Loan Rate any Issuer Derivative Payment. The determinations made by
the Administrator in (a) and (b) of this definition of "Net Loan Rate" shall be
given in writing to the Auction Agent, the Indenture Trustee and the
Broker-Dealers immediately upon their respective calculation dates.
"Non-Payment Rate" shall mean One-Month LIBOR plus 1.50%.
"Notes" shall mean, collectively, the Series A1-1 Notes through the Series
A1-13 Notes, the Series B1-1 Notes and the Series B1-2 Notes; the Series A-1
Notes through the Series A-13 Notes, the Series B-1 Notes and the Series B-2
Notes.
"One-Month LIBOR," "Three-Month LIBOR," "Six-Month LIBOR" or "One-Year
LIBOR," shall mean the rate per annum fixed by the British Bankers' Association
at 11:00 a.m., London time (BBA Libor rate), relating to quotations for London
Interbank Offered Rates on U.S. dollar deposits for the Applicable LIBOR Rate,
as determined by the Auction Agent or Indenture Trustee, as applicable. Such
rate may be available on the Internet at ▇▇▇.▇▇▇.▇▇▇.▇▇. If such a day is not a
business day in London, the most recently fixed London Interbank Offered Rates
on U.S. dollar deposits for the Applicable LIBOR Rate shall be used. If the rate
is no longer available from such source, the Auction Agent or Indenture Trustee,
as applicable, will ascertain the rate in good faith from such sources as it
shall determine to be comparable to such source. All percentages resulting from
such calculations shall be rounded upwards, if necessary, to the nearest
one-hundredth of one percent.
"Order" has the meaning set forth in Section 2.02(a)(i)(A) of this Appendix
A.
"Payment Date" shall mean, (a) initially, with respect to the with respect
to the Series A1-1 Notes, the Series A1-2 Notes, the Series A1-3 Notes and the
Series A1-4 Notes, the applicable Initial Payment Dates, (b) so long as a series
of the Notes bears 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 related Auction Period thereafter and (c) if and for so long
as a series of Notes bears interest at an Auction Note Interest Rate for an
Interest Period of greater than 180 days, the first Business Day of each June
and December.
"Payment Default" shall mean, 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
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default in the due and punctual payment of any interest on and principal of such
Auction Rate Notes at their maturity.
"Potential Owner" shall mean any Person (including an Existing Owner that
is (a) a Broker-Dealer when dealing with the Auction Agent and (b) a potential
beneficial owner when dealing with a Broker-Dealer) who may be interested in
acquiring Auction Rate Notes (or, in the case of an Existing Owner thereof, an
additional principal amount of Auction Rate Notes).
"Program Expense Percentage" shall mean, the percentage that all Program
Expenses (other than Consolidation Loan rebate fees) estimated for the next 12
months represent of the principal amount of the Notes, which as of November 30,
2002 is 0.60%, and which the Administrator shall calculate annually on the last
day of each calendar year. Any adjustment in the Program Expense Percentage
shall be effective beginning on the first Interest Rate Determination Date
following each such calculation.
"Regular Record Date" shall mean, with respect to each Payment Date, the
Business Day immediately preceding such Payment Date.
"Sell Order" has the meaning set forth in Section 2.02(a)(i)(A) of this
Appendix A.
"Submission Deadline" shall mean 1:00 p.m., eastern time, on any Auction
Date or such other time on any Auction Date by which the 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) of
this Appendix A.
"Submitted Hold Order" has the meaning set forth in Section 2.02(a)(iii)(A)
of this Appendix A.
"Submitted Order" has the meaning set forth in Section 2.02(a)(iii)(A) of
this Appendix A.
"Submitted Sell Order" has the meaning set forth in Section 2.02(a)(iii)(A)
of this Appendix A.
"Substitute Auction Agent" shall mean the Person with whom the Issuer and
the Indenture Trustee enter into a Substitute Auction Agent Agreement.
"Substitute Auction Agent Agreement" shall mean an auction agent agreement
containing terms substantially similar to the terms of the Initial Auction Agent
Agreement, whereby a Person having the qualifications required by Section
2.02(e) of this Appendix A agrees with the Indenture Trustee and the Issuer to
perform the duties of the Auction Agent under this Appendix A.
"Sufficient Bids" has the meaning set forth in Section 2.02(a)(iii)(A) of
this Appendix A.
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Article II
Terms and Issuance
Section 2.01 Auction Rate and Carry-over Amounts. During the Initial
Period, each of the Series A1-1 Notes, the Series A1-2 Notes, the Series A1-3
Notes and the Series A1-4 Notes shall bear interest at the Initial Rate for such
Series. Each of the Series A1-5 Notes, Series A1-6 Notes, Series A1-7 Notes,
Series A1-8 Notes, Series A1-9 Notes, Series A1-10 Notes, Series A1-11 Notes,
Series A1-12 Notes, Series A1-13 Notes, Series B1-1 Notes and Series B1-2 Notes
shall bear interest at the Auction Note Interest Rate in effect for the Auction
Period corresponding to each of the Series A-5 Notes, Series A-6 Notes, Series
A-7 Notes, Series A-8 Notes, Series A-9 Notes, Series A-10 Notes, Series A-11
Notes, Series A-12 Notes, Series A-13 Notes, Series B-1 Notes and Series B-2
Notes, respectively, as of the Exchange Date.
Each Series of Auction Rate Notes, except (a) with respect to an Auction
Period Adjustment, or (b) during the Initial Period with respect to the Series
A1-1 Notes, the Series A1-2 Notes, the Series A1-3 Notes and the Series A1-4
Notes, shall bear interest at an Auction Note Interest Rate based on a 28-day
Auction Period for the Auction Rate Notes, as determined pursuant to this
Section 2.01 and Section 2.02 of this Appendix A.
For the Auction Rate Notes during the Initial Period and each Auction
Period, interest at the applicable Auction Note 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
(except during the Initial Period with respect to the Series A1-1 Notes, the
Series A1-2 Notes, the Series A1-3 Notes and the Series A1-4 Notes) for each
Auction Period until an Auction Period Adjustment, if any, shall be determined
as described below. Each such Auction Period shall commence on and include the
day following the expiration of the immediately preceding Auction Period and
terminate on and include (i) the first Business Day of the following fourth week
in the case of the Series A1-8 Notes, the Series A1-10 Notes, the Series A1-11
Notes and the Series A1-13 Notes, (ii) the second Business Day of the following
fourth week in the case of the Series A1-1 Notes, the Series A1-2 Notes, the
Series A1-3 Notes and the Series A1-4 Notes, and (iii) the third Business Day of
the following fourth week in the case of the Series A1-12 Notes and the Series
B1-2 Notes, and (iv) the fourth Business Day of the following fourth week in the
case of the Series A1-5 Notes, the Series A1-6 Notes, the Series A1-7 Notes, the
Series A1-9 Notes and the Series B1-1 Notes; provided, however, that the Auction
Period that immediately follows the Initial Period for each of the Series A1-1
Notes, the Series A1-2 Notes, the Series A1-3 Notes and the Series A1-4 Notes,
shall commence on the Interest 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) of this Appendix A; provided that, if on any Interest Rate Determination
Date, an Auction is not held for any reason, the following Business Day shall be
considered the Interest Rate Determination Date and an Auction is to be held on
such date. If an Auction is not held for any reason on such date, then the
Auction Note Interest Rate on such Auction Rate Notes for the next succeeding
Auction Period shall be the applicable Cap Rate.
A-8
Notwithstanding the foregoing:
(a) if the ownership of an Auction Rate Note is no longer maintained
in Book-entry Form, the Auction Note Interest Rate on the Auction Rate
Notes for any Interest Period commencing after the delivery of certificates
representing Auction Rate Notes pursuant to this Supplemental Indenture
shall equal the Cap Rate; or
(b) if a Payment Default shall have occurred, the Auction Note
Interest Rate on the Auction Rate Notes for the Interest Period commencing
on or immediately after such Payment Default, and for each Interest Period
thereafter, to and including the Interest Period, if any, during which, or
commencing less than two Business Days after, such Payment Default is
cured, shall equal the applicable Non-Payment Rate on the first day of each
such Interest Period.
In accordance with Section 2.02(a)(iii)(B) and (C) of this Appendix A, the
Auction Agent shall promptly give written notice to the Indenture 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 Rate when such rate is
not the Auction Note Interest Rate, applicable to the Auction Rate Notes. The
Indenture Trustee shall, upon request, notify the Noteholders and the Issuer 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 Rate in effect for such Auction Period.
If the Auction Rate for the Auction Rate Notes is greater than the Net Loan
Rate, then the Auction Note Interest Rate applicable to such Auction Rate Notes
for that Interest Period will be the Net Loan Rate and the Issuer 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 Indenture Trustee) from the 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 Supplemental Indenture
and this Appendix A, any reference to "principal" or "interest" herein shall not
include within the meaning of such words Carry-over Amount or any interest
accrued on any such Carry-over Amount. Such Carry-over Amount shall be
separately calculated for each Auction Rate Note by the Issuer during such
Interest Period in sufficient time for the Indenture Trustee to give notice to
each Noteholder of such Carry-over Amount as required in the next succeeding
sentence. Not less than four days before the Payment Date for an Interest Period
with respect to which such Carry-over Amount has been calculated by the Issuer,
the Indenture Trustee shall give written notice to each Noteholder, the Auction
Agent and the Issuer, in the form provided by the Issuer, of the Carry-over
Amount applicable to each Auction Rate Note, which written notice may accompany
the payment of
A-9
interest made to the Noteholder on such Payment Date. 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 such 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 Indenture Trustee pursuant to an Issuer Order on an Auction
Rate Note on the earliest of (i) the date of defeasance of any of the Auction
Rate Notes or (ii) the first occurring Payment Date with respect to the Auction
Rate Note (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 the Indenture 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 Indenture Trustee pursuant to an Issuer Order 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 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 Payment Date there are
sufficient moneys in the Revenue Fund to pay all interest due on the Auction
Rate Notes on such Payment Date, to redeem any Auction Rate Notes required to be
redeemed on such Payment Date in accordance with the Indenture and to fund
amounts required to be added to the Reserve Fund on such Payment Date. Any
Carry-over Amount (and any interest accrued thereon) on any Auction Rate Note
that is due and payable on a Payment Date, which Auction Rate Note is to be
redeemed (other than by optional redemption) on said Payment Date, shall be paid
to the Noteholder thereof on said Payment Date to the extent that moneys are
available therefor in accordance with the provisions of this Appendix A;
provided, however, that any Carry-over Amount (and any interest accrued thereon)
that is not yet due and payable on said Payment Date shall be cancelled with
respect to said Auction Rate Note that is to be redeemed (other than by optional
redemption) on said Payment Date and shall not be paid on any succeeding 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 Indenture Trustee on the earliest of (a) the date of defeasance of any of
the Auction Rate Notes or (b) the next occurring Payment Date or Dates, as
necessary, if and to the extent that the conditions in the second preceding
sentence are satisfied. On any Payment Date on which the Indenture Trustee pays
only a portion of the Carry-over Amount (and any interest accrued thereon) on
Auction Rate Notes, the Indenture Trustee shall give written notice in the
manner set forth in the immediately preceding paragraph to the Noteholder of
such Auction Rate Note receiving such partial payment of the Carry-over Amount
remaining unpaid on such Auction Rate Note.
The 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 Indenture Trustee in accordance with the provisions of the
immediately preceding paragraph and the Indenture, and the Indenture Trustee
shall make payment of the Carry-over Amount (and any interest accrued thereon)
in the same manner as, and from the same Fund from which, it pays interest on
the Auction Rate
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Notes on a 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 Cap 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 Cap Rate, the Cap Rate shall be determined
by the securities dealer appointed by the Issuer capable of making such a
determination in accordance with the provisions of this Appendix A and written
notice of such determination shall be given by such securities dealer to the
Indenture Trustee.
Section 2.02 Auction Rate.
(a) Determining the Auction Rate. By purchasing Auction Rate Notes, whether
in an Auction or otherwise, each purchaser of Auction Rate Notes, or its
Broker-Dealer, must agree and shall be deemed by such purchase to have agreed
(x) to participate in Auctions on the terms described herein, (y) to have its
beneficial ownership of the Auction Rate Notes maintained at all times in
Book-entry Form for the account of its Participant, which in turn will maintain
records of such beneficial ownership, and (z) to authorize such Participant to
disclose to the Auction Agent such information with respect to such beneficial
ownership as the Auction Agent may request.
So long as the ownership of Auction Rate Notes is maintained in Book-entry
Form by the Securities Depository, an Existing Owner may sell, transfer or
otherwise dispose of Auction Rate Notes only pursuant to a Bid or Sell Order
placed in an Auction or otherwise sell, transfer or dispose of Auction Rate
Notes through a Broker-Dealer; provided that, in the case of all transfers other
than pursuant to Auctions, such Existing Owner, its Broker-Dealer or its
Participant advises the Auction Agent of such transfer.
Auctions shall be conducted on each Auction Date, if there is an Auction
Agent on such Auction Date, in the following manner:
(i) (A) Prior to the Submission Deadline on each Auction Date;
(1) each Existing Owner of Auction Rate Notes may submit to a
Broker-Dealer by telephone or otherwise any information as to:
a. the principal amount of Outstanding Auction Rate Notes,
if any, owned by such Existing Owner that 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, that such Existing Owner offers to sell if the Auction
Note Interest
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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 that 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 that 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) (1) Subject to the provisions of Section 2.02(a)(ii) of this
Appendix A, 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) of this Appendix A, 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) of this Appendix A, if the rate
specified therein shall be higher than the applicable Maximum
Rate and Sufficient Bids have not been made.
(2) Subject to the provisions of Section 2.02(a)(ii) of this
Appendix A, a Sell Order by an Existing Owner shall constitute an
irrevocable offer to sell:
A-12
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) of this Appendix A, if Sufficient Bids have not
been made.
(3) Subject to the provisions of Section 2.02(a)(ii) of this
Appendix A, 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. such principal amount, or a lesser principal amount of
Outstanding Auction Rate Notes set forth in Section
2.02(a)(iv)(A)(5) of this Appendix A, 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.
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(B) If any rate specified in any Bid contains more than three
figures to the right of the decimal point, the Auction Agent shall
round such rate up to the next higher one thousandth of 1%.
(C) If an Order or Orders covering all Outstanding Auction Rate
Notes owned by an Existing Owner is not submitted to the Auction Agent
prior to the Submission Deadline, the Auction Agent shall deem a Hold
Order to have been submitted on behalf of such Existing Owner covering
the principal amount of Outstanding Auction Rate Notes owned by such
Existing Owner and not subject to an Order submitted to the Auction
Agent.
(D) Neither the Issuer, the Indenture 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 (ii);
b. subject to subclause (2)a. of this clause (E), 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 (2)a. and (2)b. of this clause
(E), if more than one Bid with different rates are submitted
on behalf of
A-14
such Existing Owner, such Bids shall be considered valid
first in the ascending order of their respective rates until
the highest rate is reached at which such excess exists and
then at such rate up to the amount of such excess; and
d. in any such event, the amount of Outstanding Auction
Rate Notes, if any, subject to Bids not valid under this
clause (E) 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 (E) 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
Rate will (1) be treated as a Sell Order if submitted by an Existing
Owner and (2) not be accepted if submitted by a Potential Owner.
(J) Any Order submitted in an Auction by a Broker-Dealer to the
Auction Agent prior to the Submission Deadline on any Auction Date
shall be irrevocable.
(iii) (A) Not earlier than the Submission Deadline on each Auction
Date, the Auction Agent shall assemble all valid Orders submitted or deemed
submitted to it by the Broker-Dealers (each such Order as submitted or
deemed submitted by a Broker-Dealer being herein referred to individually
as a "Submitted Hold Order," a "Submitted Bid" or a "Submitted Sell Order,"
as the case may be, or as a "Submitted Order," and collectively as
"Submitted Hold Orders," "Submitted Bids" or "Submitted Sell Orders," as
the case may be, or as "Submitted Orders") and shall determine:
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(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 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 Rate; and
c. the aggregate principal amount of Outstanding
Auction Rate Notes subject to Submitted Sell Orders;
(in the event such excess or such equality exists, other than
because all of the Outstanding Auction Rate Notes are subject to
Submitted Hold Orders, such Submitted Bids described in subclause
a. above shall be referred to collectively as "Sufficient Bids");
and
(3) if Sufficient Bids exist, the "Bid Auction Rate", which
shall be the lowest rate specified in such Submitted Bids such
that if:
a. (x) each Submitted Bid from Existing Owners
specifying such lowest rate and (y) all other Submitted Bids
from Existing Owners specifying lower rates were rejected,
thus entitling such Existing Owners to continue to own the
principal amount of Auction Rate Notes subject to such
Submitted Bids; and
b. (x) each such Submitted Bid from Potential Owners
specifying such lowest rate and (y) all other Submitted Bids
from Potential Owners specifying lower rates were accepted;
the result would be that such Existing Owners described in
subclause a. above would continue to own an aggregate principal
amount of Outstanding Auction Rate Notes that, 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.
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(B) Promptly after the Auction Agent has made the determinations
pursuant to Section 2.02(a)(iii)(A) of this Appendix A, the Auction
Agent shall advise the Indenture Trustee, the Broker-Dealers and the
Issuer of the Net Loan Rate, Maximum Rate and the All Hold Rate and
the components thereof on the Auction Date. Based on such
determinations, the Auction Rate for the next succeeding Interest
Period will be established 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 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 Indenture
Trustee of the Auction Note Interest Rate, which rate shall be the
lesser of (x) the Auction Rate and (y) the applicable Maximum Rate.
(iv) Existing Owners shall continue to own the principal amount of
Auction Rate Notes that are subject to Submitted Hold Orders. If the Net
Loan Rate is equal to or greater than the Bid Auction Rate and if
Sufficient Bids have been received by the Auction Agent, the Bid Auction
Rate will be the 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 Maximum Rate is less than the Auction Rate, the Maximum Rate will be
the Auction Note Interest 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 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 the Maximum Rate is
equal to or greater than the Bid Auction Rate (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:
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(1) Existing Owners' Submitted Bids specifying any rate that
is higher than the Auction Note Interest Rate shall be accepted,
thus requiring each such Existing Owner to sell the aggregate
principal amount of Auction Rate Notes subject to such Submitted
Bids;
(2) Existing Owners' Submitted Bids specifying any rate that
is lower than the Auction Note Interest Rate shall be rejected,
thus entitling each such Existing Owner to continue to own the
aggregate principal amount of Auction Rate Notes subject to such
Submitted Bids;
(3) Potential Owners' Submitted Bids specifying any rate
that is lower than the Auction Note Interest Rate shall be
accepted;
(4) Each Existing Owners' Submitted Bid specifying a rate
that is equal to the Auction Note Interest Rate shall be
rejected, thus entitling such Existing Owner to continue to own
the aggregate principal amount of Auction Rate Notes subject to
such Submitted Bid, unless the aggregate principal amount of
Outstanding Auction Rate Notes subject to all such Submitted Bids
shall be greater than the principal amount of Auction Rate Notes
(the "remaining principal amount") equal to the excess of the
Available Auction Rate Notes over the aggregate principal amount
of Auction Rate Notes subject to Submitted Bids described in
clauses (2) and (3) of this Section 2.02(a)(iv)(A), 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) of this Appendix A; 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
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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) of this Appendix A.
(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 Maximum Rate is less than the Bid Auction Rate (in
which case the Auction Note Interest Rate shall be the Maximum Rate),
subject to the provisions of Section 2.02(a)(iv)(D) of this Appendix
A, Submitted Orders shall be accepted or rejected as follows in the
following order of priority and all other Submitted Bids shall be
rejected:
(1) Existing Owners' Submitted Bids specifying any rate that
is equal to or lower than the Auction Note Interest Rate shall be
rejected, thus entitling such Existing Owners to continue to own
the aggregate principal amount of Auction Rate Notes subject to
such Submitted Bids;
(2) Potential Owners' Submitted Bids specifying (x) any rate
that is equal to or lower than the Auction Note Interest Rate
shall be accepted and (y) any rate that is higher than the
Auction Note Interest Rate shall be rejected; and
(3) each Existing Owner's Submitted Bid specifying any rate
that is higher than the Auction Note Interest Rate and the
Submitted Sell Order of each Existing Owner shall be accepted,
thus entitling each Existing Owner that submitted any such
Submitted Bid or Submitted Sell Order to sell the Auction Rate
Notes subject to such Submitted Bid or Submitted Sell Order, but
in both cases only in an amount equal to the aggregate principal
amount of Auction Rate Notes obtained by multiplying the
aggregate principal amount of Auction Rate Notes subject to
Submitted Bids described in clause (2)(x) of this Section
2.02(a)(iv)(B) by a fraction the numerator of which shall be the
aggregate principal amount of Outstanding Auction Rate Notes
owned by such Existing Owner subject to such submitted Bid or
Submitted Sell Order and the denominator of which shall be the
aggregate principal amount of Outstanding Auction Rate Notes
subject to all such Submitted Bids and Submitted Sell Orders.
(C) If all Auction Rate Notes are subject to Submitted Hold
Orders, all Submitted Bids shall be rejected.
(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
A-19
sold by any Existing Owner or Potential Owner so that the principal
amount of Auction Rate Notes purchased or sold by each Existing Owner
or Potential Owner shall be equal to an Authorized Denomination.
(E) If, as a result of the procedures described in paragraph (B)
of this Section 2.02(a)(iv), any Potential Owner would be entitled or
required to purchase less than an Authorized Denomination of Auction
Rate Notes, the Auction Agent shall, in such manner as in its sole
discretion it shall determine, allocate Auction Rate Notes for
purchase among Potential Owners so that only Auction Rate Notes in
Authorized Denominations are purchased by any Potential Owner, even if
such allocation results in one or more of such Potential Owners not
purchasing any Auction Rate Notes.
(v) Based on the result of each Auction, the Auction Agent shall
determine the aggregate principal amount of Auction Rate Notes to be
purchased and the aggregate principal amount of Auction Rate Notes to be
sold by Potential Owners and Existing Owners on whose behalf each
Broker-Dealer submitted Bids or Sell Orders and, with respect to each
Broker-Dealer, to the extent that such aggregate principal amount of
Auction Rate Notes to be sold differs from such aggregate principal amount
of Auction Rate Notes to be purchased, determine to which other
Broker-Dealer or Broker-Dealers acting for one or more purchasers such
Broker-Dealer shall deliver, or from which other Broker-Dealer or
Broker-Dealers acting for one or more sellers such Broker-Dealer shall
receive, as the case may be, Auction Rate Notes.
(vi) Any calculation by the Auction Agent or the Indenture Trustee, as
applicable, of the Auction Note Interest Rate, the Maximum Rate, the All
Hold Rate, the Net Loan Rate and the Non-Payment Rate shall, in the absence
of manifest error, be binding on all other parties.
(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 Revenue Fund to pay, or otherwise held by the
Indenture Trustee under the Indenture and available to pay, the principal
of and interest due on the Auction Rate Notes on the 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
Indenture Trustee shall promptly notify the Auction Agent of any such
occurrence.
(b) Application of Interest Payments for the Auction Rate Notes.
(i) The Indenture Trustee shall determine not later than 2:00 p.m.,
eastern time, on the Business Day next succeeding a Payment Date, whether a
Payment Default has occurred. If a Payment Default has occurred, the
Indenture Trustee shall, not later than 2:15 p.m., eastern time, on such
Business Day, send a notice thereof in substantially the form of Exhibit C
attached hereto to the Auction Agent by telecopy or similar means and, if
such Payment Default is cured, the Indenture Trustee shall immediately send
a notice in
A-20
substantially the form of Exhibit D attached hereto to the Auction Agent by
telecopy or similar means.
(ii) Not later than 2:00 p.m., eastern time, on each anniversary of
the Exchange Date, the Indenture 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
as set forth in the Servicer's Report. Not later than 2:00 p.m., eastern
time, on each Auction Date, the Indenture 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 Indenture 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 Rate, All Hold Rate, Net Loan Rate, Applicable
LIBOR Rate, and Non-Payment Rate. The Auction Agent shall calculate the
applicable Maximum Rate, Net Loan Rate, Applicable LIBOR Rate, and All Hold
Rate, as the case may be, on each Auction Date and shall notify the Indenture
Trustee and the Broker-Dealers of the applicable Maximum Rate, Net Loan Rate,
Applicable LIBOR 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 Indenture Trustee shall determine the applicable Maximum
Rate, Net Loan Rate, Applicable LIBOR Rate, All Hold Rate and Non-Payment Rate
for each such Interest Period. If the ownership of the Auction Rate Notes is no
longer maintained in Book-entry Form by the Securities Depository, the Indenture
Trustee shall calculate the applicable Maximum Rate and the Net Loan 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 Indenture 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
Indenture Trustee or the Auction Agent, as the case may be, of the applicable
Maximum Rate, Net Loan Rate, Applicable LIBOR 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 Indenture Trustee of the applicable Maximum
Rate, Net Loan Rate, Applicable LIBOR Rate, and All Hold Rate.
(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 Indenture Trustee shall determine the aggregate
amounts of interest distributable on the next succeeding Payment Date to
the beneficial owners of Auction Rate Notes.
(ii) At least four days prior to any Payment Date, the Indenture
Trustee shall:
A-21
(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 Payment Date and (2) the amount payable to
the Auction Agent on the Auction Date pursuant to Section 2.02(b)(ii)
of this Appendix A; and
(B) 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 Payment Date to the beneficial
owners of each Series of the Auction Rate Notes.
If any day scheduled to be a Payment Date shall be changed after the
Indenture Trustee shall have given the notice or confirmation referred to in
clause (i) of the preceding sentence, the Indenture Trustee shall, not later
than 11:15 a.m., eastern time, on the Business Day next preceding the earlier of
the new Payment Date or the old Payment Date, by such means as the Indenture
Trustee deems practicable, give notice of such change to the Auction Agent, so
long as no Payment Default has occurred and is continuing and the ownership of
the Auction Rate Notes is maintained in Book-entry Form by the Securities
Depository.
(e) Auction Agent.
(i) Deutsche Bank Trust Company Americas is hereby appointed as
Initial Auction Agent to serve as agent for the Issuer in connection with
Auctions. The Indenture Trustee and the Issuer will, and the Indenture
Trustee is hereby directed to, enter into the Initial Auction Agent
Agreement with Deutsche Bank Trust Company Americas, 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 Indenture 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 Indenture Trustee, each
Broker-Dealer and the Issuer. The Auction Agent may be removed at any time
by the Indenture Trustee upon the written direction of an Authorized
Officer or by the holders of a majority of the aggregate principal amount
of the Auction Rate Notes then Outstanding, and if by such Noteholders, by
an instrument signed by such Noteholders or their attorneys and filed with
the Auction Agent, the Issuer and the Indenture 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
A-22
Agreement if, within 25 days after notifying the Indenture Trustee, each
Broker-Dealer 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 Indenture Trustee at
the direction of an Authorized Officer, shall use its best efforts to
appoint a Substitute Auction Agent.
(iii) The Auction Agent is acting as agent for the Issuer in
connection with Auctions. In the absence of bad faith, negligent failure to
act or negligence on its part, the Auction Agent shall not be liable for
any action taken, suffered or omitted or any error of judgment made by it
in the performance of its duties under the Auction Agent Agreement and
shall not be liable for any error of judgment made in good faith unless the
Auction Agent shall have been negligent in ascertaining (or failing to
ascertain) the pertinent facts.
(f) Broker-Dealers.
(i) The Auction Agent will enter into a Broker-Dealer Agreement with
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co., as the sole initial Broker-Dealer for Series A1-1
Notes, Series A1-2 Notes, Series A1-3 Notes, Series A1-4 Notes, Series A1-5
Notes, Series A1-6 Notes, Series A1-7 Notes, Series A1-8 Notes, Series A1-9
Notes, Series A1-10 Notes, Series A1-11 Notes and Series B1-1 Notes and
Series B1-2 Notes, and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc., as the sole initial
Broker-Dealer for Series A1-12 Notes and Series A1-13 Notes. An Authorized
Officer may, from time to time, approve one or more additional persons to
serve as a Broker-Dealer under the Broker-Dealer Agreements and shall be
responsible for providing such Broker-Dealer Agreements to the Indenture
Trustee and the Auction Agent.
(ii) Any Broker-Dealer may be removed at any time, at the request of
an Authorized Officer, but there shall, at all times, be at least one
Broker-Dealer appointed and acting as such.
(g) Changes in Auction Period or Periods and Certain Percentages.
(i) While any of the Auction Rate Notes are Outstanding, the Issuer
may, from time to time, change the length of one or more Auction Periods
(an "Auction Period Adjustment"), 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
A-23
Indenture Trustee, the Auction Agent, the Market Agent, each Broker-Dealer,
each Rating Agency and the Securities Depository in substantially the form
of, or containing substantially the information contained in, Exhibit E
attached hereto at least 10 days prior to the Auction Date for such Auction
Period.
(ii) Any such adjusted Auction Period shall not be less than 7 days
nor more than 366 days.
(iii) An Auction Period Adjustment shall take effect only if (A) the
Indenture Trustee and the Auction Agent receive, by 11:00 a.m., eastern
time, on the Business Day before the Auction Date for the first such
Auction Period, an Issuer Certificate in substantially the form attached
as, or containing substantially the same information contained in, Exhibit
F attached hereto, authorizing the Auction Period Adjustment specified in
such certificate along with a copy of the written consent of the Market
Agent and, (B) Sufficient Bids exist as of the Auction on the Auction Date
for such first Auction Period. If the condition referred to in (A) above is
not met, the applicable Auction Note Interest Rate for the next Auction
Period shall be determined pursuant to the above provisions of this Section
2.02 and the Auction Period shall be the Auction Period determined without
reference to the proposed change. If the condition referred to in (A) is
met but the condition referred in (B) above is not met, the applicable
Auction Note Interest Rate for the next Auction Period shall be the
applicable Maximum 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 the Administrator on behalf of the Issuer, may specify a different Auction
Date (but in no event more than five Business Days earlier than the Auction Date
that would otherwise be determined in accordance with the definition of "Auction
Date" in Section 1.01 of this Appendix A) with respect to one or more specified
Auction Periods 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 Administrator at least 14 days prior to the effective date
of such change. If the Administrator 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 Indenture Trustee, the Auction Agent, the Issuer, the Administrator,
each Rating Agency and the Securities Depository. Such notice shall be
substantially in the form of, or contain substantially the information contained
in, Exhibit G attached hereto.
In connection with any change described in this Section 2.02(h), the
Auction Agent shall provide such further notice to such parties as is specified
in Section 2.03 of the Auction Agent Agreement.
A-24
Section 2.03 Additional Provisions Regarding the Interest Rates on the
Auction Rate Notes. The determination of an Auction Note Interest Rate by the
Auction Agent or any other Person pursuant to the provisions of the applicable
Section of this Article II shall be conclusive and binding on the Noteholders of
the Auction Rate Notes to which such Auction Note Interest Rate applies, and the
Issuer and the Indenture 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 and are contracted for, charged, reserved, taken or received
pursuant to the Auction Rate Notes or related documents) calculated from the
Date of Issuance of the Series A Notes and the Series B Notes, as applicable,
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 Noteholder or any former Noteholder 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.
▇-▇▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF SERIES A1 NOTES
[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
A-2-1
EXHIBIT A-2
FORM OF SERIES B1 NOTES
[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
A-2-1
EXHIBIT B
2002 SERIES A1&B1 NOTES CLOSING CASH FLOW PROJECTIONS
EXHIBIT C
NOTICE OF PAYMENT DEFAULT
EDUCATION FUNDING CAPITAL TRUST-I
AUCTION RATE EDUCATION LOAN BACKED NOTES
SERIES 2002
----
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.
FIFTH THIRD BANK, as Indenture Trustee
Dated: By:
---------------------------- ----------------------------------
EXHIBIT D
NOTICE OF CURE OF PAYMENT DEFAULT
EDUCATION FUNDING CAPITAL TRUST-I
AUCTION RATE EDUCATION LOAN BACKED NOTES
SERIES 2002
----
NOTICE IS HEREBY GIVEN that a Payment Default with respect to the Auction
Rate Notes identified above has been waived or cured. The next Payment Date is
and the Auction Date is .
-------------------------- --------------------------
FIFTH THIRD BANK, as Indenture Trustee
Dated: By:
---------------------------- ----------------------------------
EXHIBIT E
NOTICE OF PROPOSED CHANGE IN LENGTH
OF ONE OR MORE AUCTION PERIODS
EDUCATION FUNDING CAPITAL TRUST-I
AUCTION RATE EDUCATION LOAN BACKED NOTES
SERIES 2002
----
Notice is hereby given that the Issuer proposes to change the length of one
or more Auction Periods pursuant to 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 Indenture 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
Series Notes described herein, that there were Sufficient Bids for such
------
Series Notes at the Auction immediately preceding the date of this Notice.
-----
5. Terms not defined in this Notice shall have the meanings set forth in
the Indenture entered into in connection with the Series Notes.
------
EDUCATION FUNDING CAPITAL TRUST-I
Dated: By:
---------------------------- ----------------------------------
EXHIBIT F
NOTICE ESTABLISHING CHANGE IN LENGTH
OF ONE OR MORE AUCTION PERIODS
EDUCATION FUNDING CAPITAL TRUST-I
AUCTION RATE EDUCATION LOAN BACKED NOTES
SERIES 2002
-----
Notice is hereby given that the Issuer hereby establishes new lengths for
one or more Auction Periods pursuant to the Indenture:
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.
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 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 relating to the Series Notes.
----
EDUCATION FUNDING CAPITAL TRUST-I
Dated: By:
---------------------------- ----------------------------------
EXHIBIT G
NOTICE OF CHANGE IN AUCTION DATE
EDUCATION FUNDING CAPITAL TRUST-I
AUCTION RATE EDUCATION LOAN BACKED NOTES
SERIES 2002
-----
Notice is hereby given by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co., as Broker-Dealer 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 Series 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 Series Notes shall be subject to further
----
change hereafter as provided in the Indenture.
4. Terms not defined in this Notice shall have the meaning set forth in the
Indenture relating to the Series Notes.
----
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co., as Broker-Dealer
Dated: By:
---------------------------- ------------------------------------