SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 27, 2001
USA EDUCATION, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE File No. 001-13251 52-2013874
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
11600 Sallie Mae Drive, Reston, Virginia 20153
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (703) 810-3000
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Not Applicable
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(former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS
On February 27, 2001, USA Education, Inc. consummated the issuance of
$500,000,000 of Senior Notes due February 18, 2003.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired:
Not applicable.
(b) Pro Form Financial Information:
Not applicable.
(c) Exhibits:
1.1 Underwriting agreement, dated February 22, 2001, between USA
Education, Inc. and Goldman, Sachs & Co. and Credit Suisse
First Boston Corporation, as representatives of the
underwriters
1.2 Pricing agreement, dated February 22, 2001, between USA
Education, Inc. and Goldman, Sachs & Co. and Credit Suisse
First Boston Corporation, as representatives of the
underwriters
4.1.1 Second Supplemental Indenture, dated as of February 27, 2001,
between USA Education, Inc. and The Chase Manhattan Bank, as
trustee
4.1.2 Form of Global Certificates for $500,000,000 of Senior Notes
Due February 18, 2003
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
USA Education, INC.
By: /s/ John F. Remondi
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Name: John F. Remondi
Title: Executive Vice President &
Chief Financial Officer
Dated: February 27, 2001
USA EDUCATION, INC.
Form 8-K
CURRENT REPORT
EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
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1.1 Underwriting agreement, dated February 22, 2001, between USA
Education, Inc. and Goldman, Sachs & Co. and Credit Suisse
First Boston Corporation, as representatives of the
underwriters
1.2 Pricing agreement, dated February 22, 2001, between USA
Education, Inc. and Goldman, Sachs & Co. and Credit Suisse
First Boston Corporation, as representatives of the
underwriters
4.1.1 Second Supplemental Indenture, dated as of February 27, 2001,
between USA Education, Inc. and The Chase Manhattan Bank, as
trustee
4.1.2 Form of Global Certificates for $500,000,000 of Senior Notes
Due February 18, 2001
USA EDUCATION, INC.
DEBT SECURITIES
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UNDERWRITING AGREEMENT
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February 22, 2001
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
ABN AMRO Incorporated
Banc of America Securities LLC
Banc One Capital Markets, Inc.
Salomon Smith Barney Inc.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
From time to time USA Education, Inc., a Delaware corporation (the
"Company"), proposes to enter into one or more Pricing Agreements (each a
"Pricing Agreement") in the form of Annex I hereto, with such additions and
deletions as the parties thereto may determine, and, subject to the terms and
conditions stated herein and therein, to issue and sell to the firms named in
Schedule I to the applicable Pricing Agreement (such firms constituting the
"Underwriters" with respect to such Pricing Agreement and the securities
specified therein) certain of its debt securities (the "Securities") specified
in Schedule II to such Pricing Agreement (with respect to such Pricing
Agreement, the "Designated Securities").
The terms and rights of any particular issuance of Designated Securities
shall be as specified in the Pricing Agreement relating thereto and in or
pursuant to the indenture (the "Indenture") identified in such Pricing
Agreement.
1. Particular sales of Designated Securities may be made from time to time
to the Underwriters of such Securities, for whom the firms designated as
representatives of the Underwriters of such Securities in the Pricing Agreement
relating thereto will act as representatives (the "Representatives"). The term
"Representatives" also refers to a single firm acting as sole representative of
the Underwriters and to an Underwriter or Underwriters who act without any firm
being designated as its or their representatives. This Underwriting Agreement
shall not be construed as an obligation of the Company to sell any of the
Securities or as an obligation of any of the Underwriters to purchase the
Securities. The obligation of the Company to issue and sell any of the
Securities and the obligation of any of the Underwriters to purchase any of the
Securities shall be evidenced by the Pricing Agreement with respect to the
Designated Securities specified therein. Each Pricing Agreement shall specify
the aggregate principal amount of such Designated Securities, the initial public
offering price of such Designated Securities, the purchase price to the
Underwriters of such Designated Securities, the names of the Underwriters of
such Designated Securities, the names of the Representatives of such
Underwriters and the principal amount of such Designated Securities to be
purchased by each Underwriter and shall set forth the date, time and manner of
delivery of such Designated Securities and payment therefor. The Pricing
Agreement shall also specify (to the extent not set forth in the Indenture and
the registration statement and prospectus with respect thereto) the terms of
such Designated Securities. A Pricing Agreement shall be in the form of an
executed writing (which may be in counterparts), and may be evidenced by an
exchange of telegraphic communications or any other rapid transmission device
designed to produce a written record of communications transmitted. The
obligations of the Underwriters under this Agreement and each Pricing Agreement
shall be several and not joint.
2. The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-46056) (the
"Initial Registration Statement") in respect of the Securities has been
filed with the Securities and Exchange Commission (the "Commission"); the
Initial Registration Statement and any post-effective amendment thereto,
each in the form heretofore delivered or to be delivered to the
Representatives and, excluding exhibits to the Initial Registration
Statement, but including all documents incorporated by reference in the
prospectus contained therein, to the Representatives for each of the other
Underwriters, have been declared effective by the Commission in such form;
other than a registration statement, if any, increasing the size of the
offering (a "Rule 462(b) Registration Statement"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "Act"), which
became effective upon filing, no other document with respect to the
Initial Registration Statement or document incorporated by reference
therein has heretofore been filed or transmitted for filing with the
Commission (other than prospectuses filed pursuant to Rule 424(b) of the
rules and regulations of the Commission under the Act, each in the form
heretofore delivered to the Representatives); and no stop order suspending
the effectiveness of the Initial Registration Statement, any
post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and no proceeding for that purpose has
been initiated or threatened by the Commission (any preliminary prospectus
included in the Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) under the Act, is hereinafter called a
"Preliminary Prospectus"; the various parts of the Initial Registration
Statement, any post-effective amendment thereto and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and the
documents incorporated by reference in the prospectus contained in the
Initial Registration Statement at the time such part of the Initial
Registration Statement became effective but excluding Form T-1, each as
amended at the time such part of the Initial Registration Statement became
effective or such part of the Rule 462(b) Registration Statement, if any,
became or hereafter becomes effective, are hereinafter collectively called
the "Registration Statement"; the prospectus relating to the Securities,
in the form in which it has most recently been filed, or transmitted for
filing, with the Commission on or prior to the date of this Agreement,
being hereinafter called the "Prospectus"; any reference herein to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to the
applicable form under the Act, as of the date of such Preliminary
Prospectus or Prospectus, as the case may be; any reference to any
amendment or supplement to any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include any documents filed after the date
of such Preliminary Prospectus or Prospectus, as the case may be, under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in such Preliminary Prospectus or Prospectus, as
the case may be; any reference to any amendment to the Initial
Registration Statement shall be deemed to refer to and include any annual
report of the Company filed pursuant to Sections 13(a) or 15(d) of the
Exchange Act after the effective date of the Initial Registration
Statement that is incorporated by reference in the Registration Statement;
and any reference to the Prospectus as amended or supplemented shall be
deemed to refer to the Prospectus as amended or supplemented in relation
to the applicable Designated Securities in the form in which it is filed
with the Commission pursuant to Rule 424(b) under the Act in accordance
with Section 5(a) hereof, including any documents incorporated by
reference therein as of the date of such filing);
(b) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement
thereto, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and
in conformity with information furnished in writing to the Company by an
Underwriter of Designated Securities through the Representatives expressly
for use in the Prospectus as amended or supplemented relating to such
Securities;
(c) The Registration Statement and the Prospectus conform, and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and the rules and regulations of the Commission thereunder
and do not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the
Company by an Underwriter of Designated Securities through the
Representatives expressly for use in the Prospectus as amended or
supplemented relating to such Securities;
(d) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus; and, since the respective dates
as of which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries (except as
described in the Pricing Agreement) or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Prospectus;
(e) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws Delaware, with power and
authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus;
(f) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable;
(g) The Securities have been duly authorized, and, when Designated
Securities are issued and delivered pursuant to this Agreement and the
Pricing Agreement with respect to such Designated Securities, such
Designated Securities will have been duly executed, authenticated, issued
and delivered and will constitute valid and legally binding obligations of
the Company entitled to the benefits provided by the Indenture, which will
be substantially in the form filed as an exhibit to the Registration
Statement; the Indenture has been duly authorized and duly qualified under
the Trust Indenture Act and, at the Time of Delivery for such Designated
Securities (as defined in Section 4 hereof), the Indenture will constitute
a valid and legally binding instrument, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and the
Indenture conforms, and the Designated Securities will conform, to the
descriptions thereof contained in the Prospectus as amended or
supplemented with respect to such Designated Securities;
(h) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Indenture, this
Agreement and any Pricing Agreement, and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which the Company
is a party or by which the Company is bound or to which any of the
property or assets of the Company is subject, nor will such action result
in any violation of the provisions of the Certificate of Incorporation or
By-laws of the Company or any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Company or any of its properties; and no consent, approval, authorization,
order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Securities or the consummation by the Company of the transactions
contemplated by this Agreement or any Pricing Agreement or the Indenture,
except such as have been, or will have been prior to the Time of Delivery
(as defined in Section 4 hereof), obtained under the Act and the Trust
Indenture Act and such consents, approvals, authorizations, registrations
or qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Securities by
the Underwriters;
(i) The statements set forth in the Prospectus as supplemented under
the caption "Description of Senior Notes", insofar as they purport to
constitute a summary of the terms of the Securities, and under the caption
"Underwriting", insofar as they purport to describe the provisions of the
laws and documents referred to therein, are accurate, complete in all
material respects and fair;
(j) Neither the Company nor any of its subsidiaries is in violation
of its Certificate of Incorporation or By-laws or in default in the
performance or observance of any material obligation, agreement, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party
or by which it or any of its properties may be bound;
(k) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the current or future consolidated
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries; and, to the best of the Company's knowledge,
no such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(l) The Company is not and, after giving effect to the offering and
sale of the Securities, will not be an "investment company", as such term
is defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
(m) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes;
(n) Arthur Anderson LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder.
3. Upon the execution of the Pricing Agreement applicable to any
Designated Securities and authorization by the Representatives of the release of
such Designated Securities, the several Underwriters propose to offer such
Designated Securities for sale upon the terms and conditions set forth in the
Prospectus as amended or supplemented.
4. Designated Securities to be purchased by each Underwriter pursuant to
the Pricing Agreement relating thereto, in the form specified in such Pricing
Agreement, and in such authorized denominations and registered in such names as
the Representatives may request upon at least forty-eight hours' prior notice to
the Company, shall be delivered by or on behalf of the Company to the
Representatives for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor by wire transfer of
Federal (same-day) funds to the account specified by the Company to the
Representatives at least forty-eight hours in advance or at such other place and
time and date as the Representatives and the Company may agree upon in writing,
such time and date being herein called the "Time of Delivery" for such
Securities.
5. The Company agrees with each of the Underwriters of any Designated
Securities:
(a) To prepare the Prospectus as amended or supplemented in relation
to the applicable Designated Securities in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under
the Act not later than the Commission's close of business on the second
business day following the execution and delivery of the Pricing Agreement
relating to the applicable Designated Securities or, if applicable, such
earlier time as may be required by Rule 424(b); to make no further
amendment or any supplement to the Registration Statement or Prospectus as
amended or supplemented after the date of the Pricing Agreement relating
to such Securities and prior to the Time of Delivery for such Securities
which shall be disapproved by the Representatives for such Securities
promptly after reasonable notice thereof; to advise the Representatives
promptly of any such amendment or supplement after such Time of Delivery
and furnish the Representatives with copies thereof; to file promptly all
reports and any definitive proxy or information statements required to be
filed by the Company with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act for so long as the delivery of a
prospectus is required in connection with the offering or sale of such
Securities, and during such same period to advise the Representatives,
promptly after it receives notice thereof, of the time when any amendment
to the Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed with
the Commission, of the issuance by the Commission of any stop order or of
any order preventing or suspending the use of any prospectus relating to
the Securities, of the suspension of the qualification of such Securities
for offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration Statement
or Prospectus or for additional information; and, in the event of the
issuance of any such stop order or of any such order preventing or
suspending the use of any prospectus relating to the Securities or
suspending any such qualification, to promptly use its best efforts to
obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify such Securities for
offering and sale under the securities laws of such jurisdictions as the
Representatives may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for as
long as may be necessary to complete the distribution of such Securities,
provided that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service
of process in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the Business Day
(defined in Section 14 hereof) next succeeding the date of this Agreement
and from time to time, to furnish the Underwriters with copies of the
Prospectus in New York City as amended or supplemented in such quantities
as the Representatives may reasonably request, and, if the delivery of a
prospectus is required at any time in connection with the offering or sale
of the Securities and if at such time any event shall have occurred as a
result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the Prospectus or
to file under the Exchange Act any document incorporated by reference in
the Prospectus in order to comply with the Act, the Exchange Act or the
Trust Indenture Act, to notify the Representatives and upon their request
to file such document and to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and
the rules and regulations of the Commission thereunder (including, at the
option of the Company, Rule 158);
(e) During the period beginning from the date of the Pricing
Agreement for such Designated Securities and continuing to and including
the later of (i) the termination of trading restrictions for such
Designated Securities, as notified to the Company by the Representatives
and (ii) the Time of Delivery for such Designated Securities, not to
offer, sell, contract to sell or otherwise dispose of any debt securities
of the Company which mature more than one year after such Time of Delivery
and which are substantially similar to such Designated Securities, without
the prior written consent of the Representatives; and
(f) If the Company elects to rely upon Rule 462(b), the Company shall
file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on the
date of this Agreement, and the Company shall at the time of filing either
pay to the Commission the filing fee for the Rule 462(b) Registration
Statement or give irrevocable instructions for the payment of such fee
pursuant to Rule 111(b) under the Act.
6. The Company covenants and agrees with the several Underwriters that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's counsel and accountants in connection with the
registration of the Securities under the Act and all other expenses in
connection with the preparation, printing and filing of the Registration
Statement, any Preliminary Prospectus and the Prospectus and amendments and
supplements thereto and the mailing and delivering of copies thereof to the
Underwriters and dealers; (ii) the cost of printing or producing any Agreement
among Underwriters, this Agreement, any Pricing Agreement, any Indenture, any
Blue Sky and Legal Investment Memoranda, closing documents (including any
compilations thereof) and any other documents in connection with the offering,
purchase, sale and delivery of the Securities; (iii) all expenses in connection
with the qualification of the Securities for offering and sale under state
securities laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky and Legal Investment Surveys;
(iv) any fees charged by securities rating services for rating the Securities;
(v) any filing fees incident to, and the fees and disbursements of counsel for
the Underwriters in connection with, any required review by the National
Association of Securities Dealers, Inc. of the terms of the sale of the
Securities; (vi) the cost of preparing the Securities; (vii) the fees and
expenses of any trustee and any agent of any trustee and the fees and
disbursements of counsel for any trustee in connection with any Indenture and
the Securities; and (viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that, except as
provided in this Section, and Sections 8 and 11 hereof, the Underwriters will
pay all of their own costs and expenses, including the fees of their counsel,
transfer taxes on resale of any of the Securities by them, and any advertising
expenses connected with any offers they may make.
7. The obligations of the Underwriters of any Designated Securities under
the Pricing Agreement relating to such Designated Securities shall be subject,
in the discretion of the Representatives, to the condition that all
representations and warranties and other statements of the Company in or
incorporated by reference in the Pricing Agreement relating to such Designated
Securities are, at and as of the Time of Delivery for such Designated
Securities, true and correct, the condition that the Company shall have
performed all of its obligations hereunder theretofore to be performed, and the
following additional conditions:
(a) The Prospectus as amended or supplemented in relation to the
applicable Designated Securities shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with Section
5(a) hereof; if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00 p.m.,
Washington, D.C. time, on the date of this Agreement; no stop order suspending
the effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to the Representatives'
reasonable satisfaction;
(b) Cadwalader, Wickersham & Taft, counsel for the Underwriters, shall
have furnished to the Representatives such written opinion or opinions (a draft
of each such opinion is attached as Annex II(a) hereto), dated the Time of
Delivery for such Designated Securities, with respect to the matters covered in
paragraphs (i), (ii), (iv), (v), (vi), (x), (xii) and (xiii) of subsection (c)
below as well as such other related matters as the Representatives may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;
(c) The general counsel of or other counsel employed by the Company, or
outside counsel for the Company satisfactory to the Representatives shall have
furnished to the Representatives their written opinion (a draft of such opinion
is attached as Annex II(b) hereto), dated the Time of Delivery for such
Designated Securities, in form and substance satisfactory to the
Representatives, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority
(corporate and other) to own its properties and conduct its business
as described in the Prospectus as amended or supplemented;
(ii) The Company has an authorized capitalization as set forth
in the Prospectus as amended or supplemented and all of the issued
shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable;
(iii) To the best of such counsel's knowledge and other than as
set forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries
is a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the current or future
consolidated financial position, stockholders' equity or results of
operations of the Company and its subsidiaries; and, to the best of
such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(iv) This Agreement and the Pricing Agreement with respect to
the Designated Securities have been duly authorized, executed and
delivered by the Company;
(v) The Designated Securities have been duly authorized,
executed, authenticated, issued and delivered and constitute valid
and legally binding obligations of the Company entitled to the
benefits provided by the Indenture; and the Designated Securities and
the Indenture conform to the descriptions thereof in the Prospectus
as amended or supplemented;
(vi) The Indenture has been duly authorized, executed and
delivered by the parties thereto and constitutes a valid and legally
binding instrument, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and the Indenture
has been duly qualified under the Trust Indenture Act;
(vii) The issue and sale of the Designated Securities being
delivered at such Time of Delivery and the compliance by the Company
with all of the provisions of the Designated Securities, the
Indenture, this Agreement and the Pricing Agreement with respect to
the Designated Securities and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other material agreement or instrument known to
such counsel to which the Company or any of its subsidiaries is a
party or by which the Company is bound or to which any of the
property or assets of the Company or any of its subsidiaries is
subject, nor will such actions result in any violation of the
provisions of the Certificate of Incorporation or By-laws of the
Company or any statute or any order, rule or regulation known to such
counsel of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of
its properties;
(viii) No consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or
body is required for the issue and sale of the Designated Securities
being delivered at such Time of Delivery or the consummation by the
Company of the transactions contemplated by this Agreement or such
Pricing Agreement or the Indenture, except such as have been obtained
under the Act and the Trust Indenture Act and such consents,
approvals, authorizations, orders, registrations or qualifications as
may be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Designated Securities by
the Underwriters;
(ix) Neither the Company nor any of its material subsidiaries
is in violation of its By-laws or Certificate of Incorporation or in
default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument
to which it is a party or by which it or any of its properties may be
bound;
(x) The statements set forth in the Prospectus under the caption
"Description of Senior Notes", insofar as they purport to constitute
a summary of the terms of the Designated Securities, and under the
caption "Underwriting", insofar as they purport to describe the
provisions of the laws and documents referred to therein, constitute
a fair summary of such terms, laws and documents;
(xi) The Company is not an "investment company", as such term
is defined in the Investment Company Act;
(xii) The documents incorporated by reference in the Prospectus
as amended or supplemented (other than the financial statements,
related schedules and other financial information therein, as to
which such counsel need express no opinion), when they became
effective or were filed with the Commission, as the case may be,
complied as to form in all material respects with the requirements of
the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder; and they have no reason to
believe that any of such documents, when they became effective or
were so filed, as the case may be, contained, in the case of a
registration statement which became effective under the Act, an
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading, or, in the case of other documents
which were filed under the Act or the Exchange Act with the
Commission, an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made
when such documents were so filed, not misleading; and
(xiii) The Registration Statement and the Prospectus as amended
or supplemented, and any further amendments and supplements thereto
made by the Company prior to the Time of Delivery for the Designated
Securities (other than the financial statements, related schedules
and other financial information therein, as to which such counsel
need express no opinion), comply as to form in all material respects
with the requirements of the Act and the Trust Indenture Act and the
rules and regulations thereunder; although such counsel does not
assume any responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement or the
Prospectus, except for those referred to in the opinion in subsection
(x) of this Section 7(c), such counsel has no reason to believe that,
as of its effective date, the Registration Statement or any further
amendment thereto made by the Company prior to the Time of Delivery
(other than the financial statements and related schedules therein,
as to which such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading or that, as of its date, the Prospectus as
amended or supplemented or any further amendment or supplement
thereto made by the Company prior to the Time of Delivery (other than
the financial statements and related schedules therein, as to which
such counsel need express no opinion) contained an untrue statement
of a material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading or that, as of the Time of
Delivery, either the Registration Statement or the Prospectus as
amended or supplemented or any further amendment or supplement
thereto made by the Company prior to such Time of Delivery (other
than the financial statements, related schedules and other financial
information therein, as to which such counsel need express no
opinion) contains an untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; and such counsel does not know of any amendment to the
Registration Statement required to be filed or any contracts or other
documents of a character required to be filed as an exhibit to the
Registration Statement or required to be incorporated by reference
into the Prospectus as amended or supplemented or required to be
described in the Registration Statement or the Prospectus as amended
or supplemented which are not filed or incorporated by reference or
described as required;
Such counsel may rely on the opinion of Cadwalader, Wickersham & Taft as
to matters of New York law.
(d) On the date of the Pricing Agreement for such Designated Securities at
a time prior to the execution of the Pricing Agreement with respect to such
Designated Securities and at the Time of Delivery for such Designated
Securities, the independent accountants of the Company who have certified the
financial statements of the Company and its subsidiaries included or
incorporated by reference in the Registration Statement shall have furnished to
the Representatives a letter, dated the date of the Pricing Agreement or the
date of the most recent report filed with the Commission containing financial
statements and incorporated by reference in the Registration Statement, if the
date of such report is later than such date, and a letter dated such Time of
Delivery, respectively, to the effect set forth in Annex II hereto, and with
respect to such letter dated such Time of Delivery, as to such other matters as
the Representatives may reasonably request and in form and substance reasonably
satisfactory to the Representatives (the executed copy of the letter delivered
prior to the execution of this Agreement is attached as Annex I(a) hereto and a
draft of the form of letter to be delivered on the effective date of any
post-effective amendment to the Registration Statement and as of each Time of
Delivery is attached as Annex I(b) hereto);
(e) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus as amended prior to the date of the
Pricing Agreement relating to the Designated Securities any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Prospectus
as amended prior to the date of the Pricing Agreement relating to the Designated
Securities, and (ii) since the respective dates as of which information is given
in the Prospectus as amended prior to the date of the Pricing Agreement relating
to the Designated Securities there shall not have been any change in the capital
stock or long-term debt of the Company or any of its subsidiaries or any change,
or any development involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus as amended prior to the date of the Pricing
Agreement relating to the Designated Securities, the effect of which, in any
such case described in clause (i) or (ii), is in the judgment of the
Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Designated Securities on the terms and in the manner contemplated in the
Prospectus as amended or supplemented relating to the Designated Securities;
(f) On or after the date of the Pricing Agreement relating to the
Designated Securities (i) no downgrading shall have occurred in the rating
accorded the Company's debt securities or preferred stock by any "nationally
recognized statistical rating organization", as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company's
debt securities or preferred stock;
(g) On or after the date of the Pricing Agreement relating to the
Designated Securities there shall not have occurred any of the following: (i) a
suspension or material limitation in trading in securities generally on the New
York Stock Exchange (the "Exchange"); (ii) a suspension or material limitation
in trading in the Company's securities on the Exchange; (iii) a general
moratorium on commercial banking activities declared by either Federal or New
York State authorities, or a general moratorium on commercial banking activities
in the District of Columbia declared by either Federal or District of Columbia
authorities; or (iv) the outbreak or escalation of hostilities involving the
United States or the declaration by the United States of a national emergency or
war, if the effect of any such event specified in this clause (iv) in the
judgment of the Representatives makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Designated Securities on the
terms and in the manner contemplated in the Prospectus as first amended or
supplemented relating to the Designated Securities;
(h) The Company shall have complied with the provisions of Section 5(c)
hereof with respect to the furnishing of prospectuses on the Business Day next
succeeding the date of this Agreement; and
(i) The Company shall have furnished or caused to be furnished to the
Representatives at the Time of Delivery for the Designated Securities a
certificate or certificates of officers of the Company satisfactory to the
Representatives as to the accuracy of the representations and warranties of the
Company herein at and as of such Time of Delivery, as to the performance by the
Company of all of its obligations hereunder to be performed at or prior to such
Time of Delivery, as to the matters set forth in subsections (a) and (e) of this
Section and as to such other matters as the Representatives may reasonably
request.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, any preliminary
prospectus supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Securities, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, any preliminary prospectus supplement, the Registration Statement,
the Prospectus as amended or supplemented and any other prospectus relating to
the Securities, or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
of Designated Securities through the Representatives expressly for use in the
Prospectus as amended or supplemented relating to such Securities.
(b) Each Underwriter will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement, the Prospectus as amended or supplemented and any other prospectus
relating to the Securities, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, any preliminary prospectus
supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Securities, or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representatives expressly for use therein; and will reimburse the Company for
any legal or other expenses reasonably incurred by the Company in connection
with investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party (which consent shall not be
unreasonably withheld, conditioned or delayed), be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include any
statement as to, or an admission of, fault, culpability or a failure to act, by
or on behalf of any indemnified party. The consent in this last sentence shall
not be unreasonably withheld, conditioned or delayed and the indemnifying party
agrees that the indemnified party shall in all cases be justified in withholding
consent unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to, or an
admission of, fault, culpability or a failure to act, by or on behalf of any
indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters of the Designated Securities
on the other from the offering of the Designated Securities to which such loss,
claim, damage or liability (or action in respect thereof) relates. If, however,
the allocation provided by the immediately preceding sentence is not permitted
by applicable law or if the indemnified party failed to give the notice required
under subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters of the Designated
Securities on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and such Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from such offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by such Underwriters.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or such Underwriters on the other and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the applicable Designated Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The obligations of the Underwriters
of Designated Securities in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations with respect to such
Securities and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase the
Designated Securities which it has agreed to purchase under the Pricing
Agreement relating to such Designated Securities, the Representatives may in
their discretion arrange for themselves or another party or other parties to
purchase such Designated Securities on the terms contained herein. If within
thirty-six hours after such default by any Underwriter the Representatives do
not arrange for the purchase of such Designated Securities, then the Company
shall be entitled to a further period of thirty-six hours within which to
procure another party or other parties satisfactory to the Representatives to
purchase such Designated Securities on such terms. In the event that, within the
respective prescribed period, the Representatives notify the Company that they
have so arranged for the purchase of such Designated Securities, or the Company
notifies the Representatives that it has so arranged for the purchase of such
Designated Securities, the Representatives or the Company shall have the right
to postpone a Time of Delivery for such Designated Securities for a period of
not more than seven days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus as amended or
supplemented, or in any other documents or arrangements, and the Company agrees
to file promptly any amendments or supplements to the Registration Statement or
the Prospectus which in the opinion of the Representatives may thereby be made
necessary. The term "Underwriter" as used in this Agreement shall include any
person substituted under this Section with like effect as if such person had
originally been a party to the Pricing Agreement with respect to such Designated
Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Designated Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of such Designated Securities which remains
unpurchased does not exceed one-eleventh of the aggregate principal amount of
the Designated Securities, to be purchased at the Time of Delivery, then the
Company shall have the right to require each non-defaulting Underwriter to
purchase the principal amount of Designated Securities which such Underwriter
agreed to purchase under the Pricing Agreement relating to such Designated
Securities and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the principal amount of Designated
Securities which such Underwriter agreed to purchase under such Pricing
Agreement) of the Designated Securities of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Designated Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of Designated Securities which remains unpurchased
exceeds one-eleventh of the aggregate principal amount of the Designated
Securities, to be purchased at the Time of Delivery, as referred to in
subsection (b) above, or if the Company shall not exercise the right described
in subsection (b) above to require non-defaulting Underwriters to purchase
Designated Securities of a defaulting Underwriter or Underwriters, then the
Pricing Agreement relating to such Designated Securities shall thereupon
terminate, without liability on the part of any non-defaulting Underwriter or
the Company, except for the expenses to be borne by the Company and the
Underwriters as provided in Section 6 hereof and the indemnity and contribution
agreements in Section 8 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Securities.
11. If any Pricing Agreement shall be terminated pursuant to Section 9
hereof, the Company shall not then be under any liability to any Underwriter
with respect to the Designated Securities with respect to which such Pricing
Agreement shall have been terminated except as provided in Sections 6 and 8
hereof; but, if for any other reason Designated Securities are not delivered by
or on behalf of the Company as provided herein, the Company will reimburse the
Underwriters through the Representatives for all out-of-pocket expenses approved
in writing by the Representatives, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the purchase,
sale and delivery of such Designated Securities, but the Company shall then be
under no further liability to any Underwriter with respect to such Designated
Securities except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, the Representatives of the Underwriters of
Designated Securities shall act on behalf of each of such Underwriters, and the
parties hereto shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of any Underwriter made or given by such
Representatives jointly or by such of the Representatives, if any, as may be
designated for such purpose in the Pricing Agreement.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Representatives as set forth in the
Pricing Agreement; and if to the Company shall be delivered or sent by facsimile
transmission or registered mail to USA Education, Inc., 11600 Sallie Mae Drive,
Reston, Virginia 20193, facsimile transmission number (703) 810-7586, Attention:
General Counsel's office; provided, however, that any notice to an Underwriter
pursuant to Section 8(c) hereof shall be delivered or sent by mail, telex or
facsimile transmission to such Underwriter at its address set forth in its
Underwriters' Questionnaire, or telex constituting such Questionnaire, which
address will be supplied to the Company by the Representatives upon request. Any
such statements, requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement and each Pricing Agreement shall be binding upon, and
inure solely to the benefit of, the Underwriters, the Company and, to the extent
provided in Sections 8 and 10 hereof, the officers and directors of the Company
and each person who controls the Company or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement or any such Pricing Agreement. No purchaser of any of the Securities
from any Underwriter shall be deemed a successor or assign by reason merely of
such purchase.
14. Time shall be of the essence of each Pricing Agreement. As used
herein, "Business Day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement and each Pricing Agreement may be executed by any one
or more of the parties hereto and thereto in any number of counterparts, each of
which shall be deemed to be an original, but all such respective counterparts
shall together constitute one and the same instrument.
If the foregoing is in accordance with your understanding, please sign and
return counterparts to us, one for the Company and for each of the
Representatives plus one for each counsel.
Very truly yours,
USA EDUCATION, INC.
By: /s/ John F. Remondi
---------------------------------
Name: John F. Remondi
Title: Executive Vice President &
Chief Financial Officer
Accepted as of the date hereof:
GOLDMAN, SACHS & CO.
/s/ Goldman, Sachs & Co.
- ---------------------------------------
Goldman, Sachs & Co.
As Representative of the Underwriters
PRICING AGREEMENT
-----------------
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
As Representatives of the several
Underwriters named in Schedule I hereto
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
February 22, 2001
Ladies and Gentlemen:
USA Education, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein and in the Underwriting
Agreement, dated as of February 22, 2001 (the "Underwriting Agreement"), between
the Company on the one hand and Goldman, Sachs & Co. and Credit Suisse First
Boston Corporation on the other hand, to issue and sell to the Underwriters
named in Schedule I hereto (the "Underwriters") the Securities specified in
Schedule II hereto (the "Designated Securities"). Each of the provisions of the
Underwriting Agreement is incorporated herein by reference in its entirety, and
shall be deemed to be a part of this Agreement to the same extent as if such
provisions had been set forth in full herein; and each of the representations
and warranties set forth therein shall be deemed to have been made at and as of
the date of this Pricing Agreement, except that each representation and warranty
which refers to the Prospectus in Section 2 of the Underwriting Agreement shall
be deemed to be a representation or warranty as of the date of the Underwriting
Agreement in relation to the Prospectus (as therein defined), and also a
representation and warranty as of the date of this Pricing Agreement in relation
to the Prospectus as amended or supplemented relating to the Designated
Securities which are the subject of this Pricing Agreement. Each reference to
the Representatives herein and in the provisions of the Underwriting Agreement
so incorporated by reference shall be deemed to refer to you. Unless otherwise
defined herein, terms defined in the Underwriting Agreement are used herein as
therein defined. The Representatives designated to act on behalf of the
Representatives and on behalf of each of the Underwriters of the Designated
Securities pursuant to Section 12 of the Underwriting Agreement and the address
of the Representatives referred to in such Section 12 are set forth at the end
of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
issue and sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at the time and place
and at the purchase price to the Underwriters set forth in Schedule II hereto,
the principal amount of Designated Securities set forth opposite the name of
such Underwriter in Schedule I hereto.
If the foregoing is in accordance with your understanding, please sign and
return to us one for the Company and each of the Representatives plus one for
each counsel counterparts hereof, and upon acceptance hereof by you, on behalf
of each of the Underwriters, this letter and such acceptance hereof, including
the provisions of the Underwriting Agreement incorporated herein by reference,
shall constitute a binding agreement between each of the Underwriters and the
Company. It is understood that your acceptance of this letter on behalf of each
of the Underwriters is or will be pursuant to the authority set forth in a form
of Agreement among Underwriters, the form of which shall be submitted to the
Company for examination upon request, but without warranty on the part of the
Representatives as to the authority of the signers thereof.
Very truly yours,
USA EDUCATION, INC.
By: /s/ John F. Remondi
.................................
Name: John F. Remondi
Title: Executive Vice President
& Chief Financial Officer
Accepted as of the date hereof:
Goldman, Sachs & Co.
/s/ Goldman, Sachs & Co.
..........................................
Goldman, Sachs & Co.
On behalf of each of the Underwriters
SCHEDULE I
PRINCIPAL
AMOUNT OF
DESIGNATED
SECURITIES
TO BE
UNDERWRITER PURCHASED
----------- ---------
Goldman, Sachs & Co. ...................................... $210,000,000
Credit Suisse First Boston Corporation .................... 210,000,000
ABN AMRO Incorporated ..................................... 20,000,000
Banc of America Securities LLC ............................ 20,000,000
Banc One Capital Markets, Inc. ............................ 20,000,000
Salomon Smith Barney, Inc. ................................ 20,000,000
------------
Total.......................................... $500,000,000
============
SCHEDULE II
TITLE OF DESIGNATED SECURITIES:
Senior Notes due February 18, 2003
AGGREGATE PRINCIPAL AMOUNT:
$500,000,000
PRICE TO PUBLIC:
100 % of the principal amount of the Designated Securities
PURCHASE PRICE BY UNDERWRITERS:
99.750 % of the principal amount of the Designated Securities
FORM OF DESIGNATED SECURITIES:
Book-entry only form represented by two global securities deposited with
The Depository Trust Company ("DTC") or its designated custodian, to be
made available for checking by the Representatives at least twenty-four
hours prior to the Time of Delivery.
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE:
Federal (same day) funds
TIME OF DELIVERY:
11:00 a.m. (New York City time), February 27, 2001
INDENTURE:
Indenture, dated as of October 1, 2000, between USA Education, Inc. and The
Chase Manhattan Bank, as trustee, and Second Supplemental Indenture, dated
February 27, 2001, between USA Education, Inc. and The Chase Manhattan
Bank, as trustee
MATURITY:
February 18, 2003
INTEREST RATE:
For the first accrual period, 5.84906%. Thereafter, three-month LIBOR, as
determined on the second business day before the applicable accrual period,
plus 0.28%, except that the last payment of interest will be based upon a
two-month LIBOR, as determined on the second business day before the
applicable accrual period, plus 0.28%.
Interest will accrue from the date of original issuance, February 27, 2001.
INTEREST PAYMENT DATES:
Quarterly on March 16, June 16, September 16 and December 16 of each year,
except that last payment of interest will be made on February 18, 2003.
REDEMPTION PROVISIONS:
No provisions for redemption.
SINKING FUND PROVISIONS:
No sinking fund provisions.
FLOATING RATE PROVISIONS:
Annual interest rate will be 0.28% over three-month LIBOR, as determined on
the second business day before the applicable accrual period.
DEFEASANCE PROVISIONS:
No defeasance provisions.
CLOSING LOCATION FOR DELIVERY OF DESIGNATED SECURITIES:
Offices of USA Education, Inc.
11600 Sallie Mae Drive
Reston, Virginia 20193
ADDITIONAL CLOSING CONDITIONS:
None.
NAMES AND ADDRESSES OF REPRESENTATIVES:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Credit Suisse First Boston Corporation
11 Madison Avenue
New York, New York 10010
Goldman, Sachs & Co. shall be entitled to execute documents and instruments
on behalf of the Representatives and the Underwriters
OTHER TERMS:
None.
SECOND SUPPLEMENTAL INDENTURE
between
USA EDUCATION, INC.
and
THE CHASE MANHATTAN BANK
Dated as of February 27, 2001
$500,000,000
SENIOR NOTES DUE FEBRUARY 18, 2003
================================================================================
SECOND SUPPLEMENTAL INDENTURE, dated as of February 27, 2001 (the
"Supplemental Indenture"), between USA Education, Inc., a Delaware corporation
(the "Company"), and The Chase Manhattan Bank, as trustee (the "Trustee") under
the Indenture, dated as of October 1, 2000 between the Company and the Trustee
(the "Base Indenture" and, together with this Supplemental Indenture, the
"Indenture").
WHEREAS, the Company executed and delivered the Base Indenture to
the Trustee to provide for the future issuance of debentures, notes or other
evidences of indebtedness of the Company to be issued from time to time in one
or more series as might be determined by the Company under the Indenture, in an
unlimited aggregate principal amount which may be authenticated and delivered as
provided in the Base Indenture;
WHEREAS, pursuant to the terms of the Base Indenture, the Company
desires to provide for the establishment of a series of senior unsecured and
unsubordinated notes to be known as its Senior Notes due February 18, 2003, the
form and substance of such Notes and the terms, provisions and conditions
thereof to be set forth as provided in the Base Indenture and this Supplemental
Indenture;
WHEREAS, the Company has requested that the Trustee execute and
deliver this Supplemental Indenture; all requirements necessary to make this
Supplemental Indenture a valid instrument in accordance with its terms, and to
make the Notes, when executed by the Company and authenticated and delivered by
the Trustee, the valid obligations of the Company, have been performed; and the
execution and delivery of this Supplemental Indenture has been duly authorized
in all respects.
NOW THEREFORE, in consideration for the purchase and acceptance of
the Notes by the Holders thereof, and for the purpose of setting forth, as
provided in the Base Indenture, the form and substance of the Notes and the
terms, provisions and conditions thereof, the Company covenants and agrees with
the Trustee as follows:
ARTICLE 1
DEFINITIONS
1.1 Definition of Terms. Capitalized terms used and not otherwise defined
in this Supplemental Indenture (including the form of Global Note attached as
Exhibit A to this Supplemental Indenture, the terms of which are a part of this
Supplemental Indenture) have the meanings assigned to them below:
"Base Indenture" is defined in the introductory paragraph.
"Business Day" is defined in the Global Note.
"Company" is defined in the introductory paragraph.
"Company Order" is defined in the Base Indenture.
"Depositary" is defined in the Base Indenture.
"Eligible Instruments" is defined in the Base Indenture.
"Global Note" is defined in Section 2.3.
"Global Security" is defined in the Base Indenture.
"Holder" is defined in the Base Indenture.
"Indenture" is defined in the introductory paragraph.
"Interest Accrual Period" is defined in the Global Note.
"Interest Payment Date" is defined in the Global Note.
"LIBOR Business Day" is defined in the Global Note.
"LIBOR Determination Date" is defined in the Global Note.
"Notes" is defined in Section 2.1.
"Maturity Date" is defined in the Global Note.
"Paying Agent" is defined in the Base Indenture.
"Person" is defined in the Base Indenture.
"Registered Security" is defined in the Base Indenture.
"Registrar" is defined in the Base Indenture.
"Regular Record Date" is defined in the Global Note.
"Supplemental Indenture" is defined in the introductory paragraph.
"Three-month LIBOR" is defined in the Global Note.
"Trustee" is defined in the introductory paragraph.
"Two-month LIBOR" is defined in the Global Note.
1.2 Other Rules of Construction. For all purposes of this Supplemental
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:
(a) capitalized terms used and not defined in this Supplemental
Indenture have the meanings assigned to them in the Base Indenture;
(b) capitalized terms defined in the Global Note have the meanings
assigned to them in the Global Note;
(c) all terms used in this Supplemental Indenture which are defined
in the Trust Indenture Act, whether directly or by reference therein, have the
meanings assigned to them in the Trust Indenture Act;
(d) "or" is not exclusive;
(e) words in the singular include the plural, and words in the
plural include the singular;
(f) a reference to a Section or Article is to a Section or Article
of this Supplemental Indenture;
(g) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Supplemental Indenture as a whole and not to any
particular Article, Section or other subdivision; and
(h) headings are for convenience of reference only and do not affect
interpretation.
ARTICLE 2
TERMS AND CONDITIONS OF THE NOTES
2.1 Title of Securities. The title of the Securities is "Senior Notes due
February 18, 2003" (the "Notes").
2.2 Aggregate Principal Amount of Notes. The aggregate principal amount of
Notes that may be authenticated and delivered is $500,000,000. The Company is
entitled under Section 2.02(b) of the Base Indenture to reopen the Series of
Notes by offering additional Securities of such Series. Upon receipt of a
Company Order for the authentication and delivery of the Notes and satisfaction
of the requirements of Section 2.03 of the Base Indenture, the Trustee shall
authenticate Notes for original issuance in an aggregate principal amount of
$500,000,000.
2.3 Form of Notes. The Notes and the Trustee's Certificate of
Authentication to be endorsed on the Notes are to be substantially in the form
attached as Exhibit A to this Supplemental Indenture (the "Global Note").
2.4 Maturity Date. The entire outstanding principal of the Notes shall be
payable on the Maturity Date set forth on the face of the Global Note to Holders
as of the Regular Record Date immediately preceding the Maturity Date.
2.5 Interest. The rate of interest on the Notes for each Interest Accrual
Period after the first shall be Three-month LIBOR, plus the Spread set forth on
the face of the Global Note, except that the rate of interest on the Notes for
the final accrual period shall be Two-month LIBOR, plus the Spread set forth on
the face of the Global Note, in each case determined by the Trustee as set forth
in the Global Note. Interest shall accrue from the Original Issue Date set forth
on the face of the Global Note, and the interest rate for the first Interest
Accrual Period shall be as set forth in the Global Note. Interest is payable on
each Interest Payment Date to Holders as of each Regular Record Date, determined
as set forth in the Global Note. Interest shall be computed on the basis of a
360-day year and the actual number of days elapsed in the applicable Interest
Accrual Period. Upon each determination of Three-month LIBOR, the Trustee shall
forthwith notify the Company of such determination. The Trustee may appoint an
agent to determine Three-month LIBOR.
2.6 Record Date. Payments of interest and principal shall be made to
Holders on each Regular Record Date, determined as set forth in the Global Note.
2.7 Paying Agent. The Trustee shall be the Registrar and the Paying Agent
with respect to the Notes. Payments in respect of the Notes represented by
Global Securities (including principal and interest) shall be made in
immediately available funds as provided in the Global Note.
2.8 Registered Securities. The Notes shall be issuable only as Registered
Securities (without coupons) and as permanent Global Securities. The Notes shall
not be issuable in definitive form (other than in the name of the Depositary's
nominee) except under the circumstances described in Section 2.15 of the Base
Indenture. The Trustee shall act as transfer agent for the Notes.
2.9 Depositary. The Depositary for Notes in global form shall be The
Depository Trust Company. Beneficial interests in such Notes shall be held
through the Depositary.
2.10 Denomination. The Notes shall be issued in denominations of $1,000
and any integral multiple thereof. The Notes may be transferred or exchanged
only in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof; and any attempted transfer, sale or other disposition of Notes
in a denomination of less than $1,000 shall be deemed to be void and of no legal
effect whatsoever.
2.11 Currency. Payments of the principal and interest on the Notes shall
be made in U.S. Dollars, and the Notes shall be denominated in U.S. Dollars.
2.12 Redemption. The Company shall have no option to redeem the Notes
prior to their maturity, nor shall they be repayable before the Maturity Date at
the option of any Holder.
2.13 Sinking Fund. The Notes shall not have the benefit of any sinking
fund.
2.14 Conversion. The Notes shall not be convertible or exchangeable into
any other class or series of securities.
2.15 Defeasance. The Company shall not be entitled to defease payments
under the Notes.
2.16. Priority. The Notes are senior unsecured obligations of the Company
and rank equally in right of payment with any other senior unsecured and
unsubordinated indebtedness that the Company may issue from time to time. The
Notes will rank senior to any subordinated indebtedness that the Company may
issue from time to time.
ARTICLE 3
TRUSTEE PAYMENTS
3.1. Establishment of Account; Investments. The Company hereby directs and
authorizes the Trustee to establish and maintain a debt service account to be
entitled the "USA Education, Inc. 2001-A Debt Service Account." All or a portion
of amounts paid to the Trustee by the Company pursuant to Section 2.05 of the
Base Indenture shall be deposited in the USA Education, Inc. 2001-A Debt Service
Account established for such purpose and shall be invested and reinvested by the
Trustee pursuant to written directions from the Company, which direction may be
in the form of a standing direction. Such investments may be in one or more
Eligible Instruments or Eligible Investments (defined below). Notwithstanding
the foregoing, no investment of any such amount may mature later than the
business day preceding the applicable payment date (or, in the case of an
investment in an obligation of the Trustee, no later than the applicable payment
date) and no such investment shall be sold prior to its maturity date. On each
payment date the Trustee shall withdraw any net reinvestment income and return
such amount to the Company. The Trustee shall have no obligation to invest and
reinvest any cash held in the USA Education Inc. 2001-A Debt Service Account in
the absence of timely and specific written investment direction from the
Company. In no event shall the Trustee be liable for the selection of
investments or for investment losses incurred thereon. The Trustee shall have no
liability in respect of losses incurred as a result of the liquidation of any
investment prior to its stated maturity or the failure of the Company to provide
timely written investment direction.
"Eligible Investments" means book-entry securities, negotiable instruments
or securities represented by instruments in bearer or registered form, with
respect to which the Trustee has taken delivery, which evidence: (a) direct
obligations of, and obligations fully guaranteed as to the full and timely
payment by, the United States of America; (b) demand deposits, time deposits or
certificates of deposit of any depository institution or trust company
incorporated under the laws of the United States of America or any State thereof
and subject to supervision and examination by Federal or State banking or
depository institution authorities, provided that at the time of the investment
or contractual commitment to invest therein, the commercial paper or other
short-term unsecured debt obligations (other than such obligations the rating of
which is based on the credit of a Person other than such depository institution
or trust company) thereof shall be rated "A-1+" by Standard & Poor's Credit
Market Services ("S&P") and "P-1" by Moody's Investors Service, Inc.
("Moody's"); (c) commercial paper that, at the time of the investment or
contractual commitment to invest therein, is rated "A-1" by S&P and "P-1" by
Moody's; (d) bankers' acceptances issued by any depository institution or trust
company referred to in (b) above; (e) repurchase obligations with respect to any
security pursuant to a written agreement that is a direct obligation of, or
fully guaranteed as to the full and timely payment by, the United States of
America or any agency or instrumentality thereof, the obligations of which are
backed by the full faith and credit of the United States of America, in either
case entered into with (i) a depository institution or trust company the
deposits of which are insured by the Federal Deposit Insurance Corporation and
whose commercial paper or other short-term unsecured debt obligations are rated
"A-1+" by S&P and "Aaa" by Moody's; and (f) money market mutual funds registered
under the Investment Company Act having a rating, at the time of such investment
from each of S&P and Moody's in the highest investment category granted thereby.
Any Eligible Investments may be purchased by or through the Trustee or any of
its Affiliates and shall include such securities issued by the Trustee or its
Affiliates.
ARTICLE 4
MISCELLANEOUS
4.1 Terms. The foregoing form and terms of the Notes have been established
in conformity with the provisions of the Base Indenture.
4.2 Ratification of Base Indenture; Supplemental Indenture Controls. The
Base Indenture, as supplemented by this Supplemental Indenture, is in all
respects ratified and confirmed, and this Supplemental Indenture shall be deemed
part of the Base Indenture in the manner and to the extent herein and therein
provided. The provisions of this Supplemental Indenture (including the Global
Note) shall supersede the provisions of the Base Indenture to the extent the
Base Indenture is inconsistent herewith.
4.3 Trustee Not Responsible for Recitals. The recitals in this
Supplemental Indenture are made by the Company and not by the Trustee, and the
Trustee assumes no responsibility for the correctness thereof. The Trustee makes
no representation as to the validity or sufficiency of this Supplemental
Indenture.
4.4 Governing Law. THIS SUPPLEMENTAL INDENTURE AND EACH NOTE SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER THE INTERNAL LAWS OF THE STATE OF NEW YORK,
AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF SAID STATE, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.
4.5 Separability. In case any one or more of the provisions contained in
this Supplemental Indenture or in the Notes shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Supplemental
Indenture or of the Notes, but this Supplemental Indenture and the Notes shall
be construed as if such invalid or illegal or unenforceable provision had never
been contained herein or therein.
4.6 Counterparts. This Supplemental Indenture may be executed in any
number of counterparts each of which shall be an original; but such counterparts
shall together constitute but one and the same instrument.
[remainder of page left blank intentionally]
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the day and year set forth above.
USA EDUCATION, INC.
By: /s/ William M. E. Rachal
-------------------------------------
Name: William M. E. Rachal
Title: authorized agent
THE CHASE MANHATTAN BANK, not in its
individual capacity, but solely as Trustee
By: /s/ Patricia M. F. Russo
-------------------------------------
Name: Patricia M. F. Russo
Title: Vice President
EXHIBIT A
[FORM OF GLOBAL NOTE]
EXCEPT AS OTHERWISE PROVED IN SECTION 2.15 OF THE BASE INDENTURE, THIS NOTE MAY
BE TRANSFERRED IN WHOLE, BUT NOT IN PART, ONLY TO ANOTHER NOMINEE OF THE
DEPOSITARY OR TO A SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET,
NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL, SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
REGISTERED
[No. R-1 $400,000,000.00]
[No. R-2 $100,000,000.00]
CUSIP 90390U AB 8
USA EDUCATION, INC.
SENIOR NOTE DUE FEBRUARY 18, 2003
(FLOATING RATE)
Original Issue Date: February 27, 2001 LIBOR Determination Date:
Second LIBOR Business Day
prior to Interest Accrual
Period
Maturity Date: February 18, 2003 Interest Payment Dates: *
Interest Rate Basis: LIBOR (Telerate) Interest Accrual Period: **
Index Maturity: Three Months*** Maximum Interest Rate:
Maximum permitted by law
Spread: +0.28% Redeemable On and After: N/A
Initial Interest Rate: 5.84906% Optional Repayment Date(s):
N/A
* March 16, June 16, September 16 and December 16 of each year and the
Maturity Date.
** From previous Interest Payment Date (or Original Issue Date, in the case of
the first Interest Accrual Period) through the calendar day before current
Interest Payment Date (or Maturity Date, in the case of the last Interest
Accrual Period).
*** Except for the last Interest Accrual Period, which will be based upon a
two-month index maturity.
USA EDUCATION, INC., a Delaware corporation (the "Company"), for
value received, hereby promises to pay to CEDE & CO., or registered assigns, the
principal amount stated above on the Maturity Date shown above and interest on
the principal amount stated above at the rate per annum equal to the Initial
Interest Rate shown above on the first Interest Payment Date shown above and
thereafter at a rate determined in accordance with the provisions on the reverse
hereof, until the principal hereof is fully paid or duly made available for
payment. The Company will pay interest on each Interest Payment Date and on the
Maturity Date, provided if any Interest Payment Date, other than the Maturity
Date, would otherwise be a day that is not a Business Day, such Interest Payment
Date will be postponed until the next calendar day that is a Business Day. If
the Maturity Date is a day that is not a Business Day, principal and interest
will be paid on the next succeeding Business Day, with the same force and effect
as if made on the Maturity Date, and no interest on such payment shall accrue
from or after the Maturity Date. "Business Day" means any day other than a
Saturday, Sunday or Legal Holiday in New York City. The "Regular Record Date"
for each payment is the date one calendar day immediately preceding such
Interest Payment Date or Maturity Date.
The interest so payable, and punctually paid or duly provided for,
on the Interest Payment Dates referred to above, will, as provided in the
Indenture, be paid to the Person in whose name this Note is registered at the
close of business on the Regular Record Date for such interest, provided that
interest payable on the Maturity Date will be paid to the Person to whom the
principal of this Note is payable. Any such interest which is payable, but is
not punctually paid or duly provided for, on any Interest Payment Date shall
forthwith cease to be payable to the Holder on such Regular Record Date, and may
be paid to the Person in whose name this Note is registered at the close of
business on a special record date for the payment of such defaulted interest to
be fixed by the Trustee, notice whereof shall be given to the Holder of this
Note not less than ten days prior to such special record date, or may be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed and upon such notice as
may be required by such exchange, all as more fully provided in the Indenture.
The Company shall pay interest at the applicable interest rate (calculated
quarterly on each LIBOR Determination Date) on overdue principal and, to the
extent permitted by law, on overdue interest.
Payments of principal and interest will be made at the office or
agency of the Trustee maintained for that purpose in the Borough of Manhattan,
The City of New York, in such coin or currency of the United States of America
as at the time of payment is legal tender for the payment of public and private
debt, by check mailed to the address of the Person entitled thereto as such
address shall appear in the register for this Note, provided that so long as
this Note is represented by a Global Security, each payment shall be made by
wire transfer of immediately available funds, if the registered holder has
provided the Trustee appropriate instructions for such payment.
The principal hereof and interest due at maturity will be paid upon
maturity by wire transfer of immediately available funds against presentation of
this Note at the office or agency of the Trustee maintained for that purpose in
the Borough of Manhattan, The City of New York.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH ON THE FACE HEREOF.
This Note shall be governed by and construed in accordance with the
law of the State of New York.
Unless the certificate of authentication hereon has been executed by
The Chase Manhattan Bank, the Trustee under the Indenture, or its successor
thereunder by the manual signature of one of its authorized signatories, this
Note shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.
Dated: February 27, 2001
USA EDUCATION, INC.
By: /s/ James C. Lintzenich
-------------------------------------
Name: James C. Lintzenich
Title: President & Chief Operating
Officer
By: /s/ John F. Remondi
-------------------------------------
Name: John F. Remondi
Title: Executive Vice President &
Chief Financial Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned
Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By: /s/ Patricia M. F. Russo
-------------------------------------
Authorized Signature
[Reverse of Note]
USA EDUCATION, INC.
SENIOR NOTE DUE FEBRUARY 18, 2003
(FLOATING RATE)
This Note is one of a duly authorized issue of notes of the Company
issued under the Indenture, dated as of October 1, 2000 (the "Base Indenture"),
as supplemented by a Second Supplemental Indenture, dated as of February 27,
2001 (collectively, the "Indenture"), each between the Company and The Chase
Manhattan Bank, as trustee (the "Trustee," which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights and
limitations of rights thereunder of the Company, the Trustee and the Holders of
the Notes, and the terms upon which the Securities are, and are to be,
authenticated and delivered. Capitalized terms used and not otherwise defined in
this Note have the meanings ascribed to them in the Indenture.
This Note is designated as a Senior Note due February 18, 2003. The
Interest Accrual Period for each Interest Payment Date begins on each Interest
Payment Date and ends on the calendar day before the next Interest Payment Date,
provided that the first Interest Accrual Period begins on February 27, 2001 and
ends on March 15, 2001, the calendar day before the first Interest Payment Date.
The interest rate in effect during each Interest Accrual Period after the first
will be the interest rate determined on the LIBOR Determination Date immediately
preceding such Interest Accrual Period, provided that the interest rate in
effect for the first Interest Accrual Period will be the Initial Interest Rate
specified on the face hereof. Interest shall be computed on the basis of a
360-day year and the actual number of days elapsed in the applicable Interest
Accrual Period. All percentages resulting from any calculations will be carried
to five decimal places (that is, to the one hundred thousandths place), with
five one-millionths being rounded upwards, if necessary. In addition, the
interest rate hereon shall in no event be higher than the maximum rate, if any,
permitted by applicable law.
Commencing with the first LIBOR Determination Date, and thereafter
on each succeeding LIBOR Determination Date, the rate at which interest on this
Note is payable shall be adjusted. Each such adjusted rate shall be applicable
to the Interest Accrual Period to which it relates.
Subject to applicable law and except as specified herein, the rate
of interest on this Note for each Interest Accrual Period after the first shall
be Three-month LIBOR plus the Spread (as specified on the face hereof), provided
the rate of interest on this Note for the last Interest Accrual Period shall be
Two-month LIBOR plus the Spread.
Three-month LIBOR or Two-month LIBOR, for any Interest Accrual
Period, are the London interbank offered rate for deposits in U.S. dollars
having a maturity of three months or two months, respectively, commencing on the
first day of the Interest Accrual Period, which appears on Telerate Page 3750 as
of 11:00 a.m. London time, on the related LIBOR Determination Date. If this rate
does not appear on Telerate Page 3750, the rate for that day will be determined
on the basis of the rates at which deposits in U.S. dollars, having the
applicable maturity and in a principal amount of not less than U.S. $1,000,000,
are offered at approximately 11:00 a.m., London time, on that LIBOR
Determination Date, to prime banks in the London interbank market by the
Reference Banks. The Trustee will request the principal London office of each
Reference Bank to provide a quotation of its rate. If the Reference Banks
provide at least two quotations, the rate for that day will be the arithmetic
mean of the quotations. If the Reference Banks provide fewer than two
quotations, the rate for that day will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Trustee, at
approximately 11:00 a.m. New York time, on that LIBOR Determination Date, for
loans in U.S. dollars to leading European banks having the applicable maturity
and in a principal amount of not less than U.S. $1,000,000. If the banks
selected as described above are not providing quotations, Two-month LIBOR or
Three-month LIBOR in effect for the applicable Interest Accrual Period will be
Two-month LIBOR or Three-month LIBOR, as applicable, as most recently quoted on
Telerate Page 3750.
"LIBOR Business Day" means any day on which banks in New York City
and the City of London are open for the transaction of international business.
"LIBOR Determination Date" means, for each Interest Accrual Period,
the second LIBOR Business Day before the beginning of that Interest Accrual
Period.
"Reference Banks" means four major banks in the London interbank
market selected by the Trustee.
"Telerate Page 3750" means the display page so designated on the
Bridge Telerate Capital Markets Report or any other page that may replace that
page on that service for the purpose of displaying comparable rates or prices.
The Trustee shall calculate the interest rate hereon in accordance
with the foregoing and will confirm in writing such calculation to the Company
and the Paying Agent (if other than the Trustee) immediately after each
determination. All determinations made by the Trustee shall be, in the absence
of manifest error, conclusive for all purposes and binding on the Company and
Holders of the Notes. At the request of the Holder hereof, the Trustee will
provide to the Holder hereof the interest rate hereon then in effect and, if
determined, the interest rate which will become effective as of the next
Interest Accrual Period.
If an Event of Default with respect to the Notes shall occur and be
continuing, the Trustee, by notice to the Company, or the Holders of at least
25% in principal amount of all of the outstanding Notes, by notice to the
Company and the Trustee, may declare the principal of all the Notes due and
payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes at any time by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Notes at the time outstanding. The Indenture also
contains provisions permitting the Holders of specified percentages in aggregate
principal amount of the Notes at the time outstanding, on behalf of the Holders
of all Notes, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note shall be conclusive and
binding upon such Holder and upon future Holders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange therefor or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note.
Holders of Notes may not enforce their rights pursuant to the
Indenture or the Notes except as provided in the Indenture. No reference herein
to the Indenture and no provision of this Note or the Indenture shall alter or
impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of and interest on this Note at the time, place, and rate, and
in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note may be registered on the Note
register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, The
City of New York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company, and this Note duly executed by,
the Holder hereof or by his attorney duly authorized in writing and thereupon
one or more new Notes, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 or any amount in excess thereof which is an integral
multiple of $1,000. As provided in the Indenture and subject to certain
limitations therein set forth, this Note is exchangeable for a like aggregate
principal amount of Notes of different authorized denomination as requested by
the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to the due presentment of this Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT - ________________________ Custodian _________________________
(Cust) (Minor)
Under Uniform Gifts to Minors Act
________________________________________
_____________________________ (State)
Additional abbreviations may also be used though not in the above list.
____________________________
Assignment
FOR VALUE RECEIVED, the undersigned
hereby sell(s), assign(s) and transfer(s) unto
________________________________________________________________________________
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting
and appointing
________________________________________________________________________________
Attorney to transfer said Note on the books of the Company, with full power of
substitution in the premises.
Dated: __________________________ ________________________________
_______________________________________
(Signature Guarantee)