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J. C. Bradford Affiliate of UBS PaineWebber Settles Bond Audits With Internal Revenue Service

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UBS PaineWebber today announced that J.C. Bradford, an affiliate, has entered into an agreement with the Internal Revenue Service (IRS) to settle and close audits of several different series of bonds issued by various state and local governments during the period 1990 to 1993.

With this settlement the IRS has agreed that it will not dispute or challenge the tax-exempt status of the interest on the bonds. In addition, the IRS agreed that it will not assert any income tax effect or penalty against any of the state or local governmental issuers of the bonds.

Pursuant to the agreement, J. C. Bradford made a payment to the IRS and J.C. Bradford agreed to treat a portion of the payment as a penalty pursuant to Section 6700 of the Internal Revenue Code.

Under the terms of the agreement, J.C. Bradford did not admit that it had engaged in any conduct that would be subject to a penalty under the tax law.

Seven of the law firms that were involved in the bond transactions also participated in the agreement to close the audits and made payments to the IRS.

The aggregate payment made by J.C. Bradford and the seven law firms pursuant to the agreement was $30,000,000.

UBS PaineWebber is pleased that the agreement concludes this matter involving the tax-exempt status of the bonds. These transactions were undertaken a decade ago by former employees of J.C. Bradford, numerous law firms and other transaction participants - none of whom were ever employed or associated with UBS PaineWebber.

A list of the tax-exempt bond issues (including CUSIP numbers.) covered by the agreement follows:

Defeased Zero-Coupon Bonds Included in Settlement

Colorado Health Facilities Authority
Retirement Housing Revenue Bonds (Liberty Heights Project) 1990 Subordinate Series B (19647HAP6)
Retirement Housing Revenue Bonds (Liberty Heights Project) 1991 Series A (19647HAT8)
Retirement Housing Revenue Bonds (Liberty Heights Project) 1991 Series B (19647HAS0/HAU5)

Illinois Development Finance Authority
Retirement Housing Revenue Bonds (Regency Park at Lincolnwood Project) 1990 Subordinate Series B (451913AE7)
Retirement Housing Revenue Bonds (Regency Park at Lincolnwood Project) 1991 Series A (451913AJ6)
Retirement Housing Revenue Bonds (Regency Park at Lincolnwood Project) 1991 Series B (451913AH0)

City of Palm Springs
Certificates of Participation (Palm Springs Assisted Living Center) 1991 Subordinate Series B (696656EZ6)

Glen Cove Industrial Development Agency
Civic Facility Revenue Bonds (The Regency at Glen Cove) 1992 Series B (377446AY5/AZ2/BA6)

City of Bakersfield

Certificates of Participation (Bakersfield Assisted Living Center) 1991 Subordinate Series B Certificates (057497CP2)

The Industrial Development Board of the County of Knox (Tennessee)
Industrial Development Refunding Revenue Bonds (Station Eighty-Two #4, Ltd. Project) Series 1991B (499530KR3)

Dawson Ridge Metropolitan District No. 1 Douglas County, Colorado

Limited Tax Refunding Bonds Series 1992A (239427AC1/AE7/AG2)
Limited Tax Refunding Bonds Series 1992B (239427AD9/AF4/AH0)

Development Authority of Richmond County
First Mortgage Zero Coupon Revenue Bonds (Southern Care Corporation Facility) Series 1991A (764595AC8)
Subordinated Zero Coupon Revenue Bonds (Southern Care Corporation Facility) Series 1991C (764595AA2/AD6)

Development Authority of Colquitt County
First Mortgage Zero Coupon Revenue Bonds (Southern Care Corporation Facility) Series 1991A (196821AM4)
Subordinated Zero Coupon Revenue Bonds (Southern Care Corporation Facility) Series 1991C (196821AN2/AL6)

Savannah Economic Development Authority
First Mortgage Zero Coupon Revenue Bonds (Southern Care Corporation Facility) Series 1991A (80483CAE1)
Subordinated Zero Coupon Revenue Bonds (Southern Care Corporation Facility) Series 1991C (80483CAC5/CAD3)

Washington Wilkes Payroll Development Authority
First Mortgage Zero Coupon Revenue Bonds (Southern Care Corporation Facility) Series 1991A (938860AD5)
Subordinated Zero Coupon Revenue Bonds (Southern Care Corporation Facility) Series 1991C (938860AC7)

Montgomery County Health Facilities Development Corporation
Health Facilities Revenue Refunding Bonds, Series 1990 (Heritage Manor in the Woodlands Project) (613692AB8/AC6/AA0)

Lucas-Plaza Housing Development Corporation
Mortgage Revenue Refunding Bonds Series 1991 (FHA Insured Mortgage Loan - The Plaza Section 8 Assisted Project) (549364AE7/AD9)

The Health and Educational Facilities Board of the Metropolitan Government of Nashville and Davidson County, Tennessee
Subordinated Revenue Bonds (Volunteer Healthcare Systems, Inc. Project) Series 1988B (592040C72)


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Inquiries: Paul Marrone 212-713-8503