<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 20, 1996.
REGISTRATION NO. 333-4274
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
KEYCORP STUDENT LOAN TRUST 1996-A
(Issuer of the Notes and the Certificates)
------------------------
KEY BANK USA, NATIONAL ASSOCIATION
(Originator of the Trust described herein)
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
UNITED STATES 6021 34-1804148
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
------------------------
KEYCENTER
127 PUBLIC SQUARE
CLEVELAND, OHIO 44114
(216) 689-3000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
------------------------
FORREST F. STANLEY
GENERAL COUNSEL AND SECRETARY
KEY BANK USA, NATIONAL ASSOCIATION
KEYCENTER
127 PUBLIC SQUARE
CLEVELAND, OHIO 44114
(216) 689-3000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPIES TO:
Robert J. Gilker, Esq.
Jones, Day, Reavis & Pogue
1900 Huntington Center
Columbus, Ohio 43215
Reed D. Auerbach, Esq.
Stroock & Stroock & Lavan
7 Hanover Square
New York, New York 10004
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. / /___________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / ________________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses in connection with the offering of the Notes and the Certificates
being registered herein are estimated as follows:
<TABLE>
<S> <C>
SEC registration fee................................................. $ --
Legal fees and expenses.............................................. 70,000
Accounting fees and expenses......................................... 50,000
Rating agency fees................................................... 600,000
Eligible Lender Trustee fees and expenses............................ 14,000
Indenture Trustee fees and expenses.................................. 13,000
Printing and engraving............................................... 55,000
Servicer conversion fees............................................. 100,000
Miscellaneous........................................................ *
-------------
Total...................................................... $ *
============
</TABLE>
- ---------------
* To be filed by Amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Paragraph (a) of Article Tenth of the Articles of Association of the
Registrant (this "Association") provides as follows:
(a) This Association shall indemnify, to the full extent permitted or
authorized by the Ohio General Corporation Law as it may from time to time
be amended, any person made or threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, or investigative, by reason of the fact that he
is or was a director, officer, or employee of this Association, or is or
was serving at the request of this Association as a director, trustee,
officer, or employee of another association, corporation, partnership,
joint venture, trust, or other enterprise; in the case of a person serving
at the request of this Association, such request shall be evidenced by a
resolution of the Board of Directors or a duly-authorized committee thereof
or by a writing executed by an officer of this Association pursuant to a
resolution of the Board of Directors or a duly-authorized committee
thereof. In the case of a merger into this Association of a constituent
association which, if its separate existence had continued, would have been
required to indemnify directors, officers, or employees in specified
situations prior to the merger, any person who served as a director,
officer, or employee of the constituent association, or served at the
request of the constituent association as a director, trustee, officer, or
employee of another association, corporation, partnership, joint venture,
trust, or other enterprise, shall be entitled to indemnification by this
Association (as the surviving association) for acts, omissions, or other
events or occurrences prior to the merger to the same extent he would have
been entitled to indemnification by the constituent association if its
separate existence had continued. The indemnification provided by this
[Article Tenth] shall not be deemed exclusive of any other rights to which
any person seeking indemnification may be entitled by law or under these
Articles or the Bylaws [of this Association], or any agreement, vote of
shareholders or disinterested directors, or otherwise, both as to action in
his official capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased to be a
director, trustee, officer, or employee and shall inure to the benefit of
the heirs, executors, and administrators of such a person.
(b) Notwithstanding division (a) of this [Article Tenth], no director,
officer, or employee of this Association shall be indemnified against
expenses, including attorneys' fees, penalties or other payments
II-1
<PAGE> 3
incurred in an administrative proceeding or action instituted by the
Comptroller of the Currency or other appropriate bank regulatory agency
when such proceeding or action results in a final order assessing civil
money penalties against, or requiring affirmative action of, such director,
officer, or employee in the form of payments to this Association.
Reference is made to Section 1701.13(E) of the General Corporation Law of
the State of Ohio relating to indemnification of directors, officers and
employees of an Ohio corporation. For the full text of Article Tenth of the
Registrant's Articles of Association, reference is hereby made to Exhibit 3(a)
hereto.
The Registrant also maintains insurance on behalf of each director and
certain officers against any loss arising from any claim asserted against him in
any such capacity, subject to certain exclusions.
ITEM 15. RECENT SALE OF UNREGISTERED SECURITIES.
On or about January 12, 1996, Key Bank USA, National Association began
offering for sale its senior bank notes with maturities ranging from 30 days to
one year from their respective dates of issue, its senior bank notes with
maturities ranging from more than one year to 15 years from their respective
dates of issue, and its subordinated bank notes with maturities ranging from
more than five years to 15 years from their respective dates of issue
(collectively, the "Bank Notes"). Key Bank USA, National Association has
authority to issue Bank Notes in an aggregate principal amount not to exceed
$600,000,000. Key Bank USA, National Association anticipates offering and
selling the Bank Notes on a continuous basis. As of August 15, 1996,
approximately $50,000,000 agrgregate principal amount of such Bank Notes have
been sold and were outstanding. The principal amount of such Bank Notes have
been sold and were outstanding. The principal agents for such offering by Key
Bank USA, National Association are Salomon Brothers Inc. CS First Boston
Corporation, Goldman, Sachs & Co., Lehman Brothers Inc. (including its affiliate
Lehman Commercial Paper Inc.), Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, J.P. Morgan Securities Inc. and Morgan Stanley &
Co. Incorporated. The Bank Notes are being sold at par to the public. Key Bank
USA, National Association will pay a commission ranging from .050% to .625% to
any agent for Bank Notes placed through such agent. The Bank Notes are being
sold only to "accredited investors" within the meaning of Rule 501 under the
Act. The Bank Notes are being sold without registration in reliance upon the
exemption from registration in Section 3(a)(2) of the Act.
II-2
<PAGE> 4
ITEM 16. FINANCIAL STATEMENTS AND EXHIBITS.
a. Exhibits:
<TABLE>
<S> <C> <C>
1(a) -- Form of Underwriting Agreement for Notes*
1(b) -- Form of Underwriting Agreement for Certificates*
3(a) -- Articles of Association of Key Bank USA, National Association**
3(b) -- Bylaws of Key Bank USA, National Association**
4(a) -- Form of Indenture between the Trust and the Indenture Trustee (including as
exhibits thereto a form of Floating Rate Asset Backed Note)*
4(b) -- Form of Amended and Restated Trust Agreement between Key Bank USA, National
Association and the Eligible Lender Trustee (including as an exhibit thereto a
form of Floating Rate Asset Backed Certificate)*
5 -- Opinion of Forrest F. Stanley, Esq. with respect to legality
8 -- Opinion of Jones, Day, Reavis & Pogue with respect to federal and Pennsylvania tax
matters
10(a) -- Form of Sale and Servicing Agreement among the Seller, PHEAA, the Trust, the
Eligible Lender Trustee and the Administrator*
10(b) -- Form of Supplemental Sale and Servicing Agreement among Key Bank USA, National
Association, as Seller and Administrator, PHEAA, the Trust, the Eligible Lender
Trustee, the Indenture Trustee and The Access(SM) Group.**
10(c) -- Form of Administration Agreement among the Administrator, the Trust, and the
Indenture Trustee*
10(d) -- Form of Guarantee Agreement between the Eligible Lender Trustee on behalf of the
Trust and PHEAA**
10(e) -- Form of Guarantee Agreement between the Eligible Lender Trustee on behalf of the
Trust and ASA**
10(f) -- Form of Guarantee Agreement among the Eligible Lender Trustee on behalf of the
Trust, Key Bank USA, National Bank and TERI**
23(a) -- Consent of Forrest F. Stanley, Esq. (included as part of Exhibit 5)
23(b) -- Consent of Jones, Day, Reavis & Pogue (included as part of Exhibit 8)
24 -- Powers of Attorney of directors and officers of Key Bank USA, National
Association**
25 -- Statement of Eligibility under the Trust Indenture Act of 1939 of the Indenture
Trustee**
- ---------------
<FN>
* Filed herewith.
** Previously filed.
</TABLE>
b. Financial Statements:
Not applicable.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
The undersigned Registrant hereby undertakes to provide to the Underwriter
at the closing specified in the Underwriting Agreements Notes and Certificates
in such denominations and registered in such names as required by the
Underwriter to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 14, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is therefore unenforceable. In the
II-3
<PAGE> 5
event that a claim for indemnification against such liabilities (other than
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of such Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, such Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933 each post-effective amendment that contains a form of
prospectus shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 2 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Cleveland, State of Ohio, on the 20th day of August, 1996.
KEY BANK USA, NATIONAL
ASSOCIATION
By: /s/ FORREST F. STANLEY
------------------------
Forrest F. Stanley, Secretary
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed on August 20, 1996, by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
NAME TITLE
- --------------------------------------------- --------------------------------------------
<S> <C>
* Principal Executive Officer and Director
- ---------------------------------------------
A. Jay Meyerson
* Principal Financial Officer
- ---------------------------------------------
Ronald J. Nicolas
* Principal Accounting Officer
- ---------------------------------------------
Joseph A. Pampush
* Director
- ---------------------------------------------
Lee Irving
* Director
- ---------------------------------------------
Craig C. Brooks
* Director
- ---------------------------------------------
Allen J. Gula, Jr.
* Director
- ---------------------------------------------
Jeanne B. Krips
* Director
- ---------------------------------------------
John H. Mancuso
* Director
- ---------------------------------------------
Bruce E. Tofte
Director
- ---------------------------------------------
Frederick E. Wolfert
* Director
- ---------------------------------------------
Stephen E. Wall
*By: /s/ FORREST F. STANLEY
------------------------------------
Forrest F. Stanley
Attorney-in-Fact
August 20, 1996
</TABLE>
II-5
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION OF EXHIBIT PAGE NUMBER
- ------ ------------------------------------------------------------------- ------------
<S> <C> <C> <C>
1(a) -- Form of Underwriting Agreement for Notes*
1(b) -- Form of Underwriting Agreement for Certificates*
3(a) -- Articles of Association of Key Bank USA, National Association**
3(b) -- Bylaws of Key Bank USA, National Association**
4(a) -- Form of Indenture between the Trust and the Indenture Trustee
(including as exhibits thereto a form of Floating Rate Asset Backed
Note)*
4(b) -- Form of Amended and Restated Trust Agreement between Key Bank USA,
National Association and the Eligible Lender Trustee (including as
an exhibit thereto a form of Floating Rate Asset Backed
Certificate)*
5 -- Opinion of Forrest F. Stanley, Esq. with respect to legality
8 -- Opinion of Jones, Day, Reavis & Pogue with respect to federal and
Pennsylvania tax matters
10(a) -- Form of Sale and Servicing Agreement among the Seller, PHEAA, the
Trust, the Eligible Lender Trustee and the Administrator*
10(b) -- Form of Supplemental Sale and Servicing Agreement among Key Bank
USA, National Association, as Seller and Administrator, PHEAA, the
Trust, the Eligible Lender Trustee, the Indenture Trustee and The
Access(SM) Group.**
10(c) -- Form of Administration Agreement among the Administrator, the Trust
and the Indenture Trustee*
10(d) -- Form of Guarantee Agreement between the Eligible Lender Trustee on
behalf of the Trust and PHEAA**
10(e) -- Form of Guarantee Agreement between the Eligible Lender Trustee on
behalf of the Trust and ASA**
10(f) -- Form of Guarantee Agreement among the Eligible Lender Trustee on
behalf of the Trust, Key Bank USA, National Association and TERI**
23(a) -- Consent of Forrest F. Stanley, Esq. (included as part of Exhibit 5)
23(b) -- Consent of Jones, Day, Reavis & Pogue (included as part of Exhibit
8)
24 -- Powers of Attorney of directors and officers of Key Bank USA,
National Association**
25 -- Statement of Eligibility under the Trust Indenture Act of 1939 of
the Indenture Trustee**
- ---------------
<FN>
* Filed herewith.
** Previously filed.
</TABLE>
<PAGE> 8
REGISTRATION NO. 333-4274
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
EXHIBITS
FILED WITH
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
KEYCORP STUDENT LOAN TRUST 1996-A
(Issuer of the Notes and the Certificates)
------------------------
KEY BANK USA, NATIONAL ASSOCIATION
(Originator of the Trust described herein)
(Exact name of Registrant as specified in its charter)
------------------------
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<PAGE> 1
Exhibit 1(a)
KEYCORP STUDENT LOAN TRUST 1996-A
$__________________
FLOATING RATE ASSET BACKED NOTES
KEY BANK USA, NATIONAL ASSOCIATION
(SELLER)
NOTE UNDERWRITING AGREEMENT
---------------------------
__________ __, 1996
CS First Boston Corporation
As Representative of the
several Underwriters
Park Avenue Plaza
New York, N.Y. 10055
Dear Sirs:
1. INTRODUCTORY. Key Bank USA, National Association, a
national banking association (the "Seller"), proposes to cause KeyCorp Student
Loan Trust 1996-A (the "Trust") to issue and sell $___________ principal amount
of its Floating Rate Asset Backed Notes (the "Notes") to the underwriters named
in Schedule I hereto (the "Underwriters"), for whom you (the "Representative")
are acting as representative. The assets of the Trust include, among other
things, a pool of law school student loans (the "Initial Financed Student
Loans") and certain monies due thereunder on and after __________ __, 1996 (the
"Cutoff Date"). Such Initial Financed Student Loans were sold to the Eligible
Lender Trustee (as defined below) on behalf of the Trust by the Seller and are
to be serviced by Pennsylvania Higher Education Assistance Agency, an agency of
the Commonwealth of Pennsylvania ("PHEAA" or the "Servicer"). The Notes will be
issued pursuant to the Indenture to be dated as of __________ __, 1996 (as
amended and supplemented from time to time, the "Indenture"), between the Trust
and _____________, a New York banking corporation (the "Indenture Trustee").
Simultaneously with the issuance and sale of the Notes as
contemplated herein, the Trust will issue $____________ principal amount of its
Floating Rate Asset Backed Certificates (the "Certificates"), each representing
a fractional undivided ownership interest in the Trust, which will be sold
pursuant to an underwriting agreement
<PAGE> 2
2
dated the date hereof (the "Certificate Underwriting Agreement") between the
Seller and the Underwriters.
Capitalized terms used and not otherwise defined herein shall
have the meanings given them in Appendix A hereto.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
(a) The Seller represents and warrants to and agrees with the several
Underwriters that:
(i) A registration statement (No. 333-4274), including a form
of prospectus, on Form S-1 relating to the Notes, has been filed with
the Securities and Exchange Commission (the "Commission") and either
(A) has been declared effective under the Securities Act of 1933, as
amended (the "Act"), and is not proposed to be amended or (B) is
proposed to be amended by amendment or post-effective amendment. If the
Seller does not propose to amend such registration statement and if any
post-effective amendment to such registration statement has been filed
with the Commission prior to the execution and delivery of this
Agreement, the most recent such amendment has been declared effective
by the Commission. For purposes of this Agreement, "Effective Time"
means (x) if the Seller has advised the Representative that it does not
propose to amend such registration statement, the date and time as of
which such registration statement, or the most recent post-effective
amendment thereto (if any) filed prior to the execution and delivery of
this Agreement, was declared effective by the Commission, or (y) if the
Seller has advised the Representative that it proposes to file an
amendment or post-effective amendment to such registration statement,
the date and time as of which such registration statement, as amended
by such amendment or post-effective amendment, as the case may be, is
declared effective by the Commission. "Effective Date" means the date
of the Effective Time. Such registration statement, as amended at the
Effective Time, including all information (if any) deemed to be a part
of such registration statement as of the Effective Time pursuant to
Rule 430A(b) under the Act, and including the exhibits thereto and any
material incorporated by reference therein, is hereinafter referred to
as the "Registration Statement", and the form of prospectus relating to
the Notes, as first filed with the
<PAGE> 3
3
Commission pursuant to and in accordance with Rule 424(b) ("Rule
424(b)") under the Act or, if no such filing is required, as included
in the Registration Statement at the Effective Date, is hereinafter
referred to as the "Prospectus".
(ii) If the Effective Time is prior to the execution and
delivery of this Agreement: (A) on the Effective Date, the Registration
Statement conformed in all material respects to the requirements of the
Act, the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), and the rules and regulations of the Commission thereunder (the
"Rules and Regulations") and did not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading, (B) on the date of this Agreement, the Registration
Statement conforms, and at the time of filing of the Prospectus
pursuant to Rule 424(b), the Registration Statement and the Prospectus
will conform, in all material respects to the requirements of the Act,
the Trust Indenture Act and the Rules and Regulations, (C) on the
Effective Date, the Registration Statement did not and will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading and (D) on the Effective Date, the
Prospectus, if not filed pursuant to Rule 424(b), did not or will not,
and on the date of any filing pursuant to Rule 424(b) and on the
Closing Date, the Prospectus will not, include any untrue statement of
a material fact or omit to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which
they are made, not misleading. If the Effective Time is subsequent to
the execution and delivery of this Agreement: (1) on the Effective
Date, the Registration Statement and the Prospectus will conform in all
material respects to the requirements of the Act, the Trust Indenture
Act and the Rules and Regulations, (2) on the Effective Date, the
Registration Statement will not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading and (3) on the Effective Date, at the time of filing of the
Prospectus pursuant to Rule 424(b) and at the Closing Date, the
Prospectus will not include
<PAGE> 4
4
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The two preceding sentences do not apply to
statements in or omissions from the Registration Statement or
Prospectus based upon written information furnished to the Seller by
any Underwriter through the Representative specifically for use
therein. As of the Closing Date (as defined below), the Seller's
representations and warranties in the Sale and Servicing Agreement, the
Supplemental Sale and Servicing Agreement, the Trust Agreement and the
Guarantee Agreement to which TERI is a party will be true and correct
in all material respects.
(iii) This Agreement has been duly authorized, executed and
delivered by the Seller. The execution, delivery and performance of
this Agreement and the issuance and sale of the Notes and compliance
with the terms and provisions hereof will not result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, any agreement or instrument to which the Seller is a
party or by which the Seller is bound or to which any of the properties
of the Seller is subject which could reasonably be expected to have a
material adverse effect on the transactions contemplated herein. The
Seller has full corporate power and authority to cause the Trust to
authorize, issue and sell the Notes, all as contemplated by this
Agreement.
(iv) Other than as contemplated by this Agreement or as
disclosed in the Prospectus, there is no broker, finder or other party
that is entitled to receive from the Seller or any of its subsidiaries
any brokerage or finder's fee or other fee or commission as a result of
any of the transactions contemplated by this Agreement.
(v) All legal or governmental proceedings, contracts or
documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement have been so described or filed as required.
(vi) The Seller's assignment and delivery of the Initial
Financed Student Loans to the Eligible Lender Trustee on behalf of the
Trust as of the Closing Date
<PAGE> 5
5
will vest in the Eligible Lender Trustee on behalf of the Trust all the
Seller's right, title and interest therein, or will result in a first
priority perfected security interest therein, in either case subject to
no prior lien, mortgage, security interest, pledge, adverse claim,
charge or other encumbrance.
(vii) The Trust's assignment of the Initial Financed Student Loans
to the Indenture Trustee pursuant to the Indenture will vest in the
Indenture Trustee, for the benefit of the Noteholders, a first priority
perfected security interest therein, subject to no prior lien,
mortgage, security interest, pledge, adverse claim, charge or other
encumbrance.
(b) The Seller hereby agrees with the Underwriters that, for
all purposes of this Agreement, the only information furnished to the Seller by
the Underwriters through the Representative specifically for use in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
or any related preliminary prospectus, are the statements with respect to
stabilization on the second page of, and the statements under the caption
"Underwriting" in, the preliminary prospectus and the Prospectus.
3. PURCHASE, SALE AND DELIVERY OF THE NOTES. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Seller agrees to cause the Trust
to sell to the Underwriters, and the Underwriters agree, severally and not
jointly, to purchase from the Trust, at a purchase price of __.__% of the
principal amount of the Notes, the respective principal amounts of Notes set
forth opposite the names of the Underwriters in Schedule I hereto. In addition,
the Seller agrees to pay CS First Boston Corporation a structuring fee equal to
$_________.
The Seller will deliver the Notes to the Representative for
the respective accounts of the Underwriters, against payment of the purchase
price to or upon the order of the Seller by wire transfer or check in Federal
(same day) Funds, at the office of Stroock & Stroock & Lavan, 7 Hanover Square,
New York, New York 10004, on _________ __, 1996, or at such other time not later
than seven full business days thereafter as the Representative and the Seller
determine, such time being herein referred to as the "Closing Date". The Notes
to be so delivered will be
<PAGE> 6
6
initially represented by one or more Notes registered in the name of Cede & Co.,
the nominee of The Depository Trust Company ("DTC"). The interests of beneficial
owners of the Notes will be represented by book entries on the records of DTC
and participating members thereof. Definitive Notes will be available only under
the limited circumstances specified in the Indenture.
4. OFFERING BY THE UNDERWRITERS. It is understood that, after
the Registration Statement becomes effective, the several Underwriters propose
to offer the Notes for sale to the public (which may include selected dealers)
as set forth in the Prospectus.
5. COVENANTS OF THE SELLER. The Seller covenants
and agrees with the several Underwriters that:
(a) If the Effective Time is prior to the execution and
delivery of this Agreement, the Seller will file the Prospectus, properly
completed, with the Commission pursuant to and in accordance with subparagraph
(1) (or, if applicable and if consented to by the Representative, subparagraph
(4)) of Rule 424(b) not later than the earlier of (i) the second business day
following the execution and delivery of this Agreement and (ii) the fifth
business day after the Effective Date. The Seller will advise the Representative
promptly of any such filing pursuant to Rule 424(b).
(b) The Seller will advise the Representative promptly of any
proposal to amend or supplement the registration statement as filed or the
related prospectus or the Registration Statement or the Prospectus and will not
effect such amendment or supplementation without the consent of the
Representative prior to the Closing Date, and thereafter will not effect any
such amendment or supplementation to which the Representative reasonably
objects; the Seller will also advise the Representative promptly of any request
by the Commission for any amendment of or supplement to the Registration
Statement or the Prospectus or for any additional information; and the Seller
will also advise the Representative promptly of the effectiveness of the
Registration Statement (if the Effective Time is subsequent to the execution of
this Agreement) and of any amendment or supplement to the Registration Statement
or the Prospectus and of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the institu-
<PAGE> 7
7
tion or threat of any proceeding for that purpose and the Seller will use its
best efforts to prevent the issuance of any such stop order and to obtain as
soon as possible the lifting of any issued stop order.
(c) If, at any time when a prospectus relating to the Notes is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then amended or supplemented would contain an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend or supplement
the Prospectus to comply with the Act, the Seller promptly will prepare and
file, or cause to be prepared and filed, with the Commission an amendment or
supplement which will correct such statement or omission, or an amendment or
supplement which will effect such compliance. Neither the consent of the
Representative to, nor the delivery of the several Underwriters of, any such
amendment or supplement shall constitute a waiver of any of the conditions set
forth in Section 6.
(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Seller will cause the Trust to make
generally available to Noteholders an earnings statement of the Trust covering a
period of at least twelve months beginning after the Effective Date which will
satisfy the provisions of Section 11(a) of the Act and Rule 158 of the
applicable Rules and Regulations thereunder. For the purpose of the preceding
sentence, "Availability Date" means the 45th day after the end of the fourth
fiscal quarter following the fiscal quarter that includes the Effective Date,
except that, if such fourth fiscal quarter is the last quarter of the Trust's
fiscal year, "Availability Date" means the 90th day after the end of such fourth
fiscal quarter.
(e) The Seller will furnish to the Representative copies of
the Registration Statement (two of which will be signed and will include all
exhibits), each related preliminary prospectus, the Prospectus and all
amendments and supplements to such documents, in each case as soon as available
and in such quantities as the Representative reasonably requests.
(f) The Seller will arrange for the qualification
of the Notes for sale under the laws of the States of New
<PAGE> 8
8
York and California and will continue such qualifications in effect so long as
required for the distribution.
(g) For a period from the date of this Agreement until the
retirement of the Notes, or until such time as the several Underwriters shall
cease to maintain a secondary market in the Notes, whichever occurs first, the
Seller will deliver to the Representative the annual statements of compliance
and the annual independent certified public accountants' reports furnished to
the Indenture Trustee or the Eligible Lender Trustee pursuant to the Sale and
Servicing Agreement, as soon as such statements and reports are furnished to the
Indenture Trustee or the Eligible Lender Trustee.
(h) So long as any of the Notes is outstanding, the Seller
will furnish to the Representative (i) as soon as practicable after the end of
the fiscal year all documents required to be distributed to Noteholders or filed
with the Commission on behalf of the Trust pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or any order of the Commission
thereunder and (ii) from time to time, any other information concerning the
Seller as the Representative may reasonably request only insofar as such
information reasonably relates to the Registration Statement or the transactions
contemplated by the Basic Documents.
(i) On or before the Closing Date, the Seller shall mark its
accounting and other records, if any, relating to the Initial Financed Student
Loans and shall cause the Servicer to mark the computer records of the Servicer
relating to the Initial Financed Student Loans to show the absolute ownership by
the Eligible Lender Trustee on behalf of the Trust of the Initial Financed
Student Loans, and from and after the Closing Date neither the Seller nor the
Servicer shall take any action inconsistent with the ownership by the Eligible
Lender Trustee on behalf of the Trust of such Initial Financed Student Loans,
other than as permitted by the Sale and Servicing Agreement.
(j) To the extent, if any, that the rating provided with
respect to the Notes by the rating agency or agencies that initially rate the
Notes is conditional upon the furnishing of documents or the taking of any other
actions by the Seller agreed upon on or prior to the Closing Date, the Seller
shall furnish such documents and take any such other actions. A copy of any such
document shall be
<PAGE> 9
9
provided to the Representative at the time it is delivered to the rating
agencies.
(k) For the period beginning on the date of this Agreement and
ending 90 days after the Closing Date, neither the Seller nor any trust
originated, directly or indirectly, by the Seller will, without the prior
written consent of the Representative, offer to sell or sell notes (other than
the Notes) collateralized by, or certificates (other than the Certificates)
evidencing an ownership interest in, student loans; PROVIDED, HOWEVER, that this
shall not be construed to prevent the sale of student loans by the Seller.
(l) The Seller will apply the net proceeds of the offering and
the sale of the Notes and the Certificates that it receives in the manner set
forth in the Prospectus under the caption "Use of Proceeds".
(m) The Seller will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the printing
and filing of the documents (including the Registration Statement and
Prospectus) (ii) the preparation, issuance and delivery of the Notes to the
Representative, (iii) the fees and disbursements of the Seller's counsel and
accountants, (iv) the qualification of the Notes under securities laws in
accordance with the provisions of Section 5(f), including filing fees and the
fees and disbursements of counsel for the Representative in connection therewith
and in connection with the preparation of any blue sky or legal investment
survey, if any is requested, (v) the printing and delivery to the Representative
of copies of the Registration Statement as originally filed and of each
amendment thereto, (vi) the printing and delivery to the Representative of
copies of any blue sky or legal investment survey prepared in connection with
the Notes, (vii) any fees charged by rating agencies for the rating of the
Notes, (viii) the fees and expenses, if any, incurred with respect to any filing
with the National Association of Securities Dealers, Inc. and (ix) the fees and
expenses of Jones, Day, Reavis & Pogue in its role as counsel to the Trust
incurred as a result of providing the opinions required by Section 6(h) hereof.
6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Notes will
be subject to the accuracy of the representations and warranties on the part of
the Seller herein, to the accuracy of the written
<PAGE> 10
10
statements of officers of the Seller made pursuant to the provisions of this
Section, to the performance by the Seller of its obligations hereunder and to
the following additional conditions precedent:
(a) If the Effective Time is not prior to the execution and
delivery of this Agreement, the Effective Time shall have occurred not later
than 6:00 p.m., New York City time, on the date of this Agreement or such later
time or date as shall have been consented to by the Representative.
(b) If the Effective Time is prior to the execution and
delivery of this Agreement, the Prospectus and any supplements thereto shall
have been filed with the Commission in accordance with the Rules and Regulations
and Section 5(a) hereof. Prior to the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the knowledge of
the Seller or the Representative, shall be contemplated by the Commission.
(c) The Representative shall have received a letter, dated the
date of delivery thereof (which, if the Effective Time is prior to the execution
and delivery of this Agreement, shall be on or prior to the date of this
Agreement or, if the Effective Time is subsequent to the execution and delivery
of this Agreement, shall be prior to the filing of the amendment or
post-effective amendment to the Registration Statement to be filed shortly prior
to the Effective Time), of (i) Ernst & Young on behalf of the Seller and (ii)
KPMG Peat Marwick with respect to certain agreed-upon procedures with respect to
the Program, in each case confirming that such accountants are independent
public accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder, and substantially in the form of the drafts to
which the Representative has previously agreed and otherwise in form and
substance reasonably satisfactory to the Representative and its counsel.
(d) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any development
involving a prospective change, in or affecting particularly the business or
properties of the Trust, the Seller, the Servicer or KeyCorp which, in the
judgment of the Representative, materially impairs the investment quality of the
Notes or makes it impractical or
<PAGE> 11
11
inadvisable to market the Notes; (ii) any downgrading in the rating of any debt
securities of the Seller or KeyCorp by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule 436(g) under the Act), or
any public announcement that any such organization has under surveillance or
review its rating of any debt securities of the Seller or KeyCorp (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (iii) any suspension or
limitation of trading in securities generally on the New York Stock Exchange, or
any setting of minimum prices for trading on such exchange; (iv) any suspension
of trading of any securities of the Seller or KeyCorp on any exchange or in the
over-the-counter market; (v) any banking moratorium declared by Federal or New
York authorities; or (vi) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by Congress, or any
other substantial national or international calamity or emergency if, in the
judgment of the Representative, the effect of any such outbreak, escalation,
declaration, calamity, or emergency makes it impractical or inadvisable to
proceed with completion of the sale of and payment for the Notes.
(e) The Representative shall have received an opinion of
Forrest F. Stanley, Esq., General Counsel of Key Bank USA, National Association
("Key Bank"), as counsel for Key Bank, as the Seller and the Administrator,
dated the Closing Date, in the form attached hereto as Exhibit A, or as is
otherwise satisfactory in form and substance to the Representative and its
counsel.
(f) The Representative shall have received an opinion of
Jones, Day, Reavis & Pogue, counsel to the Seller, dated the Closing Date, in
the form attached hereto as Exhibit B, or as is otherwise satisfactory in form
and substance to the Representative and its counsel.
(g) The Representative shall have received an opinion of
Jones, Day, Reavis & Pogue, counsel to the Seller, dated the Closing Date and
satisfactory in form and substance to the Representative and its counsel, to the
effect that the statements in the Prospectus under the headings "Summary of
Terms--Tax Considerations" and "Material Tax Consequences--State and Local
Income and Franchise Tax Consequences with Respect to the Notes" accurately
describe the material Pennsylvania tax consequences to holders of the Notes.
<PAGE> 12
12
(h) The Representative shall have received an opinion
addressed to the several Underwriters of Jones, Day, Reavis & Pogue, in its
capacity as Federal tax and ERISA counsel for the Trust, to the effect that the
statements in the Prospectus under the headings "Summary of Terms--Tax
Considerations" and "Material Tax Consequences--Material Federal Tax
Consequences with Respect to the Notes" accurately describe the material Federal
income tax consequences to holders of the Notes, and the statements in the
Prospectus under the headings "Summary of Terms--ERISA Considerations" and
"ERISA Considerations--The Notes", to the extent that they constitute statements
of matters of law or legal conclusions with respect thereto, have been prepared
or reviewed by such counsel and accurately describe the material consequences to
holders of the Notes under ERISA. Jones, Day, Reavis & Pogue, in its capacity as
special counsel to the Trust, shall have delivered an opinion with respect to
the characterization of the transfer of the Initial Financed Student Loans.
(i) The Representative shall have received an opinion
addressed to the several Underwriters of Stroock & Stroock & Lavan, in its
capacity as special counsel to the several Underwriters, dated the Closing Date,
with respect to the validity of the Notes and the Certificates and such other
related matters as the Representative shall reasonably require and the Seller
shall have furnished or caused to be furnished to such counsel such documents as
they may reasonably request for the purpose of enabling them to pass upon such
matters.
(j) The Representative shall have received an opinion of Dean
Blakey & Moskowitz, special student loan counsel to the several Underwriters
and, in the case of clause (iii) below, special student loan counsel to the
Eligible Lender Trustee, dated the Closing Date, satisfactory in form and
substance to the Representative, to the effect that:
(i) the agreements implementing the Program, (including the
Coordination Agreements (as such term is defined in the Supplemental
Sale and Servicing Agreement)) and the Basic Documents, and the
transactions contemplated by the Basic Documents, conform in all
material respects to the applicable requirements of the Higher
Education Act, and that, upon the due authorization, execution and
delivery of the Basic Documents and the consummation of such
<PAGE> 13
13
transactions, the Financed Federal Loans, legal title to which will be
held by the Eligible Lender Trustee on behalf of the Trust, will
qualify, subject to compliance with all applicable origination and
servicing requirements, for all applicable federal assistance payments,
including federal reinsurance and federal interest subsidies and
special allowance payments;
(ii) such counsel has examined the Registration Statement and
the Prospectus, and nothing has come to such counsel's attention that
would lead such counsel to believe that, solely with respect to the
Higher Education Act and the student loan business, the Registration
Statement or the Prospectus or any amendment or supplement thereto as
of the respective dates thereof or on the Closing Date contains an
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein not misleading; and
(iii) the Eligible Lender Trustee is an "eligible lender" as
such term is defined in Section 435(d) of the Higher Education Act for
purposes of holding legal title to the Financed Federal Loans.
(k) The Representative shall have received an opinion of
counsel to PHEAA, dated the Closing Date and satisfactory in form and substance
to the Representative and its counsel, to the effect that:
(i) PHEAA has been duly organized and is validly existing as
an agency of the Commonwealth of Pennsylvania in good standing under
the laws thereof with full power and authority (corporate and other) to
own its properties and conduct its business, as presently conducted by
it, and to enter into and perform its obligations under the Sale and
Servicing Agreement, the Supplemental Sale and Servicing Agreement and
the Guarantee Agreement (and the agreements with the Department under
Section 428 of the Higher Education Act to the extent relevant to
PHEAA's obligations under such Guarantee Agreement) to which it is a
party, and had at all relevant times, and now has, the power, authority
and legal right to service the Financed Student Loans, to guarantee the
Financed Federal Loans covered by such Guarantee Agreement and to
receive, subject to compliance with all applicable
<PAGE> 14
14
conditions, restrictions and limitations of the Higher Education Act,
reinsurance payments from the Department with respect to claims paid by
it on such Financed Federal Loans.
(ii) PHEAA is duly qualified to do business and is in good
standing, and has obtained all necessary licenses and approvals in each
jurisdiction in which failure to qualify or to obtain such license or
approval would render any Financed Student Loan or PHEAA's obligation
under its Guarantee Agreement unenforceable by or on behalf of the
Trust.
(iii) Each of the Sale and Servicing Agreement, the Supplemental
Sale and Servicing Agreement and the Guarantee Agreement (and the
agreements with the Department under Section 428 of the Higher
Education Act to the extent relevant to PHEAA's obligations under such
Guarantee Agreement) to which PHEAA is a party has been duly
authorized, executed and delivered by PHEAA and is the legal, valid and
binding obligation of PHEAA enforceable against PHEAA in accordance
with its terms, notwithstanding the existence of any doctrine of
sovereign immunity except (x) the enforceability thereof may be subject
to bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights and (y)
the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(iv) Neither the execution and delivery by PHEAA of the Sale and
Servicing Agreement, the Supplemental Sale and Servicing Agreement or
the Guarantee Agreement to which it is a party, nor the consummation by
PHEAA of the transactions contemplated therein nor the fulfillment of
the terms thereof by PHEAA will conflict with, result in a breach,
violation or acceleration of, or constitute a default under, any term
or provision of the certificate of incorporation or by-laws of PHEAA or
of any indenture or other agreement or instrument to which PHEAA is a
party or by which PHEAA is bound, or result in a violation of or
contravene the terms of any statute, order or regulation applicable to
PHEAA of any court, regulatory body, administrative agency or
governmental body having jurisdiction over PHEAA.
<PAGE> 15
15
(v) There are no actions, proceedings or investigations
pending or, to the best of such counsel's knowledge after due inquiry,
threatened against PHEAA before or by any governmental authority that
might materially and adversely affect the performance by PHEAA of its
obligations under, or the validity or enforceability of, the Sale and
Servicing Agreement, the Supplemental Sale and Servicing Agreement or
the Guarantee Agreement (or the agreements with the Department under
Section 428 of the Higher Education Act to the extent relevant to
PHEAA's obligations under such Guarantee Agreement) to which it is a
party.
(vi) Nothing has come to such counsel's attention that would
lead such counsel to believe that the representations and warranties of
the Servicer contained in the Sale and Servicing Agreement and the
Supplemental Sale and Servicing Agreement are other than as stated
therein.
(l) The Representative shall have received an opinion of
counsel to the Massachusetts Higher Education Assistance Corporation, now doing
business as American Student Assistance Corporation, a Massachusetts non-profit
corporation ("ASA"), dated the Closing Date and satisfactory in form and
substance to the Representative and its counsel, to the effect that:
(i) ASA has been duly incorporated and is validly existing as
a non-profit corporation in good standing under the laws of the
Commonwealth of Massachusetts with full power and authority (corporate
and other) to own its properties and conduct its business, as presently
conducted by it, and to enter into and perform its obligations under
the Guarantee Agreement (and the agreements with the Department under
Section 428 of the Higher Education Act to the extent relevant to ASA's
obligations under such Guarantee Agreement) to which it is a party, and
had at all relevant times, and now has, the power, authority and legal
right to guarantee the Financed Federal Loans covered by such Guarantee
Agreement and to receive, subject to compliance with all applicable
conditions, restrictions and limitations of the Higher Education Act,
reinsurance payments from the Department with respect to claims paid by
it on such Financed Federal Loans.
<PAGE> 16
16
(ii) ASA is duly qualified to do business and is in good
standing, and has obtained all necessary licenses and approvals in each
jurisdiction in which failure to qualify or to obtain such license or
approval would render ASA's obligation under its Guarantee Agreement to
guarantee the Financed Federal Loans covered thereby unenforceable by
or on behalf of the Trust.
(iii) The Guarantee Agreement (and the agreements with the
Department under Section 428 of the Higher Education Act to the extent
relevant to ASA's obligations under such Guarantee Agreement) to which
ASA is a party has been duly authorized, executed and delivered by ASA
and is the legal, valid and binding obligation of ASA enforceable
against ASA in accordance with its terms, except (x) the enforceability
thereof may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights and (y) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(iv) Neither the execution and delivery by ASA of the Guarantee
Agreement to which it is a party, nor the consummation by ASA of the
transactions contemplated therein nor the fulfillment of the terms
thereof by ASA will conflict with, result in a breach, violation or
acceleration of, or constitute a default under, any term or provision
of the certificate of incorporation or by-laws of ASA or of any
indenture or other agreement or instrument to which ASA is a party or
by which ASA is bound, or result in a violation of or contravene the
terms of any statute, order or regulation applicable to ASA of any
court, regulatory body, administrative agency or governmental body
having jurisdiction over ASA.
(v) There are no actions, proceedings or investigations
pending or, to the best of such counsel's knowledge after due inquiry,
threatened against ASA before or by any governmental authority that
might materially and adversely affect the performance by ASA of its
obligations under, or the validity or enforceability of, the Guarantee
Agreement (or the agreements with the Department under Section 428 of
the
<PAGE> 17
17
Higher Education Act to the extent relevant to ASA's obligations under
such Guarantee Agreement) to which it is a party.
(m) The Representative shall have received an opinion of
Kotin, Crabtree & Strong, counsel to The Education Resources Institute, Inc., a
Massachusetts non-profit corporation ("TERI"), dated the Closing Date and
satisfactory in form and substance to the Representative and its counsel, to the
effect that:
(i) TERI has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the Commonwealth of
Massachusetts with full power and authority (corporate and other) to
own its properties and conduct its business, as presently conducted by
it, and to enter into and perform its obligations under the Guarantee
Agreement to which it is a party, and had at all relevant times, and
now has, the power, authority and legal right to guarantee the Financed
Private Loans covered by such Guarantee Agreement.
(ii) TERI is duly qualified to do business and is in good
standing, and has obtained all necessary licenses and approvals in each
jurisdiction in which failure to qualify or to obtain such license or
approval would render TERI's obligation under its Guarantee Agreement
to guarantee the Financed Private Loans unenforceable by or on behalf
of the Trust.
(iii) The Guarantee Agreement to which TERI is a party has been
duly authorized, executed and delivered by TERI and is the legal, valid
and binding obligation of TERI enforceable against TERI in accordance
with its terms, except (x) the enforceability thereof may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights and (y)
the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(iv) Neither the execution and delivery by TERI of the Guarantee
Agreement to which it is a party, nor the consummation by TERI of the
transactions contemplated therein nor the fulfillment of the terms
thereof by
<PAGE> 18
18
TERI will conflict with, result in a breach, violation or acceleration
of, or constitute a default under, any term or provision of the
certificate of incorporation or by-laws of TERI or of any indenture or
other agreement or instrument to which TERI is a party or by which TERI
is bound, or result in a violation of or contravene the terms of any
statute, order or regulation applicable to TERI of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over TERI.
(v) There are no actions, proceedings or investigations
pending or, to the best of such counsel's knowledge after due inquiry,
threatened against TERI before or by any governmental authority that
might materially and adversely affect the performance by TERI of its
obligations under, or the validity or enforceability of, the Guarantee
Agreement to which it is a party.
(n) The Representatives shall have received an opinion of
________________, counsel to the Indenture Trustee, dated the Closing Date and
satisfactory in form and substance to the Representative and its counsel, to the
effect that:
(i) The Indenture trustee is a New York banking corporation
duly incorporated or organized under the laws of New York.
(ii) The Indenture Trustee has the full corporate trust power to
accept the office of indenture trustee under the Indenture, the Sale
and Servicing Agreement, the Supplemental Sale and Servicing Agreement
and the Administration Agreement.
(iii) The execution and delivery of the Indenture, the Supplemental
Sale and Servicing Agreement and the performance by the Indenture
Trustee of its obligations under the Indenture, the sale and Servicing
Agreement, the Supplemental Sale and Servicing Agreement and the
Administration Agreement have been duly authorized by all necessary
action of the Indenture Trustee and each has been duly executed and
delivered by the Indenture Trustee.
(iv) The Indenture, the Sale and Servicing Agreement and the
Supplemental Sale and Servicing
<PAGE> 19
19
Agreement and the Administration Agreement constitute valid and binding
obligations of the Indenture Trustee enforceable against the Indenture
Trustee in accordance with their terms under the laws of the State of
New York and the Federal law of the United States.
(v) The execution and delivery by the Indenture Trustee of the
Indenture, the Supplemental Sale and Servicing Agreement and the
Administration Agreement and the acceptance of the Sale and Servicing
Agreement do not require any consent, approval or authorization of, or
any registration or filing with, any New York or United States Federal
governmental authority, other than the qualification of the Indenture
Trustee under the Trust Indenture Act.
(vi) Each of the Notes has been duly authenticated by the
Indenture Trustee.
(vii) Neither the consummation by the Indenture Trustee of the
transactions contemplated in the Sale and Servicing Agreement, the
Supplemental Sale and Servicing Agreement, the indenture or the
Administration Agreement nor the fulfillment of the terms thereof by
the Indenture Trustee will conflict with, result in the breach or
violation of, or constitute a default under any law or the charter,
by-laws or other organizational documents of the Indenture Trustee or
the terms of any indenture or other agreement or instrument known to
such counsel and to which the Indenture Trustee or any of its
subsidiaries is a party or is bound or any judgment, order or decree
known to such counsel to be applicable to the Indenture Trustee or any
of its subsidiaries of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over the
Indenture Trustee or any of its subsidiaries.
(viii) There are no actions, suits or proceedings pending or, to the
best of such counsel's knowledge after due inquiry, threatened against
the Indenture Trustee (as indenture trustee under the Indenture or in
its individual capacity) before or by any governmental authority that
might materially and adversely affect the performance by the Indenture
Trustee of its obligations under, or the validity or enforceability of,
the Indenture, the Sale and
<PAGE> 20
20
Servicing Agreement, the Supplemental Sale and Servicing Agreement or
the Administration Agreement.
(ix) The execution, delivery and performance by the Indenture
Trustee of the Indenture, the Supplemental Sale and Servicing Agreement
and the Administration Agreement, and the acceptance of the Sale and
Servicing Agreement, will not subject any of the property or assets of
the Trust or any portion thereof, to any lien created by or arising
under the Indenture Trustee that are unrelated to the transactions
contemplated in such agreements.
(o) The Representative shall have received an opinion of
counsel to the Eligible Lender Trustee, dated the Closing Date and satisfactory
in form and substance to the Representative and its counsel, to the effect that:
(i) The Eligible Lender Trustee is a national banking
association duly incorporated or organized and validly existing under
the laws of the United States.
(ii) The Eligible Lender Trustee has the full corporate trust power
to accept the office of eligible lender trustee under the Trust
Agreement and to enter into and perform its obligations under the Trust
Agreement, the Sale and Servicing Agreement, the Supplemental Sale and
Servicing Agreement and, on behalf of the Trust, under the Indenture,
the Sale and Servicing Agreement, the Supplemental Sale and Servicing
Agreement, the Administration Agreement and the Guarantee Agreements.
(iii) The execution and delivery of the Trust Agreement, the Sale
and Servicing Agreement and the Supplemental Sale and Servicing
Agreement and, on behalf of the Trust, of the Indenture, the Sale and
Servicing Agreement, the Supplemental Sale and Servicing Agreement, the
Administration Agreement and the Guarantee Agreements, and the
performance by the Eligible Lender Trustee of its obligations under the
Trust Agreement, the Indenture, the Sale and Servicing Agreement, The
Supplemental sale and Servicing Agreement, the Administration Agreement
and the Guarantee Agreements have been duly authorized by all necessary
action of the Eligible Lender Trustee and each has been duly executed
and delivered by the Eligible Lender Trustee.
<PAGE> 21
21
(iv) The Trust Agreement, the Sale and Servicing Agreement, the
Supplemental Sale and Servicing Agreement and the Administration
Agreement constitute valid and binding obligations of the Eligible
Lender Trustee enforceable against the Eligible Lender Trustee
in accordance with their terms.
(v) The execution and delivery by the Eligible Lender Trustee
of the Trust Agreement, the Sale and Servicing Agreement and the
Supplemental Sale and Servicing Agreement and, on behalf of the Trust,
of the Indenture, the Sale and Servicing Agreement, the Supplemental
Sale and Servicing Agreement, the Administration Agreement and the
Guarantee Agreements do not require any consent, approval or
authorization of, or any registration or filing with, any applicable
governmental authority.
(vi) Each of the Notes has been duly executed and delivered by the
Eligible Lender Trustee, on behalf of the Trust. Each of the
Certificates has been duly executed and delivered by the Eligible
Lender Trustee, as eligible lender trustee and authenticating agent.
(vii) Neither the consummation by the Eligible Lender Trustee of the
transactions contemplated in the Sale and Servicing Agreement, the
Supplemental Sale and Servicing Agreement, the Indenture, the Trust
Agreement or the Administration Agreement nor the fulfillment of the
terms thereof by the Eligible Lender Trustee will conflict with, result
in a breach or violation of, or constitute a default under any law or
the charter, by-laws or other organizational documents of the Eligible
Lender Trustee or the terms of any indenture or other agreement or
instrument known to such counsel and to which the Eligible Lender
Trustee or any of its subsidiaries is a party or is bound or any
judgment, order or decree known to such counsel to be applicable to the
Eligible Lender Trustee or any of its subsidiaries of any court,
regulatory body, administrative agency, governmental body or arbitrator
having jurisdiction over the Eligible Lender Trustee or any of its
subsidiaries.
(viii) There are no actions, suits or proceedings pending or, to the
best of such counsel's knowledge after due inquiry, threatened against
the Eligible Lender Trustee (as eligible lender trustee under the
<PAGE> 22
22
Trust Agreement or in its individual capacity) before or by any
governmental authority that might materially and adversely affect the
performance by the Eligible Lender Trustee of its obligations under, or
the validity or enforceability of, the Trust Agreement, the Sale and
Servicing Agreement, the Supplemental Sale and Servicing Agreement.
(ix) The execution, delivery and performance by the Eligible Lender
Trustee of the Sale and Servicing Agreement, the Supplemental Sale and
Servicing Agreement, the Indenture, the Trust Agreement, the
Administration Agreement or any Guarantee Agreement will not subject
any of the property or assets of the Trust or any portion thereof, to
any lien created by or arising under the Eligible Lender Trustee that
are unrelated to the transactions contemplated in such agreements.
(p) The Representative shall have received certificates dated
the Closing Date of any two of the Chairman of the Board, the President, any
Executive Vice President, Senior Vice President or Vice President, the
Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the
principal financial officer or the principal accounting officer of each the
Seller and the Servicer in which such officers shall state that, to the best of
their knowledge after reasonable investigation, (i) the representations and
warranties of the Seller or the Servicer, as the case may be, contained in the
Trust Agreement, the Sale and Servicing Agreement and the Supplemental Sale and
Servicing Agreement, as applicable, are true and correct in all material
respects, that the Seller or the Servicer, as the case may be, has complied with
all agreements and satisfied all conditions on its part to be performed or
satisfied under such agreements at or prior to the Closing Date, in the case of
the certificate from the Seller only, that no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are contemplated by the Commission, and
(ii) since June 30, 1995, except as may be disclosed in the Prospectus or in
such certificate, no material adverse change, or any development involving a
prospective material adverse change, in or affecting particularly the business
or properties of the Trust, the Seller or the Servicer, as applicable, has
occurred.
<PAGE> 23
23
(q) The Representative shall have received evidence
satisfactory to it that, on or before the Closing Date, UCC-1 financing
statements have been or are being filed in the office of the Secretary of State
of the States of Ohio and New York and the Commonwealth of Pennsylvania
reflecting the transfer of the interest of the Seller in the Financed Student
Loans to the Eligible Lender Trustee on behalf of the Trust and the proceeds
thereof to the Trust and the grant of the security interest by the Trust in the
Financed Student Loans and the proceeds thereof to the Indenture Trustee.
(r) The Notes shall be rated at least "AAA" by Standard and
Poor's Corporation and at least "Aaa" by Moody's Investors Service, Inc., and
neither corporation shall have placed the Notes under surveillance or review
with possible negative implications.
(r) The issuance of the Notes and the Certificates shall not
have resulted in a reduction or withdrawal by any Rating Agency of the current
rating of any outstanding securities issued or originated by the Seller or any
of its affiliates.
(s) On the Closing Date, $_____________ aggregate principal
amount of the Certificates shall have been issued and sold.
The Seller will provide or cause to be provided to the
Representative such conformed copies of such of the foregoing opinions,
certificates, letters and documents as the Representative reasonably requests.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Seller will
indemnify and hold each Underwriter harmless 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 any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus or any amendment or supplement
thereto or any related preliminary prospectus, 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
<PAGE> 24
24
Underwriter in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; PROVIDED, HOWEVER,
that the Seller will 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 in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to the Seller by any Underwriter through the
Representative specifically for use therein.
(b) Each Underwriter will severally and not jointly indemnify
and hold harmless the Seller against any losses, claims, damages or liabilities
to which the Seller 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 any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, the Prospectus or
any amendment or supplement thereto or any related preliminary prospectus, or
arise out of or are based upon the omission or the 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 reliance upon and in conformity with written
information relating to such Underwriter furnished to the Seller by such
Underwriter through the Representative specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by the Seller in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a) or (b) above. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with
<PAGE> 25
25
any other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party (who shall not, except with
the consent of the indemnified party, 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 and approval by the indemnified party
of the counsel appointed by the indemnifying party, the indemnifying party will
not be liable to such indemnified party under this Section for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation. In no
event shall the indemnifying party be liable for fees and expenses for more than
one counsel separate from their own counsel for all indemnified parties in
connection with any one action or related actions in the same jurisdiction
arising out of the same general allegations or circumstances unless any such
indemnified party shall have been advised by such counsel that there may be one
or more legal defenses available to it which are different from or additional to
or in conflict with those available to the other indemnified parties and in the
reasonable judgment of such counsel it is advisable for such indemnified party
to employ separate counsel. An indemnifying party will not, without the prior
written consent of the indemnified party, settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnifying party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Seller on the one hand and the Underwriters on the other from the offering
of the Notes or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
<PAGE> 26
26
only the relative benefits referred to in clause (i) above but also the relative
fault of the Seller on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Seller on the one hand and
the Underwriters on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received by
the Seller bear to the total underwriting discounts and commissions received by
the 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 Seller or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of 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 action or claim which is
the subject of this subsection (d). 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 Notes 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, except as may be provided in any agreement among the Underwriters
relating to the offering of the Notes. 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 in this subsection (d) to
contribute are several in proportion their respective underwriting obligations
and not joint.
(e) The obligations of the Seller under this Section shall be
in addition to any liability which the Seller 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 shall be
<PAGE> 27
27
in addition to any liability which the respective Underwriters may otherwise
have and shall extend, upon the same terms and conditions, to each director of
the Seller, to each officer of the Seller who has signed the Registration
Statement and to each person, if any, who controls the Seller within the meaning
of the Act.
8. SURVIVAL OF REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of the
Seller or its officers and of the several Underwriters set forth in or made
pursuant to this Agreement or contained in certificates of officers of the
Seller submitted pursuant hereto shall remain operative and in full force and
effect, regardless of any investigation or statement as to the results thereof,
made by or on behalf of any Underwriter, the Seller or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Notes. If for any reason the purchase of
the Notes by the Underwriters is not consummated, the Seller shall remain
responsible for the expenses to be paid or reimbursed by the Seller pursuant to
Section 5 and the respective obligations of the Seller and the Underwriters
pursuant to Section 7 shall remain in effect. If for any reason the purchase of
the Notes by the Underwriters is not consummated (other than because of a
failure to satisfy the conditions set forth in items (iii), (v) and (vi) of
Section 6(d)), the Seller will reimburse the Underwriters for all out-of-pocket
expenses (including fees and disbursements of counsel) reasonably incurred by
them in connection with the offering of the Notes.
9. NOTICES. All communications hereunder will be in writing
and, if sent to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to the Representative at Park Avenue Plaza, New York, N.Y. 10055,
Attention: Investment Banking Department--Transactions Advisory Group; if sent
to the Seller, will be mailed, delivered or telegraphed and confirmed to it at
Key Bank USA, National Association, 5000 Tiedeman Road, Brooklyn, OH 44144,
Attention: Senior Vice President, Education Lending; PROVIDED, HOWEVER, that any
notice to an Underwriter pursuant to Section 7 will be mailed, delivered or
telegraphed and confirmed to such Underwriter. Any such notice will take effect
at the time of receipt.
10. SUCCESSORS. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their
<PAGE> 28
28
respective successors and the officers and directors and controlling persons
referred to in Section 7, and no other person will have any right or obligations
hereunder.
11. REPRESENTATION OF UNDERWRITERS. The Representative shall
act for the several Underwriters in connection with this financing, and any
action under this Agreement taken by the Representative will be binding upon all
the Underwriters.
12. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all such counterparts shall together constitute one and the same Agreement.
<PAGE> 29
29
13. APPLICABLE LAW. This Agreement will be governed by, and
construed in accordance with, the laws of the State of New York.
If the foregoing is in accordance with the understanding of
the Representative of our agreement, kindly sign and return to us one of the
counterparts hereof, whereupon it will become a binding agreement between the
Seller and the several Underwriters in accordance with its terms.
Very truly yours,
KEY BANK USA, NATIONAL
ASSOCIATION
by
---------------------------
Name:
Title:
The foregoing Note
Underwriting Agreement is
hereby confirmed and
accepted as of the date
first written above.
CS FIRST BOSTON CORPORATION,
by
-----------------------------
Name:
Title:
Acting on behalf of itself and as
of Representative of the several
Underwriters.
<PAGE> 30
SCHEDULE I
<TABLE>
Principal Amount
UNDERWRITER OF NOTES
- ----------- ----------------
<S> <C>
CS First Boston Corporation............................................ $__________
Key Capital Markets, Inc............................................... $__________
Total............................................................. $
===========
</TABLE>
<PAGE> 31
APPENDIX A
[See Appendix A to Sale and Servicing Agreement]
<PAGE> 32
EXHIBIT A
[Society opinion]
<PAGE> 33
EXHIBIT B
[Jones Day opinions]
<PAGE> 1
Exhibit 1(b)
KEYCORP STUDENT LOAN TRUST 1996-A
$__________
FLOATING RATE ASSET BACKED CERTIFICATES
KEY BANK USA, NATIONAL ASSOCIATION
(SELLER)
CERTIFICATE UNDERWRITING AGREEMENT
----------------------------------
__________, 1996
CS First Boston Corporation
As Representative of the
several Underwriters
Park Avenue Plaza
New York, N.Y. 10055
Dear Sirs:
1. INTRODUCTORY. Society National Bank, a national banking
association (the "Seller"), proposes to cause KeyCorp Student Loan Trust 1996-A
(the "Trust") to issue and sell $__________ principal amount of its Floating
Rate Asset Backed Certificates (the "Certificates") to the underwriters named in
Schedule I hereto (the "Underwriters"), for whom you (the "Representative") are
acting as representative. The assets of the Trust include, among other things, a
pool of law school student loans (the "Initial Financed Student Loans") and
certain monies due thereunder on and after _________, 1996 (the "Cutoff Date").
Such Initial Financed Student Loans were sold to the Eligible Lender Trustee (as
defined below) on behalf of the Trust by the Seller and are to be serviced by
Pennsylvania Higher Education Assistance Agency, an agency of the Commonwealth
of Pennsylvania ("PHEAA" or the "Servicer"). The Certificates will be issued
pursuant to the Amended and Restated Trust Agreement to be dated as of
_________, 1996 (as amended and supplemented from time to time, the "Trust
Agreement"), between the Seller, as Depositor, and The First National Bank of
Chicago, a national banking association (the "Eligible Lender Trustee").
Simultaneously with the issuance and sale of the Certificates
as contemplated herein, the Trust will issue $___________ principal amount of
its Floating Rate Asset Backed Notes (the "Notes"). The Notes will be sold
pursuant to an underwriting agreement dated the date hereof (the "Note
Underwriting Agreement") between the Seller and the Underwriters.
<PAGE> 2
2
Capitalized terms used and not otherwise defined herein shall
have the meanings given them in Appendix A hereto.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
(a) The Seller represents and warrants to and agrees with the several
Underwriters that:
(i) A registration statement (No. 333-4274), including a form
of prospectus, on Form S-1 relating to the Notes, has been filed with
the Securities and Exchange Commission (the "Commission") and either
(A) has been declared effective under the Securities Act of 1933, as
amended (the "Act"), and is not proposed to be amended or (B) is
proposed to be amended by amendment or post-effective amendment. If the
Seller does not propose to amend such registration statement and if any
post-effective amendment to such registration statement has been filed
with the Commission prior to the execution and delivery of this
Agreement, the most recent such amendment has been declared effective
by the Commission. For purposes of this Agreement, "Effective Time"
means (x) if the Seller has advised the Representative that it does not
propose to amend such registration statement, the date and time as of
which such registration statement, or the most recent post-effective
amendment thereto (if any) filed prior to the execution and delivery of
this Agreement, was declared effective by the Commission, or (y) if the
Seller has advised the Representative that it proposes to file an
amendment or post-effective amendment to such registration statement,
the date and time as of which such registration statement, as amended
by such amendment or post-effective amendment, as the case may be, is
declared effective by the Commission. "Effective Date" means the date
of the Effective Time. Such registration statement, as amended at the
Effective Time, including all information (if any) deemed to be a part
of such registration statement as of the Effective Time pursuant to
Rule 430A(b) under the Act, and including the exhibits thereto and any
material incorporated by reference therein, is hereinafter referred to
as the "Registration Statement", and the form of prospectus relating to
the Certificates, as first filed with the Commission pursuant to and in
accordance with Rule 424(b) ("Rule 424(b)") under the Act or, if no
such filing is required, as included in the Registration Statement at
the Effective Date, is hereinafter referred to as the "Prospectus".
<PAGE> 3
3
(ii) If the Effective Time is prior to the execution and
delivery of this Agreement: (A) on the Effective Date, the Registration
Statement conformed in all material respects to the requirements of the
Act, the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), and the rules and regulations of the Commission thereunder (the
"Rules and Regulations") and did not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading, (B) on the date of this Agreement, the Registration
Statement conforms, and at the time of filing of the Prospectus
pursuant to Rule 424(b), the Registration Statement and the Prospectus
will conform, in all material respects to the requirements of the Act,
the Trust Indenture Act and the Rules and Regulations, (C) on the
Effective Date, the Registration Statement did not and will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading and (D) on the Effective Date, the
Prospectus, if not filed pursuant to Rule 424(b), did not or will not,
and on the date of any filing pursuant to Rule 424(b) and on the
Closing Date, the Prospectus will not, include any untrue statement of
a material fact or omit to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which
they are made, not misleading. If the Effective Time is subsequent to
the execution and delivery of this Agreement: (1) on the Effective
Date, the Registration Statement and the Prospectus will conform in all
material respects to the requirements of the Act, the Trust Indenture
Act and the Rules and Regulations, (2) on the Effective Date, the
Registration Statement will not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading and (3) on the Effective Date, at the time of filing of the
Prospectus pursuant to Rule 424(b) and at the Closing Date, the
Prospectus will not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The two
preceding sentences do not apply to statements in or omissions from the
Registration Statement or Prospectus based upon written information
furnished to the Seller by any Underwriter
<PAGE> 4
4
through the Representative specifically for use therein. As of the
Closing Date (as defined below), the Seller's representations and
warranties in the Sale and Servicing Agreement, the Supplemental Sale
and Servicing Agreement, the Trust Agreement and the Guarantee
Agreement to which TERI is a party will be true and correct in all
material respects.
(iii) This Agreement has been duly authorized, executed and
delivered by the Seller. The execution, delivery and performance of
this Agreement and the issuance and sale of the Certificates and
compliance with the terms and provisions hereof will not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, any agreement or instrument to which the
Seller is a party or by which the Seller is bound or to which any of
the properties of the Seller is subject which could reasonably be
expected to have a material adverse effect on the transactions
contemplated herein. The Seller has full corporate power and authority
to cause the Trust to authorize, issue and sell the Certificates, all
as contemplated by this Agreement.
(iv) Other than as contemplated by this Agreement or as
disclosed in the Prospectus, there is no broker, finder or other party
that is entitled to receive from the Seller or any of its subsidiaries
any brokerage or finder's fee or other fee or commission as a result of
any of the transactions contemplated by this Agreement.
(v) All legal or governmental proceedings, contracts or
documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement have been so described or filed as required.
(vi) The Seller's assignment and delivery of the Initial
Financed Student Loans to the Eligible Lender Trustee on behalf of the
Trust as of the Closing Date will vest in the Eligible Lender Trustee
on behalf of the Trust all the Seller's right, title and interest
therein, or will result in a first priority perfected security interest
therein, in either case subject to no prior lien, mortgage, security
interest, pledge, adverse claim, charge or other encumbrance.
(vii) The Trust's assignment of the Initial Financed Student Loans
to the Indenture Trustee pursuant to the Indenture will vest in the
Indenture
<PAGE> 5
5
Trustee, for the benefit of the Noteholders, a first priority perfected
security interest therein, subject to no prior lien, mortgage, security
interest, pledge, adverse claim, charge or other encumbrance.
(b) The Seller hereby agrees with the Underwriters that, for
all purposes of this Agreement, the only information furnished to the Seller by
the Underwriters through the Representative specifically for use in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
or any related preliminary prospectus, are the statements with respect to
stabilization on the second page of, and the statements under the caption
"Underwriting" in, the preliminary prospectus and the Prospectus.
3. PURCHASE, SALE AND DELIVERY OF THE CERTIFICATES. On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Seller agrees to cause
the Trust to sell to the Underwriters, and the Underwriters agree, severally and
not jointly, to purchase from the Trust, at a purchase price of _____% of the
principal amount of the Notes, the respective principal amounts of Certificates
set forth opposite the names of the Underwriters in Schedule I hereto. In
addition, the Seller agrees to pay CS First Boston Corporation a structuring fee
equal to $_______.
The Seller will deliver the Certificates to the Representative
for the respective accounts of the Underwriters, against payment of the purchase
price to or upon the order of the Seller by wire transfer or check in Federal
(same day) Funds, at the office of Stroock & Stroock & Lavan, 7 Hanover Square,
New York, New York 10004, on __________, 1996, or at such other time not later
than seven full business days thereafter as the Representative and the Seller
determine, such time being herein referred to as the "Closing Date". The
Certificates to be so delivered will be initially represented by one or more
Certificates registered in the name of Cede & Co., the nominee of The Depository
Trust Company ("DTC"). The interests of beneficial owners of the Notes will be
represented by book entries on the records of DTC and participating members
thereof. Definitive Certificates will be available only under the limited
circumstances specified in the Trust Agreement.
4. OFFERING BY THE UNDERWRITERS. It is understood that,
after the Registration Statement becomes effective, the several Underwriters
propose to offer the
<PAGE> 6
6
Certificates for sale to the public (which may include selected dealers) as set
forth in the Prospectus.
5. COVENANTS OF THE SELLER. The Seller covenants
and agrees with the several Underwriters that:
(a) If the Effective Time is prior to the execution and
delivery of this Agreement, the Seller will file the Prospectus, properly
completed, with the Commission pursuant to and in accordance with subparagraph
(1) (or, if applicable and if consented to by the Representative, subparagraph
(4)) of Rule 424(b) not later than the earlier of (i) the second business day
following the execution and delivery of this Agreement and (ii) the fifth
business day after the Effective Date. The Seller will advise the Representative
promptly of any such filing pursuant to Rule 424(b).
(b) The Seller will advise the Representative promptly of any
proposal to amend or supplement the registration statement as filed or the
related prospectus or the Registration Statement or the Prospectus and will not
effect such amendment or supplementation without the consent of the
Representative prior to the Closing Date, and thereafter will not effect any
such amendment or supplementation to which the Representative reasonably
objects; the Seller will also advise the Representative promptly of any request
by the Commission for any amendment of or supplement to the Registration
Statement or the Prospectus or for any additional information; and the Seller
will also advise the Representative promptly of the effectiveness of the
Registration Statement (if the Effective Time is subsequent to the execution of
this Agreement) and of any amendment or supplement to the Registration Statement
or the Prospectus and of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the institution or
threat of any proceeding for that purpose and the Seller will use its best
efforts to prevent the issuance of any such stop order and to obtain as soon as
possible the lifting of any issued stop order.
(c) If, at any time when a prospectus relating to the
Certificates is required to be delivered under the Act, any event occurs as a
result of which the Prospectus as then amended or supplemented would contain an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or if it is necessary at any time to amend or
supplement the Prospec-
<PAGE> 7
7
tus to comply with the Act, the Seller promptly will prepare and file, or cause
to be prepared and filed, with the Commission an amendment or supplement which
will correct such statement or omission, or an amendment or supplement which
will effect such compliance. Neither the consent of the Representative to, nor
the delivery of the several Underwriters of, any such amendment or supplement
shall constitute a waiver of any of the conditions set forth in Section 6.
(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Seller will cause the Trust to make
generally available to Certificateholders an earnings statement of the Trust
covering a period of at least twelve months beginning after the Effective Date
which will satisfy the provisions of Section 11(a) of the Act and Rule 158 of
the applicable Rules and Regulations thereunder. For the purpose of the
preceding sentence, "Availability Date" means the 45th day after the end of the
fourth fiscal quarter following the fiscal quarter that includes the Effective
Date, except that, if such fourth fiscal quarter is the last quarter of the
Trust's fiscal year, "Availability Date" means the 90th day after the end of
such fourth fiscal quarter.
(e) The Seller will furnish to the Representative copies of
the Registration Statement (two of which will be signed and will include all
exhibits), each related preliminary prospectus, the Prospectus and all
amendments and supplements to such documents, in each case as soon as available
and in such quantities as the Representative reasonably requests.
(f) The Seller will arrange for the qualification of the
Certificates for sale under the laws of the States of New York and California
and will continue such qualifications in effect so long as required for the
distribution.
(g) For a period from the date of this Agreement until the
retirement of the Certificates, or until such time as the several Underwriters
shall cease to maintain a secondary market in the Certificates, whichever occurs
first, the Seller will deliver to the Representative the annual statements of
compliance and the annual independent certified public accountants' reports
furnished to the Indenture Trustee or the Eligible Lender Trustee pursuant to
the Sale and Servicing Agreement, as soon as such statements and reports are
furnished to the Indenture Trustee or the Eligible Lender Trustee.
<PAGE> 8
8
(h) So long as any of the Certificates is outstanding, the
Seller will furnish to the Representative (i) as soon as practicable after the
end of the fiscal year all documents required to be distributed to
Certificateholders or filed with the Commission on behalf of the Trust pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
order of the Commission thereunder and (ii) from time to time, any other
information concerning the Seller as the Representative may reasonably request
only insofar as such information reasonably relates to the Registration
Statement or the transactions contemplated by the Basic Documents.
(i) On or before the Closing Date, the Seller shall mark its
accounting and other records, if any, relating to the Initial Financed Student
Loans and shall cause the Servicer to mark the computer records of the Servicer
relating to the Initial Financed Student Loans to show the absolute ownership by
the Eligible Lender Trustee on behalf of the Trust of the Initial Financed
Student Loans, and from and after the Closing Date neither the Seller nor the
Servicer shall take any action inconsistent with the ownership by the Eligible
Lender Trustee on behalf of the Trust of such Initial Financed Student Loans,
other than as permitted by the Sale and Servicing Agreement.
(j) To the extent, if any, that the rating provided with
respect to the Certificates by the rating agency or agencies that initially rate
the Certificates is conditional upon the furnishing of documents or the taking
of any other actions by the Seller agreed upon on or prior to the Closing Date,
the Seller shall furnish such documents and take any such other actions. A copy
of any such document shall be provided to the Representative at the time it is
delivered to the rating agencies.
(k) For the period beginning on the date of this Agreement and
ending 90 days after the Closing Date, neither the Seller nor any trust
originated, directly or indirectly, by the Seller will, without the prior
written consent of the Representative, offer to sell or sell notes (other than
the Notes) collateralized by, or certificates (other than the Certificates)
evidencing an ownership interest in, student loans; PROVIDED, HOWEVER, that this
shall not be construed to prevent the sale of student loans by the Seller.
(l) The Seller will apply the net proceeds of the offering and
the sale of the Certificates and the Notes that it receives in the manner set
forth in the Prospectus under the caption "Use of Proceeds".
<PAGE> 9
9
(m) The Seller will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the printing
and filing of the documents (including the Registration Statement and
Prospectus) (ii) the preparation, issuance and delivery of the Certificates to
the Representative, (iii) the fees and disbursements of the Seller's counsel and
accountants, (iv) the qualification of the Certificates under securities laws in
accordance with the provisions of Section 5(f), including filing fees and the
fees and disbursements of counsel for the Representative in connection therewith
and in connection with the preparation of any blue sky or legal investment
survey, if any is requested, (v) the printing and delivery to the Representative
of copies of the Registration Statement as originally filed and of each
amendment thereto, (vi) the printing and delivery to the Representative of
copies of any blue sky or legal investment survey prepared in connection with
the Certificates, (vii) any fees charged by rating agencies for the rating of
the Certificates, (viii) the fees and expenses, if any, incurred with respect to
any filing with the National Association of Securities Dealers, Inc. and (ix)
the fees and expenses of Jones, Day, Reavis & Pogue in its role as counsel to
the Trust incurred as a result of providing the opinions required by Section
6(h) hereof.
6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Certificates
will be subject to the accuracy of the representations and warranties on the
part of the Seller herein, to the accuracy of the written statements of officers
of the Seller made pursuant to the provisions of this Section, to the
performance by the Seller of its obligations hereunder and to the following
additional conditions precedent:
(a) If the Effective Time is not prior to the execution and
delivery of this Agreement, the Effective Time shall have occurred not later
than 6:00 p.m., New York City time, on the date of this Agreement or such later
time or date as shall have been consented to by the Representative.
(b) If the Effective Time is prior to the execution and
delivery of this Agreement, the Prospectus and any supplements thereto shall
have been filed with the Commission in accordance with the Rules and Regulations
and Section 5(a) hereof. Prior to the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the knowledge of
<PAGE> 10
10
the Seller or the Representative, shall be contemplated by the Commission.
(c) The Representative shall have received a letter, dated the
date of delivery thereof (which, if the Effective Time is prior to the execution
and delivery of this Agreement, shall be on or prior to the date of this
Agreement or, if the Effective Time is subsequent to the execution and delivery
of this Agreement, shall be prior to the filing of the amendment or
post-effective amendment to the Registration Statement to be filed shortly prior
to the Effective Time), of (i) Ernst & Young on behalf of the Seller and (ii)
KPMG Peat Marwick with respect to certain agreed-upon procedures with respect to
the Program, in each case confirming that such accountants are independent
public accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder, and substantially in the form of the drafts to
which the Representative has previously agreed and otherwise in form and
substance reasonably satisfactory to the Representative and its counsel.
(d) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any development
involving a prospective change, in or affecting particularly the business or
properties of the Trust, the Seller, the Servicer or KeyCorp which, in the
judgment of the Representative, materially impairs the investment quality of the
Certificates or makes it impractical or inadvisable to market the Certificates;
(ii) any downgrading in the rating of any debt securities of the Seller or
KeyCorp by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act), or any public announcement
that any such organization has under surveillance or review its rating of any
debt securities of the Seller or KeyCorp (other than an announcement with
positive implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (iii) any suspension or limitation of trading in
securities generally on the New York Stock Exchange, or any setting of minimum
prices for trading on such exchange; (iv) any suspension of trading of any
securities of the Seller or KeyCorp on any exchange or in the over-the-counter
market; (v) any banking moratorium declared by Federal or New York authorities;
or (vi) any outbreak or escalation of major hostilities in which the United
States is involved, any declaration of war by Congress, or any other substantial
national or international calamity or emergency if, in the judgment of the
Representative, the effect of any such outbreak, escalation,
<PAGE> 11
11
declaration, calamity, or emergency makes it impractical or inadvisable to
proceed with completion of the sale of and payment for the Certificates.
(e) The Representative shall have received an opinion of
Forrest F. Stanley, Esq., General Counsel of Key Bank USA, National Association
("Key Bank"), as counsel for Key Bank, as the Seller and the Administrator,
dated the Closing Date, in the form attached hereto as Exhibit A, or as is
otherwise satisfactory in form and substance to the Representative and its
counsel.
(f) The Representative shall have received an opinion of
Jones, Day, Reavis & Pogue, counsel to the Seller, dated the Closing Date, in
the form attached hereto as Exhibit B, or as is otherwise satisfactory in form
and substance to the Representative and its counsel.
(g) The Representative shall have received an opinion of
Jones, Day, Reavis & Pogue, counsel to the Seller, dated the Closing Date and
satisfactory in form and substance to the Representative and its counsel, to the
effect that the statements in the Prospectus under the headings "Summary of
Terms--Tax Considerations" and "Material Tax Consequences--State and Local
Income and Franchise Tax Consequences with Respect to the Certificates"
accurately describe the material Pennsylvania tax consequences to holders of the
Certificates.
(h) The Representative shall have received an opinion
addressed to the several Underwriters of Jones, Day, Reavis & Pogue, in its
capacity as Federal tax and ERISA counsel for the Trust, to the effect that the
statements in the Prospectus under the headings "Summary of Terms--Tax
Considerations" and "Material Tax Consequences--Material Federal Tax
Consequences with Respect to the Certificates" accurately describe the material
Federal income tax consequences to holders of the Certificates, and the
statements in the Prospectus under the headings "Summary of Terms--ERISA
Considerations" and "ERISA Considerations--The Certificates", to the extent that
they constitute statements of matters of law or legal conclusions with respect
thereto, have been prepared or reviewed by such counsel and accurately describe
the material consequences to holders of the Certificates under ERISA. Jones,
Day, Reavis & Pogue, in its capacity as special counsel to the Trust, shall have
delivered an opinion with respect to the characterization of the transfer of the
Initial Financed Student Loans.
<PAGE> 12
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(i) The Representative shall have received an opinion
addressed to the several Underwriters of Stroock & Stroock & Lavan, in its
capacity as special counsel to the several Underwriters, dated the Closing Date,
with respect to the validity of the Certificates and the Notes and such other
related matters as the Representative shall reasonably require and the Seller
shall have furnished or caused to be furnished to such counsel such documents as
they may reasonably request for the purpose of enabling them to pass upon such
matters.
(j) The Representative shall have received an opinion of Dean
Blakey & Moskowitz, special student loan counsel to the several Underwriters
and, in the case of clause (iii) below, special student loan counsel to the
Eligible Lender Trustee, dated the Closing Date, satisfactory in form and
substance to the Representative, to the effect that:
(i) the agreements implementing the Program, (including the
Coordination Agreements (as such term is defined in the Supplemental
Sale and Servicing Agreement)) and the Basic Documents, and the
transactions contemplated by the Basic Documents, conform in all
material respects to the applicable requirements of the Higher
Education Act, and that, upon the due authorization, execution and
delivery of the Basic Documents and the consummation of such
transactions, the Financed Federal Loans, legal title to which will be
held by the Eligible Lender Trustee on behalf of the Trust, will
qualify, subject to compliance with all applicable origination and
servicing requirements, for all applicable federal assistance payments,
including federal reinsurance and federal interest subsidies and
special allowance payments;
(ii) such counsel has examined the Registration Statement and
the Prospectus, and nothing has come to such counsel's attention that
would lead such counsel to believe that, solely with respect to the
Higher Education Act and the student loan business, the Registration
Statement or the Prospectus or any amendment or supplement thereto as
of the respective dates thereof or on the Closing Date contains an
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein not misleading; and
<PAGE> 13
13
(iii) the Eligible Lender Trustee is an "eligible lender" as
such term is defined in Section 435(d) of the Higher Education Act for
purposes of holding legal title to the Financed Federal Loans.
(k) The Representative shall have received an opinion of
counsel to PHEAA, dated the Closing Date and satisfactory in form and substance
to the Representative and its counsel, to the effect that:
(i) PHEAA has been duly organized and is validly existing as
an agency of the Commonwealth of Pennsylvania in good standing under
the laws thereof with full power and authority (corporate and other) to
own its properties and conduct its business, as presently conducted by
it, and to enter into and perform its obligations under the Sale and
Servicing Agreement, the Supplemental Sale and Servicing Agreement and
the Guarantee Agreement (and the agreements with the Department under
Section 428 of the Higher Education Act to the extent relevant to
PHEAA's obligations under such Guarantee Agreement) to which it is a
party, and had at all relevant times, and now has, the power, authority
and legal right to service the Financed Student Loans, to guarantee the
Financed Federal Loans covered by such Guarantee Agreement and to
receive, subject to compliance with all applicable conditions,
restrictions and limitations of the Higher Education Act, reinsurance
payments from the Department with respect to claims paid by it on such
Financed Federal Loans.
(ii) PHEAA is duly qualified to do business and is in good
standing, and has obtained all necessary licenses and approvals in each
jurisdiction in which failure to qualify or to obtain such license or
approval would render any Financed Student Loan or PHEAA's obligation
under its Guarantee Agreement unenforceable by or on behalf of the
Trust.
(iii) Each of the Sale and Servicing Agreement, the Supplemental
Sale and Servicing Agreement and the Guarantee Agreement (and the
agreements with the Department under Section 428 of the Higher
Education Act to the extent relevant to PHEAA's obligations under such
Guarantee Agreement) to which PHEAA is a party has been duly
authorized, executed and delivered by PHEAA and is the legal, valid and
binding obligation of PHEAA enforceable against PHEAA in accordance
with its terms, notwithstanding the existence of any doctrine of
<PAGE> 14
14
sovereign immunity except (x) the enforceability thereof may be subject
to bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights and (y)
the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(iv) Neither the execution and delivery by PHEAA of the Sale and
Servicing Agreement, the Supplemental Sale and Servicing Agreement or
the Guarantee Agreement to which it is a party, nor the consummation by
PHEAA of the transactions contemplated therein nor the fulfillment of
the terms thereof by PHEAA will conflict with, result in a breach,
violation or acceleration of, or constitute a default under, any term
or provision of the certificate of incorporation or by-laws of PHEAA or
of any indenture or other agreement or instrument to which PHEAA is a
party or by which PHEAA is bound, or result in a violation of or
contravene the terms of any statute, order or regulation applicable to
PHEAA of any court, regulatory body, administrative agency or
governmental body having jurisdiction over PHEAA.
(v) There are no actions, proceedings or investigations
pending or, to the best of such counsel's knowledge after due inquiry,
threatened against PHEAA before or by any governmental authority that
might materially and adversely affect the performance by PHEAA of its
obligations under, or the validity or enforceability of, the Sale and
Servicing Agreement, the Supplemental Sale and Servicing Agreement or
the Guarantee Agreement (or the agreements with the Department under
Section 428 of the Higher Education Act to the extent relevant to
PHEAA's obligations under such Guarantee Agreement) to which it is a
party.
(vi) Nothing has come to such counsel's attention that would
lead such counsel to believe that the representations and warranties of
the Servicer contained in the Sale and Servicing Agreement and the
Supplemental Sale and Servicing Agreement are other
than as stated therein.
(l) The Representative shall have received an opinion of
counsel to the Massachusetts Higher Education Assistance Corporation, now doing
business as American Student Assistance Corporation, a Massachusetts non-profit
<PAGE> 15
15
corporation ("ASA"), dated the Closing Date and satisfactory in form and
substance to the Representative and its counsel, to the effect that:
(i) ASA has been duly incorporated and is validly existing as
a non-profit corporation in good standing under the laws of the
Commonwealth of Massachusetts with full power and authority (corporate
and other) to own its properties and conduct its business, as presently
conducted by it, and to enter into and perform its obligations under
the Guarantee Agreement (and the agreements with the Department under
Section 428 of the Higher Education Act to the extent relevant to ASA's
obligations under such Guarantee Agreement) to which it is a party, and
had at all relevant times, and now has, the power, authority and legal
right to guarantee the Financed Federal Loans covered by such Guarantee
Agreement and to receive, subject to compliance with all applicable
conditions, restrictions and limitations of the Higher Education Act,
reinsurance payments from the Department with respect to claims paid by
it on such Financed Federal Loans.
(ii) ASA is duly qualified to do business and is in good
standing, and has obtained all necessary licenses and approvals in each
jurisdiction in which failure to qualify or to obtain such license or
approval would render ASA's obligation under its Guarantee Agreement to
guarantee the Financed Federal Loans covered thereby unenforceable by
or on behalf of the Trust.
(iii) The Guarantee Agreement (and the agreements with the
Department under Section 428 of the Higher Education Act to the extent
relevant to ASA's obligations under such Guarantee Agreement) to which
ASA is a party has been duly authorized, executed and delivered by ASA
and is the legal, valid and binding obligation of ASA enforceable
against ASA in accordance with its terms, except (x) the enforceability
thereof may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights and (y) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(iv) Neither the execution and delivery by ASA of the Guarantee
Agreement to which it is a party, nor the
<PAGE> 16
16
consummation by ASA of the transactions contemplated therein nor the
fulfillment of the terms thereof by ASA will conflict with, result in a
breach, violation or acceleration of, or constitute a default under,
any term or provision of the certificate of incorporation or by-laws of
ASA or of any indenture or other agreement or instrument to which ASA
is a party or by which ASA is bound, or result in a violation of or
contravene the terms of any statute, order or regulation applicable to
ASA of any court, regulatory body, administrative agency or
governmental body having jurisdiction over ASA.
(v) There are no actions, proceedings or investigations
pending or, to the best of such counsel's knowledge after due inquiry,
threatened against ASA before or by any governmental authority that
might materially and adversely affect the performance by ASA of its
obligations under, or the validity or enforceability of, the Guarantee
Agreement (or the agreements with the Department under Section 428 of
the Higher Education Act to the extent relevant to ASA's obligations
under such Guarantee Agreement) to which it is a party.
(m) The Representative shall have received an opinion of
Kotin, Crabtree & Strong, counsel to The Education Resources Institute, Inc., a
Massachusetts non-profit corporation ("TERI"), dated the Closing Date and
satisfactory in form and substance to the Representative and its counsel, to the
effect that:
(i) TERI has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the Commonwealth of
Massachusetts with full power and authority (corporate and other) to
own its properties and conduct its business, as presently conducted by
it, and to enter into and perform its obligations under the Guarantee
Agreement to which it is a party, and had at all relevant times, and
now has, the power, authority and legal right to guarantee the Financed
Private Loans covered by such Guarantee Agreement.
(ii) TERI is duly qualified to do business and is in good
standing, and has obtained all necessary licenses and approvals in each
jurisdiction in which failure to qualify or to obtain such license or
approval would render TERI's obligation under its
<PAGE> 17
17
Guarantee Agreement to guarantee the Financed Private Loans
unenforceable by or on behalf of the Trust.
(iii) The Guarantee Agreement to which TERI is a party has been
duly authorized, executed and delivered by TERI and is the legal, valid
and binding obligation of TERI enforceable against TERI in accordance
with its terms, except (x) the enforceability thereof may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights and (y)
the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(iv) Neither the execution and delivery by TERI of the Guarantee
Agreement to which it is a party, nor the consummation by TERI of the
transactions contemplated therein nor the fulfillment of the terms
thereof by TERI will conflict with, result in a breach, violation or
acceleration of, or constitute a default under, any term or provision
of the certificate of incorporation or by-laws of TERI or of any
indenture or other agreement or instrument to which TERI is a party or
by which TERI is bound, or result in a violation of or contravene the
terms of any statute, order or regulation applicable to TERI of any
court, regulatory body, administrative agency or governmental body
having jurisdiction over TERI.
(v) There are no actions, proceedings or investigations
pending or, to the best of such counsel's knowledge after due inquiry,
threatened against TERI before or by any governmental authority that
might materially and adversely affect the performance by TERI of its
obligations under, or the validity or enforceability of, the Guarantee
Agreement to which it is a party.
(n) The Representative shall have received an opinion of
counsel to the Eligible Lender Trustee, dated the Closing Date and satisfactory
in form and substance to the Representative and its counsel, to the effect that:
(i) The Eligible Lender Trustee is a national banking
association duly incorporated or organized and validly existing under
the laws of the United States.
<PAGE> 18
18
(ii) The Eligible Lender Trustee has the full corporate trust power
to accept the office of eligible lender trustee under the Trust
Agreement and to enter into and perform its obligations under the Trust
Agreement, the Sale and Servicing Agreement, the Supplemental Sale and
Servicing Agreement and, on behalf of the Trust, under the Indenture,
the Sale and Servicing Agreement, the Supplemental Sale and Servicing
Agreement, the Administration Agreement and the Guarantee Agreements.
(iii) The execution and delivery of the Trust Agreement, the Sale
and Servicing Agreement and the Supplemental Sale and Servicing
Agreement and, on behalf of the Trust, of the Indenture, the Sale and
Servicing Agreement, the Supplemental Sale and Servicing Agreement, the
Administration Agreement and the Guarantee Agreements, and the
performance by the Eligible Lender Trustee of its obligations under the
Trust Agreement, the Indenture, the Sale and Servicing Agreement, The
Supplemental sale and Servicing Agreement, the Administration Agreement
and the Guarantee Agreements have been duly authorized by all necessary
action of the Eligible Lender Trustee and each has been duly executed
and delivered by the Eligible Lender Trustee.
(iv) The Trust Agreement, the Sale and Servicing Agreement, the
Supplemental Sale and Servicing Agreement and the Administration
Agreement constitute valid and binding obligations of the Eligible
Lender Trustee enforceable against the Eligible Lender Trustee
in accordance with their terms.
(v) The execution and delivery by the Eligible Lender Trustee
of the Trust Agreement, the Sale and Servicing Agreement and the
Supplemental Sale and Servicing Agreement and, on behalf of the Trust,
of the Indenture, the Sale and Servicing Agreement, the Supplemental
Sale and Servicing Agreement, the Administration Agreement and the
Guarantee Agreements do not require any consent, approval or
authorization of, or any registration or filing with, any applicable
governmental authority.
(vi) Each of the Certificates has been duly executed and delivered
by the Eligible Lender Trustee, as eligible lender trustee and
authenticating agent. Each of the Notes has been duly executed and
delivered by the Eligible Lender Trustee, on behalf of the Trust.
<PAGE> 19
19
(vii) Neither the consummation by the Eligible Lender Trustee of the
transactions contemplated in the Sale and Servicing Agreement, the
Supplemental Sale and Servicing Agreement, the Indenture, the Trust
Agreement or the Administration Agreement nor the fulfillment of the
terms thereof by the Eligible Lender Trustee will conflict with, result
in a breach or violation of, or constitute a default under any law or
the charter, by-laws or other organizational documents of the Eligible
Lender Trustee or the terms of any indenture or other agreement or
instrument known to such counsel and to which the Eligible Lender
Trustee or any of its subsidiaries is a party or is bound or any
judgment, order or decree known to such counsel to be applicable to the
Eligible Lender Trustee or any of its subsidiaries of any court,
regulatory body, administrative agency, governmental body or arbitrator
having jurisdiction over the Eligible Lender Trustee or any of its
subsidiaries.
(viii) There are no actions, suits or proceedings pending or, to the
best of such counsel's knowledge after due inquiry, threatened against
the Eligible Lender Trustee (as eligible lender trustee under the Trust
Agreement or in its individual capacity) before or by any governmental
authority that might materially and adversely affect the performance by
the Eligible Lender Trustee of its obligations under, or the validity
or enforceability of, the Trust Agreement, the Sale and Servicing
Agreement, the Supplemental Sale and Servicing Agreement.
(ix) The execution, delivery and performance by the Eligible Lender
Trustee of the Sale and Servicing Agreement, the Supplemental Sale and
Servicing Agreement, the Indenture, the Trust Agreement, the
Administration Agreement or any Guarantee Agreement will not subject
any of the property or assets of the Trust or any portion thereof, to
any lien created by or arising under the Eligible Lender Trustee that
are unrelated to the transactions contemplated in such agreements.
(o) The Representative shall have received certificates dated
the Closing Date of any two of the Chairman of the Board, the President, any
Executive Vice President, Senior Vice President or Vice President, the
Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the
principal financial officer or the principal accounting officer of each the
Seller and the
<PAGE> 20
20
Servicer in which such officers shall state that, to the best of their knowledge
after reasonable investigation, (i) the representations and warranties of the
Seller or the Servicer, as the case may be, contained in the Trust Agreement,
the Sale and Servicing Agreement and the Supplemental Sale and Servicing
Agreement, as applicable, are true and correct in all material respects, that
the Seller or the Servicer, as the case may be, has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied under such
agreements at or prior to the Closing Date, in the case of the certificate from
the Seller only, that no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are contemplated by the Commission, and (ii) since June 30,
1996, except as may be disclosed in the Prospectus or in such certificate, no
material adverse change, or any development involving a prospective material
adverse change, in or affecting particularly the business or properties of the
Trust, the Seller or the Servicer, as applicable, has occurred.
(p) The Representative shall have received evidence
satisfactory to it that, on or before the Closing Date, UCC-1 financing
statements have been or are being filed in the office of the Secretary of State
of the States of Ohio and New York and the Commonwealth of Pennsylvania
reflecting the transfer of the interest of the Seller in the Financed Student
Loans to the Eligible Lender Trustee on behalf of the Trust and the proceeds
thereof to the Trust and the grant of the security interest by the Trust in the
Financed Student Loans and the proceeds thereof to the Indenture Trustee.
(q) The Certificates shall be rated in one of the three
highest investment rating category by Standard and Poor's Corporation and at
least "Aaa" by Moody's Investors Service, Inc., and neither corporation shall
have placed the Certificates under surveillance or review with possible negative
implications.
(r) The issuance of the Notes and the Certificates shall not
have resulted in a reduction or withdrawal by any Rating Agency of the current
rating of any outstanding securities issued or originated by the Seller or any
of its affiliates.
(s) On the Closing Date, $720,112,000 aggregate principal
amount of the Notes shall have been issued and sold.
<PAGE> 21
21
The Seller will provide or cause to be provided to the
Representative such conformed copies of such of the foregoing opinions,
certificates, letters and documents as the Representative reasonably requests.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Seller will
indemnify and hold each Underwriter harmless 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 any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus or any amendment or supplement
thereto or any related preliminary prospectus, 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 loss, claim, damage, liability or action as such expenses are incurred;
PROVIDED, HOWEVER, that the Seller will 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 in or omission or alleged
omission from any of such documents in reliance upon and in conformity with
written information furnished to the Seller by any Underwriter through the
Representative specifically for use therein.
(b) Each Underwriter will severally and not jointly indemnify
and hold harmless the Seller against any losses, claims, damages or liabilities
to which the Seller 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 any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, the Prospectus or
any amendment or supplement thereto or any related preliminary prospectus, or
arise out of or are based upon the omission or the 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 reliance upon and in conformity with written
information relating to such Underwriter furnished to the Seller by such
Underwriter through the Representative specifically for use therein, and will
reimburse any legal
<PAGE> 22
22
or other expenses reasonably incurred by the Seller in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a) or (b) above. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, 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 and approval by the indemnified party of the
counsel appointed by the indemnifying party, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. In no event shall
the indemnifying party be liable for fees and expenses for more than one counsel
separate from their own counsel for all indemnified parties in connection with
any one action or related actions in the same jurisdiction arising out of the
same general allegations or circumstances unless any such indemnified party
shall have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to or in
conflict with those available to the other indemnified parties and in the
reasonable judgment of such counsel it is advisable for such indemnified party
to employ separate counsel. An indemnifying party will not, without the prior
written consent of the indemnified party, settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an
<PAGE> 23
23
unconditional release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnifying party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Seller on the one hand and the Underwriters on the other from the offering
of the Notes or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Seller on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Seller on the one hand and
the Underwriters on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received by
the Seller bear to the total underwriting discounts and commissions received by
the 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 Seller or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of 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 action or claim which is
the subject of this subsection (d). 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 Certificates
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, except as may be provided in any agreement among the
Underwriters relating to the offering of the Certificates.
<PAGE> 24
24
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
in this subsection (d) to contribute are several in proportion their respective
underwriting obligations and not joint.
(e) The obligations of the Seller under this Section shall be
in addition to any liability which the Seller 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 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 director of the Seller, to each officer of the Seller
who has signed the Registration Statement and to each person, if any, who
controls the Seller within the meaning of the Act.
8. SURVIVAL OF REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of the
Seller or its officers and of the several Underwriters set forth in or made
pursuant to this Agreement or contained in certificates of officers of the
Seller submitted pursuant hereto shall remain operative and in full force and
effect, regardless of any investigation or statement as to the results thereof,
made by or on behalf of any Underwriter, the Seller or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Certificates. If for any reason the
purchase of the Certificates by the Underwriters is not consummated, the Seller
shall remain responsible for the expenses to be paid or reimbursed by the Seller
pursuant to Section 5 and the respective obligations of the Seller and the
Underwriters pursuant to Section 7 shall remain in effect. If for any reason the
purchase of the Certificates by the Underwriters is not consummated (other than
because of a failure to satisfy the conditions set forth in items (iii), (v) and
(vi) of Section 6(d)), the Seller will reimburse the Underwriters for all
out-of-pocket expenses (including fees and disbursements of counsel) reasonably
incurred by them in connection with the offering of the Certificates.
9. NOTICES. All communications hereunder will be
in writing and, if sent to the Underwriters, will be mailed,
delivered or telegraphed and confirmed to the Representative
<PAGE> 25
25
at Park Avenue Plaza, New York, N.Y. 10055, Attention: Investment Banking
Department--Transactions Advisory Group; if sent to the Seller, will be mailed,
delivered or telegraphed and confirmed to it at Key Bank USA, National
Association, 5000 Tiedeman Road, Brooklyn, OH 44144, Attention: Senior Vice
President, Education Lending; PROVIDED, HOWEVER, that any notice to an
Underwriter pursuant to Section 7 will be mailed, delivered or telegraphed and
confirmed to such Underwriter. Any such notice will take effect at the time of
receipt.
10. SUCCESSORS. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 7, and no
other person will have any right or obligations hereunder.
11. REPRESENTATION OF UNDERWRITERS. The Representative shall
act for the several Underwriters in connection with this financing, and any
action under this Agreement taken by the Representative will be binding upon all
the Underwriters.
12. COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same Agreement.
<PAGE> 26
26
13. APPLICABLE LAW. This Agreement will be governed by, and
construed in accordance with, the laws of the State of New York.
If the foregoing is in accordance with the understanding of
the Representative of our agreement, kindly sign and return to us one of the
counterparts hereof, whereupon it will become a binding agreement between the
Seller and the several Underwriters in accordance with its terms.
Very truly yours,
KEY BANK USA, NATIONAL ASSOCIATION
by
--------------------------------
Name:
Title:
The foregoing Certificate
Underwriting Agreement is
hereby confirmed and
accepted as of the date
first written above.
CS FIRST BOSTON CORPORATION,
by
------------------------------
Name:
Title:
Acting on behalf of itself and as
of Representative of the several
Underwriters.
<PAGE> 27
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount
Underwriter of Certificates
- ----------- ---------------
<S> <C>
CS First Boston Corporation............................................ $
Key Capital Markets, Inc............................................... $
Total............................................................. $
=
</TABLE>
<PAGE> 28
APPENDIX A
[See Appendix A to Sale and Servicing Agreement]
<PAGE> 29
EXHIBIT A
[Key Bank opinion]
<PAGE> 30
EXHIBIT B
[Jones Day opinions]
<PAGE> 1
Exhibit 4(a)
================================================================================
INDENTURE
between
KEYCORP STUDENT LOAN TRUST 1996-A,
as Issuer
and
-----------------------------,
not in its individual capacity but
solely as Indenture Trustee
Dated as of September 1, 1996
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
ARTICLE I
DEFINITIONS AND USAGE
---------------------
<S> <C>
SECTION 1.01. Definitions and Usage....................................................... 2
SECTION 1.02. Incorporation by Reference of Trust
Indenture Act............................................................. 2
ARTICLE II
THE NOTES
---------
SECTION 2.01. Form........................................................................ 3
SECTION 2.02. Execution, Authentication and Delivery...................................... 4
SECTION 2.03. Temporary Notes............................................................. 4
SECTION 2.04. Registration; Registration of Transfer
and Exchange.............................................................. 5
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen
Notes..................................................................... 6
SECTION 2.06. Persons Deemed Owner........................................................ 8
SECTION 2.07. Payment of Principal and Interest;
Defaulted Interest; Noteholders'
Interest Index Carryover.............................................. 8
SECTION 2.08. Cancellation................................................................ 10
SECTION 2.09. Release of Collateral....................................................... 10
SECTION 2.10. Book-Entry Notes............................................................ 10
SECTION 2.11. Notices to Clearing Agency.................................................. 11
SECTION 2.12. Definitive Notes............................................................ 11
ARTICLE III
COVENANTS
---------
SECTION 3.01. Payment to Noteholders...................................................... 12
SECTION 3.02. Maintenance of Office or Agency............................................. 13
SECTION 3.03. Money for Payments To Be Held in Trust...................................... 13
SECTION 3.04. Existence................................................................... 15
SECTION 3.05. Protection of Indenture Trust Estate........................................ 15
SECTION 3.06. Opinions as to Indenture Trust Estate....................................... 16
SECTION 3.07. Performance of Obligations; Servicing of
Financed Student Loans................................................ 17
SECTION 3.08. Negative Covenants.......................................................... 20
SECTION 3.09. Annual Statement as to Compliance........................................... 21
SECTION 3.10. Issuer May Consolidate, etc., Only on
Certain Terms......................................................... 21
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
SECTION 3.11. Successor or Transferee..................................................... 23
SECTION 3.12. No Other Business........................................................... 24
SECTION 3.13. No Borrowing................................................................ 24
SECTION 3.14. Obligations of Servicer and Administrator................................... 24
SECTION 3.15. Guarantees, Loans, Advances and Other
Liabilities........................................................... 24
SECTION 3.16. Capital Expenditures........................................................ 25
SECTION 3.17. Restricted Payments......................................................... 25
SECTION 3.18. Notice of Events of Default................................................. 25
SECTION 3.19. Further Instruments and Acts................................................ 25
ARTICLE IV
SATISFACTION AND DISCHARGE
--------------------------
SECTION 4.01. Satisfaction and Discharge of Indenture..................................... 26
SECTION 4.02. Application of Trust Money.................................................. 27
SECTION 4.03. Repayment of Moneys Held by Paying Agent.................................... 27
SECTION 4.04. Auction of Financed Student Loans........................................... 28
ARTICLE V
REMEDIES
--------
SECTION 5.01. Events of Default........................................................... 28
SECTION 5.02. Acceleration of Maturity; Rescission and
Annulment............................................................. 30
SECTION 5.03. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee...................................... 31
SECTION 5.04. Remedies; Priorities........................................................ 34
SECTION 5.05. Optional preservation of the Financed
Student Loans......................................................... 36
SECTION 5.06. Limitation of Suits......................................................... 36
SECTION 5.07. Unconditional Rights of Noteholders To
Receive Principal and Interest........................................ 37
SECTION 5.08. Restoration of Rights and Remedies.......................................... 37
SECTION 5.09. Rights and Remedies Cumulative.............................................. 38
SECTION 5.10. Delay or Omission Not a Waiver.............................................. 38
SECTION 5.11. Control by Noteholders...................................................... 38
SECTION 5.12. Waiver of Past Defaults..................................................... 39
SECTION 5.13. Undertaking for Costs....................................................... 39
SECTION 5.14. Waiver of Stay or Extension Laws............................................ 40
SECTION 5.15. Action on Notes............................................................. 40
SECTION 5.16. Performance and Enforcement of Certain
Obligations........................................................... 40
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
ARTICLE VI
THE INDENTURE TRUSTEE
---------------------
<S> <C>
SECTION 6.01. Duties of Indenture Trustee................................................. 41
SECTION 6.02. Rights of Indenture Trustee................................................. 43
SECTION 6.03. Individual Rights of Indenture Trustee...................................... 44
SECTION 6.04. Indenture Trustee's Disclaimer.............................................. 44
SECTION 6.05. Notice of Defaults.......................................................... 44
SECTION 6.06. Reports by Indenture Trustee to
Noteholders........................................................... 45
SECTION 6.07. Compensation and Indemnity.................................................. 45
SECTION 6.08. Replacement of Indenture Trustee............................................ 46
SECTION 6.09. Successor Indenture Trustee by Merger....................................... 47
SECTION 6.10. Appointment of Co-Trustee or Separate
Trustee............................................................... 48
SECTION 6.11. Eligibility; Disqualification............................................... 49
SECTION 6.12. Preferential Collection of Claims Against
Issuer................................................................ 50
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
------------------------------
SECTION 7.01. Issuer To Furnish Indenture Trustee Names
and Addresses of Noteholders.......................................... 50
SECTION 7.02. Preservation of Information; Communications
to Noteholders........................................................ 50
SECTION 7.03. Reports by Issuer........................................................... 51
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
------------------------------------
SECTION 8.01. Collection of Money......................................................... 52
SECTION 8.02. Trust Accounts.............................................................. 52
SECTION 8.03. General Provisions Regarding Accounts....................................... 53
SECTION 8.04. Release of Indenture Trust Estate........................................... 54
SECTION 8.05. Opinion of Counsel.......................................................... 55
ARTICLE IX
SUPPLEMENTAL INDENTURES
-----------------------
SECTION 9.01. Supplemental Indentures Without Consent of
Noteholders........................................................... 55
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C>
SECTION 9.02. Supplemental Indentures with Consent of
Noteholders........................................................... 57
SECTION 9.03. Execution of Supplemental Indentures........................................ 59
SECTION 9.04. Effect of Supplemental Indenture............................................ 59
SECTION 9.05. Conformity with Trust Indenture Act......................................... 59
SECTION 9.06. Reference in Notes to Supplemental
Indentures............................................................ 60
ARTICLE X
REDEMPTION OF NOTES
-------------------
SECTION 10.01. Redemption.................................................................. 60
SECTION 10.02. Form of Redemption Notice................................................... 61
SECTION 10.03. Notes Payable on Redemption Date............................................ 61
ARTICLE XI
MISCELLANEOUS
-------------
SECTION 11.01. Compliance Certificates and Opinions, etc................................... 62
SECTION 11.02. Form of Documents Delivered to Indenture
Trustee............................................................... 64
SECTION 11.03. Acts of Noteholders......................................................... 65
SECTION 11.04. Notices, etc., to Indenture Trustee, Issuer
and Rating Agencies................................................... 66
SECTION 11.05. Notices to Noteholders; Waiver.............................................. 67
SECTION 11.06. Alternate Payment and Notice Provisions..................................... 68
SECTION 11.07. Conflict with Trust Indenture Act........................................... 68
SECTION 11.08. Effect of Headings and Table of Contents.................................... 68
SECTION 11.09. Successors and Assigns...................................................... 68
SECTION 11.10. Separability................................................................ 68
SECTION 11.11. Benefits of Indenture....................................................... 68
SECTION 11.12. Legal Holidays.............................................................. 69
SECTION 11.13. Governing Law............................................................... 69
SECTION 11.14. Counterparts................................................................ 69
SECTION 11.15. Recording of Indenture...................................................... 69
SECTION 11.16. Trust Obligations........................................................... 69
SECTION 11.17. No Petition................................................................. 70
SECTION 11.18. Inspection.................................................................. 70
APPENDIX A Definitions and Usage
SCHEDULE A Schedule of Financed Student Loans
SCHEDULE B Location of Financed Student Loan Files
EXHIBIT A Form of Note
EXHIBIT B Form of Note Depository Agreement
</TABLE>
-iv-
<PAGE> 6
INDENTURE dated as of _________, 1996, between
KEYCORP STUDENT LOAN TRUST 1996-A, a New York trust (the
"Issuer"), and _______ _____ _______, a ________ banking
corporation, as trustee and not in its individual capacity
(the "Indenture Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the holders of the Issuer's
Floating Rate Asset Backed Notes
(the "Notes"):
GRANTING CLAUSE
The Issuer (and, with respect to the Financed Student Loans,
the Eligible Lender Trustee) hereby Grants to the Indenture Trustee at the
Closing Date, as trustee for the benefit of the Noteholders, all the Issuer's
right, title and interest in and to the following:
(a) the Financed Student Loans, and all obligations of the
Obligors thereunder including all moneys paid thereunder on or after
the Cutoff Date (or, in the case of Additional Student Loans, on or
after the related Subsequent Cutoff Date);
(b) the Sale and Servicing Agreement, including the right of
the Issuer to cause the Seller to repurchase or the Servicer to
purchase, Financed Student Loans from the Issuer under circumstances
described therein and including the Assigned Rights, and the
Supplemental Sale and Servicing Agreement;
(c) each Guarantee Agreement, including the right of the
Issuer to cause the related Guarantor to make Guarantee Payments in
respect of the Financed Student Loans;
(d) all funds on deposit from time to time in the Trust
Accounts, including the Reserve Account Initial Deposit and the
Pre-Funded Amount, and in all investments and proceeds thereof
(including all income thereon); and
-1-
<PAGE> 7
(e) all present and future claims, demands, causes and choses
in action in respect of any or all of the foregoing and all payments on
or under and all proceeds of every kind and nature whatsoever in
respect of any or all of the foregoing, including all proceeds of the
conversion, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind
and other forms of obligations and receivables, instruments and other
property which at any time constitute all or part of or are included in
the proceeds of any of the foregoing (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, equally and ratably without prejudice, priority or distinction, and to
secure compliance with the provisions of this Indenture, all as provided in this
Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the
Noteholders, acknowledges such Grant, accepts the trusts under this Indenture in
accordance with the provisions of this Indenture and agrees to perform its
duties required in this Indenture to the best of its ability to the end that the
interests of the Noteholders may be adequately and effectively protected.
ARTICLE I
DEFINITIONS AND USAGE
---------------------
SECTION 1.01. DEFINITIONS AND USAGE. Except as otherwise
specified herein or as the context may otherwise require, capitalized terms used
but not defined herein are defined in Appendix A hereto, which also contains
rules as to usage that shall be applicable herein.
SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE
ACT. Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The
-2-
<PAGE> 8
following TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Indenture Trustee.
"obligor" on the indenture securities means the
Issuer and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by Commission
rule have the meaning assigned to them by such definitions.
ARTICLE II
THE NOTES
---------
SECTION 2.01. FORM. The Notes, together with the Indenture
Trustee's certificate of authentication, shall be in substantially the forms set
forth in Exhibit A, with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing the Notes, as evidenced by their execution of the Notes. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed,
lithographed or engraved or produced by any combination of these methods (with
or without steel engraved borders), all as determined by the officers executing
such Notes, as evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The
terms of the Notes set forth in Exhibit A are part of the terms of this
Indenture.
-3-
<PAGE> 9
SECTION 2.02. EXECUTION, AUTHENTICATION AND DELIVERY. The
Notes shall be executed on behalf of the Issuer by any of its Authorized
Officers. The signature of any such Authorized Officer on the Notes may be
manual or facsimile.
Notes bearing the manual or facsimile signature of individuals
who were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall upon Issuer Order authenticate and
deliver Notes for original issue in an aggregate principal amount of
$___________. The aggregate principal amount of Notes outstanding at any time
may not exceed such amounts except as provided in Section 2.05.
Each Note shall be dated the date of its authentication. The
Notes shall be issuable as registered Notes in the minimum denomination of
$1,000 and in integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
SECTION 2.03. TEMPORARY NOTES. Pending the preparation of
Definitive Notes, the Issuer may execute, and upon receipt of an Issuer Order
the Indenture Trustee shall authenticate and deliver, temporary Notes which are
printed, lithographed, typewritten, mimeographed or otherwise produced, of the
tenor of the Definitive Notes in lieu of which they are issued and with such
variations not inconsistent with the terms of this Indenture as the officers
executing such Notes may determine, as evidenced by their execution of such
Notes.
If temporary Notes are issued, the Issuer will cause
Definitive Notes to be prepared without unreasonable delay. After the
preparation of Definitive Notes, the temporary Notes shall be exchangeable for
Definitive Notes upon surrender of the temporary Notes at the office or
-4-
<PAGE> 10
agency of the Issuer to be maintained as provided in Section 3.02, without
charge to the Noteholder. Upon surrender for cancellation of any one or more
temporary Notes, the Issuer shall execute and the Indenture Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
Definitive Notes of authorized denominations. Until so exchanged, the temporary
Notes shall in all respects be entitled to the same benefits under this
Indenture as Definitive Notes.
SECTION 2.04. REGISTRATION; REGISTRATION OF TRANSFER AND
EXCHANGE. The Issuer shall cause to be kept a register (the "Note Register") in
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee shall be "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a successor
or, if it elects not to make such an appointment, assume the duties of Note
Registrar.
If a Person other than the Indenture Trustee is appointed by
the Issuer as Note Registrar, the Issuer will give the Indenture Trustee prompt
written notice of the appointment of such Note Registrar and of the location,
and any change in the location, of the Note Register, and the Indenture Trustee
shall have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Indenture Trustee shall have the right to rely
upon a certificate executed on behalf of the Note Registrar by an Executive
Officer thereof as to the names and addresses of the Noteholders and the
principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the
office or agency of the Issuer to be maintained as provided in Section 3.02, if
the requirements of Section 8-401(1) of the UCC are met, the Issuer shall
execute, and the Indenture Trustee shall authenticate and the Noteholder shall
obtain from the Indenture Trustee, in the name of the designated transferee or
transferees, one or more new Notes in any authorized denominations and a like
aggregate principal amount.
At the option of the Noteholder, Notes may be exchanged for
other Notes in any authorized denominations and a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, if the
-5-
<PAGE> 11
requirements of Section 8-401(1) of the UCC are met, the Issuer shall execute,
and the Indenture Trustee shall authenticate and the Noteholder shall obtain
from the Indenture Trustee, the Notes which the Noteholder making the exchange
is entitled to receive.
All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of
transfer or exchange shall be duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee duly
executed by the Noteholder thereof or such Noteholder's attorney duly authorized
in writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, which requirements
include membership or participation in Securities Transfer Agent's Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Exchange Act.
No service charge shall be made to a Noteholder for any
registration of transfer or exchange of Notes, but the Indenture Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.03 or 9.06 not
involving any transfer.
The preceding provisions of this Section notwithstanding, the
Issuer shall not be required to make and the Note Registrar need not register
transfers or exchanges of Notes selected for redemption or of any Note for a
period of 15 days preceding the due date for any payment with respect to the
Note.
SECTION 2.05. MUTILATED, DESTROYED, LOST OR STOLEN NOTES. If
(i) any mutilated Note is surrendered to the Indenture Trustee, or the Indenture
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, and (ii) there is delivered to the Indenture Trustee such security
or indemnity as may be required by it to hold the Issuer and the Indenture
Trustee harmless, then, in the absence of notice to the Issuer, the Note
Registrar or the Indenture Trustee that such Note has
-6-
<PAGE> 12
been acquired by a bona fide purchaser, and provided that the requirements of
Section 8-405 of the UCC are met, the Issuer shall execute and upon its request
the Indenture Trustee shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Note, a replacement Note;
PROVIDED, HOWEVER, that if any such destroyed, lost or stolen Note, but not a
mutilated Note, shall have become or within 15 days shall be due and payable, or
shall have been called for redemption, instead of issuing a replacement Note,
the Issuer may pay such destroyed, lost or stolen Note when so due or payable or
upon the Redemption Date without surrender thereof. If, after the delivery of
such replacement Note or payment of a destroyed, lost or stolen Note pursuant to
the proviso to the preceding sentence, a bona fide purchaser of the original
Note in lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer and the Indenture Trustee shall be entitled to recover
such replacement Note (or such payment) from the Person to whom it was delivered
or any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section,
the Issuer may require the payment by the Noteholder thereof of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
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SECTION 2.06. PERSONS DEEMED OWNER. Prior to due presentment
for registration of transfer of any Note, the Issuer, the Indenture Trustee and
any agent of the Issuer or the Indenture Trustee may treat the Person in whose
name any Note is registered (as of the day of determination) as the owner of
such Note for the purpose of receiving payments of principal of, interest (and
any Noteholders' Interest Index Carryover), if any, on such Note and for all
other purposes whatsoever, whether or not such Note be overdue, and neither the
Issuer, the Indenture Trustee nor any agent of the Issuer or the Indenture
Trustee shall be affected by notice to the contrary.
SECTION 2.07. PAYMENT OF PRINCIPAL AND INTEREST; DEFAULTED
INTEREST; NOTEHOLDERS' INTEREST INDEX CARRYOVER. (a) The Notes shall accrue
interest as provided in the form of Note set forth in Exhibit A, and such
interest shall be payable on each Distribution Date as specified therein,
subject to Section 3.01. Any installment of interest (and any Noteholders'
Interest Index Carryover) or principal, if any, payable on any Note which is
punctually paid or duly provided for by the Issuer on the applicable
Distribution Date shall be paid to the Person in whose name such Note (or one or
more Predecessor Notes) is registered on the Record Date by check mailed
first-class, postage prepaid to such Person's address as it appears on the Note
Register on such Record Date, except that, unless Definitive Notes have been
issued pursuant to Section 2.12, with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payment will be made by wire transfer in immediately
available funds to the account designated by such nominee and except for the
final installment of principal payable with respect to such Note on a
Distribution Date or on the Note Final Maturity Date which shall be payable as
provided below. The funds represented by any such checks returned undelivered
shall be held in accordance with Section 3.03.
(b) The principal of each Note shall be payable in
installments on each Distribution Date as provided in the form of Note set forth
in Exhibit A. Notwithstanding the foregoing, the entire unpaid principal amount
of the Notes shall be due and payable, if not previously paid, on the date on
which an Event of Default shall have occurred and be continuing, if the
Indenture Trustee or the Noteholders of the Notes representing not less than a
majority of the Outstanding Amount of the Notes have declared the Notes to be
immediately due and payable in the manner provided in Section 5.02. All
principal payments on the Notes shall be made pro rata to the Noteholders
entitled thereto. The
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Indenture Trustee shall notify the Person in whose name a Note is registered at
the close of business on the Record Date preceding the Distribution Date on
which the Issuer expects that the final installment of principal of and interest
(and any Noteholders' Interest Index Carryover) on such Note will be paid. Such
notice shall be mailed or transmitted by facsimile prior to such final
Distribution Date and shall specify that such final installment will be payable
only upon presentation and surrender of such Note and shall specify the place
where such Note may be presented and surrendered for payment of such
installment. Notices in connection with redemptions of Notes shall be mailed to
Noteholders as provided in Section 10.02.
(c) If the Issuer defaults in a payment of interest on the
Notes, the Issuer shall pay defaulted interest (plus interest on such defaulted
interest to the extent lawful) at the Note Interest Rate in any lawful manner.
The Issuer may pay such defaulted interest to the persons who are Noteholders on
a subsequent special record date, which date shall be at least five Business
Days prior to the payment date. The Issuer shall fix or cause to be fixed any
such special record date and payment date, and, at least 15 days before any such
special record date, the Issuer shall mail to each Noteholder a notice that
states the special record date, the payment date and the amount of defaulted
interest to be paid.
(d) The Noteholders' Interest Index Carryover for each
Distribution Date (including all unpaid Noteholders' Interest Index Carryover
for prior Distribution Dates and interest accrued thereon at the Note Interest
Rate for each applicable Interest Period) shall be payable on each Distribution
Date solely to the extent of funds required and available to be distributed to
Noteholders by the Indenture Trustee pursuant to Section 5.05(c)(ix), 5.06(d)(B)
or 5.06(e) of the Sale and Servicing Agreement. Any Noteholders' Interest Index
Carryover payable on any Distribution Date shall be paid to the Person in whose
name such Note (or one or more Predecessor Notes) is registered on the
applicable Record Date by check mailed first-class postage prepaid to such
Person's address as it appears on the Note Register on such Record Date, except
that, unless Definitive Notes have been issued pursuant to Section 2.12, with
respect to the Notes registered on the Record Date in the name of the nominee of
the Clearing Agency (initially, such nominee to be Cede & Co.), payment will be
made by wire transfer in immediately available funds to the account designated
by such nominee. The funds represented by any
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such checks returned undelivered shall be held in accordance with Section 3.03.
SECTION 2.08. CANCELLATION. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly cancelled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly cancelled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Notes may be held or disposed of by the
Indenture Trustee in accordance with its standard retention or disposal policy
as in effect at the time, unless the Issuer shall direct by an Issuer Order that
they be returned to it and so long as such Issuer Order is timely and the Notes
have not been previously disposed of by the Indenture Trustee.
SECTION 2.09. RELEASE OF COLLATERAL. Subject to Section 11.01
and the terms of the Basic Documents, the Indenture Trustee shall release
property from the lien of this Indenture only upon receipt of an Issuer Request
accompanied by an Officers' Certificate of the Issuer, an Opinion of Counsel and
Independent Certificates in accordance with TIA sections 314(c) and 314(d)(1) or
an Opinion of Counsel in lieu of such Independent Certificates to the effect
that the TIA does not require any such Independent Certificates.
SECTION 2.10. BOOK-ENTRY NOTES. The Notes, upon original
issuance, will be issued in the form of typewritten Notes representing the
Book-Entry Notes, to be delivered to The Depository Trust Company, the initial
Clearing Agency, by, or on behalf of, the Issuer. Such Notes shall initially be
registered on the Note Register in the name of Cede & Co., the nominee of the
initial Clearing Agency, and no Note Owner will receive a Definitive Note (as
defined below) representing such Note Owner's interest in such Note, except as
provided in Section 2.12. Unless and until definitive, fully registered Notes
(the "Definitive Notes") have been issued to Note Owners pursuant to Section
2.12:
(i) the provisions of this Section shall be in full force and
effect;
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(ii) the Note Registrar and the Indenture Trustee may deal
with the Clearing Agency for all purposes (including the payment of
principal of and interest and other amounts on the Notes) as the
authorized representative of the Note Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions
of this Section shall control;
(iv) the rights of Note Owners shall be exercised only
through the Clearing Agency and shall be limited to those established
by law and agreements between such Note Owners and the Clearing Agency
and/or the Clearing Agency Participants pursuant to the Note Depository
Agreements. Unless and until Definitive Notes are issued pursuant to
Section 2.12, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and
transmit payments of principal of and interest and other amounts on the
Notes to such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Noteholders of Notes
evidencing a specified percentage of the Outstanding Amount of the
Notes, the Clearing Agency shall be deemed to represent such percentage
only to the extent that it has received instructions to such effect
from Note Owners and/or Clearing Agency Participants owning or
representing, respectively, such required percentage of the beneficial
interest in the Notes and has delivered such instructions to the
Indenture Trustee.
SECTION 2.11. NOTICES TO CLEARING AGENCY. Whenever a notice or
other communication to the Noteholders is required under this Indenture, unless
and until Definitive Notes shall have been issued to Note Owners pursuant to
Section 2.12, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Noteholders to the Clearing
Agency.
SECTION 2.12. DEFINITIVE NOTES. If (i) the Administrator
advises the Indenture Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to the
Notes, and the Administrator is unable to locate a qualified successor, (ii) the
Administrator at its option advises the Indenture Trustee in writing that it
elects to terminate the
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book-entry system through the Clearing Agency or (iii) after the occurrence of
an Event of Default, a Servicer Default or an Administrator Default, Note Owners
representing beneficial interests aggregating at least a majority of the
Outstanding Amount of the Notes advise the Clearing Agency (which shall then
notify the Indenture Trustee) in writing that the continuation of a book-entry
system through the Clearing Agency is no longer in the best interests of the
Note Owners, then the Indenture Trustee will cause the Clearing Agency to notify
all Note Owners, through the Clearing Agency, of the occurrence of any such
event and of the availability of Definitive Notes to Note Owners requesting the
same. Upon surrender to the Indenture Trustee of the typewritten Notes
representing the Book-Entry Notes by the Clearing Agency, accompanied by
registration instructions, the Issuer shall execute and the Indenture Trustee
shall authenticate the Definitive Notes in accordance with the instructions of
the Clearing Agency. None of the Issuer, the Note Registrar or the Indenture
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the
holders of the Definitive Notes as Noteholders.
ARTICLE III
COVENANTS
---------
SECTION 3.01. PAYMENT TO NOTEHOLDERS. The Issuer will duly and
punctually pay the principal of (subject to the parenthetical in the following
sentence), interest, if any, on and any Noteholders' Interest Index Carryover
(but only to the extent provided in Sections 2.07(d) and 8.02(c)) with respect
to the Notes in accordance with the terms of the Notes and this Indenture.
Without limiting the foregoing, subject to Section 8.02(c), the Issuer will
cause to be distributed that portion of the amounts on deposit in the Trust
Accounts on a Distribution Date (other than any Eligible Investments deposited
therein that will mature on the Business Day preceding a subsequent Distribution
Date), to which the Noteholders are entitled to receive pursuant to the Sale and
Servicing Agreement to Noteholders in accordance with the Sale and Servicing
Agreement. Amounts properly withheld under the Code by any Person from a payment
to any Noteholder of interest (including any Noteholders' Interest Index
Carryover) and/or principal
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shall be considered as having been paid by the Issuer to such Noteholder for all
purposes of this Indenture.
SECTION 3.02. MAINTENANCE OF OFFICE OR AGENCY. The Issuer will
maintain in the Borough of Manhattan, The City of New York, an office or agency
where Notes may be surrendered for registration of transfer or exchange, and
where notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer hereby initially appoints the Indenture
Trustee to serve as its agent for the foregoing purposes. The Issuer will give
prompt written notice to the Indenture Trustee of the location, and of any
change in the location, of any such office or agency. If at any time the Issuer
shall fail to maintain any such office or agency or shall fail to furnish the
Indenture Trustee with the address thereof, such surrenders, notices and demands
may be made or served at the Corporate Trust Office, and the Issuer hereby
appoints the Indenture Trustee as its agent to receive all such surrenders,
notices and demands.
SECTION 3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST. As
provided in Section 8.02(a) and (b), all payments of amounts due and payable
with respect to any Notes that are to be made from amounts distributed from the
Collection Account or any other Trust Account pursuant to Section 8.02(c) shall
be made on behalf of the Issuer by the Indenture Trustee or by another Paying
Agent, and no amounts so distributed from the Collection Account for payments of
Notes shall be paid over to the Issuer except as provided in this Section.
On or before the Business Day next preceding each Distribution
Date and Redemption Date, the Issuer shall distribute or cause to be distributed
to the Indenture Trustee (or any other Paying Agent) an aggregate sum sufficient
to pay the amounts then becoming due under the Notes and/or Certificates, such
sum to be held in trust for the benefit of the Persons entitled thereto and
(unless the Paying Agent is the Indenture Trustee) shall promptly notify the
Indenture Trustee of its action or failure so to act.
The Issuer will cause each Paying Agent other than the
Indenture Trustee to execute and deliver to the Indenture Trustee an instrument
in which such Paying Agent shall agree with the Indenture Trustee (and if the
Indenture Trustee acts as Paying Agent, it hereby so agrees), subject
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to the provisions of this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Indenture Trustee notice of any default by the
Issuer of which it has actual knowledge (or any other obligor upon the
Notes) in the making of any payment required to be made with respect
to the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay
to the Indenture Trustee all sums held by it in trust for the payment
of Notes if at any time it ceases to meet the standards required to be
met by a Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds,
any money held by the Indenture Trustee or any Paying Agent in trust for the
payment of any amount due with respect to any Note and remaining unclaimed for
two years after such amount has become due and payable shall be discharged from
such trust and be paid to the Issuer on
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Issuer Request; and the Noteholder thereof shall thereafter, as an unsecured
general creditor, look only to the Issuer for payment thereof (but only to the
extent of the amounts so paid to the Issuer), and all liability of the Indenture
Trustee or such Paying Agent with respect to such trust money shall thereupon
cease; PROVIDED, HOWEVER, that the Indenture Trustee or such Paying Agent,
before being required to make any such repayment, shall at the expense and
direction of the Issuer cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in The City of New York, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication, any unclaimed balance of such money then
remaining will be repaid to the Issuer. The Indenture Trustee shall also adopt
and employ, at the expense of the Issuer, any other reasonable means of
notification of such repayment (including mailing notice of such repayment to
Noteholders whose Notes have been called but have not been surrendered for
redemption or whose right to or interest in moneys due and payable but not
claimed is determinable from the records of the Indenture Trustee or of any
Paying Agent, at the last address of record for each such Noteholder).
SECTION 3.04. EXISTENCE. The Issuer will keep in full effect
its existence, rights and franchises as a trust under the laws of the State of
New York (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other State or of the United States of America,
in which case the Issuer will keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Collateral and each other
instrument or agreement included in the Indenture Trust Estate.
SECTION 3.05. PROTECTION OF INDENTURE TRUST ESTATE. The Issuer
will from time to time execute and deliver all such supplements and amendments
hereto and all such financing statements, continuation statements, instruments
of further assurance and other instruments, and will take such other action
necessary or advisable to:
(i) maintain or preserve the lien and security interest (and
the priority thereof) of this Indenture or carry out more effectively
the purposes hereof;
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(ii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iii) enforce any of the Collateral; or
(iv) preserve and defend title to the Indenture Trust Estate
and the rights of the Indenture Trustee and the Noteholders in such
Indenture Trust Estate against the claims of all persons and parties.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this Section.
SECTION 3.06. OPINIONS AS TO INDENTURE TRUST ESTATE. (a) On
the Closing Date, the Issuer shall furnish to the Indenture Trustee an Opinion
of Counsel either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording and filing of this Indenture, any
indentures supplemental hereto, and any other requisite documents, and with
respect to the execution and filing of any financing statements and continuation
statements, as are necessary to perfect and make effective the lien and security
interest of this Indenture and reciting the details of such action, or stating
that, in the opinion of such counsel, no such action is necessary to make such
lien and security interest effective.
(b) On or before April 30 in each calendar year, beginning in
1997, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel
either stating that, in the opinion of such counsel, such action has been taken
with respect to the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite documents
and with respect to the execution and filing of any financing statements and
continuation statements as is necessary to maintain the lien and security
interest created by this Indenture and reciting the details of such action or
stating that in the opinion of such counsel no such action is necessary to
maintain such lien and security interest. Such Opinion of Counsel shall also
describe the recording, filing, re-recording and refiling of this Indenture, any
indentures supplemental hereto and any other requisite documents and the
execution and filing of any financing statements and continuation statements
that will, in the opinion of such counsel, be required to maintain the lien and
security interest of this Indenture until April 30 in the following calendar
year.
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SECTION 3.07. PERFORMANCE OF OBLIGATIONS; SERVICING OF
FINANCED STUDENT LOANS. (a) The Issuer will not take any action and will use its
best efforts not to permit any action to be taken by others that would release
any Person from any of such Person's material covenants or obligations under any
instrument or agreement included in the Indenture Trust Estate or that would
result in the amendment, hypothecation, subordination, termination or discharge
of, or impair the validity or effectiveness of, any such instrument or
agreement, except as expressly provided in this Indenture, the Sale and
Servicing Agreement, the Supplemental Sale and Servicing Agreement or such other
instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officers' Certificate of
the Issuer shall be deemed to be action taken by the Issuer. Initially, the
Issuer has contracted with the Servicer and the Administrator to assist the
Issuer in performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all its
obligations and agreements contained in this Indenture, the other Basic
Documents and in the instruments and agreements included in the Indenture Trust
Estate, including filing or causing to be filed all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture and
the Sale and Servicing Agreement in accordance with and within the time periods
provided for herein and therein. Except as otherwise expressly provided therein,
the Issuer shall not waive, amend, modify, supplement or terminate any Basic
Document or any provision thereof without the consent of the Indenture Trustee
or the Noteholders of at least a majority of the Outstanding Amount of the
Notes.
(d) If the Issuer shall have knowledge of the occurrence of a
Servicer Default or an Administrator Default under the Sale and Servicing
Agreement, the Issuer shall promptly notify the Indenture Trustee and the Rating
Agencies thereof, and shall specify in such notice the action, if any, the
Issuer is taking with respect to such default. If a Servicer Default shall arise
from the failure of the Servicer to perform any of its duties or obligations
under the Sale and Servicing Agreement or the Supplemental Sale and Servicing
Agreement, or an Administrator Default shall arise from the failure of the
Administrator to perform any of its duties or obligations under the Sale and
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Servicing Agreement, the Supplemental Sale and Servicing Agreement or the
Administration Agreement, as the case may be, with respect to the Financed
Student Loans, the Issuer shall take all reasonable steps available to it to
enforce its rights under the Basic Documents in respect of such failure.
(e) As promptly as possible after the giving of notice of
termination to the Servicer of the Servicer's rights and powers, or to the
Administrator of the Administrator's rights and powers, pursuant to Section 8.01
of the Sale and Servicing Agreement, the Issuer shall appoint a successor
servicer (the "Successor Servicer"), or a successor administrator (the
"Successor Administrator"), and such Successor Servicer or Administrator, as the
case may be, shall accept its appointment by a written assumption in a form
acceptable to the Indenture Trustee. In the event that a Successor Servicer or
Administrator has not been appointed and accepted its appointment at the time
when the Servicer or Administrator, as the case may be, ceases to act as
Servicer or Administrator, as the case may be, the Indenture Trustee without
further action shall automatically be appointed the Successor Servicer or
Administrator, as the case may be. The Indenture Trustee may resign as the
Servicer or the Administrator by giving written notice of such resignation to
the Issuer and in such event will be released from such duties and obligations,
such release not to be effective until the date a new servicer or a new
administrator enters into an agreement with the Issuer as provided below;
PROVIDED, HOWEVER, that nothing herein shall require or permit the Indenture
Trustee to act as Servicer, or otherwise service the Financed Student Loans, in
violation of the Higher Education Act. Upon delivery of any such notice to the
Issuer, the Issuer shall obtain a new servicer or a new administrator as the
Successor Servicer or Administrator under the Sale and Servicing Agreement. Any
Successor Servicer or Administrator, as the case may be, other than the
Indenture Trustee shall (i) be an established institution (A) that satisfies any
requirements of the Higher Education Act applicable to servicers and (B) whose
regular business includes the servicing or administration of student loans and
(ii) enter into a servicing agreement or an administration agreement with the
Issuer having substantially the same provisions as the provisions of the Sale
and Servicing Agreement and the Supplemental Sale and Servicing Agreement
applicable to the Servicer or the provisions of the Sale and Servicing
Agreement, the Supplemental Sale and Servicing Agreement and the Administration
Agreement applicable to the Administrator. If within 30 days after the delivery
of the notice referred
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to above, the Issuer shall not have obtained such a new servicer or
administrator, as the case may be, the Indenture Trustee may appoint, or may
petition a court of competent jurisdiction to appoint, a Successor Servicer or
Administrator; PROVIDED, HOWEVER, that such right to appoint or to petition for
the appointment of any such successor shall in no event relieve the Indenture
Trustee from any obligations otherwise imposed on it under the Basic Documents
until such successor has in fact assumed such appointment. In connection with
any such appointment, the Indenture Trustee may make such arrangements for the
compensation of such successor as it and such successor shall agree, subject to
the limitations set forth below and in the Sale and Servicing Agreement, and in
accordance with Section 8.02 of the Sale and Servicing Agreement, the Issuer
shall enter into an agreement with such successor for the servicing or
administration of the Financed Student Loans (such agreement to be in form and
substance satisfactory to the Indenture Trustee). If the Indenture Trustee shall
succeed as provided herein to the Servicer's duties as servicer with respect to
the Financed Student Loans, or the Administrator's duties with respect to the
Issuer and the Financed Student Loans, as the case may be, it shall do so in its
individual capacity and not in its capacity as Indenture Trustee and,
accordingly, the provisions of Article VI hereof shall be inapplicable to the
Indenture Trustee in its duties as the successor to the Servicer or the
Administrator, as the case may be, and the servicing or administration of the
Financed Student Loans. In case the Indenture Trustee shall become successor to
the Servicer or the Administrator, as the case may be, under the Sale and
Servicing Agreement, the Indenture Trustee shall be entitled to appoint as
Servicer or as Administrator, as the case may be, any one of its affiliates,
provided that such appointment shall not affect or alter in any way the
liability of the Indenture Trustee as a successor for the performance of the
duties and obligations of the Servicer or the Administrator in accordance with
the terms hereof.
(f) Upon any termination of the Servicer's rights and powers
pursuant to the Sale and Servicing Agreement, or any termination of the
Administrator's rights and powers pursuant to the Sale and Servicing Agreement,
as the case may be, the Issuer shall promptly notify the Indenture Trustee. As
soon as a Successor Servicer or a Successor Administrator is appointed, the
Issuer shall notify the Indenture Trustee of such appointment, specifying in
such notice the name and address of such Successor Servicer or such Successor
Administrator.
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(g) Without derogating from the absolute nature of the
assignment granted to the Indenture Trustee under this Indenture or the rights
of the Indenture Trustee hereunder, the Issuer agrees that it will not, without
the prior written consent of the Indenture Trustee or the Noteholders of at
least a majority in Outstanding Amount of the Notes, amend, modify, waive,
supplement, terminate or surrender, or agree to any amendment, modification,
supplement, termination, waiver or surrender of, the terms of any Collateral or
the Basic Documents, except to the extent otherwise provided in the Sale and
Servicing Agreement, or waive timely performance or observance by the Servicer,
the Administrator, the Seller, the Issuer or the Eligible Lender Trustee under
the Sale and Servicing Agreement and the Supplemental Sale and Servicing
Agreement; PROVIDED, HOWEVER, that no such amendment shall (i) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
distributions that are required to be made for the benefit of the Noteholders,
or (ii) reduce the aforesaid percentage of the Notes which are required to
consent to any such amendment, without the consent of the Noteholders of all the
Outstanding Notes. If any such amendment, modification, supplement or waiver
shall be so consented to by the Indenture Trustee or such Noteholders, the
Issuer agrees, promptly following a request by the Indenture Trustee to do so,
to execute and deliver, in its own name and at its own expense, such agreements,
instruments, consents and other documents as the Indenture Trustee may deem
necessary or appropriate in the circumstances.
SECTION 3.08. NEGATIVE COVENANTS. So long as any
Notes are Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture or any
other Basic Document, sell, transfer, exchange or otherwise dispose of
any of the properties or assets of the Issuer, including those included
in the Indenture Trust Estate, unless directed to do so by the
Indenture Trustee;
(ii) claim any credit on, or make any deduction from the principal
or interest (including any Noteholders' Interest Index Carryover)
payable in respect of, the Notes (other than amounts properly withheld
from such payments under the Code or applicable state law) or assert
any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the Indenture
Trust Estate; or
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(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien of this Indenture to be
amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations
with respect to the Notes under this Indenture except as may be
expressly permitted hereby, (B) permit any lien, charge, excise,
claim, security interest, mortgage or other encumbrance (other than
the lien of this Indenture) to be created on or extend to or otherwise
arise upon or burden the Indenture Trust Estate or any part thereof or
any interest therein or the proceeds thereof (other than tax liens and
other liens that aris by operation of law, in each case arising solely
as a result of an action or omission of the related Obligor, and other
than as expressly permitted by the Basic Documents) or (C) permit the
lien of this Indenture not to constitute a valid first priority (other
than with respect to any such tax or other lien) security interest in
the Indenture Trust Estate.
SECTION 3.09. ANNUAL STATEMENT AS TO COMPLIANCE. The Issuer
will deliver to the Indenture Trustee, within 120 days after the end of each
fiscal year of the Issuer (commencing with the fiscal year 1996), an Officers'
Certificate of the Issuer stating that:
(i) a review of the activities of the Issuer during such year
and of performance under this Indenture has been made under such
Authorized Officers' supervision; and
(ii) to the best of such Authorized Officers' knowledge,
based on such review, the Issuer has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a default in the compliance of any such condition or covenant,
specifying each such default known to such Authorized Officers and the
nature and status thereof.
SECTION 3.10. ISSUER MAY CONSOLIDATE, ETC., ONLY
ON CERTAIN TERMS. (a) The Issuer shall not consolidate or
merge with or into any other Person, unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and
existing under the laws of the United States of America or any State
and shall expressly assume, by an indenture supplemental hereto,
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executed and delivered to the Indenture Trustee, in form satisfactory
to the Indenture Trustee, the due and punctual payment of the principal
of, interest on and any Noteholders' Interest Index Carryover, if any,
with respect to all Notes and the performance or observance of every
agreement and covenant of this Indenture on the part of the Issuer to
be performed or observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no
Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee) to the
effect that such transaction will not have any material adverse Federal
or Pennsylvania state tax consequence to the Issuer, any Noteholder or
any Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee
an Officers' Certificate of the Issuer and an Opinion of Counsel each
stating that such consolidation or merger and such supplemental
indenture comply with this Article III and that all conditions
precedent herein provided for relating to such transaction have been
complied with (including any filing required by the Exchange Act).
(b) The Issuer shall not convey or transfer all or
substantially all its properties or assets, including those included in the
Indenture Trust Estate, to any Person, unless:
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of which
is hereby restricted shall (A) be a United States citizen or a Person
organized and existing under the laws of the United States of America
or any State, (B) expressly assumes, by an indenture supplemental
hereto, executed and delivered to the Indenture Trustee, in form
satisfactory to the Indenture Trustee, the due and
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punctual payment of the principal of, interest on and Noteholders'
Interest Index Carryover, if any, with respect to all Notes and the
performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed, all as
provided herein, (C) expressly agrees by means of such supplemental
indenture that all right, title and interest so conveyed or transferred
shall be subject and subordinate to the rights of Noteholders, (D)
unless otherwise provided in such supplemental indenture, expressly
agrees to indemnify, defend and hold harmless the Issuer against and
from any loss, liability or expense arising under or related to this
Indenture and the Notes and (E) expressly agrees by means of such
supplemental indenture that such Person (or if a group of Persons, then
one specified Person) shall make all filings with the Commission (and
any other appropriate Person) required by the Exchange Act in
connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee) to the
effect that such transaction will not have any material adverse Federal
or Pennsylvania state tax consequence to the Issuer, any Noteholder or
any Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee
an Officers' Certificate of the Issuer and an Opinion of Counsel each
stating that such conveyance or transfer and such supplemental
indenture comply with this Article III and that all conditions
precedent herein provided for relating to such transaction have been
complied with (including any filing required by the Exchange Act).
SECTION 3.11. SUCCESSOR OR TRANSFEREE. (a) Upon any
consolidation or merger of the Issuer in accordance with Section 3.10(a), the
Person formed by or surviving such
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consolidation or merger (if other than the Issuer) shall succeed to, and be
substituted for, and may exercise every right and power of, the Issuer under
this Indenture with the same effect as if such Person had been named as the
Issuer herein.
(b) Upon a conveyance or transfer of all the assets and
properties of the Issuer pursuant to Section 3.10(b), KeyCorp Student Loan Trust
1996-A will be released from every covenant and agreement of this Indenture to
be observed or performed on the part of the Issuer with respect to the Notes
immediately upon the delivery by the Issuer of written notice to the Indenture
Trustee stating that KeyCorp Student Loan Trust 1996-A is to be so released.
SECTION 3.12. NO OTHER BUSINESS. The Issuer shall not engage
in any business other than financing, purchasing, owning, selling and managing
the Financed Student Loans and making Additional Fundings in the manner
contemplated by this Indenture and the other Basic Documents and activities
incidental thereto. After the Funding Period, the Issuer shall not fund the
purchase of any Additional Student Loans, or make any other Additional Fundings.
SECTION 3.13. NO BORROWING. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
SECTION 3.14. OBLIGATIONS OF SERVICER AND ADMINISTRATOR. The
Issuer shall cause the Servicer to comply with Sections 4.08(a), 4.09, 4.10 and
4.11 of the Sale and Servicing Agreement and the Administrator to comply with
Sections 4.08(b) and (c), 4.09, 4.10 and 5.07 thereof.
SECTION 3.15. GUARANTEES, LOANS, ADVANCES AND OTHER
LIABILITIES. Except as contemplated by the Sale and Servicing Agreement or this
Indenture, the Issuer shall not make any loan or advance or credit to, or
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability of so
doing or otherwise), endorse or otherwise become contingently liable, directly
or indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
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SECTION 3.16. CAPITAL EXPENDITURES. The Issuer shall not make
any expenditure (by long-term or operating lease or otherwise) for capital
assets (either realty or personalty).
SECTION 3.17. RESTRICTED PAYMENTS. The Issuer shall not,
directly or indirectly, (i) pay any dividend or make any distribution (by
reduction of capital or otherwise), whether in cash, property, securities or a
combination thereof, to the Eligible Lender Trustee or any owner of a beneficial
interest in the Issuer or otherwise with respect to any ownership or equity
interest or security in or of the Issuer or to the Servicer or the
Administrator, (ii) redeem, purchase, retire or otherwise acquire for value any
such ownership or equity interest or security or (iii) set aside or otherwise
segregate any amounts for any such purpose; PROVIDED, HOWEVER, that the Issuer
may make, or cause to be made, distributions to the Servicer, the Eligible
Lender Trustee, the Indenture Trustee, the Certificateholders, the Noteholders,
the Administrator and the Seller as contemplated by, and to the extent funds are
available for such purpose under, the Sale and Servicing Agreement. The Issuer
will not, directly or indirectly, make payments to or distributions from the
Collection Account except in accordance with this Indenture and the other Basic
Documents.
SECTION 3.18. NOTICE OF EVENTS OF DEFAULT. The Issuer shall
give the Indenture Trustee and the Rating Agencies prompt written notice of each
Event of Default hereunder and each default on the part of the Seller of its
obligations under the Sale and Servicing Agreement or the Supplemental Sale and
Servicing Agreement, the Servicer of its obligations under the Sale and
Servicing Agreement or the Supplemental Sale and Servicing Agreement or the
Administrator of its obligations under the Sale and Servicing Agreement, the
Supplemental Sale and Servicing Agreement or the Administration Agreement. In
addition, the Issuer shall deliver to the Indenture Trustee, within five days
after the occurrence thereof, written notice in the form of an Officers'
Certificate of the Issuer of any event which with the giving of notice and the
lapse of time would become an Event of Default under Section 5.01(iii), its
status and what action the Issuer is taking or proposes to take with respect
thereto.
SECTION 3.19. FURTHER INSTRUMENTS AND ACTS. Upon request of
the Indenture Trustee, the Issuer will execute and deliver such further
instruments and do such further
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acts as may be reasonably necessary or proper to carry out more effectively the
purpose of this Indenture.
ARTICLE IV
SATISFACTION AND DISCHARGE
--------------------------
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE. This
Indenture shall cease to be of further effect with respect to the Notes except
as to (i) rights of registration of transfer and exchange, (ii) substitution of
mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to
receive payments of principal thereof and interest (including any Noteholders'
Interest Index Carryover) thereon, (iv) Sections 3.03, 3.04, 3.05, 3.08, 3.10,
3.12 and 3.13, (v) the rights, obligations and immunities of the Indenture
Trustee hereunder (including the rights of the Indenture Trustee under Section
6.07 and the obligations of the Indenture Trustee under Section 4.02) and (vi)
the rights of Noteholders as beneficiaries hereof with respect to the property
so deposited with the Indenture Trustee payable to all or any of them, and the
Indenture Trustee, on demand of and at the expense of the Issuer, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture
with respect to the Notes, when:
(A) either
(1) all Notes theretofore authenticated and
delivered (other than (i) Notes that have been destroyed, lost
or stolen and that have been replaced or paid as provided in
Section 2.05 and (ii) Notes for whose payment money has
theretofore been deposited in trust or segregated and held in
trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 3.03) have
been delivered to the Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the
Indenture Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at the Note
Final Maturity Date, within one year, or
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(iii) are to be called for redemption within
one year under arrangements satisfactory to the
Indenture Trustee for the giving of notice of
redemption by the Indenture Trustee in the name, and
at the expense, of the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited
with the Indenture Trustee cash or direct obligations of or
obligations guaranteed by the United States of America (which
will mature prior to the date such amounts are payable), in
trust for such purpose, in an amount sufficient to pay and
discharge the entire indebtedness on such Notes not
theretofore delivered to the Indenture Trustee for
cancellation when due to the Note Final Maturity Date;
(B) the Issuer has paid or caused to be paid all
other sums payable hereunder by the Issuer; and
(C) the Issuer has delivered to the Indenture Trustee an
Officers' Certificate of the Issuer, an Opinion of Counsel and (if
required by the TIA or the Indenture Trustee) an Independent
Certificate from a firm of certified public accountants, each meeting
the applicable requirements of Section 11.01(a) and, subject to Section
11.02, each stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture have been
complied with.
SECTION 4.02. APPLICATION OF TRUST MONEY. All moneys deposited
with the Indenture Trustee pursuant to Section 4.01 hereof shall be held in
trust and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Indenture Trustee may determine, to the Noteholders of the particular Notes for
the payment or redemption of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal and
interest (including any Noteholders' Interest Index Carryover); but such moneys
need not be segregated from other funds except to the extent required herein or
in the Sale and Servicing Agreement or required by law.
SECTION 4.03. REPAYMENT OF MONEYS HELD BY PAYING AGENT. In
connection with the satisfaction and discharge of
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this Indenture with respect to the Notes, all moneys then held by any Paying
Agent other than the Indenture Trustee under the provisions of this Indenture
with respect to such Notes shall, upon demand of the Issuer, be paid to the
Indenture Trustee to be held and applied according to Section 3.03 and thereupon
such Paying Agent shall be released from all further liability with respect to
such moneys.
SECTION 4.04. AUCTION OF FINANCED STUDENT LOANS. Any Financed
Student Loans remaining in the Trust as of the end of the Collection Period
immediately preceding the ________ ____ Distribution Date will be offered for
sale by the Indenture Trustee. KeyCorp, its affiliates (other than the Seller),
The Access Group, PHEAA and unrelated third parties may offer bids to purchase
such Financed Student Loans on such Distribution Date. If at least two bids are
received, the Indenture Trustee will solicit and resolicit new bids from all
participating bidders until only one bid remains or the remaining bidders
decline to resubmit bids. The Indenture Trustee shall accept the highest of such
remaining bids if it is equal to or in excess of both the Auction Purchase
Amount and the fair market value of such Financed Student Loans as of the end of
the Collection Period immediately preceding such Distribution Date. If at least
two bids are not received or the highest bid after the resolicitation process is
completed is not equal to or in excess of the Auction Purchase Amount and the
fair market value of the Financed Student Loans, the Indenture Trustee will not
consummate such sale. The Indenture Trustee may consult, and, at the direction
of the Seller, shall consult, with a financial advisor (which may be the
Administrator) to determine if the fair market value of the Financed Student
Loans has been offered. The proceeds of any such sale will be applied in the
order of priority set forth in Section 5.04(b). If the sale is not consummated
in accordance with the foregoing, the Indenture Trustee may, but shall not be
under any obligation to, solicit bids to purchase the Financed Student Loans on
future Distribution Dates upon terms similar to those described above.
ARTICLE V
REMEDIES
--------
SECTION 5.01. EVENTS OF DEFAULT. "Event of Default", wherever
used herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or
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be effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or governmental
body):
(i) default in the payment of any interest (including, subject
to the limitations of Sections 2.07(d) and 8.02(c), any Noteholders'
Interest Index Carryover) on any Note when the same becomes due and
payable, and such default shall continue for a period of five days; or
(ii) default in the payment of the principal of any Note when
the same becomes due and payable; or
(iii) default in the observance or performance of any covenant
or agreement of the Issuer made in this Indenture (other than a
covenant or agreement, a default in the observance or performance of
which is elsewhere in this Section specifically dealt with), or any
representation or warranty of the Issuer made in this Indenture or in
any certificate or other writing delivered pursuant hereto or in
connection herewith proving to have been incorrect in any material
respect as of the time when the same shall have been made, and such
default shall continue or not be cured, or the circumstance or
condition in respect of which such misrepresentation or warranty was
incorrect shall not have been eliminated or otherwise cured, for a
period of 30 days after there shall have been given, by registered or
certified mail, to the Issuer by the Indenture Trustee or to the Issuer
and the Indenture Trustee by the Noteholders of at least 25% of the
Outstanding Amount of the Notes, a written notice specifying such
default or incorrect representation or warranty and requiring it to be
remedied and stating that such notice is a notice of Default hereunder;
or
(iv) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or any
substantial part of the Indenture Trust Estate in an involuntary case
under any applicable Federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Issuer or for any substantial part of the Indenture
Trust Estate, or ordering the winding-up or liquidation of the Issuer's
affairs, and such decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or
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(v) the commencement by the Issuer of a voluntary case under
any applicable Federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by the Issuer to the
entry of an order for relief in an involuntary case under any such law,
or the consent by the Issuer to the appointment or taking possession by
a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the
Indenture Trust Estate, or the making by the Issuer of any general
assignment for the benefit of creditors, or the failure by the Issuer
generally to pay its debts as such debts become due, or the taking of
action by the Issuer in furtherance of any of the foregoing.
SECTION 5.02. ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT. If an Event of Default should occur and be continuing, then and in
every such case the Indenture Trustee or the Noteholders of Notes representing
not less than a majority of the Outstanding Amount of the Notes may declare all
the Notes to be immediately due and payable, by a notice in writing to the
Issuer (and to the Indenture Trustee if given by Noteholders), and upon any such
declaration the unpaid principal amount of such Notes, together with accrued and
unpaid interest thereon through the date of acceleration, shall become
immediately due and payable.
At any time after such declaration of acceleration of maturity
has been made and before a judgment or decree for payment of the money due has
been obtained by the Indenture Trustee as hereinafter in this Article V
provided, the Noteholders of Notes representing a majority of the Outstanding
Amount of the Notes, by written notice to the Issuer and the Indenture Trustee,
may rescind and annul such declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture
Trustee a sum sufficient to pay:
(A) all payments of principal of and interest on
all Notes and all other amounts that would then be due
hereunder or upon such Notes if the Event of Default giving
rise to such acceleration had not occurred; and
(B) all sums paid or advanced by the Indenture
Trustee hereunder and the reasonable compensation, expenses,
disbursements and advances
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of the Indenture Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration,
have been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or
impair any right consequent thereto.
SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY INDENTURE TRUSTEE. (a) The Issuer covenants that if (i) default
is made in the payment of any interest (including, subject to the limitations of
Sections 2.07(d) and 8.02(c), any Noteholders' Interest Index Carryover) on any
Note when the same becomes due and payable, and such default continues for a
period of five days, or (ii) default is made in the payment of the principal of
or any installment of the principal of any Note when the same becomes due and
payable, the Issuer will, upon demand of the Indenture Trustee, pay to it, for
the benefit of the Noteholders, the whole amount then due and payable on such
Notes for principal and interest (and any Noteholders' Interest Index
Carryover), with interest upon the overdue principal, and, to the extent payment
at such rate of interest shall be legally enforceable, upon overdue installments
of interest (and any Noteholders' Interest Index Carryover), at the rate
specified in Section 2.07 and in addition thereto such further amount as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such
amounts upon such demand, the Indenture Trustee, in its own name and as trustee
of an express trust, may institute a Proceeding for the collection of the sums
so due and unpaid, and may prosecute such Proceeding to judgment or final
decree, and may enforce the same against the Issuer or other obligor upon such
Notes and collect in the manner provided by law out of the property of the
Issuer or other obligor upon such Notes, wherever situated, the moneys adjudged
or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the
Indenture Trustee may, as more particularly provided in Section 5.04, in its
discretion, proceed to protect and enforce its rights and the rights of the
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Noteholders, by such appropriate Proceedings as the Indenture Trustee shall deem
most effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Indenture Trustee by this Indenture or by
law.
(d) In case there shall be pending, relative to the Issuer or
any other obligor upon the Notes or any Person having or claiming an ownership
interest in the Indenture Trust Estate, Proceedings under Title 11 of the United
States Code or any other applicable Federal or state bankruptcy, insolvency or
other similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial Proceedings
relative to the Issuer or other obligor upon the Notes, or to the creditors or
property of the Issuer or such other obligor, the Indenture Trustee,
irrespective of whether the principal of any Notes shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of whether
the Indenture Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount
of principal and interest (including any Noteholders' Interest Index
Carryover) owing and unpaid in respect of the Notes and to file such
other papers or documents as may be necessary or advisable in order to
have the claims of the Indenture Trustee (including any claim for
reasonable compensation to the Indenture Trustee and each predecessor
Indenture Trustee, and their respective agents, attorneys and counsel,
and for reimbursement of all expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor Indenture
Trustee, except as a result of negligence or bad faith) and of the
Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Noteholders in any election of a trustee, a
standby trustee or Person performing similar functions in any such
Proceedings;
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(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all
amounts received with respect to the claims of the Noteholders and of
the Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims
of the Indenture Trustee or the Noteholders allowed in any judicial
proceedings relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Noteholder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Indenture Trustee
without the possession of any of the Notes or the production thereof in any
trial or other Proceedings relative thereto, and any such action or Proceedings
instituted by the Indenture Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents and attorneys, shall
be for the ratable benefit of the Noteholders.
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(g) In any Proceedings brought by the Indenture Trustee (and
also any Proceedings involving the interpretation of any provision of this
Indenture to which the Indenture Trustee shall be a party), the Indenture
Trustee shall be held to represent all the Noteholders, and it shall not be
necessary to make any Noteholder a party to any such Proceedings.
SECTION 5.04. REMEDIES; PRIORITIES. (a) If an Event of Default
shall have occurred and be continuing, the Indenture Trustee may do one or more
of the following (subject to Section 5.05):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the
Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Issuer and any other obligor upon such Notes moneys adjudged
due;
(ii) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Indenture
Trust Estate;
(iii) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the
rights and remedies of the Indenture Trustee and the Noteholders; and
(iv) sell the Indenture Trust Estate or any portion thereof or
rights or interest therein, at one or more public or private sales
called and conducted in any manner permitted by law;
PROVIDED, HOWEVER, that the Indenture Trustee may not sell or otherwise
liquidate the Indenture Trust Estate following an Event of Default, other than
an Event of Default described in Section 5.01(i) or (ii), unless (A) the
Noteholders of 100% of the Outstanding Amount of the Notes consent thereto, (B)
the proceeds of such sale or liquidation distributable to the Noteholders are
sufficient to discharge in full all amounts then due and unpaid upon such Notes
for principal and interest or (C) the Indenture Trustee determines that the
Indenture Trust Estate will not continue to provide sufficient funds for the
payment of principal of and interest on the Notes as they would have become due
if the Notes had not been declared due and payable, and the Indenture Trustee
obtains the consent of Noteholders of 66-2/3% of the Outstanding Amount of the
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Notes. In determining such sufficiency or insufficiency with respect to clause
(B) and (C), the Indenture Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Indenture Trust Estate for such purpose. In addition,
notwithstanding anything herein to the contrary, the Indenture Trustee's rights
hereunder to sell the Financed Student Loans shall be subject to the rights of
PHEAA and LSAS to submit a first offer therefor in accordance with paragraph 8
of the Supplemental Sale and Servicing Agreement.
(b) If the Indenture Trustee collects any money or property
pursuant to this Article V, it shall pay out the money or property in the
following order:
FIRST: to the Indenture Trustee for amounts due under
Section 6.07;
SECOND: to the Servicer for due and unpaid Servicing Fees;
THIRD: to Noteholders for amounts due and unpaid on the Notes
for interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for interest;
FOURTH: to Noteholders for amounts due and unpaid
on the Notes for principal, ratably, without preference
or priority of any kind, according to the amounts due
and payable on the Notes for principal;
FIFTH: to the Issuer for distribution of principal and
interest due and unpaid to the Certificateholders;
SIXTH: to the Servicer, for any unpaid Excess Servicing Fees;
SEVENTH: to Noteholders for any unpaid Noteholders' Interest
Index Carryover, ratably, without preference or priority of any kind,
according to the amount of such Noteholders' Interest Index Carryover
attributable to each Note;
EIGHTH: to the Issuer for distribution to the
Certificateholders of any unpaid Certificateholders' Interest Index
Carryover; and
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NINTH: to the Issuer, for distribution in accordance with the
terms of the Sale and Servicing Agreement.
The Indenture Trustee may fix a record date and payment date
for any payment to Noteholders pursuant to this Section. At least 15 days before
such record date, the Issuer shall mail to each Noteholder and the Indenture
Trustee a notice that states the record date, the payment date and the amount to
be paid.
SECTION 5.05. OPTIONAL PRESERVATION OF THE FINANCED STUDENT
LOANS. If the Notes have been declared to be due and payable under Section 5.02
following an Event of Default and such declaration and its consequences have not
been rescinded and annulled, the Indenture Trustee may, but need not, elect to
maintain possession of the Indenture Trust Estate. It is the desire of the
parties hereto and the Noteholders that there be at all times sufficient funds
for the payment of principal of and interest (including any Noteholders'
Interest Index Carryover) on the Notes, and the Indenture Trustee shall take
such desire into account when determining whether or not to maintain possession
of the Indenture Trust Estate. In determining whether to maintain possession of
the Indenture Trust Estate, the Indenture Trustee may, but need not, obtain and
rely upon an opinion of an Independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and as to the
sufficiency of the Indenture Trust Estate for such purpose.
SECTION 5.06. LIMITATION OF SUITS. No Noteholder shall have
any right to institute any Proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(i) such Noteholder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(ii) the Noteholders of not less than 25% of the Outstanding
Amount of the Notes have made written request to the Indenture Trustee
to institute such Proceeding in respect of such Event of Default in its
own name as Indenture Trustee hereunder;
(iii) such Noteholder or Noteholders have offered to the
Indenture Trustee reasonable indemnity against the
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costs, expenses and liabilities to be incurred in complying with such
request;
(iv) the Indenture Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute
such Proceeding; and
(v) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 60-day period by the
Noteholders of a majority of the Outstanding Amount of the Notes;
it being understood and intended that no one or more Noteholders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other
Noteholders or to obtain or to seek to obtain priority or preference over any
other Noteholders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Indenture Trustee shall receive conflicting
or inconsistent requests and indemnity from two or more groups of Noteholders,
each representing less than a majority of the Outstanding Amount of the Notes,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
SECTION 5.07. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE
PRINCIPAL AND INTEREST. Notwithstanding any other provisions in this Indenture,
any Noteholder shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest, if any, on such Note on or
after the respective due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) and
to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Noteholder.
SECTION 5.08. RESTORATION OF RIGHTS AND REMEDIES. If the
Indenture Trustee or any Noteholder has instituted any Proceeding to enforce any
right or remedy under this Indenture and such Proceeding has been discontinued
or abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally and respectively to their
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former positions hereunder, and thereafter all rights and remedies of the
Indenture Trustee and the Noteholders shall continue as though no such
Proceeding had been instituted.
SECTION 5.09. RIGHTS AND REMEDIES CUMULATIVE. No right or
remedy herein conferred upon or reserved to the Indenture Trustee or to the
Noteholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 5.10. DELAY OR OMISSION NOT A WAIVER. No delay or
omission of the Indenture Trustee or any Noteholder to exercise any right or
remedy accruing upon any Default shall impair any such right or remedy or
constitute a waiver of any such Default or an acquiescence therein. Every right
and remedy given by this Article V or by law to the Indenture Trustee or to the
Noteholders may be exercised from time to time, and as often as may be deemed
expedient, by the Indenture Trustee or by the Noteholders, as the case may be.
SECTION 5.11. CONTROL BY NOTEHOLDERS. The Noteholders of a
majority of the Outstanding Amount of the Notes shall have the right to direct
the time, method and place of conducting any Proceeding for any remedy available
to the Indenture Trustee with respect to the Notes or exercising any trust or
power conferred on the Indenture Trustee; PROVIDED that
(i) such direction shall not be in conflict with any rule of
law or with this Indenture;
(ii) subject to the express terms of Section 5.04, any
direction to the Indenture Trustee to sell or liquidate the Indenture
Trust Estate shall be by the Noteholders of not less than 100% of the
Outstanding Amount of the Notes;
(iii) if the conditions set forth in Section 5.05 have been
satisfied and the Indenture Trustee elects to retain the Indenture
Trust Estate pursuant to such Section, then any direction to the
Indenture Trustee by Noteholders of less than 100% of the Outstanding
Amount
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of the Notes to sell or liquidate the Indenture Trust Estate shall be
of no force and effect; and
(iv) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction;
PROVIDED, HOWEVER, that, subject to Section 6.01, the Indenture Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to such
action.
SECTION 5.12. WAIVER OF PAST DEFAULTS. Prior to the time a
judgment or decree for payment of money due has been obtained as described in
Section 5.02, the Noteholders of not less than a majority of the Outstanding
Amount of the Notes may waive any past Default and its consequences except a
Default (a) in payment when due of principal of or interest (including, subject
to the limitations of Sections 2.07(d) and 8.02(c), any Noteholders' Interest
Index Carryover) on any of the Notes or (b) in respect of a covenant or
provision hereof which cannot be modified or amended without the consent of each
Noteholder. In the case of any such waiver, the Issuer, the Indenture Trustee
and the Noteholders shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be
deemed to have been cured and not to have occurred for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereto.
SECTION 5.13. UNDERTAKING FOR COSTS. All parties to this
Indenture agree, and each Noteholder by such Noteholder's acceptance of any Note
shall be deemed to have agreed, that any court may in its discretion require, in
any suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Indenture Trustee for any action taken, suffered or omitted
by it as Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply
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to (a) any suit instituted by the Indenture Trustee, (b) any suit instituted by
any Noteholder, or group of Noteholders, in each case holding in the aggregate
more than 10% of the Outstanding Amount of the Notes or (c) any suit instituted
by any Noteholder for the enforcement of the payment of principal of or interest
(including any Noteholders' Interest Index Carryover) on any Note on or after
the respective due dates expressed in such Note and in this Indenture (or, in
the case of redemption, on or after the Redemption Date).
SECTION 5.14. WAIVER OF STAY OR EXTENSION LAWS. The Issuer
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead or in any manner whatsoever, claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the performance of
this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
SECTION 5.15. ACTION ON NOTES. The Indenture Trustee's right
to seek and recover judgment on the Notes or under this Indenture shall not be
affected by the seeking, obtaining or application of any other relief under or
with respect to this Indenture. Neither the lien of this Indenture nor any
rights or remedies of the Indenture Trustee or the Noteholders shall be impaired
by the recovery of any judgment by the Indenture Trustee against the Issuer or
by the levy of any execution under such judgment upon any portion of the
Indenture Trust Estate or upon any of the assets of the Issuer. Any money or
property collected by the Indenture Trustee shall be applied in accordance with
Section 5.04(b).
SECTION 5.16. PERFORMANCE AND ENFORCEMENT OF CERTAIN
OBLIGATIONS. (a) Promptly following a request from the Indenture Trustee to do
so and at the Administrator's expense, the Issuer shall take all such lawful
action as the Indenture Trustee may request to compel or secure the performance
and observance by the Seller, the Administrator and the Servicer, as applicable,
of each of their obligations to the Issuer under or in connection with the Sale
and Servicing Agreement and the Supplemental Sale and Servicing Agreement (and
with respect to the Administrator only, the Administration Agreement) in
accordance with the
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terms thereof, and to exercise any and all rights, remedies, powers and
privileges lawfully available to the Issuer under or in connection with the Sale
and Servicing Agreement and the Supplemental Sale and Servicing Agreement (and
the Administration Agreement) to the extent and in the manner directed by the
Indenture Trustee, including the transmission of notices of default on the part
of the Seller, the Administrator or the Servicer thereunder and the institution
of legal or administrative actions or proceedings to compel or secure
performance by the Seller, the Administrator or the Servicer of each of their
obligations under the Sale and Servicing Agreement and the Supplemental Sale and
Servicing Agreement (and the Administration Agreement).
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and at the direction (which direction shall be in writing
or by telephone (confirmed in writing promptly thereafter)) of the Noteholders
of 66-2/3% of the Outstanding Amount of the Notes shall, exercise all rights,
remedies, powers, privileges and claims of the Issuer against the Seller, the
Administrator or the Servicer under or in connection with the Sale and Servicing
Agreement and the Supplemental Sale and Servicing Agreement (and the
Administration Agreement), including the right or power to take any action to
compel or secure performance or observance by the Seller, the Administrator or
the Servicer of each of their obligations to the Issuer thereunder and to give
any consent, request, notice, direction, approval, extension or waiver under the
Sale and Servicing Agreement and the Supplemental Sale and Servicing Agreement
(and the Administration Agreement) and any right of the Issuer to take such
action shall be suspended.
ARTICLE VI
THE INDENTURE TRUSTEE
---------------------
SECTION 6.01. DUTIES OF INDENTURE TRUSTEE. (a) If an Event of
Default has occurred and is continuing, the Indenture Trustee shall exercise the
rights and powers vested in it by this Indenture and use the same degree of care
and skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
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(b) Except during the continuance of an Event of
Default:
(i) the Indenture Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture
and no implied covenants or obligations shall be read into this
Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; PROVIDED, HOWEVER, that the Indenture
Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability
for its own negligent action, its own negligent failure to act or its own
willful misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to Section 5.11.
(d) Every provision of this Indenture that in any way relates
to the Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this
Section.
(e) The Indenture Trustee shall not be liable for interest on
any money received by it except as the Indenture Trustee may agree in writing
with the Issuer.
(f) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent
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required by law or the terms of this Indenture or the Sale and Servicing
Agreement.
(g) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayments of such funds or adequate indemnity satisfactory to it against any
loss, liability or expense is not reasonably assured to it.
(h) Except as expressly provided in the Basic Documents, the
Indenture Trustee shall have no obligation to administer, service or collect the
Financed Student Loans or to maintain, monitor or otherwise supervise the
administration, servicing or collection of the Financed Student Loans.
(i) In the event that the Indenture Trustee is the Paying
Agent or the Note Registrar, the rights and protections afforded to the
Indenture Trustee pursuant to this Indenture shall also be afforded to the
Indenture Trustee in its capacity as Paying Agent or Note Registrar.
(j) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
SECTION 6.02. RIGHTS OF INDENTURE TRUSTEE. (a) The Indenture
Trustee may rely on any document believed by it to be genuine and to have been
signed or presented by the proper Person. The Indenture Trustee need not
investigate any fact or matter stated in such document.
(b) Before the Indenture Trustee acts or refrains from acting,
it may require an Officers' Certificate of the Issuer or an Opinion of Counsel.
The Indenture Trustee shall not be liable for any action it takes or omits to
take in good faith in reliance on such Officers' Certificate or Opinion of
Counsel.
(c) The Indenture Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian or nominee, and the Indenture Trustee
shall not be responsible for any misconduct or negligence on the part of, or for
the supervision of, any such agent, attorney,
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custodian or nominee appointed with due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action
it takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; PROVIDED, HOWEVER, that the Indenture Trustee's
conduct does not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Notes shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of such
counsel.
SECTION 6.03. INDIVIDUAL RIGHTS OF INDENTURE TRUSTEE. The
Indenture Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Issuer or its Affiliates
with the same rights it would have if it were not Indenture Trustee. Any Paying
Agent, Note Registrar, co-registrar or co-paying agent may do the same with like
rights. However, the Indenture Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.04. INDENTURE TRUSTEE'S DISCLAIMER. The Indenture
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture or the Notes, it shall not be accountable
for the Issuer's use of the proceeds from the Notes, and it shall not be
responsible for any statement of the Issuer in the Indenture or in any document
issued in connection with the sale of the Notes or in the Notes other than the
Indenture Trustee's certificate of authentication.
SECTION 6.05. NOTICE OF DEFAULTS. If a Default occurs and is
continuing and if it is either actually known or written notice of the existence
thereof has been delivered to a Responsible Officer of the Indenture Trustee,
the Indenture Trustee shall mail to each Noteholder notice of the Default within
90 days after it occurs. Except in the case of a Default in payment of principal
of or interest (including any Noteholders' Interest Index Carryover) on any Note
(including payments pursuant to the mandatory redemption provisions of such
Note), the Indenture Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of Noteholders.
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SECTION 6.06. REPORTS BY INDENTURE TRUSTEE TO NOTEHOLDERS. The
Indenture Trustee shall deliver to each Noteholder (and to each Person who was a
Noteholder at any time during the applicable calendar year) such information as
may be required to enable such holder to prepare its Federal and state income
tax returns. Within 60 days after each December 31 beginning with the December
31 following the date of this Indenture, the Indenture Trustee shall mail to
each Noteholder a brief report as of such December 31 that complies with TIA ss.
313(a) if required by said section. The Indenture Trustee shall also comply with
TIA ss. 313(b). A copy of each such report required pursuant to TIA ss.ss.
313(a) or (b) shall, at the time of such transmissION to Noteholders, be filed
by the Indenture Trustee with the Commission and with each securities exchange,
if any, upon which the Notes are listed, provided that the Issuer has previously
notified the Indenture Trustee of such listing.
SECTION 6.07. COMPENSATION AND INDEMNITY. The Issuer shall
cause the Administrator to pay to the Indenture Trustee reasonable compensation
for its services in accordance with a separate agreement between the
Administrator and the Indenture Trustee and shall cause the Administrator to
reimburse the Indenture Trustee for all reasonable out-of-pocket expenses
incurred or made by it as provided in such separate agreement. The Indenture
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuer shall cause the Administrator to
indemnify the Indenture Trustee against any and all loss, liability or expense
(including attorneys' fees) incurred by it in connection with the administration
of this trust and the performance of its duties hereunder and under the other
Basic Documents. Without limiting the generality of the foregoing, it is
expressly understood that the foregoing indemnity, subject to the last sentence
of this paragraph, shall apply to any loss, liability or expense incurred by the
Indenture Trustee under Section 12(A) of the Supplemental Sale and Servicing
Agreement. The Indenture Trustee shall notify the Issuer and the Administrator
promptly of any claim for which it may seek indemnity. Failure by the Indenture
Trustee to so notify the Issuer and the Administrator shall not relieve the
Issuer or the Administrator of its obligations hereunder and under the other
Basic Documents. The Issuer shall cause the Administrator to defend the claim
and the Administrator shall not be liable for the legal fees and expenses of the
Indenture Trustee after it has assumed such defense; PROVIDED, HOWEVER, that, in
the event that there may be a conflict between the positions of the Indenture
Trustee and the Administrator in conducting the defense of such claim,
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the Indenture Trustee shall be entitled to separate counsel the fees and
expenses of which shall be paid by the Administrator on behalf of the Issuer.
Neither the Issuer nor the Administrator need reimburse any expense or indemnify
against any loss, liability or expense incurred by the Indenture Trustee through
the Indenture Trustee's own willful misconduct, negligence or bad faith.
The Issuer's payment obligations to the Indenture Trustee
pursuant to this Section shall survive the discharge of this Indenture. When the
Indenture Trustee incurs expenses after the occurrence of a Default specified in
Section 5.01(iv) or (v) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable Federal or state bankruptcy, insolvency or similar law.
SECTION 6.08. REPLACEMENT OF INDENTURE TRUSTEE. No resignation
or removal of the Indenture Trustee and no appointment of a successor Indenture
Trustee shall become effective until the acceptance of appointment by the
successor Indenture Trustee pursuant to this Section 6.08. The Indenture Trustee
may resign at any time by so notifying the Issuer. The Noteholders of a majority
in Outstanding Amount of the Notes may remove the Indenture Trustee by so
notifying the Indenture Trustee and may appoint a successor Indenture Trustee.
The Issuer shall remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) an Insolvency Event occurs with respect to the Indenture
Trustee;
(iii) a receiver or other public officer takes charge of the
Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of
acting.
If the Indenture Trustee resigns or is removed or if a vacancy
exists in the office of Indenture Trustee for any reason (the Indenture Trustee
in such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall promptly appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a
written acceptance of its appointment to the retiring
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Indenture Trustee and to the Issuer. Thereupon the resignation or removal of the
retiring Indenture Trustee shall become effective, and the successor Indenture
Trustee shall have all the rights, powers and duties of the Indenture Trustee
under this Indenture. The successor Indenture Trustee shall mail a notice of its
succession to Noteholders. The retiring Indenture Trustee shall promptly
transfer all property held by it as Indenture Trustee to the successor Indenture
Trustee.
If a successor Indenture Trustee does not take office within
60 days after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Noteholders of a majority in Outstanding
Amount of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11,
any Noteholder may petition any court of competent jurisdiction for the removal
of the Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee
pursuant to this Section, the Issuer's and the Administrator's obligations under
Section 6.07 shall continue for the benefit of the retiring Indenture Trustee.
SECTION 6.09. SUCCESSOR INDENTURE TRUSTEE BY MERGER. If the
Indenture Trustee consolidates with, merges or converts into, or transfers all
or substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Indenture Trustee;
provided that such corporation or banking association shall be otherwise
qualified and eligible under Section 6.11. The Indenture Trustee shall provide
the Rating Agencies prior written notice of any such transaction.
In case at the time such successor or successors by merger,
conversion or consolidation to the Indenture Trustee shall succeed to the trusts
created by this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the certificate
of authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the
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Indenture Trustee may authenticate such Notes either in the name of any
predecessor hereunder or in the name of the successor to the Indenture Trustee;
and in all such cases such certificates shall have the full force which it is
anywhere in the Notes or in this Indenture provided that the certificate of the
Indenture Trustee shall have.
SECTION 6.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
(a) Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Indenture Trust Estate may at the time be located, the Indenture Trustee
shall have the power and may execute and deliver all instruments to appoint one
or more Persons to act as a co-trustee or co-trustees, or separate trustee or
separate trustees, of all or any part of the Indenture Trust Estate, and to vest
in such Person or Persons, in such capacity and for the benefit of the
Noteholders, such title to the Indenture Trust Estate, or any part hereof, and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Indenture Trustee may consider necessary
or desirable. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 6.11 and no
notice to Noteholders of the appointment of any co-trustee or separate trustee
shall be required under Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Indenture Trustee joining in such act), except to the extent that under
any law of any jurisdiction in which any particular act or acts are to
be performed the Indenture Trustee shall be incompetent or unqualified
to perform such act or acts, in which event such rights, powers, duties
and obligations (including the holding of title to the Indenture Trust
Estate or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Indenture Trustee;
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(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the
Indenture Trustee shall be deemed to have been given to each of the then
separate trustees and co-trustees, as effectively as if given to each of them.
Every instrument appointing any separate trustee or co-trustee shall refer to
this Indenture and the conditions of this Article VI. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Indenture Trustee or separately, as may be provided therein,
subject to all the provisions of this Indenture, specifically including every
provision of this Indenture relating to the conduct of, affecting the liability
of, or affording protection to, the Indenture Trustee. Every such instrument
shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time
constitute the Indenture Trustee, its agent or attorney-in-fact with full power
and authority, to the extent not prohibited by law, to do any lawful act under
or in respect of this Indenture on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all its estates, properties, rights, remedies and trusts shall vest in
and be exercised by the Indenture Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
SECTION 6.11. ELIGIBILITY; DISQUALIFICATION. The Indenture
Trustee shall at all times satisfy the requirements of TIA section 310(a). The
Indenture Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of condition
and it shall have a long term debt rating of Baa3 or better by Moody's. The
Indenture Trustee shall comply with TIA section 310(b), including the optional
provision permitted by the second sentence of TIA section 310(b)(9); PROVIDED,
HOWEVER, that there shall be excluded from the operation of TIA section 310(b)
(1) any indenture or indentures under which other securities of the
Issuer are outstanding
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if the requirements for such exclusion set forth in TIA section 310(b)(1) are
met.
SECTION 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST
ISSUER. The Indenture Trustee shall comply with TIA section 311(a), excluding
any creditor relationship listed iN TIA section 311(b). An Indenture Trustee
who has resigned or beeN removed shall be subject to TIA section 311(a) to the
extent indicated.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
------------------------------
SECTION 7.01. ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND
ADDRESSES OF NOTEHOLDERS. The Issuer will furnish or cause to be furnished to
the Indenture Trustee (a) not more than five days after the earlier of (i) each
Record Date and (ii) three months after the last Record Date, a list, in such
form as the Indenture Trustee may reasonably require, of the names and addresses
of the Noteholders as of such Record Date, (b) at such other times as the
Indenture Trustee may request in writing, within 30 days after receipt by the
Issuer of any such request, a list of similar form and content as of a date not
more than 10 days prior to the time such list is furnished; PROVIDED, HOWEVER,
that so long as the Indenture Trustee is the Note Registrar, no such list shall
be required to be furnished.
SECTION 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO
NOTEHOLDERS. (a) The Indenture Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of the Noteholders contained
in the most recent list furnished to the Indenture Trustee as provided in
Section 7.01 and the names and addresses of Noteholders received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in such Section 7.01 upon receipt
of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA section 312(b)
with other Noteholders with respect to their rights under this Indenture or
under the Notes. Upon receipt by the Indenture Trustee of any request by a
Noteholder to receive a copy of the current list of Noteholders (whether or not
made pursuant to TIA section 312(b)), the Indenture Trustee shall promptly
notify the Administrator thereof by providing to the Administrator a
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copy of such request and a copy of the list of Noteholders produced in response
thereto.
(c) The Issuer, the Indenture Trustee and the Note Registrar
shall have the protection of TIA section 312(c).
(d) The Indenture Trustee shall furnish to the Noteholders
promptly upon receipt of a written request therefor, duplicates or copies of all
reports, notices, requests, demands, certificates, financial statements and any
other instruments furnished to the Indenture Trustee under the Basic Documents.
SECTION 7.03. REPORTS BY ISSUER. (a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the
Issuer is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may
from time to time by rules and regulations prescribe) which the Issuer
may be required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA
section 313(c)) such summaries of any information, documents and
reports required to be filed by the Issuer pursuant to clauses (i) and
(ii) of this Section 7.03(a) as may be required by rules and
regulations prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of
the Issuer shall end on December 31 of each year.
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ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
------------------------------------
SECTION 8.01. COLLECTION OF MONEY. Except as otherwise
expressly provided herein, the Indenture Trustee may demand payment or delivery
of, and shall receive and collect, directly and without intervention or
assistance of any fiscal agent or other intermediary, all money and other
property payable to or receivable by the Indenture Trustee pursuant to this
Indenture. The Indenture Trustee shall apply all such money received by it on
behalf of Noteholders pursuant to the Sale and Servicing Agreement as provided
in this Indenture. Except as otherwise expressly provided in this Indenture, if
any default occurs in the making of any payment or performance under any
agreement or instrument that is part of the Indenture Trust Estate, the
Indenture Trustee may take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
Proceedings. Any such action shall be without prejudice to any right to claim a
Default under this Indenture and any right to proceed thereafter as provided in
Article V.
SECTION 8.02. TRUST ACCOUNTS. (a) On or prior to the Closing
Date, the Issuer shall cause the Administrator to establish and maintain, in the
name of the Indenture Trustee, for the benefit of the Noteholders and the
Certificateholders, the Trust Accounts as provided in Section 5.01 of the Sale
and Servicing Agreement.
(b) On or before the Business Day preceding each Distribution
Date, all Available Funds with respect to the preceding Collection Period will
be deposited in the Collection Account as provided in Section 5.02 of the Sale
and Servicing Agreement. On or before each Distribution Date, the Noteholders'
Distribution Amount and any Noteholders' Interest Index Carryover, if any, with
respect to the preceding Collection Period will be distributed from the
Collection Account and any other Trust Account to the Indenture Trustee (or any
other Paying Agent) on behalf of the Noteholders as provided in Sections 5.05
and 5.06 of the Sale and Servicing Agreement.
(c) On each Distribution Date and Redemption Date, the
Indenture Trustee (or any other Paying Agent) shall distribute all amounts
received by it on behalf of Noteholders pursuant to paragraph (b) above to
Noteholders in respect of the Notes to the extent of amounts due and unpaid on
the Notes for principal, interest and any
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Noteholders' Interest Index Carryover in the following amounts and in the
following order of priority (except as otherwise provided in Section 5.04(b)):
(i) the Noteholders' Interest Distribution Amount, to the
Noteholders in an amount equal to the accrued and unpaid interest on
the Notes; provided that if there are not sufficient funds received to
pay the entire amount of accrued and unpaid interest then due on the
Notes, the amounts so received shall be applied to the payment of such
interest on the Notes on a pro rata basis;
(ii) the Noteholders' Principal Distribution Amount, to the
Noteholders until the Outstanding Amount of the Notes is reduced to
zero provided, that if there are not sufficient funds received to pay
the Outstanding Amount of the Notes, the amounts so received shall be
applied to the payment of principal on the Notes on a pro rata basis;
and
(iii) the Noteholders' Interest Index Carryover, if any, to the
Noteholders; provided that if insufficient funds are received to pay
the entire Noteholders' Interest Index Carryover then outstanding, the
amounts so received shall be applied to the payment of such
Noteholders' Interest Index Carryover on a pro rata basis.
SECTION 8.03. GENERAL PROVISIONS REGARDING ACCOUNTS. (a) So
long as no Default shall have occurred and be continuing, all or a portion of
the funds in the Trust Accounts shall be invested in Eligible Investments and
reinvested by the Indenture Trustee upon Issuer Order, subject to the provisions
of Section 5.01(b) of the Sale and Servicing Agreement. All income or other gain
from investments of moneys deposited in the Trust Accounts shall be deposited by
the Indenture Trustee in the Collection Account, and any loss resulting from
such investments shall be charged to such Trust Account. The Issuer will not
direct the Indenture Trustee to make any investment of any funds or to sell any
investment held in any of the Trust Accounts unless the security interest
granted and perfected in such account will continue to be perfected in such
investment or the proceeds of such sale, in either case without any further
action by any Person, and, in connection with any direction to the Indenture
Trustee to make any such investment or sale, if requested by the Indenture
Trustee, the Issuer shall deliver to the Indenture Trustee an Opinion
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of Counsel, acceptable to the Indenture Trustee, to such effect.
(b) Subject to Section 6.01(c), the Indenture Trustee shall
not in any way be held liable by reason of any insufficiency in any of the Trust
Accounts resulting from any loss on any Eligible Investment included therein
except for losses attributable to the Indenture Trustee's failure to make
payments on such Eligible Investments issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as trustee, in accordance with
their terms.
(c) If (i) the Issuer shall have failed to give investment
directions for any funds on deposit in the Trust Accounts to the Indenture
Trustee by 10:00 a.m. Eastern Time (or such other time as may be agreed by the
Issuer and Indenture Trustee) on any Business Day; or (ii) a Default shall have
occurred and be continuing with respect to the Notes but the Notes shall not
have been declared due and payable pursuant to Section 5.02, or, if such Notes
shall have been declared due and payable following an Event of Default, amounts
collected or receivable from the Indenture Trust Estate are being applied in
accordance with Section 5.05 as if there had not been such a declaration; then
the Indenture Trustee shall, to the fullest extent practicable, invest and
reinvest funds in the Trust Accounts in one or more Eligible Investments.
SECTION 8.04. RELEASE OF INDENTURE TRUST ESTATE. (a) Subject
to the payment of its fees and expenses pursuant to Section 6.07, the Indenture
Trustee may, and when required by the provisions of this Indenture shall,
execute instruments to release property from the lien of this Indenture, or
convey the Indenture Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture.
No party relying upon an instrument executed by the Indenture Trustee as
provided in this Article VIII shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any moneys.
(b) The Indenture Trustee shall, at such time as there are no
Notes Outstanding and all sums due the Indenture Trustee pursuant to Section
6.07 have been paid, release any remaining portion of the Indenture Trust Estate
that secured the Notes from the lien of this Indenture and release to the Issuer
or any other Person entitled thereto any funds then on deposit in the Trust
Accounts. The Indenture Trustee shall release property from the lien of
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this Indenture pursuant to this Section 8.04(b) only upon receipt of an Issuer
Request accompanied by an Officers' Certificate of the Issuer, an Opinion of
Counsel and (if required by the TIA) Independent Certificates in accordance with
TIA sections 314(c) and 314(d)(1) meeting the applicable requirements of Section
11.01.
(c) Each Noteholder, by the acceptance of a Note, acknowledges
that from time to time during the Funding Period the Indenture Trustee shall
release the lien of this Indenture on those Financed Federal Loans to be sold to
the Seller and as to which the Seller will simultaneously deposit the aggregate
Purchase Amounts thereof into the Escrow Account in accordance with, and subject
to the terms and conditions of, Section 2.03 of the Sale and Servicing
Agreement, and each Noteholder consents to such release.
SECTION 8.05. OPINION OF COUNSEL. The Indenture Trustee shall
receive at least seven days' notice when requested by the Issuer to take any
action pursuant to Section 8.04(a), accompanied by copies of any instruments
involved, and the Indenture Trustee shall also require, except in connection
with any action contemplated by Section 8.04(c), as a condition to such action,
an Opinion of Counsel, in form and substance satisfactory to the Indenture
Trustee, stating the legal effect of any such action, outlining the steps
required to complete the same, and concluding that all conditions precedent to
the taking of such action have been complied with and such action will not
materially and adversely impair the security for the Notes or the rights of the
Noteholders in contravention of the provisions of this Indenture; PROVIDED,
HOWEVER, that such Opinion of Counsel shall not be required to express an
opinion as to the fair value of the Indenture Trust Estate. Counsel rendering
any such opinion may rely, without independent investigation, on the accuracy
and validity of any certificate or other instrument delivered to the Indenture
Trustee in connection with any such action.
ARTICLE IX
SUPPLEMENTAL INDENTURES
-----------------------
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
NOTEHOLDERS. (a) Without the consent of any Noteholders but with prior notice to
the Rating Agencies, the Issuer and the Indenture Trustee, when authorized by an
Issuer Order, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall
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conform to the provisions of the Trust Indenture Act as in force at the date of
the execution thereof), in form satisfactory to the Indenture Trustee, for any
of the following purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject
to the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Noteholders, or to surrender any right or power herein conferred
upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any supplemental
indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental
indenture; provided that such action shall not materially adversely
affect the interests of the Noteholders;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
Federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA.
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The Indenture Trustee is hereby authorized to join in the
execution of any such supplemental indenture and to make any further appropriate
agreements and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by
an Issuer Order, may, also without the consent of any of the Noteholders but
with prior notice to the Rating Agencies, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Noteholders under this Indenture;
PROVIDED, HOWEVER, that such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Noteholder.
SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF
NOTEHOLDERS. The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, also may, with prior notice to the Rating Agencies and with the consent
of the Noteholders of not less than a majority of the Outstanding Amount of the
Notes, by Act of such Noteholders delivered to the Issuer and the Indenture
Trustee, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Noteholders under this Indenture; PROVIDED, HOWEVER, that no such
supplemental indenture shall, without the consent of the Noteholder of each
Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal
of or interest (including any Noteholders' Interest Index Carryover) on
any Note, or reduce the principal amount thereof, the interest rate
thereon or the Redemption Price with respect thereto, change the
provisions of this Indenture relating to the application of collections
on, or the proceeds of the sale of, the Indenture Trust Estate to
payment of principal of or interest (including any Noteholders'
Interest Index Carryover) on the Notes, or change any place of payment
where, or the coin or currency in which, any Note or the interest
thereon is payable, or impair the right to institute suit for the
enforcement of the provisions of this Indenture requiring the
application of funds available therefor, as provided in Article V, to
the payment of any such amount due on the Notes on or after the
respective due dates thereof (or,
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in the case of redemption, on or after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the
Notes, the consent of the Noteholders of which is required for any such
supplemental indenture, or the consent of the Noteholders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences provided
for in this Indenture;
(iii) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the
Notes required to direct the Indenture Trustee to direct the Issuer to
sell or liquidate the Indenture Trust Estate pursuant to Section 5.04;
(v) modify any provision of this Section except to increase
any percentage specified herein or to provide that certain additional
provisions of this Indenture or the other Basic Documents cannot be
modified or waived without the consent of the Noteholder of each
Outstanding Note affected thereby;
(vi) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of
interest (including any Noteholders' Interest Index Carryover) or
principal due on any Note on any Distribution Date (including the
calculation of any of the individual components of such calculation) or
to affect the rights of the Noteholders to the benefit of any
provisions for the mandatory redemption of the Notes contained herein;
or
(vii) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the
Indenture Trust Estate or, except as otherwise permitted or
contemplated herein, terminate the lien of this Indenture on any
property at any time subject hereto or deprive any Noteholder of any
Note of the security provided by the lien of this Indenture.
The Indenture Trustee may in its discretion determine whether
or not any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Noteholders of all Notes, whether
theretofore or thereafter authenticated and delivered
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hereunder. The Indenture Trustee shall not be liable for any such determination
made in good faith.
It shall not be necessary for any Act of Noteholders under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Promptly after the execution by the Issuer and the Indenture
Trustee of any supplemental indenture pursuant to this Section, the Indenture
Trustee shall mail to the Noteholders of the Notes to which such amendment or
supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES. In
executing, or permitting the additional trusts created by, any supplemental
indenture permitted by this Article IX or the modifications thereby of the
trusts created by this Indenture, the Indenture Trustee shall be entitled to
receive, and subject to Sections 6.01 and 6.02, shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Indenture Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Indenture Trustee's own rights, duties,
liabilities or immunities under this Indenture or otherwise.
SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURE. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith with respect to the Notes affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Indenture Trustee, the Issuer and the Noteholders shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT. Every
amendment of this Indenture and every supplemental indenture executed pursuant
to this Article IX
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shall conform to the requirements of the Trust Indenture Act as then in effect
so long as this Indenture shall then be qualified under the Trust Indenture Act.
SECTION 9.06. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article IX may, and if required by the Indenture
Trustee shall, bear a notation in form approved by the Indenture Trustee as to
any matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new Notes so modified as to conform, in
the opinion of the Indenture Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for Outstanding Notes.
ARTICLE X
REDEMPTION OF NOTES
-------------------
SECTION 10.01. REDEMPTION. (a)(i) In the event that on the
Special Determination Date any amount remains on deposit in the Subsequent Pool
Pre-Funding Subaccount, after giving effect to the purchase of any Subsequent
Pool Student Loans on such date, and the Pre-Funded Amount, after giving effect
to all Additional Fundings on such date, is greater than 25% of the sum of (x)
the principal amount of Notes and (y) the principal balance of the Certificates,
in each case on the Closing Date, the Notes will be redeemed in part, on a pro
rata basis, in an aggreagte principal amount equal to the Noteholders'
Percentage of the amount remaining on deposit in the Subsequent Pool Pre-Funding
Subaccount.
(ii) In the event that on the Distribution Date on which the
Funding Period ends (or on the Distribution Date on or immediately
following the last day of the Funding Period, if the Funding Period
does not end on a Distribution Date) any amount remains on deposit in
the Pre-Funding Account after giving effect to the making of all
Additional Fundings, including any such Additional Fundings on such
Redemption Date, the Notes will be redeemed in part, on a pro rata
basis, in an aggregate principal amount equal to the amount then on
deposit in the Pre-Funding Account.
(b) In the event that the assets of the Trust are sold
pursuant to Section 9.02 of the Trust Agreement, that portion of the amounts on
deposit in the Trust Accounts to
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be distributed to the Noteholders shall be paid to the Noteholders up to the
Outstanding Amount of the Notes and all accrued and unpaid interest thereon and
any accrued Noteholders' Interest Index Carryover with respect thereto (but only
to the extent provided by Sections 2.07(d) and 8.02(c)). If amounts are to be
paid to Noteholders pursuant to this Section 10.01(b), the Servicer, the
Administrator or the Issuer shall, to the extent practicable, furnish notice of
such event to the Indenture Trustee not later than 25 days prior to the
Redemption Date whereupon all such amounts shall be payable on the Redemption
Date.
SECTION 10.02. FORM OF REDEMPTION NOTICE. Notice of redemption
under Section 10.01 shall be given by the Indenture Trustee by first-class mail,
postage prepaid, or by facsimile, mailed or transmitted on or prior to the
applicable Redemption Date to each Noteholder, as of the close of business on
the Record Date preceding the applicable Redemption Date, at such Noteholder's
address or facsimile number appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where such Notes are to be surrendered for
payment of the Redemption Price (which shall be the office or agency
of the Issuer to be maintained as provided in Section 3.02).
Notice of redemption of the Notes shall be given by the
Indenture Trustee in the name and at the expense of the Issuer. Failure to give
notice of redemption, or any defect therein, to any Noteholder of any Note shall
not impair or affect the validity of the redemption of any other Note.
SECTION 10.03. NOTES PAYABLE ON REDEMPTION DATE. The Notes or
portions thereof to be redeemed shall on the Redemption Date become due and
payable at the Redemption Price and (unless the Issuer shall default in the
payment of the Redemption Price) no interest shall accrue on the Redemption
Price for any period after the date to which accrued interest is calculated for
purposes of calculating the Redemption Price.
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ARTICLE XI
MISCELLANEOUS
-------------
SECTION 11.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC. (a)
Upon any application or request by the Issuer to the Indenture Trustee to take
any action under any provision of this Indenture, the Issuer shall furnish to
the Indenture Trustee (i) an Officers' Certificate of the Issuer stating that
all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other
property or securities with the Indenture Trustee that is to be made the basis
for the release of any property or securities subject to the lien of this
Indenture, the Issuer
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shall, in addition to any obligation imposed in Section 11.01(a) or elsewhere in
this Indenture, furnish to the Indenture Trustee an Officers' Certificate of the
Issuer certifying or stating the opinion of each person signing such certificate
as to the fair value (within 90 days of such deposit) to the Issuer of the
Collateral or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officers' Certificate of the Issuer certifying or stating
the opinion of any signer thereof as to the matters described in clause (i)
above, the Issuer shall also deliver to the Indenture Trustee an Independent
Certificate as to the same matters, if the fair value to the Issuer of the
securities to be so deposited and of all other such securities made the basis of
any such withdrawal or release since the commencement of the then-current fiscal
year of the Issuer, as set forth in the certificates delivered pursuant to
clause (i) above and this clause (ii), is 10% or more of the Outstanding Amount
of the Notes, but such a certificate need not be furnished with respect to any
securities so deposited, if the fair value thereof to the Issuer as set forth in
the related Officers' Certificate is less than $25,000 or less than one percent
of the Outstanding Amount of the Notes.
(iii) Other than any property released as contemplated by
clause (v) below, whenever any property or securities are to be released from
the lien of this Indenture, the Issuer shall also furnish to the Indenture
Trustee an Officers' Certificate of the Issuer certifying or stating the opinion
of each person signing such certificate as to the fair value (within 90 days of
such release) of the property or securities proposed to be released and stating
that in the opinion of such person the proposed release will not impair the
security under this Indenture in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officers' Certificate of the Issuer certifying or stating
the opinion of any signer thereof as to the matters described in clause (iii)
above, the Issuer shall also furnish to the Indenture Trustee an Independent
Certificate as to the same matters if the fair value of the property or
securities and of all other property, other than property as contemplated by
clause (v) below, or securities released from the lien of this Indenture since
the commencement of the then-current calendar year, as set forth in the
certificates required by clause (iii) above and this clause (iv), equals 10% or
more
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of the Outstanding Amount of the Notes, but such certificate need not be
furnished in the case of any release of property or securities if the fair value
thereof as set forth in the related Officers' Certificate is less than $25,000
or less than one percent of the then Outstanding Amount of the Notes.
(v) Notwithstanding Section 2.09 or any other provision of
this Section, the Issuer may, without compliance with the requirements of the
other provisions of this Section, (A) collect, liquidate, sell or otherwise
dispose of Financed Student Loans as and to the extent permitted or required by
the Basic Documents, (B) make cash payments out of the Trust Accounts as and to
the extent permitted or required by the Basic Documents and (C) convey to the
Seller, in order to allow the Seller to make Consolidation Loans, those
specified Financed Student Loans as and to the extent permitted or required by
and in accordance with Section 8.04(c) hereof and Section 2.03 of the Sale and
Servicing Agreement, so long as the Issuer shall deliver to the Indenture
Trustee every six months, commencing _____ __, 1997, an Officers' Certificate of
the Issuer stating that all the dispositions of Collateral described in clauses
(A), (B) or (C) above that occurred during the immediately preceding six
calendar months were in the ordinary course of the Issuer's business and that
the proceeds thereof were applied in accordance with the Basic Documents.
SECTION 11.02. FORM OF DOCUMENTS DELIVERED TO INDENTURE
TRUSTEE. In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the
Issuer may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it
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relates to factual matters, upon a certificate or opinion of, or representations
by, an officer or officers of the Servicer, the Seller, the Issuer or the
Administrator, stating that the information with respect to such factual matters
is in the possession of the Servicer, the Seller, the Issuer or the
Administrator, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
Whenever in this Indenture, in connection with any application
or certificate or report to the Indenture Trustee, it is provided that the
Issuer shall deliver any document as a condition of the granting of such
application, or as evidence of the Issuer's compliance with any term hereof, it
is intended that the truth and accuracy, at the time of the granting of such
application or at the effective date of such certificate or report (as the case
may be), of the facts and opinions stated in such document shall in such case be
conditions precedent to the right of the Issuer to have such application granted
or to the sufficiency of such certificate or report. The foregoing shall not,
however, be construed to affect the Indenture Trustee's right to rely upon the
truth and accuracy of any statement or opinion contained in any such document as
provided in Article VI.
SECTION 11.03. ACTS OF NOTEHOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to the Indenture Trustee, and, where it
is hereby expressly required, to the Issuer. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Noteholders signing such instrument or instruments. Proof
of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Section
6.01) conclusive in favor of the
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Indenture Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any person of any
such instrument or writing may be proved in any manner that the Indenture
Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the
Note Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Noteholder of any Notes shall bind the
Noteholder of every Note issued upon the registration thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or suffered to
be done by the Indenture Trustee or the Issuer in reliance thereon, whether or
not notation of such action is made upon such Note.
SECTION 11.04. NOTICES, ETC., TO INDENTURE TRUSTEE, ISSUER AND
RATING AGENCIES. Any request, demand, authorization, direction, notice, consent,
waiver or Act of Noteholders or other documents provided or permitted by this
Indenture shall be in writing and if such request, demand, authorization,
direction, notice, consent, waiver or act of Noteholders is to be made upon,
given or furnished to or filed with:
(a) the Indenture Trustee by any Noteholder or by the Issuer
shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Indenture Trustee at its
Corporate Trust Office, or
(b) the Issuer by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder if in writing and
mailed, first-class, postage prepaid, to the Issuer addressed to:
KeyCorp Student Loan Trust 1996-A, in care of The First National Bank
of Chicago, One First National Plaza, Suite 0126, Chicago, Illinois
60670, Attention: Corporate Trust Administration; with a copy to the
Administrator, 5000 Tiedeman Road, Brooklyn, Ohio 44144, Attention:
Senior Vice President, Education Lending, or at any other address
previously furnished in writing to the Indenture Trustee by the Issuer
or the Administrator. The Issuer shall promptly transmit any notice
received by it from the Noteholders to the Indenture Trustee.
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Notices required to be given to the Rating Agencies by the
Issuer, the Indenture Trustee or the Eligible Lender Trustee shall be in
writing, personally delivered or mailed by certified mail, return receipt
requested, to (i) in the case of Moody's, at the following address: Moody's
Investors Service, Inc., ABS Monitoring Department, 99 Church Street, New York,
New York 10007 and (ii) in the case of Standard & Poor's, at the following
address: Standard & Poor's Corporation, 25 Broadway (20th Floor), New York, New
York 10004, Attention of Asset Backed Surveillance Department; or as to each of
the foregoing, at such other address as shall be designated by written notice to
the other parties.
SECTION 11.05. NOTICES TO NOTEHOLDERS; WAIVER. Where this
Indenture provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Indenture Trustee
shall be deemed to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating
Agencies, failure to give such notice shall not
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affect any other rights or obligations created hereunder, and shall not under
any circumstance constitute a Default.
SECTION 11.06. ALTERNATE PAYMENT AND NOTICE PROVISIONS.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Noteholder providing
for a method of payment, or notice by the Indenture Trustee or any Paying Agent
to such Noteholder, that is different from the methods provided for in this
Indenture for such payments or notices. The Issuer will furnish to the Indenture
Trustee a copy of each such agreement and the Indenture Trustee will cause
payments to be made and notices to be given in accordance with such agreements.
SECTION 11.07. CONFLICT WITH TRUST INDENTURE ACT. If any
provision hereof limits, qualifies or conflicts with another provision hereof
that is required to be included in this Indenture by any of the provisions of
the Trust Indenture Act, such required provision shall control.
The provisions of TIA sections 310 through 317 that impose
duties on any Person (including the provisions automatically deemed included
herein unless expressly excluded by this Indenture) are a part of and govern
this Indenture, whether or not physically contained herein.
SECTION 11.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 11.09. SUCCESSORS AND ASSIGNS. All covenants and
agreements in this Indenture and the Notes by the Issuer shall bind its
successors and assigns, whether so expressed or not. All agreements of the
Indenture Trustee in this Indenture shall bind the successors, co-trustees and
agents (excluding any legal representatives or accountants) of the Indenture
Trustee.
SECTION 11.10. SEPARABILITY. In case any provision in this
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 11.11. BENEFITS OF INDENTURE. Nothing in this
Indenture or in the Notes, express or implied, shall give to any Person, other
than the parties hereto and their successors hereunder, and the Noteholders, and
any other
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party secured hereunder, and any other Person with an ownership interest in any
part of the Indenture Trust Estate, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
SECTION 11.12. LEGAL HOLIDAYS. In any case where the date on
which any payment is due shall not be a Business Day, then (notwithstanding any
other provision of the Notes or this Indenture) payment need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.13. GOVERNING LAW. This Indenture shall be
construed in accordance with the laws of the State of New York, without
reference to its conflict of law provisions, and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.
SECTION 11.14. COUNTERPARTS. This Indenture may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.15. RECORDING OF INDENTURE. If this Indenture is
subject to recording in any appropriate public recording offices, such recording
is to be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Noteholders or any other
Person secured hereunder or for the enforcement of any right or remedy granted
to the Indenture Trustee under this Indenture.
SECTION 11.16. TRUST OBLIGATIONS. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the
Seller, the Administrator, the Servicer, the Eligible Lender Trustee or the
Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Seller, the Administrator, the Servicer, the Indenture Trustee or the Eligible
Lender Trustee in its individual capacity or (ii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Seller, the
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Administrator, the Servicer, the Indenture Trustee or the Eligible Lender
Trustee in its individual capacity, any holder or owner of a beneficial interest
in the Issuer, the Eligible Lender Trustee or the Indenture Trustee or of any
successor or assign of the Seller, the Administrator, the Servicer, the
Indenture Trustee or the Eligible Lender Trustee in its individual capacity,
except as any such Person may have expressly agreed (it being understood that
the Indenture Trustee and the Eligible Lender Trustee have no such obligations
in their individual capacity) and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity. For all purposes of this
Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Eligible Lender Trustee shall be subject to, and entitled to the
benefits of, the terms and provisions of Article VI, VII and VIII of the Trust
Agreement.
SECTION 11.17. NO PETITION. The Indenture Trustee, by entering
into this Indenture, and each Noteholder, by accepting a Note, hereby covenant
and agree that they will not at any time institute against the Seller or the
Issuer, or join in any institution against the Seller or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency, receivership or liquidation
proceedings, or other proceedings under any United States Federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes, this Indenture or any of the other Basic Documents.
SECTION 11.18. INSPECTION. The Issuer agrees that, on
reasonable prior notice, it will permit any representative of the Indenture
Trustee, during the Issuer's normal business hours, to examine all the books of
account, records, reports, and other papers of the Issuer, to make copies and
extracts therefrom, to cause such books to be audited by Independent certified
public accountants, and to discuss the Issuer's affairs, finances and accounts
with the Issuer's officers, employees, and Independent certified public
accountants, all at such reasonable times and as often as may be reasonably
requested. The Indenture Trustee shall and shall cause its representatives to
hold in confidence all such information obtained from such examination or
inspection except to the extent disclosure may be required by law (and all
reasonable applications for
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confidential treatment are unavailing) and except to the extent that the
Indenture Trustee may reasonably determine that such disclosure is consistent
with its obligations hereunder.
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have
caused this Indenture to be duly executed by their respective officers,
thereunto duly authorized and duly attested, all as of the day and year first
above written.
KEYCORP STUDENT LOAN TRUST
1996-A,
by THE FIRST NATIONAL BANK OF
CHICAGO, not in its individual
capacity but solely as
Eligible Lender Trustee,
by
------------------------------
Name:
Title:
_____________________, not in
its individual capacity but
solely as Indenture Trustee,
by
------------------------------
Name:
Title:
Acknowledged and accepted as to the
Granting Clause as of the day and
year first above written:
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but
solely as Eligible Lender Trustee,
by
-------------------------
Name:
Title:
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STATE OF NEW YORK, )
) ss.:
COUNTY OF NEW YORK, )
BEFORE ME, the undersigned authority, a Notary Public in and
for said county and state, on this day personally appeared , known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said KEYCORP STUDENT LOAN
TRUST 1996-A, a New York trust, and that such person executed the same as the
act of said trust for the purpose and consideration therein expressed, and in
the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the
day of , 1996.
------------------------------
Notary Public in and for
the State of New York.
[Seal]
My commission expires:
- ------------------------
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STATE OF NEW YORK, )
) ss.:
COUNTY OF NEW YORK, )
BEFORE ME, the undersigned authority, a Notary Public in and
for said county and state, on this day personally appeared , known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said _____________________,
a ________ banking corporation, and that such person executed the same as the
act of said corporation for the purpose and consideration therein expressed, and
in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the
day of , 1996.
------------------------------
Notary Public in and for
the State of New York.
[Seal]
My commission expires:
- ------------------------
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STATE OF NEW YORK, )
) ss.:
COUNTY OF NEW YORK, )
BEFORE ME, the undersigned authority, a Notary Public in and
for said county and state, on this day personally appeared , known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said
__________________________________, a ________ banking association, and that
such person executed the same as the act of said association for the purpose and
consideration therein expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the
day of , 1996.
------------------------------
Notary Public in and for
the State of New York.
[Seal]
My commission expires:
- ------------------------
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<PAGE> 80
EXHIBIT A
TO THE INDENTURE
[FORM OF NOTE]
SEE REVERSE FOR CERTAIN DEFINITIONS
Unless this Note is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
(as defined below) or its agent for registration of transfer, exchange or
payment, and any Note issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THIS NOTE IS NOT
GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY.
REGISTERED CUSIP NO.
$__________ 1
No. R-
KEYCORP STUDENT LOAN TRUST 1996-A
FLOATING RATE ASSET BACKED NOTES
KeyCorp Student Loan Trust 1996-A, a trust organized and
existing under the laws of the State of New York (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of [ ] DOLLARS payable on each
Distribution Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $[INSERT INITIAL PRINCIPAL AMOUNT OF THIS
NOTE] and the denominator of which is $ by (ii) the aggregate amount, if any,
payable to Noteholders on such Distribution Date in respect of principal on the
Notes pursuant to Section 3.01 of the Indenture dated as of
- --------
1 Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
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_________ 1, 1996, between the Issuer and Bankers Trust Company, a ________
banking corporation, as Indenture Trustee (the "Indenture Trustee") (capitalized
terms used but not defined herein are defined in Appendix A to the Indenture,
which also contains rules as to usage that shall be applicable herein);
PROVIDED, HOWEVER, that the entire unpaid principal amount of this Note shall be
due and payable on the _________ 20__ Distribution Date (the "Note Final
Maturity Date").
The Issuer will pay interest on this Note at the rate per
annum equal to the Note Interest Rate (as defined on the reverse hereof), on
each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained in Section 3.01 of the Indenture. Interest on this Note will accrue
for each Distribution Date from the most recent Distribution Date on which
interest has been paid to but excluding such Distribution Date or, if no
interest has yet been paid, from _______ _, 1996. Interest will be computed on
the basis of the actual number of days elapsed in a 360-day year. Such principal
of and interest on this Note shall be paid in the manner specified on the
reverse hereof.
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Note.
Unless the certificate of authentication hereon has been
executed by the Indenture Trustee whose name appears below by manual signature,
this Note shall not be entitled to any benefit under the Indenture referred to
on the reverse hereof, or be valid or obligatory for any purpose.
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IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed, manually or in facsimile, as of the date set forth below.
KEYCORP STUDENT LOAN TRUST 1996-A
by THE FIRST NATIONAL BANK OF
CHICAGO, not in its individual
capacity but solely as
Eligible Lender Trustee under
the Trust Agreement,
by
---------------------------------
Authorized Signatory
Date: _______ __, 1996
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
_____________________, not in its
individual capacity but solely
as Indenture Trustee,
by
------------------------------
Authorized Signatory
Date: _______ __, 1996
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<PAGE> 83
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its Floating Rate Asset Backed Notes (herein called the
"Notes"), all issued under the Indenture, to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the
Noteholders. The Notes are subject to all terms of the Indenture.
The Notes are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal of the Notes will be payable on each Distribution
Date in an amount described on the face hereof. "Distribution Date" means the
twenty-seventh day of each December, March, June and September, or, if any such
date is not a Business Day, the next succeeding Business Day, commencing
December 27, 1996.
As described on the face hereof, the entire unpaid principal
amount of this Note shall be due and payable on the Note Final Maturity Date.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which (i) an Event of Default shall have
occurred and be continuing and (ii) the Indenture Trustee or the Noteholders
representing not less than a majority of the Outstanding Amount of the Notes
shall have declared the Notes to be immediately due and payable in the manner
provided in Section 5.02 of the Indenture. All principal payments on the Notes
shall be made pro rata to the Noteholders entitled thereto.
Interest on the Notes will be payable on each Distribution
Date on the principal amount outstanding of the Notes until the principal amount
thereof is paid in full, at a rate per annum equal to the Note Interest Rate.
The "Note Interest Rate" for each Interest Period shall be equal to the lesser
of (a) the T-Bill Rate plus .__% and (b) the Student Loan Rate for such Interest
Period. The "Student Loan Rate" for any Interest Period will equal the product
of (a) the quotient obtained by dividing (i) 365 (or 366 in a leap year) by (ii)
the actual number of days elapsed in such Interest Period and (b) the percentage
equivalent of a fraction, (i) the numerator of which is equal to Expected
Interest Collections for the month of the Collection Period relating to such
Interest Period less the Servicing Fees and the Administration Fee, payable on
the related Distribution Date and any Servicing Fees paid on the two preceding
Monthly Servicing Payment Dates during the related Collection Period and (ii)
the denominator of which is the
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sum of (x) the Pool Balance as of the first day of the related Collection Period
and (y) the principal balance on deposit in the Pre-Funding Account as of such
first day (after giving effect to all deposits thereto and withdrawals therefrom
on the preceding Distribution Date).
Pursuant to the Sale and Servicing Agreement, the
Administrator shall determine the T-Bill Rate for purposes of calculating the
Note Interest Rate for each given Interest Period. The "T-Bill Rate" means, on
any day, the weighted average per annum discount rate (expressed on a bond
equivalent basis and applied on a daily basis) for 91- day Treasury Bills sold
at the most recent 91-day Treasury Bill auction prior to such date as reported
by the U.S. Treasury Department. In the event that the results of the auctions
of 91-day Treasury Bills cease to be published or reported as provided above, or
that no such auction is held in a particular week, then the "T-Bill Rate" in
effect as a result of the last such publication or report shall remain in effect
until such time, if any, as the results of auctions of 91-day Treasury Bills
shall again be so published or reported or such an auction is held, as the case
may be. The T-Bill Rate shall be subject to a Lock-In Period of six Business
Days.
Any Noteholders' Interest Index Carryover that may exist on
any Distribution Date attributable to the Notes shall be payable to the
Noteholders on that Distribution Date and any succeeding Distribution Dates
solely out of the funds available and required to be applied thereto pursuant to
the Sale and Servicing Agreement.
Payments of interest on this Note due and payable on each
Distribution Date, together with the installment of principal, if any, to the
extent not in full payment of this Note, shall be made by check mailed to the
Person whose name appears as the Registered Holder of this Note (or one or more
Predecessor Notes) on the Note Register on the Record Date, except that with
respect to Notes registered on the Record Date in the name of the nominee of the
Clearing Agency, unless Definitive Notes have been issued (initially, such
nominee to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment, and the mailing of such
check shall constitute payment of the amount thereof regardless of whether such
check is returned undelivered. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Distribution Date shall be binding upon all future Noteholders of this Note and
of any Note issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not noted hereon. If funds are
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expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Distribution Date,
then the Indenture Trustee, in the name of and on behalf of the Issuer, will
notify the Person who was the Noteholder hereof as of the Record Date preceding
such Distribution Date by notice mailed no later than five days prior to such
Distribution Date and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Indenture Trustee's Corporate
Trust Office or at the office of the Indenture Trustee's agent appointed for
such purposes located in the Borough of Manhattan, The City of New York.
The Issuer shall pay interest on overdue installments of
interest at the Note Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed in
part, on a pro rata basis among all Noteholders, on the Distribution Date on
which the Funding Period ends (or on the Distribution Date immediately following
the last day of the Funding Period, if the Funding Period does not end on a
Distribution Date) in the event that any amount remains on deposit in the
Pre-Funding Account after giving effect to all Additional Fundings, including
any occurring on such Distribution Date.
As provided in the Indenture, the Notes may also be redeemed
in part, on a pro rata basis among all Noteholders and Certificateholders, on
______ __, 1996 to the extent of the funds remaining on deposit in the
Subsequent Pool Pre-Funding Subaccount as of ______ __, 1996, after giving
effect to the purchase of any Subsequent Pool Student Loans on such date, if the
amount on deposit in the Subsequent Pool Pre-Funding Subaccount is greater than
zero and the Pre-Funded Amount, after giving effect to all Additional Fundings
on such date, is greater than 25% of the sum of (x) the principal amount of
Notes and (y) the principal balance of the Certificates, in each case as of the
Closing Date.
As provided in the Indenture and subject to certain
limitations set forth therein, the transfer of this Note may be registered on
the Note Register upon surrender of this Note for registration of transfer at
the office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Noteholder hereof or
his attorney duly authorized in writing, with such signature guaranteed by an
"eligible guarantor institution" meeting the requirements of the Note Registrar,
which requirements include membership or participation in Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP (all in
-80-
<PAGE> 86
accordance with the Exchange Act), and such other documents as the Indenture
Trustee may require, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in the Note, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Indenture Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Indenture Trustee or the Eligible Lender Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Eligible Lender Trustee in its individual capacity,
any holder of a beneficial interest in the Issuer, the Eligible Lender Trustee
or the Indenture Trustee, except as any such Person may have expressly agreed
and except that any such partner, owner or beneficiary shall be fully liable, to
the extent provided by applicable law, for any unpaid consideration for stock,
unpaid capital contribution or failure to pay any installment or call owing to
such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note, covenants and agrees
that by accepting the benefits of the Indenture that such Noteholder or Note
Owner will not at any time institute against the Seller or the Issuer, or join
in any institution against the Seller or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency, receivership or liquidation proceedings
or other proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the other Basic Documents.
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
-81-
<PAGE> 87
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Noteholders under the Indenture
at any time by the Issuer with the consent of the Noteholders representing a
majority of the Outstanding Amount of all Notes at the time outstanding. The
Indenture also contains provisions permitting the Noteholders representing
specified percentages of the Outstanding Amount of the Notes, on behalf of all
the Noteholders, to waive compliance by the Issuer 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 (or any one
of more Predecessor Notes) shall be conclusive and binding upon such holder and
upon all future holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The Indenture
also permits the Indenture Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor
to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the Noteholders under the Indenture.
The Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Note shall be construed in accordance with the laws of
the State of New York, without reference to its conflict of law provisions, and
the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the times, place, and rate, and in the coin or currency, herein
prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Basic Documents, neither Bankers Trust Company in its
individual capacity, The First National Bank of Chicago in its individual
capacity, any owner of a beneficial interest in the Issuer, nor any of their
respective partners, beneficiaries, agents, officers, directors, employees or
successors or assigns shall be personally liable for, nor shall recourse be had
to any of
-82-
<PAGE> 88
them for, the payment of principal of or interest on, or performance of, or
omission to perform, any of the covenants, obligations or indemnifications
contained in this Note or the Indenture; it being expressly understood that said
covenants, obligations and indemnifications have been made by the Eligible
Lender Trustee for the sole purposes of binding the interests of the Eligible
Lender Trustee in the assets of the Issuer. The Noteholder of this Note by the
acceptance hereof agrees that, except as expressly provided in the Basic
Documents, in the case of an Event of Default under the Indenture, the
Noteholder shall have no claim against any of the foregoing for any deficiency,
loss or claim therefrom; PROVIDED, HOWEVER, that nothing contained herein shall
be taken to prevent recourse to, and enforcement against, the assets of the
Issuer for any and all liabilities, obligations and undertakings contained in
the Indenture or in this Note.
-83-
<PAGE> 89
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number
of assignee
- ------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto _______________________________
- --------------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ______________________, attorney, to transfer said Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated: _____________
________________________________ */
Signature Guaranteed:
________________________________ */
- ----------------------
*/ NOTICE: The signature to this assignment must
correspond with the name of the registered owner as it
appears on the face of the within Note in every
particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by
an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements
include membership or participation in STAMP or such
other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in
substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
-84-
<PAGE> 1
Exhibit 4(b)
================================================================================
AMENDED AND RESTATED
TRUST AGREEMENT
between
KEY BANK USA, NATIONAL ASSOCIATION
as Depositor
and
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but solely
as Eligible Lender Trustee
Dated as of _________, 1996
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
ARTICLE I
<S> <C> <C>
Definitions and Usage................................................................................... 1
ARTICLE II
ORGANIZATION
------------
SECTION 2.01. Name.................................................................................. 2
SECTION 2.02. Office................................................................................ 2
SECTION 2.03. Purposes and Powers................................................................... 2
SECTION 2.04. Appointment of Eligible Lender
Trustee............................................................................ 3
SECTION 2.05. Initial Capital Contribution of Trust
Estate............................................................................. 3
SECTION 2.06. Declaration of Trust.................................................................. 3
SECTION 2.07. Liability of the Certificate-
holders............................................................................ 4
SECTION 2.08. Title to Trust Property............................................................... 4
SECTION 2.09. Representations and Warranties of the
Depositor.......................................................................... 5
SECTION 2.10. Federal Income Tax Allocations........................................................ 6
ARTICLE III
TRUST CERTIFICATES AND TRANSFER
-------------------------------
OF INTERESTS
------------
SECTION 3.01. Initial Beneficial Ownership.......................................................... 7
SECTION 3.02. The Trust Certificates................................................................ 7
SECTION 3.03. Authentication of Trust Certificates.................................................. 7
SECTION 3.04. Registration of Transfer and Exchange
of Trust Certificates.............................................................. 8
SECTION 3.05. Mutilated, Destroyed, Lost or Stolen
Trust Certificates................................................................. 9
SECTION 3.06. Persons Deemed Owners................................................................. 10
SECTION 3.07. Access to List of Certificateholders'
Names and Addresses................................................................ 10
SECTION 3.08. Maintenance of Office or Agency....................................................... 11
SECTION 3.09. Appointment of Certificate Paying
Agent.............................................................................. 11
SECTION 3.10. Disposition by Depositor.............................................................. 12
SECTION 3.11. Book-Entry Certificates............................................................... 12
SECTION 3.12 Notices to Clearing Agency............................................................ 14
</TABLE>
<PAGE> 3
3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 3.13. Definitive Certificates............................................................... 14
ARTICLE IV
ACTIONS BY ELIGIBLE LENDER TRUSTEE
----------------------------------
SECTION 4.01. Prior Notice to Certificateholders with
Respect to Certain Matters......................................................... 15
SECTION 4.02. Action by Certificateholders with
Respect to Certain Matters......................................................... 16
SECTION 4.03. Action by Certificateholders with
Respect to Bankruptcy.............................................................. 16
SECTION 4.04. Restrictions on Certificateholders'
Power.............................................................................. 16
SECTION 4.05. Majority Control...................................................................... 16
ARTICLE V
APPLICATION OF TRUST FUNDS;
---------------------------
CERTAIN DUTIES
--------------
SECTION 5.01. Application of Trust Funds............................................................ 17
SECTION 5.02. Method of Payment..................................................................... 18
SECTION 5.03. No Segregation of Moneys; No
Interest........................................................................... 18
SECTION 5.04. Accounting and Reports to the
Noteholders, Certificateholders, the
Internal Revenue Service and
Others............................................................................. 18
SECTION 5.05. Signature on Returns; Tax Matters
Partner............................................................................ 19
ARTICLE VI
AUTHORITY AND DUTIES OF
-----------------------
ELIGIBLE LENDER TRUSTEE
-----------------------
SECTION 6.01. General Authority..................................................................... 19
SECTION 6.02. General Duties........................................................................ 20
SECTION 6.03. Action upon Instruction............................................................... 21
</TABLE>
<PAGE> 4
4
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 6.04. No Duties Except as Specified in this
Agreement, the Sale and Servicing
Agreement, the Supplemental Sale and
Servicing Agreement or in
Instructions....................................................................... 22
SECTION 6.05. No Action Except Under Specified
Documents or Instructions.......................................................... 23
SECTION 6.06. Restrictions.......................................................................... 23
ARTICLE VII
CONCERNING THE ELIGIBLE LENDER TRUSTEE
--------------------------------------
SECTION 7.01. Acceptance of Trusts and Duties....................................................... 23
SECTION 7.02. Furnishing of Documents............................................................... 25
SECTION 7.03. Representations and Warranties........................................................ 25
SECTION 7.04. Reliance; Advice of Counsel........................................................... 26
SECTION 7.05. Not Acting in Individual Capacity..................................................... 27
SECTION 7.06. Eligible Lender Trustee Not Liable for
Trust Certificates or Financed
Student Loans...................................................................... 27
SECTION 7.07. Eligible Lender Trustee May Own Trust
Certificates and Notes............................................................. 28
ARTICLE VIII
COMPENSATION OF ELIGIBLE LENDER TRUSTEE
---------------------------------------
SECTION 8.01. Eligible Lender Trustee's Fees and
Expenses........................................................................... 28
SECTION 8.02. Payments to the Eligible Lender
Trustee............................................................................ 28
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
------------------------------
SECTION 9.01. Termination of Trust Agreement........................................................ 28
SECTION 9.02. Dissolution upon Insolvency of the
Depositor.......................................................................... 30
</TABLE>
<PAGE> 5
5
ARTICLE X
SUCCESSOR ELIGIBLE LENDER TRUSTEES AND
--------------------------------------
ADDITIONAL ELIGIBLE LENDER TRUSTEES
-----------------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 10.01. Eligibility Requirements for
Eligible Lender Trustee.............................. 31
SECTION 10.02. Resignation or Removal of Eligible
Lender Trustee....................................... 32
SECTION 10.03. Successor Eligible Lender Trustee....................... 33
SECTION 10.04. Merger or Consolidation of Eligible
Lender Trustee....................................... 33
SECTION 10.05. Appointment of Co-Eligible Lender
Trustee or Separate Eligible Lender
Trustee.............................................. 34
ARTICLE XI
MISCELLANEOUS
-------------
SECTION 11.01. Supplements and Amendments.............................. 36
SECTION 11.02. No Legal Title to Trust Estate in
Certificateholders................................... 37
SECTION 11.03. Limitations on Rights of Others......................... 37
SECTION 11.04. Notices................................................. 38
SECTION 11.05. Severability............................................ 38
SECTION 11.06. Separate Counterparts................................... 38
SECTION 11.07. Successors and Assigns.................................. 38
SECTION 11.08. No Petition............................................. 39
SECTION 11.09. No Recourse............................................. 39
SECTION 11.10. Headings................................................ 39
SECTION 11.11. Governing Law........................................... 39
</TABLE>
EXHIBIT A Form of Trust Certificate
EXHIBIT B Form of Certificate Depository
Agreement
<PAGE> 6
AMENDED AND RESTATED TRUST AGREEMENT dated as
of _________, 1996, between KEY BANK USA, NATIONAL
ASSOCIATION, a national banking association, as
Depositor, and THE FIRST NATIONAL BANK OF CHICAGO, a
national banking association, not in its individual
capacity but solely as Eligible Lender Trustee.
WHEREAS this Trust Agreement was entered into as of
_______ __, 1996;
WHEREAS this Trust Agreement is being amended and restated in
its entirety as of _________, 1996, in order to make the changes and
modifications as are set forth herein; and
WHEREAS, in connection therewith, the Depositor and the Eligible
Lender Trustee agree that the terms and provisions of such earlier Trust
Agreement shall no longer have any force and effect with respect to any date on
or after the date as of which this Amended and Restated Trust Agreement is being
entered into (other than Section 4 thereof to the extent applicable to the
allocation of collections, Interest Subsidy Payments and Special Allocation
Payments accruing during any period prior to the Cutoff Date).
NOW, THEREFORE, the Depositor and the Eligible Lender Trustee
hereby agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
---------------------
Capitalized terms used but not defined herein are defined in
Appendix A to the Sale and Servicing Agreement, which also contains rules as to
construction and usage that shall be applicable herein.
<PAGE> 7
2
ARTICLE II
ORGANIZATION
------------
SECTION 2.01. NAME. The Trust created hereby shall be known as
"KeyCorp Student Loan Trust 1996-A", in which name the Eligible Lender Trustee
may conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.
SECTION 2.02. OFFICE. The office of the Trust shall be in care
of the Eligible Lender Trustee at its Corporate Trust Office or at such other
address as the Eligible Lender Trustee may designate by written notice to the
Certificateholders and the Depositor.
SECTION 2.03. PURPOSES AND POWERS. The purpose of the
Trust is to engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and the Trust
Certificates pursuant to this Agreement and to sell the Notes and the
Trust Certificates in one or more transactions;
(ii) with the proceeds of the sale of the Notes and the Trust
Certificates, to purchase the Financed Student Loans and to fund the
Pre-Funding Account pursuant to the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey
the Trust Estate pursuant to the Indenture and to hold, manage and
distribute to the Certificateholders pursuant to the terms of the Sale
and Servicing Agreement any portion of the Trust Estate released from
the Lien of, and remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the Basic Documents, to engage
in such other activities as may be required in connection with
conservation of the Trust Estate and the making of distributions to the
Certificateholders, the Noteholders and the others specified in
Section 5.05 of the Sale and Servicing Agreement.
<PAGE> 8
3
The Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this Agreement
or the other Basic Documents.
SECTION 2.04. APPOINTMENT OF ELIGIBLE LENDER TRUSTEE. The
Depositor hereby appoints the Eligible Lender Trustee as trustee of the Trust
effective as of the date hereof, to have all the rights, powers and duties set
forth herein.
SECTION 2.05. INITIAL CAPITAL CONTRIBUTION OF TRUST ESTATE. The
Depositor hereby sells, assigns, transfers, conveys and sets over to the
Eligible Lender Trustee, as of the date hereof, the sum of $1.00. The Eligible
Lender Trustee hereby acknowledges receipt in trust from the Depositor, as of
the date hereof, of the foregoing contribution, which shall constitute the
initial Trust Estate and shall be deposited in the Collection Account. The
Depositor shall pay the organizational expenses of the Trust as they may arise
or shall, upon the request of the Eligible Lender Trustee, promptly reimburse
the Eligible Lender Trustee for any such expenses paid by the Eligible Lender
Trustee.
SECTION 2.06. DECLARATION OF TRUST. The Eligible Lender Trustee
hereby declares that it will hold the Trust Estate in trust upon and subject to
the conditions set forth herein for the use and benefit of the
Certificateholders, subject to the obligations of the Trust under the other
Basic Documents. It is the intention of the parties hereto that the Trust
constitute a trust under New York law and that this Agreement constitute the
governing instrument of such trust. It is the intention of the parties hereto
that, solely for income and franchise tax purposes, the Trust shall be treated
as a partnership, with the assets of the partnership being the Financed Student
Loans and other assets held by the Trust, the partners of the partnership being
the Certificateholders (including the Depositor in its capacity as recipient of
distributions from the Reserve Account), and the Notes being debt of the
partnership. The parties agree that, unless otherwise required by appropriate
tax authorities, the Trust will file or cause to be filed annual or other
necessary returns, reports and other forms consistent with the characterization
of the Trust as a partnership for such tax purposes. Effective as of the date
hereof, the Eligible Lender Trustee shall have all rights, powers and duties set
forth herein with respect to accomplishing the purposes of the Trust.
SECTION 2.07. LIABILITY OF THE CERTIFICATEHOLDERS. (a) The
Depositor shall be liable directly to and will indemnify the injured party for
all losses, claims, damages,
<PAGE> 9
4
liabilities and expenses of the Trust (including Expenses, to the extent not
paid out of the Trust Estate) to the extent that the Depositor would be liable
if the Trust were a partnership under the Delaware Revised Uniform Limited
Partnership Act in which the Depositor were a general partner; PROVIDED,
HOWEVER, that the Depositor shall not be liable for any losses incurred by a
Certificateholder or a Certificate Owner in the capacity of an investor in the
Trust Certificates or a Noteholder or a Note Owner in the capacity of an
investor in the Notes. In addition, any third party creditors of the Trust
(other than in connection with the obligations described in the preceding
sentence for which the Depositor shall not be liable) shall be deemed third
party beneficiaries of this paragraph. The obligations of the Depositor under
this paragraph shall be evidenced by the Trust Certificates described in
Section 3.10, which shall be deemed to be a separate class of Trust
Certificates from all other Trust Certificates issued by the Trust; PROVIDED
that the rights and obligations evidenced by all Trust Certificates, regardless
of class, except as provided in this Section, shall be identical.
(b) No Certificateholder, other than to the extent set forth in
paragraph (a), shall have any personal liability for any liability or obligation
of the Trust.
SECTION 2.08. TITLE TO TRUST PROPERTY. Legal title to all the
Trust Estate shall be vested at all times in the Trust as a separate legal
entity except where applicable law in any jurisdiction requires title to any
part of the Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Eligible Lender Trustee, a co-trustee
and/or a separate trustee, as the case may be; provided that legal title to the
Financed Student Loans shall be vested at all times in the Eligible Lender
Trustee on behalf of the Trust.
SECTION 2.09. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor hereby represents and warrants to the Eligible Lender Trustee
that:
(a) The Depositor is duly organized and validly existing as a
national banking association in good standing under the laws of the
United States of America, with power and authority to own its properties
and to conduct its business as such properties are currently owned and
such business is presently conducted.
(b) The Depositor has the corporate power and authority to
execute and deliver this Agreement and to carry out its terms; the
Depositor has full corporate power and authority to sell and assign the
property to be sold and assigned to and deposited with the Trust (or
with the
<PAGE> 10
5
Eligible Lender Trustee on behalf of the Trust) and the Depositor has
duly authorized such sale and assignment and deposit to the Trust (or
to the Eligible Lender Trustee on behalf of the Trust) by all necessary
corporate action; and the execution, delivery and performance of this
Agreement has been duly authorized by the Depositor by all necessary
corporate action.
(c) This Agreement constitutes a legal, valid and binding
obligation of the Depositor enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization and similar
laws relating to creditors' rights generally or the rights of creditors
of banks the deposit accounts of which are insured by the FDIC and
subject to general principles of equity.
(d) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default
under, the articles of association or by-laws of the Depositor, or any
indenture, agreement or other instrument to which the Depositor is a
party or by which it is bound; nor result in the creation or imposition
of any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than pursuant to the
Basic Documents); nor violate any law or, to the Depositor's knowledge,
any order, rule or regulation applicable to the Depositor of any court
or of any Federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the
Depositor or its properties.
SECTION 2.10. FEDERAL INCOME TAX ALLOCATIONS. Net income of the
Trust for any Collection Period as determined for Federal income tax purposes
(and each item of income, gain, loss and deduction entering into the computation
thereof) shall be allocated:
(a) among the Certificateholders as of the close of business on
the last day of such Collection Period, in proportion to their ownership
of principal amount of Trust Certificates on such date, an amount of net
income up to the sum of (i) the portion of the Certificateholders'
Interest Distribution Amount and the Certificateholders' Interest Index
Carryover, if any, for the related Distribution Date allocable to such
Collection Period, (ii) interest on the excess, if any, of the
Certificateholders' Interest Distribution Amount for the preceding
Distribution Date over the amount in respect of interest that is
actually
<PAGE> 11
6
distributed to Certificateholders on such preceding Distribution Date,
to the extent permitted by law, at the Certificate Rate for such
Collection Period and (iii) the portion of the market discount on the
Financed Student Loans accrued during such quarter that is allocable to
the excess, if any, of the initial aggregate principal amount of the
Trust Certificates over their initial aggregate issue price; and
(b) to the Depositor, to the extent of any remaining net
income.
If the net income of the Trust for any month is insufficient for the allocations
described in clause (a) above, subsequent net income shall first be allocated to
make up such shortfall before being allocated as provided in the preceding
sentence. Net losses of the Trust, if any, for any month as determined for
Federal income tax purposes (and each item of income, gain, loss and deduction
entering into the computation thereof) shall be allocated to the Depositor to
the extent the Depositor is reasonably expected to bear the economic burden of
such net losses, and any remaining net losses shall be allocated among the
remaining Certificateholders as of the close of business on the last day of such
month in proportion to their ownership of principal amount of Trust Certificates
on such Record Date. The Depositor is authorized to modify the allocations in
this paragraph if necessary or appropriate, in its sole discretion, for the
allocations to fairly reflect the economic income, gain or loss to the Depositor
or to the Certificateholders, or as otherwise required by the Code.
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
--------------------------------------------
SECTION 3.01. INITIAL BENEFICIAL OWNERSHIP. Upon the formation
of the Trust by the contribution by the Depositor pursuant to Section 2.05 and
until the issuance of the Trust Certificates, the Depositor shall be the sole
beneficial owner of the Trust.
SECTION 3.02. THE TRUST CERTIFICATES. The Trust Certificates
shall be issued in denominations of $1,000 or in integral multiples of $1,000 in
excess thereof; PROVIDED, HOWEVER, that the Trust Certificates issued to the
Depositor pursuant to Section 3.10 may be issued in such denomination as to
include any residual amount. The Trust Certificates shall be executed on behalf
of the Trust by manual or facsimile signature of an authorized officer of the
Eligible Lender Trustee. Trust
<PAGE> 12
7
Certificates bearing the manual or facsimile signatures of individuals who
were, at the time when such signatures shall have been affixed, authorized to
sign on behalf of the Trust, shall be valid and binding obligations of the
Trust, notwithstanding that such individuals or any of them shall have ceased
to be so authorized prior to the authentication and delivery of such Trust
Certificates or did not hold such offices at the date of authentication and
delivery of such Trust Certificates.
SECTION 3.03. AUTHENTICATION OF TRUST CERTIFICATES. Concurrently
with the initial sale of the Financed Student Loans to the Trust pursuant to the
Sale and Servicing Agreement, the Eligible Lender Trustee shall cause the Trust
Certificates in an aggregate principal amount equal to the Initial Certificate
Balance to be executed on behalf of the Trust, authenticated and delivered to or
upon the written order of the Depositor, signed by its chairman of the board,
its president or any vice president, without further action by the Depositor, in
authorized denominations. No Trust Certificate shall entitle its holder to any
benefit under this Agreement, or shall be valid for any purpose, unless there
shall appear on such Trust Certificate a certificate of authentication
substantially in the form set forth in Exhibit A, executed by the Eligible
Lender Trustee or First Chicago Trust Company of New York, as the Eligible
Lender Trustee's authenticating agent, by manual signature; such authentication
shall constitute conclusive evidence that such Trust Certificate shall have been
duly authenticated and delivered hereunder. All Trust Certificates shall be
dated the date of their authentication. No further Trust Certificates shall be
issued except pursuant to Section 3.04, 3.05 or 3.13 hereunder.
SECTION 3.04. REGISTRATION OF TRANSFER AND EXCHANGE OF TRUST
CERTIFICATES. The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.08, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Eligible
Lender Trustee shall provide for the registration of Trust Certificates and of
transfers and exchanges of Trust Certificates as herein provided. The Eligible
Lender Trustee shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Trust
Certificate at the office or agency maintained pursuant to Section 3.08, the
Eligible Lender Trustee shall execute, authenticate and deliver (or shall cause
First Chicago Trust Company of New York as its authenticating agent to
authenticate and deliver), in the name of the designated transferee or
transferees, one or more new Trust Certificates in authorized
<PAGE> 13
8
denominations of a like aggregate amount dated the date of authentication by
the Eligible Lender Trustee or any authenticating agent. At the option of a
Certificateholder, Trust Certificates may be exchanged for other Trust
Certificates of authorized denominations of a like aggregate amount upon
surrender of the Trust Certificates to be exchanged at the office or agency
maintained pursuant to Section 3.08.
Every Trust Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Eligible Lender Trustee and
the Certificate Registrar duly executed by the Certificateholder or his attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Certificate Registrar,
which requirements include membership or participation in Security Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Certificate Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Exchange Act. Each Trust
Certificate surrendered for registration of transfer or exchange shall be
cancelled and subsequently disposed of by the Eligible Lender Trustee in
accordance with its customary practice.
No service charge shall be made for any registration of transfer
or exchange of Trust Certificates, but the Eligible Lender Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer or
exchange of Trust Certificates.
The preceding provisions of this Section notwithstanding, the
Eligible Lender Trustee shall not be required to make and the Certificate
Registrar need not register transfers or exchanges of Trust Certificates for a
period of 15 days preceding any Distribution Date with respect to the Trust
Certificates.
The Trust Certificates and any beneficial interest in such Trust
Certificates may not be acquired by (a) an employee benefit plan (as defined in
Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA,
(b) an individual retirement account described in Section 408(a) of the Code or
(c) any entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each, a "Benefit Plan"). By accepting and holding a
Trust Certificate or an interest therein, the Certificateholder thereof or
Certificate Owner thereof shall be deemed to have represented and warranted that
it is not a Benefit Plan.
<PAGE> 14
9
SECTION 3.05. MUTILATED, DESTROYED, LOST OR STOLEN TRUST
CERTIFICATES. If (a) any mutilated Trust Certificate shall be surrendered to the
Certificate Registrar, or if the Certificate Registrar shall receive evidence to
its satisfaction of the destruction, loss or theft of any Trust Certificate, and
(b) there shall be delivered to the Certificate Registrar and the Eligible
Lender Trustee such security or indemnity as may be required by them to save
each of them harmless, then in the absence of notice that such Trust Certificate
shall have been acquired by a bona fide purchaser, the Eligible Lender Trustee
on behalf of the Trust shall execute and the Eligible Lender Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Trust Certificate, a new Trust Certificate of like
tenor and denomination. In connection with the issuance of any new Trust
Certificate under this Section, the Eligible Lender Trustee and the Certificate
Registrar may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Trust Certificate issued pursuant to this Section shall constitute conclusive
evidence of ownership in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Trust Certificate shall be found at any time.
SECTION 3.06. PERSONS DEEMED OWNERS. Prior to due presentation
of a Trust Certificate for registration of transfer, the Eligible Lender Trustee
or the Certificate Registrar and any agent of any thereof may treat the Person
in whose name any Trust Certificate shall be registered in the Certificate
Register as the owner of such Trust Certificate for the purpose of receiving
distributions pursuant to Section 5.01 and for all other purposes whatsoever,
and neither the Eligible Lender Trustee, the Certificate Registrar nor any agent
of any thereof shall be bound by any notice to the contrary.
SECTION 3.07. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES. The Eligible Lender Trustee shall furnish or cause to be furnished
to the Depositor, within 15 days after receipt by the Eligible Lender Trustee
of a request therefor from the Depositor in writing, a list, in such form as
the Depositor may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date. If three or more
Certificateholders or one or more Certificateholders evidencing not less than
25% of the Certificate Balance apply in writing to the Eligible Lender Trustee,
and such application states that the applicants desire to communicate with
other Certificateholders with respect to their rights under this Agreement or
under the Trust Certificates and such application is accompanied by a copy of
the communication that such applicants propose to transmit, then the
<PAGE> 15
10
Eligible Lender Trustee shall, within five Business Days after the receipt of
such application, afford such applicants access during normal business hours to
the current list of Certificateholders. Upon receipt of any such application,
the Eligible Lender Trustee will promptly notify the Depositor by providing a
copy of such application and a copy of the list of Certificateholders produced
in response thereto. Each Certificateholder, by receiving and holding a Trust
Certificate, shall be deemed to have agreed not to hold any of the Depositor,
the Certificate Registrar or the Eligible Lender Trustee accountable by reason
of the disclosure of its name and address, regardless of the source from which
such information was derived.
SECTION 3.08. MAINTENANCE OF OFFICE OR AGENCY. The Eligible
Lender Trustee shall maintain in the Borough of Manhattan, The City of New York,
an office or offices or agency or agencies where Trust Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Eligible Lender Trustee in respect of the Trust
Certificates and the other Basic Documents may be served. The Eligible Lender
Trustee initially designates One First National Plaza, Suite 0126, Chicago,
Illinois 60670, as its principal Corporate Trust Office. The Eligible Lender
Trustee's New York office and its authenticating agent's office are located at
First Chicago Trust Company of New York, 14 Wall Street, 8th Floor, New York,
New York 10005, Attention: Corporate Trust Administration. The Eligible Lender
Trustee shall give prompt written notice to the Depositor and to the
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
SECTION 3.09. APPOINTMENT OF CERTIFICATE PAYING AGENT. The
Certificate Paying Agent shall make distributions to Certificateholders from the
amounts received from the Indenture Trustee out of the Trust Accounts pursuant
to Section 5.01 and shall report the amounts of such distributions to the
Eligible Lender Trustee. Any Certificate Paying Agent shall have the revocable
power to receive such funds from the Indenture Trustee for the purpose of
making the distributions referred to above. The Eligible Lender Trustee may
revoke such power and remove the Certificate Paying Agent if the Eligible
Lender Trustee determines in its sole discretion that the Certificate Paying
Agent shall have failed to perform its obligations under this Agreement in any
material respect. The Certificate Paying Agent shall initially be the Eligible
Lender Trustee, and any co-paying agent chosen by the Eligible Lender Trustee,
and acceptable to the Administrator (which consent shall not be unreasonably
withheld). The Eligible Lender Trustee shall be permitted to resign as
Certificate Paying Agent upon 30 days' written notice to the Administrator. In
the event that the
<PAGE> 16
11
Eligible Lender Trustee shall no longer be the Certificate Paying Agent, the
Eligible Lender Trustee, shall appoint a successor to act as Certificate Paying
Agent (which shall be a bank or trust company). The Eligible Lender Trustee
shall cause such successor Certificate Paying Agent or any additional
Certificate Paying Agent appointed by the Eligible Lender Trustee to execute
and deliver to the Eligible Lender Trustee an instrument in which such
successor Certificate Paying Agent or additional Certificate Paying Agent shall
agree with the Eligible Lender Trustee that as Certificate Paying Agent, such
successor Certificate Paying Agent or additional Certificate Paying Agent will
hold all sums, if any, held by it for payment to the Certificateholders in
trust for the benefit of the Certificateholders entitled thereto until such
sums shall be paid to such Certificateholders. The Certificate Paying Agent
shall return all unclaimed funds to the Eligible Lender Trustee and upon
removal of a Certificate Paying Agent such Certificate Paying Agent shall also
return all funds in its possession to the Eligible Lender Trustee. The
provisions of Sections 7.01, 7.03, 7.04, 7.05 and 8.01 shall apply to the
Eligible Lender Trustee also in its role as Certificate Paying Agent, for so
long as the Eligible Lender Trustee shall act as Certificate Paying Agent and,
to the extent applicable, to any other paying agent appointed hereunder. Any
reference in this Agreement to the Certificate Paying Agent shall include any
co-paying agent unless the context requires otherwise.
SECTION 3.10. DISPOSITION BY DEPOSITOR. On and after the Closing
Date, the Depositor shall retain beneficial and record ownership of Trust
Certificates representing at least 1% of the Certificate Balance. Any attempted
transfer of any Trust Certificate that would reduce such interest of the
Depositor below 1% of the Certificate Balance shall be void. The Eligible Lender
Trustee shall cause any Trust Certificate issued to the Depositor on the Closing
Date (and any Trust Certificate issued in exchange therefor) to contain a
legend stating "THIS CERTIFICATE IS NONTRANSFERABLE".
SECTION 3.11. BOOK-ENTRY CERTIFICATES. The Trust Cer- tificates,
upon original issuance, will be issued in the form of a typewritten Trust
Certificate or Trust Certificates representing Book-Entry Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Trust; PROVIDED, HOWEVER, that one Definitive Certificate (as
defined below) may be issued to the Depositor pursuant to Section 3.10. Such
Book-Entry Certificate or Book-Entry Certificates shall initially be registered
on the Certificate Register in the name of Cede & Co., the nominee of the
initial Clearing Agency, and no Certificate Owner (other than the Depositor)
will receive a Definitive Certificate
<PAGE> 17
12
representing such Certificate Owner's interest in such Trust Certificate,
except as provided in Section 3.13. Unless and until definitive, fully
registered Trust Certificates (the "Definitive Certificates") have been issued
to Certificate Owners pursuant to Section 3.13:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Certificate Registrar and the Eligible Lender Trustee
shall be entitled to deal with the Clearing Agency for all purposes of
this Agreement (including the payment of principal of and interest on
the Trust Certificates and the giving of instructions or directions
hereunder) as the sole Certificateholder and shall have no obligation to
the Certificate Owners;
(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this
Section shall control;
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and shall be limited to those established by
law and agreements between such Certificate Owners and the Clearing
Agency and/or the Clearing Agency Participants. Pursuant to the
Certificate Depository Agreement, unless and until Definitive
Certificates are issued pursuant to Section 3.13, the initial Clearing
Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit payments of principal of and
interest on the Trust Certificates to such Clearing Agency Participants;
and
(v) whenever this Agreement requires or permits actions to be
taken based upon instructions or directions of Certificateholders of
Trust Certificates evidencing a specified percentage of the Certificate
Balance, the Clearing Agency shall be deemed to represent such
percentage only to the extent that it has received instructions to such
effect from Certificate Owners and/or Clearing Agency Participants
owning or representing, respectively, such required percentage of the
beneficial interest in the Trust Certificates and has delivered such
instructions to the Eligible Lender Trustee.
SECTION 3.12. NOTICES TO CLEARING AGENCY. Whenever a notice or
other communication to the Certificateholders is required under this Agreement,
unless and until Definitive Certificates shall have been issued to Certificate
Owners pursuant to Section 3.13, the Eligible Lender Trustee shall give
<PAGE> 18
13
all such notices and communications specified herein to be given to
Certificateholders to the Clearing Agency, and shall have no obligations to the
Certificate Owners.
SECTION 3.13. DEFINITIVE CERTIFICATES. If (i) the Administrator
advises the Eligible Lender Trustee in writing that the Clearing Agency is no
longer willing or able to discharge properly its responsibilities with respect
to the Trust Certificates, and the Administrator is unable to locate a qualified
successor, (ii) the Administrator at its option advises the Eligible Lender
Trustee in writing that it elects to terminate the book-entry system through the
Clearing Agency or (iii) after the occurrence of an Event of Default, a Servicer
Default or an Administrator Default, Certificate Owners representing beneficial
interests aggregating at least a majority of the Certificate Balance advise the
Clearing Agency (which shall then notify the Eligible Lender Trustee) in writing
that the continuation of a book-entry system through the Clearing Agency is no
longer in the best interest of the Certificate Owners, then the Eligible Lender
Trustee shall cause the Clearing Agency to notify all Certificate Ownof the
occurrence of any such event and of the availability of the Definitive
Certificates to Certificate Owners requesting the same. Upon surrender to the
Eligible Lender Trustee of the typewritten Trust Certificate or Trust
Certificates representing the Book-Entry Certificates by the Clearing Agency,
accompanied by registration instructions, the Eligible Lender Trustee shall
execute and authenticate the Definitive Certificates in accordance with the
instructions of the Clearing Agency. Neither the Certificate Registrar nor the
Eligible Lender Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying
on, such instructions. Upon the issuance of Definitive Certificates, the
Eligible Lender Trustee shall recognize the registered holders of the Definitive
Certificates as Certificateholders. The Definitive Certificates shall, at the
expense of the Depositor, be printed, lithographed or engraved or may be
produced in any other manner as is reasonably acceptable to the Eligible Lender
Trustee, as evidenced by its execution thereof.
ARTICLE IV
ACTIONS BY ELIGIBLE LENDER TRUSTEE
----------------------------------
SECTION 4.01. PRIOR NOTICE TO CERTIFICATEHOLDERS WITH RESPECT TO
CERTAIN MATTERS. With respect to the following matters, the Eligible Lender
Trustee shall not take action unless at least 30 days before the taking of such
action, the
<PAGE> 19
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Eligible Lender Trustee shall have notified the Certificateholders in writing
of the proposed action and the Certificateholders shall not have notified the
Eligible Lender Trustee in writing prior to the 30th day after such notice is
given that such Certificateholders have withheld consent or provided
alternative direction:
(a) the initiation of any material claim or lawsuit by the Trust
(except claims or lawsuits brought in connection with the collection of
the Financed Student Loans) and the compromise of any material action,
claim or lawsuit brought by or against the Trust (except with respect to
the afore-mentioned claims or lawsuits for collection of Financed
Student Loans);
(b) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Note- holder is required;
(c) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is not required and
such amendment materially adversely affects the interest of the
Certificateholders;
(d) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any
provision in a manner or add any provision that would not materially
adversely affect the interests of the Certificateholders; or
(e) the appointment pursuant to the Indenture of a successor
Note Registrar, Certificate Paying Agent or Indenture Trustee or
pursuant to this Agreement of a successor Certificate Registrar, or the
consent to the assignment by the Note Registrar, Certificate Paying
Agent or Indenture Trustee or Certificate Registrar of its obligations
under the Indenture or this Agreement, as applicable.
SECTION 4.02. ACTION BY CERTIFICATEHOLDERS WITH RESPECT TO
CERTAIN MATTERS. The Eligible Lender Trustee shall not have the power, except
upon the direction of the Certificateholders, to (a) remove the Servicer or the
Administrator under the Sale and Servicing Agreement pursuant to Section 8.01
thereof or (b) except as expressly provided in the Basic Documents, sell the
Financed Student Loans after the termination of the Indenture. The Eligible
Lender Trustee shall take the actions referred to in the preceding sentence only
upon written instructions signed by the Certificateholders.
<PAGE> 20
15
SECTION 4.03. ACTION BY CERTIFICATEHOLDERS WITH RESPECT TO
BANKRUPTCY. The Eligible Lender Trustee shall not have the power to commence a
voluntary proceeding in bankruptcy relating to the Trust without the unanimous
prior approval of all Certificateholders and the delivery to the Eligible Lender
Trustee by each such Certificateholder of a certificate certifying that such
Certificateholder reasonably believes that the Trust is insolvent.
SECTION 4.04. RESTRICTIONS ON CERTIFICATEHOLDERS' POWER. The
Certificateholders shall not direct the Eligible Lender Trustee to take or
refrain from taking any action if such action or inaction would be contrary to
any obligation of the Trust or the Eligible Lender Trustee under this Agreement
or any of the other Basic Documents or would be contrary to Section 2.03 nor
shall the Eligible Lender Trustee be permitted to follow any such direction, if
given.
SECTION 4.05. MAJORITY CONTROL. Except as expressly provided
herein, any action that may be taken by the Certificateholders under this
Agreement may be taken by the Certificateholders of Trust Certificates
evidencing not less than a majority of the Certificate Balance. Except as
expressly provided herein, any written notice of the Certificateholders
delivered pursuant to this Agreement shall be effective if signed by
Certificateholders of Trust Certificates evidencing not less than a majority of
the Certificate Balance at the time of the delivery of such notice.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
------------------------------------------
SECTION 5.01. APPLICATION OF TRUST FUNDS. (a) On each
Distribution Date, the Eligible Lender Trustee will distribute to
Certificateholders, on a pro rata basis, amounts received from the Indenture
Trustee pursuant to Sections 5.05 and 5.06 of the Sale and Servicing Agreement
on such Distribution Date.
(b) On each Distribution Date, the Eligible Lender Trustee shall
send to each Certificateholder the statement provided to the Eligible Lender
Trustee by the Administrator pursuant to Section 5.07 of the Sale and Servicing
Agreement on such Distribution Date.
(c) In the event that any withholding tax is imposed on the
Trust's payment (or allocations of income) to a Certificateholder, such tax
shall reduce the amount otherwise
<PAGE> 21
16
distributable to the Certificateholder in accordance with this Section. The
Eligible Lender Trustee is hereby authorized and directed to retain from
amounts otherwise distributable to the Certificateholders sufficient funds for
the payment of any tax that is legally owed by the Trust (but such
authorization shall not prevent the Eligible Lender Trustee from contesting any
such tax in appropriate proceedings, and withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings). The amount of any
withholding tax imposed with respect to a Certificateholder shall be treated as
cash distributed to such Certificateholder at the time it is withheld by the
Trust to be remitted to the appropriate taxing authority. If there is a
possibility that withholding tax is payable with respect to a distribution
(such as a distribution to a non-U.S. Certificateholder), the Eligible Lender
Trustee in its sole discretion may (but unless otherwise required by law shall
be obligated to) withhold such amounts in accordance with this paragraph (c).
In the event that a Certificateholder wishes to apply for a refund of any such
withholding tax, the Eligible Lender Trustee shall reasonably cooperate with
such Certificateholder in making such claim so long as such Certificateholder
agrees to reimburse the Eligible Lender Trustee for any out-of-pocket expenses
incurred.
SECTION 5.02. METHOD OF PAYMENT. Subject to Section 9.01(c),
distributions required to be made to Certificateholders on any Distribution Date
shall be made to each Certificateholder of record on the preceding Record Date
either by wire transfer, in immediately available funds, to the account of
such Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder shall have provided to the Certificate
Registrar appropriate written instructions signed by two authorized officers, if
any, at least five Business Days prior to such Distribution Date and such
Certificateholder's Trust Certificates in the aggregate evidence a denomination
of not less than $1,000,000, or, if not, by check mailed to such
Certificateholder at the address of such Certificateholder appearing in the
Certificate Register; PROVIDED, HOWEVER, that, unless Definitive Certificates
have been issued pursuant to Section 3.13, with respect to Trust Certificates
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be Cede & Co.), distributions will be made by wire
transfer in immediately available funds to the account designated by such
nominee. Notwithstanding the foregoing, the final distribution in respect of any
Trust Certificate (whether on the Certificate Final Maturity Date or otherwise)
will be payable only upon presentation and surrender of such Trust Certificate
at the Corporate Trust Office of the Eligible Lender Trustee or such
<PAGE> 22
17
other location specified in writing to the Certificateholder thereof.
SECTION 5.03. NO SEGREGATION OF MONEYS; NO INTEREST. Subject to
Section 5.01, moneys received by the Eligible Lender Trustee hereunder need not
be segregated in any manner except to the extent required by law or the Sale and
Servicing Agreement and may be deposited under such general conditions as may be
prescribed by law, and the Eligible Lender Trustee shall not be liable for any
interest thereon.
SECTION 5.04. ACCOUNTING AND REPORTS TO THE NOTEHOLDERS,
CERTIFICATEHOLDERS, THE INTERNAL REVENUE SERVICE AND OTHERS. The Eligible Lender
Trustee shall (a) maintain (or cause to be maintained) the books of the Trust on
a calendar year basis on the accrual method of accounting, (b) deliver to each
Certificateholder (and to each Person who was a Certificateholder at any time
during the applicable calendar year), as may be required by the Code and
applicable Treasury Regulations, such information as may be required (including
Schedule K-1) to enable each such Certificateholder to prepare its Federal and
state income tax returns, (c) file such tax returns relating to the Trust
(including a partnership information return, Internal Revenue Service Form
1065), and make such elections as may from time to time be required or
appropriate under any applicable state or Federal statute or rule or regulation
thereunder so as to maintain the Trust's characterization as a partnership for
Federal income tax purposes, (d) cause such tax returns to be signed in the
manner required by law and (e) collect or cause to be collected any withholding
tax as described in and in accordance with Section 5.01(c) with respect to
income or distributions to Certificateholders. The Eligible Lender Trustee
shall elect under Section 1278 of the Code to include in income currently any
market discount that accrues with respect to the Financed Student Loans. The
Eligible Lender Trustee shall not make the election provided under Section 754
of the Code.
SECTION 5.05. SIGNATURE ON RETURNS; TAX MATTERS PARTNER. (a) The
Eligible Lender Trustee shall sign on behalf of the Trust the tax returns of the
Trust, unless applicable law requires a Certificateholder to sign such
documents, in which case such documents shall be signed by the Depositor.
(b) The Depositor shall be designated the "tax matters partner"
of the Trust pursuant to Section 6231(a)(7)(A) of the Code and applicable
Treasury Regulations.
<PAGE> 23
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ARTICLE VI
AUTHORITY AND DUTIES OF ELIGIBLE LENDER TRUSTEE
-----------------------------------------------
SECTION 6.01. GENERAL AUTHORITY. The Eligible Lender Trustee is
authorized and directed to execute and deliver the Basic Documents to which the
Trust is to be a party and each certificate or other document attached as an
exhibit to or contemplated by the Basic Documents to which the Trust is to be a
party, in each case, in such form as the Depositor shall approve as evidenced
conclusively by the Eligible Lender Trustee's execution thereof, and, on behalf
of the Trust, to direct the Indenture Trustee to authenticate and deliver Notes
in the aggregate principal amount of $720,112,000. The Eligible Lender Trustee
is also authorized and directed on behalf of the Trust (i) to acquire and hold
legal title to the Financed Student Loans from the Depositor and (ii) to take
all actions required pursuant to Section 4.02(c) of the Sale and Servicing
Agreement, and otherwise follow the direction of and cooperate with the
Administrator in submitting, pursuing and collecting any claims to and with the
Department with respect to any Interest Subsidy Payments and Special Allowance
Payments relating to the Financed Federal Loans.
In addition to the foregoing, the Eligible Lender Trustee is
authorized, but shall not be obligated, to take all actions required of the
Trust pursuant to the Basic Documents. The Eligible Lender Trustee is further
authorized from time to time to take such action as the Administrator directs or
instructs with respect to the Basic Documents and is directed to take such
action to the extent that the Administrator is expressly required pursuant to
the Basic Documents to cause the Eligible Lender Trustee to act.
SECTION 6.02. GENERAL DUTIES. It shall be the duty of the
Eligible Lender Trustee to discharge (or cause to be discharged) all its
responsibilities pursuant to the terms of this Agreement and the other Basic
Documents to which the Trust is a party and to administer the Trust in the
interest of the Certificateholders, subject to and in accordance with the
provisions of this Agreement and the other Basic Documents. Without limiting the
foregoing, the Eligible Lender Trustee shall on behalf of the Trust file and
prove any claim or claims that may exist on behalf of the Trust against the
Depositor in connection with any claims paying procedure as part of an
insolvency or a receivership proceeding involving the Depositor. Notwithstanding
the foregoing, the Eligible Lender Trustee shall be deemed to have discharged
its duties and responsibilities hereunder and under the other Basic Documents to
the extent the Administrator has agreed in the Administration Agreement to
<PAGE> 24
19
perform any act or to discharge any duty of the Eligible Lender Trustee
hereunder or under any other Basic Document, and the Eligible Lender Trustee
shall not be held liable for the default or failure of the Administrator to
carry out its obligations under the Administration Agreement. Except as
expressly provided in the Basic Documents, the Eligible Lender Trustee shall
have no obligation to administer, service or collect the Financed Student Loans
or to maintain, monitor or otherwise supervise the administration, servicing or
collection of the Financed Student Loans.
SECTION 6.03. ACTION UPON INSTRUCTION. (a) Subject to Article
IV, Section 7.01 and in accordance with the terms of the Basic Documents, the
Certificateholders may by written instruction direct the Eligible Lender Trustee
in the management of the Trust. Such direction may be exercised at any time by
written instruction of the Certificateholders pursuant to Article IV.
(b) The Eligible Lender Trustee shall not be required to take
any action hereunder or under any other Basic Document if the Eligible Lender
Trustee shall have reasonably determined, or shall have been advised by counsel,
that such action is likely to result in liability on the part of the Eligible
Lender Trustee or is contrary to the terms hereof or of any other Basic Document
or is otherwise contrary to law.
(c) Whenever the Eligible Lender Trustee is unable to determine
the appropriate course of action between alternative courses of action permitted
or required by the terms of this Agreement or under any other Basic Document,
the Eligible Lender Trustee shall promptly give notice (in such form as shall be
appropriate under the circumstances) to the Certificateholders requesting
instruction as to the course of action to be adopted, and to the extent the
Eligible Lender Trustee acts in good faith in accordance with any written
instruction of the Certificateholders received, the Eligible Lender Trustee
shall not be liable on account of such action to any Person. If the Eligible
Lender Trustee shall not have received appropriate instruction within 10 days of
such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the other Basic Documents, as it shall deem
to be in the best interests of the Certificateholders, and shall have no
liability to any Person for such action or inaction.
(d) In the event that the Eligible Lender Trustee is unsure as
to the application of any provision of this Agreement
<PAGE> 25
20
or any other Basic Document or any such provision is ambiguous as to its
application, or is, or appears to be, in conflict with any other applicable
provision, or in the event that this Agreement permits any determination by the
Eligible Lender Trustee or is silent or is incomplete as to the course of
action that the Eligible Lender Trustee is required to take with respect to a
particular set of facts, the Eligible Lender Trustee may give notice (in such
form as shall be appropriate under the circumstances) to the Certificateholders
requesting instruction and, to the extent that the Eligible Lender Trustee acts
or refrains from acting in good faith in accordance with any such instruction
received, the Eligible Lender Trustee shall not be liable, on account of such
action or inaction, to any Person. If the Eligible Lender Trustee shall not
have received appropriate instruction within 10 days of such notice (or within
such shorter period of time as reasonably may be specified in such notice or
may be necessary under the circumstances) it may, but shall be under no duty
to, take or refrain from taking such action, not inconsistent with this
Agreement or the other Basic Documents, as it shall deem to be in the best
interests of the Certificateholders, and shall have no liability to any Person
for such action or inaction.
SECTION 6.04. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT,
THE SALE AND SERVICING AGREEMENT, THE SUPPLEMENTAL SALE AND SERVICING AGREEMENT
OR IN INSTRUCTIONS. The Eligible Lender Trustee shall not have any duty or
obligation to manage, make any payment with respect to, register, record, sell,
service, dispose of or otherwise deal with the Trust Estate, or to otherwise
take or refrain from taking any action under, or in connection with, any
document contemplated hereby to which the Eligible Lender Trustee is a party,
except as expressly provided by the terms of this Agreement, the Sale and
Servicing Agreement, the Supplemental Sale and Servicing Agreement or in any
document or written instruction received by the Eligible Lender Trustee
pursuant to Section 6.03; and no implied duties or obligations shall be read
into this Agreement or any other Basic Document against the Eligible Lender
Trustee. The Eligible Lender Trustee shall have no responsibility for filing
any financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to prepare or file any Commission filing for the
Trust or to record this Agreement or any other Basic Document. The Eligible
Lender Trustee nevertheless agrees that it will, at its own cost and expense,
promptly take all action as may be necessary to discharge any liens on any part
of the Trust Estate that result from actions by, or claims against, The First
National Bank of Chicago in its individual capacity or as the Eligible Lender
<PAGE> 26
21
Trustee that are not related to the ownership or the administration of the
Trust Estate.
SECTION 6.05. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Eligible Lender Trustee shall not manage, control, use, sell,
service, dispose of or otherwise deal with any part of the Trust Estate except
(i) in accordance with the powers granted to and the authority conferred upon
the Eligible Lender Trustee pursuant to this Agreement, (ii) in accordance with
the other Basic Documents to which it is a party and (iii) in accordance with
any document or instruction delivered to the Eligible Lender Trustee pursuant to
Section 6.03.
SECTION 6.06. RESTRICTIONS. The Eligible Lender Trustee shall
not take any action (a) that is inconsistent with the purposes of the Trust set
forth in Section 2.03 or (b) that, to the actual knowledge of the Eligible
Lender Trustee, would result in the Trust's becoming taxable as a corporation
for Federal income tax purposes. The Certificateholders shall not direct the
Eligible Lender Trustee to take action that would violate the provisions of this
Section.
ARTICLE VII
CONCERNING THE ELIGIBLE LENDER TRUSTEE
--------------------------------------
SECTION 7.01. ACCEPTANCE OF TRUSTS AND DUTIES. The Eligible
Lender Trustee accepts the trusts hereby created and agrees to perform its
duties hereunder with respect to such trusts but only upon the terms of this
Agreement. The Eligible Lender Trustee also agrees to disburse all moneys
actually received by it constituting part of the Trust Estate upon the terms of
this Agreement and the other Basic Documents. The Eligible Lender Trustee shall
not be answerable or accountable hereunder or under any other Basic Document
under any circumstances, except (i) for its own willful misconduct or negligence
or (ii) in the case of the inaccuracy of any representation or warranty
contained in Section 7.03 expressly made by the Eligible Lender Trustee. In
particular, but not by way of limitation (and subject to the exceptions set
forth in the preceding sentence):
(a) the Eligible Lender Trustee shall not be liable for any
error of judgment made by a responsible officer of the Eligible Lender
Trustee;
(b) the Eligible Lender Trustee shall not be liable with respect
to any action taken or omitted to be taken by
<PAGE> 27
22
it in accordance with the direction or instructions of the
Administrator or any Certificateholder;
(c) no provision of this Agreement or any other Basic Document
shall require the Eligible Lender Trustee to expend or risk funds or
otherwise incur any financial liability in the performance of any of its
rights or powers hereunder or under any other Basic Document, if the
Eligible Lender Trustee shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Eligible Lender Trustee be
liable for indebtedness evidenced by or arising under any of the Basic
Documents, including the principal of and interest on the Notes;
(e) the Eligible Lender Trustee shall not be responsible for or
in respect of the validity or sufficiency of this Agreement or for the
due execution hereof by the Depositor or for the form, character,
genuineness, sufficiency, value or validity of any of the Trust Estate
or for or in respect of the validity or sufficiency of the Basic
Documents, other than the certificate of authentication on the Trust
Certificates, and the Eligible Lender Trustee shall in no event assume
or incur any liability, duty, or obligation to any Noteholder or to any
Certificateholder, other than as expressly provided for herein and in
the other Basic Documents;
(f) the Eligible Lender Trustee shall not be liable for the
action or inaction, default or misconduct of the Administrator, the
Seller, the Indenture Trustee or the Servicer under any of the other
Basic Documents or otherwise and the Eligible Lender Trustee shall have
no obligation or liability to perform the obligations of the Trust under
this Agreement or the other Basic Documents that are required to be
performed by the Administrator under the Sale and Servicing Agreement,
the Supplemental Sale and Servicing Agreement or the Administration
Agreement, the Indenture Trustee under the Indenture or the Servicer
under the Sale and Servicing Agreement or the Supplemental Sale and
Servicing Agreement; and
(g) the Eligible Lender Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement, or
to institute, conduct or defend any litigation under this Agreement or
otherwise or in relation to this Agreement or any other Basic Document,
at the
<PAGE> 28
23
request, order or direction of any of the Certificateholders,
unless such Certificateholders have offered to the Eligible Lender
Trustee security or indemnity satisfactory to it against the costs,
expenses and liabilities that may be incurred by the Eligible Lender
Trustee therein or thereby. The right of the Eligible Lender Trustee to
perform any discretionary act enumerated in this Agreement or in any
other Basic Document shall not be construed as a duty, and the Eligible
Lender Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of any such act.
SECTION 7.02. FURNISHING OF DOCUMENTS. The Eligible Lender
Trustee shall furnish to the Certificateholders promptly upon receipt of a
written request therefor, duplicates or copies of all reports, notices,
requests, demands, certificates, financial statements and any other instruments
furnished to the Eligible Lender Trustee under the Basic Documents.
SECTION 7.03. REPRESENTATIONS AND WARRANTIES. The Eligible
Lender Trustee hereby represents and warrants to the Depositor, for the benefit
of the Certificateholders, that:
(a) It is a national banking association duly organized and
validly existing in good standing under the laws of the United States
and having an office located within the State of New York. It has all
requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will
be executed and delivered by one of its officers who is duly authorized
to execute and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any Federal or New York state law, governmental rule or
regulation governing the banking or trust powers of the Eligible Lender
Trustee or any judgment or order binding on it, or constitute any
default under its charter documents or by-laws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by
which any of its properties may be bound.
(d) It is an "eligible lender" as such term is defined in
Section 435(d) of the Higher Education Act, for purposes
<PAGE> 29
24
of holding legal title to the Financed Student Loans as contemplated by
this Agreement and the other Basic Documents, has obtained a lender
identification number with respect to the Trust from the Department and
has in effect a Guarantee Agreement with each of the Guarantors with
respect to the Financed Student Loans.
SECTION 7.04. RELIANCE; ADVICE OF COUNSEL. (a) The Eligible
Lender Trustee shall incur no liability to anyone in acting upon any signature,
instrument, direction, notice, reso- lution, request, consent, order,
certificate, report, opinion, bond, or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Eligible Lender Trustee may accept a certified copy of a resolution of the board
of directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that the
same is in full force and effect. As to any fact or matter the method of the
determination of which is not specifically prescribed herein, the Eligible
Lender Trustee may for all purposes hereof rely on a certificate, signed by the
president or any vice president or by the treasurer or other authorized officers
of the relevant party, as to such fact or matter and such certificate shall
constitute full protection to the Eligible Lender Trustee for any action taken
or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder
and in the performance of its duties and obligations under this Agreement or the
other Basic Documents, the Eligible Lender Trustee (i) may act directly or
through its agents or attorneys pursuant to agreements entered into with any of
them, and the Eligible Lender Trustee shall not be liable for the conduct or
misconduct of such agents or attorneys if such agents or attorneys shall have
been selected by the Eligible Lender Trustee with reasonable care, and (ii) may
consult with counsel, accountants and other skilled persons to be selected with
reasonable care and employed by it. The Eligible Lender Trustee shall not be
liable for anything done, suffered or omitted in good faith by it in accordance
with the written opinion or advice of any such counsel, accountants or other
such persons and not contrary to this Agreement or any other Basic Document.
SECTION 7.05. NOT ACTING IN INDIVIDUAL CAPACITY. Except as
provided in this Article VII, in accepting the trusts hereby created THE FIRST
NATIONAL BANK OF CHICAGO acts solely as Eligible Lender Trustee hereunder and
not in its individual capacity and all Persons having any claim against the
Eligible Lender Trustee by reason of the transactions contemplated by
<PAGE> 30
25
this Agreement or any other Basic Document shall look only to the Trust Estate
for payment or satisfaction thereof.
SECTION 7.06. ELIGIBLE LENDER TRUSTEE NOT LIABLE FOR TRUST
CERTIFICATES OR FINANCED STUDENT LOANS. The recitals contained herein and in the
Trust Certificates (other than the signature and countersignature of the
Eligible Lender Trustee on the Trust Certificates) shall be taken as the
statements of the Depositor and the Eligible Lender Trustee assumes no
responsibility for the correctness thereof. The Eligible Lender Trustee makes no
representations as to the validity or sufficiency of this Agreement, the Trust
Certificates or any other Basic Document (other than the signature and
countersignature of the Eligible Lender Trustee on the Trust Certificates) or
the Notes, or of any Financed Student Loan or related documents. The Eligible
Lender Trustee shall at no time have any responsibility (or liability except for
willfully or negligently terminating or allowing to be terminated any of the
Guarantee Agreements, in a case where the Eligible Lender Trustee knows of any
facts or circumstances which will or could reasonably be expected to result in
any such termination) for or with respect to the legality, validity,
enforceability and eligibility for Guarantee Payments, federal reinsurance,
Interest Subsidy Payments or Special Allowance Payments, as applicable, of any
Financed Student Loan, or for or with respect to the sufficiency of the Trust
Estate or its ability to generate the payments to be distributed to
Certificateholders under this Agreement or the Noteholders under the Indenture,
including: the existence and contents of any computer or other record of any
Financed Student Loan; the validity of the assignment of any Financed Student
Loan to the Eligible Lender Trustee on behalf of the Trust; the completeness of
any Financed Student Loan; the performance or enforcement (except as expressly
set forth in any Basic Document) of any Financed Student Loan; the compliance by
the Depositor or the Servicer with any warranty or representation made under any
Basic Document or in any related document or the accuracy of any such warranty
or representation or any action or inaction of the Administrator, the Indenture
Trustee or the Servicer or any subservicer taken in the name of the Eligible
Lender Trustee.
SECTION 7.07. ELIGIBLE LENDER TRUSTEE MAY OWN TRUST CERTIFICATES
AND NOTES. The Eligible Lender Trustee in its individual or any other capacity
may become the owner or pledgee of Trust Certificates or Notes and may deal with
the Depositor, the Administrator, the Indenture Trustee and the Servicer in
banking transactions with the same rights as it would have if it were not
Eligible Lender Trustee.
<PAGE> 31
26
ARTICLE VIII
COMPENSATION OF ELIGIBLE LENDER TRUSTEE
---------------------------------------
SECTION 8.01. ELIGIBLE LENDER TRUSTEE'S FEES AND EXPENSES. The
Eligible Lender Trustee shall receive as compensation for its services hereunder
such fees as have been separately agreed upon before the date hereof between the
Depositor and the Eligible Lender Trustee, and the Eligible Lender Trustee shall
be entitled to be reimbursed by the Depositor, to the extent provided in such
separate agreement, for its other reasonable expenses hereunder.
SECTION 8.02. PAYMENTS TO THE ELIGIBLE LENDER TRUSTEE. Any
amounts paid to the Eligible Lender Trustee pursuant to Section 8.01 hereof or
pursuant to Section 6.03 or 6.04 of the Sale and Servicing Agreement shall be
deemed not to be a part of the Trust Estate immediately after such payment.
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
------------------------------
SECTION 9.01. TERMINATION OF TRUST AGREEMENT. (a) This Agreement
(other than Article VIII) and the Trust shall terminate and be of no further
force or effect upon the earlier of (i) the final distribution by the Eligible
Lender Trustee of all moneys or other property or proceeds of the Trust Estate
(including a final distribution to any Substitute Certificateholder pursuant to
Article X of the Sale and Servicing Agreement) in accordance with the terms of
the Indenture, the Sale and Servicing Agreement and Article V, (ii) the
expiration of 21 years from the death of the last survivor of the descendants of
Joseph P. Kennedy, the late Ambassador of the United States to the Court of St.
James, living on the date hereof, and (iii) the time provided in Section 9.02.
The bankruptcy, liquidation, dissolution, death or incapacity of any
Certificateholder, other than the Depositor as described in Section 9.02, shall
not (x) operate to terminate this Agreement or the Trust, nor (y) entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of all
or any part of the Trust or Trust Estate nor (z) otherwise affect the rights,
obligations and liabilities of the parties hereto.
(b) Except as provided in Section 9.01(a), neither the Depositor
nor any Certificateholder shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the
Distribution Date upon which the Certificateholders shall
<PAGE> 32
27
surrender their Trust Certificates to the Certificate Paying Agent for payment
of the final distribution and cancellation, shall be given promptly by the
Eligible Lender Trustee by letter to Certificateholders mailed within five
Business Days of receipt of notice of such termination from the Administrator
given pursuant to Section 9.01(d) of the Sale and Servicing Agreement, stating
(i) the Distribution Date upon which final payment of the Trust Certificates
shall be made upon presentation and surrender of the Trust Certificates at the
office of the Certificate Paying Agent therein designated, (ii) the amount of
any such final payment and (iii) that the Record Date otherwise applicable to
such Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Trust Certificates at the office of the
Certificate Paying Agent therein specified. The Eligible Lender Trustee shall
give such notice to the Certificate Registrar (if other than the Eligible
Lender Trustee) and the Certificate Paying Agent at the time such notice is
given to Certificateholders. Upon presentation and surrender of the
Trust Certificates, the Certificate Paying Agent shall cause to be distributed
to Certificateholders amounts distributable on such Distribution Date pursuant
to Section 5.01.
In the event that all the Certificateholders shall not surrender
their Trust Certificates for cancellation within six months after the date
specified in the above-mentioned written notice, the Eligible Lender Trustee
shall give a second written notice to the remaining Certificateholders to
surrender their Trust Certificates for cancellation and receive the final
distribution with respect thereto. If within one year after the second notice
all the Trust Certificates shall not have been surrendered for cancellation, the
Eligible Lender Trustee may take appropriate steps, or may appoint an agent to
take appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Trust Certificates, and the cost thereof shall be paid out of
the funds and other assets that shall remain subject to this Agreement. Any
funds remaining in the Trust after exhaustion of such remedies and no later than
five years after the first such notice shall be distributed by the Eligible
Lender Trustee to the Depositor.
SECTION 9.02. DISSOLUTION UPON INSOLVENCY OF THE DEPOSITOR. In
the event that an Insolvency Event shall occur with respect to the Depositor,
this Agreement shall be terminated in accordance with Section 9.01 90 days after
the date of such Insolvency Event, unless, before the end of such 90-day period,
the Eligible Lender Trustee shall have received written instructions from
Certificateholders (other than the Depositor) representing more than 50% of the
Certificate Balance (not including the principal amount of Trust Certificates
held by the Depositor), to the effect that each such party disapproves of the
liquidation of the Financed Student Loans and termination of the Trust, in which
event the Trust shall continue in accordance
<PAGE> 33
28
with the Basic Documents. Promptly after the occurrence of any Insolvency Event
with respect to the Depositor, (i) the Depositor shall give the Indenture
Trustee and the Eligible Lender Trustee written notice of such Insolvency
Event, (ii) the Eligible Lender Trustee shall, upon the receipt of such written
notice from the Depositor, give prompt written notice to the Certificateholders
and the Indenture Trustee, of the occurrence of such event and (iii) the
Indenture Trustee shall, upon receipt of written notice of such Insolvency
Event from the Eligible Lender Trustee or the Depositor, give prompt written
notice to the Noteholders of the occurrence of such event; PROVIDED, HOWEVER,
that any failure to give a notice required by this sentence shall not prevent
or delay, in any manner, a termination of the Trust pursuant to the first
sentence of this Section 9.02. Upon a termination pursuant to this Section, the
Eligible Lender Trustee shall direct the Indenture Trustee promptly to sell the
assets of the Trust (other than the Trust Accounts) in a commercially
reasonable manner and on commercially reasonable terms, subject to the rights
of PHEAA and LSAS to submit a first offer for the Financed Student Loans in
accordance with paragraph 8 of the Supplemental Sale and Servicing Agreement.
The proceeds of such a sale of the assets of the Trust shall be treated as
collections under the Sale and Servicing Agreement.
ARTICLE X
SUCCESSOR ELIGIBLE LENDER TRUSTEES AND
--------------------------------------
ADDITIONAL ELIGIBLE LENDER TRUSTEES
-----------------------------------
SECTION 10.01. ELIGIBILITY REQUIREMENTS FOR ELIGIBLE LENDER
TRUSTEE. The Eligible Lender Trustee shall at all times be a corporation or
association (i) qualifying as an "eligible lender" as such term is defined in
Section 435(d) of the Higher Education Act for purposes of holding legal title
to the Financed Student Loans on behalf of the Trust, with a valid lender
identification number with respect to the Trust from the Department; (ii) being
authorized to exercise corporate trust powers and hold legal title to the
Financed Student Loans; (iii) having in effect Guarantee Agreements with each of
the Guarantors; (iv) having a combined capital and surplus of at least
$50,000,000 and being subject to supervision or examination by Federal or state
authorities; (v) incorporated or authorized to do business in the State of New
York or which is a national bank having an office located within the State of
New York; and (vi) having (or having a parent which has) a rating of at least
Baa3 by Moody's. If the Eligible Lender Trustee shall publish reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section, the combined capital and surplus of the Eligible Lender Trustee shall
be deemed to be its combined capital and surplus as set forth in
<PAGE> 34
29
its most recent report of condition so published. In case at any time the
Eligible Lender Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Eligible Lender Trustee shall resign
immediately in the manner and with the effect specified in Section 10.02.
SECTION 10.02. RESIGNATION OR REMOVAL OF ELIGIBLE LENDER
TRUSTEE. The Eligible Lender Trustee may at any time resign and be discharged
from the trusts hereby created by giving written notice thereof to the
Administrator and the Surety Provider. Upon receiving such notice of
resignation, the Administrator shall promptly appoint a successor Eligible
Lender Trustee meeting the eligibility requirements of Section 10.01 by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Eligible Lender Trustee and one copy to the successor Eligible Lender
Trustee. If no successor Eligible Lender Trustee shall have been so appointed
and have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Eligible Lender Trustee may petition any court of
competent jurisdiction for the appointment of a successor Eligible Lender
Trustee; PROVIDED, HOWEVER, that such right to appoint or to petition for the
appointment of any such successor shall in no event relieve the resigning
Eligible Lender Trustee from any obligations otherwise imposed on it under the
Basic Documents until such successor has in fact assumed such appointment.
If at any time the Eligible Lender Trustee shall cease to be
eligible in accordance with the provisions of Section 10.01 and shall fail to
resign after written request therefor by the Administrator, or if at any time an
Insolvency Event with respect to the Eligible Lender Trustee shall have occurred
and be continuing, then the Administrator may remove the Eligible Lender
Trustee. If the Administrator shall remove the Eligible Lender Trustee under the
authority of the immediately preceding sentence, the Administrator shall
promptly appoint a successor Eligible Lender Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the outgoing
Eligible Lender Trustee so removed and one copy to the successor Eligible Lender
Trustee and payment of all fees owed to the outgoing Eligible Lender Trustee.
Any resignation or removal of the Eligible Lender Trustee and
appointment of a successor Eligible Lender Trustee pursuant to any of the
provisions of this Section shall not become effective until acceptance of
appointment by the successor Eligible Lender Trustee pursuant to Section 10.03
and payment of all fees and expenses owed to the outgoing Eligible Lender
Trustee. The Administrator shall provide notice of such resignation or removal
of the Eligible Lender Trustee and to each of the Rating Agencies.
<PAGE> 35
30
SECTION 10.03. SUCCESSOR ELIGIBLE LENDER TRUSTEE. Any successor
Eligible Lender Trustee appointed pursuant to Section 10.02 shall execute,
acknowledge and deliver to the Administrator and to its predecessor Eligible
Lender Trustee an instrument accepting such appointment under this Agreement,
and thereupon the resignation or removal of the predecessor Eligible Lender
Trustee shall become effective and such successor Eligible Lender Trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor under this
Agreement, with like effect as if originally named as Eligible Lender Trustee.
The predecessor Eligible Lender Trustee shall upon payment of its fees and
expenses deliver to the successor Eligible Lender Trustee all documents,
statements, moneys and properties held by it under this Agreement and shall
assign, if permissible, to the successor Eligible Lender Trustee the lender
identification number obtained from the Department on behalf of
the Trust; and the Administrator and the predecessor Eligible Lender Trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for fully and certainly vesting and confirming in the
successor Eligible Lender Trustee all such rights, powers, duties and
obligations.
No successor Eligible Lender Trustee shall accept appointment as
provided in this Section unless at the time of such acceptance such successor
Eligible Lender Trustee shall be eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Eligible Lender
Trustee pursuant to this Section, the Administrator shall mail notice of the
successor of such Eligible Lender Trustee to all Certificateholders, the
Indenture Trustee, the Noteholders and the Rating Agencies. If the Administrator
shall fail to mail such notice within 10 days after acceptance of appointment by
the successor Eligible Lender Trustee, the successor Eligible Lender Trustee
shall cause such notice to be mailed at the expense of the Administrator.
SECTION 10.04. MERGER OR CONSOLIDATION OF ELIGIBLE LENDER
TRUSTEE. Any corporation into which the Eligible Lender Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Eligible Lender
Trustee shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of the Eligible Lender Trustee, shall, without
the execution or filing of any instrument or any further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding, be the
successor of the Eligible Lender Trustee hereunder; PROVIDED that such
corporation shall be eligible pursuant to Section 10.01; PROVIDED FURTHER that
the Eligible Lender Trustee shall mail notice of such merger or consolidation to
the Rating Agencies.
<PAGE> 36
31
SECTION 10.05. APPOINTMENT OF CO-ELIGIBLE LENDER TRUSTEE OR
SEPARATE ELIGIBLE LENDER TRUSTEE. Notwithstanding any other provisions of this
Agreement, at any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust may at the time be located, the
Administrator and the Eligible Lender Trustee acting jointly shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Eligible Lender Trustee, meeting the eligibility
requirements of clauses (i) through (iii) of Section 10.01, to act as
co-trustee, jointly with the Eligible Lender Trustee, or separate trustee or
separate trustees, of all or any part of the Trust Estate, and to vest in such
Person, in such capacity, such title to the Trust Estate, or any part thereof,
and, subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Administrator and the Eligible Lender
Trustee may consider necessary or desirable. If the Administrator shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, the Eligible Lender Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor trustee pursuant to
clauses (iv) and (v) of Section 10.01 and no notice of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 10.03.
Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties, and obligations conferred or
imposed upon the Eligible Lender Trustee shall be conferred upon and
exercised or performed by the Eligible Lender Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without the
Eligible Lender Trustee joining in such act), except to the extent that
under any law of any jurisdiction in which any particular act or acts
are to be performed, the Eligible Lender Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties, and obligations (including the holding of title to the
Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee,
solely at the direction of the Eligible Lender Trustee;
(ii) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
<PAGE> 37
32
(iii) the Administrator and the Eligible Lender Trustee acting
jointly may at any time accept the resignation of or remove any separate
trustee or co-trustee.
Any notice, request or other writing given to the Eligible
Lender Trustee shall be deemed to have been given to each of the then separate
trustees and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to this
Agreement and the conditions of this Article. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Eligible Lender Trustee or separately, as may be provided
therein, subject to all the provisions of this Agreement, specifically including
every provision of this Agreement relating to the conduct of, affecting the
liability of, or affording protection to, the Eligible Lender Trustee. Each
such instrument shall be filed with the Eligible Lender Trustee and a copy
thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the
Eligible Lender Trustee as its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Eligible Lender Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
ARTICLE XI
MISCELLANEOUS
-------------
SECTION 11.01. SUPPLEMENTS AND AMENDMENTS. This Agreement may be
amended by the Depositor and the Eligible Lender Trustee, with prior written
notice to the Rating Agencies, without the consent of any of the Noteholders or
the Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement or
of modifying in any manner the rights of the Noteholders or the
Certificateholders; PROVIDED, HOWEVER, that such action shall not, as evidenced
by an Opinion of Counsel, adversely affect in any material respect the interests
of any Noteholder or Certificateholder.
This Agreement may also be amended from time to time by the
Depositor and the Eligible Lender Trustee, with prior
<PAGE> 38
33
written notice to the Rating Agencies, (i) with the consent of the Noteholders
of Notes evidencing not less than a majority of the Outstanding Amount of the
Notes and (ii) the Certificateholders of Certificates evidencing not less than
a majority of the Certificate Balance, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this
Agreement or of modifying in any manner the rights of the Noteholders or the
Certificateholders; PROVIDED, HOWEVER, that no such amendment shall (a)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on Financed Student Loans or distributions
that shall be required to be made for the benefit of the Noteholders or the
Certificateholders or (b) reduce the aforesaid percentage of the Outstanding
Amount of the Notes and the Certificate Balance required to consent to any such
amendment, without the consent of all the outstanding Noteholders and
Certificateholders.
Promptly after the execution of any such amendment or consent,
the Eligible Lender Trustee shall furnish written notification of the substance
of such amendment or consent to each Certificateholder, the Indenture Trustee
and each of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders,
the Noteholders or the Indenture Trustee pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Eligible Lender Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the
Eligible Lender Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by this Agreement. The Eligible Lender Trustee may, but shall not be obligated
to, enter into any such amendment which affects the Eligible Lender Trustee's
own rights, duties or immunities under this Agreement or otherwise.
SECTION 11.02. NO LEGAL TITLE TO TRUST ESTATE IN
CERTIFICATEHOLDERS. The Certificateholders shall not have legal title to any
part of the Trust Estate. The Certificateholders shall be entitled to receive
distributions with respect to their undivided beneficial ownership interest
therein only in accordance with Articles V and IX. No transfer, by operation of
law or otherwise, of any right, title, or interest of the Certificateholders to
and in their beneficial ownership interest
<PAGE> 39
34
in the Trust Estate shall operate to terminate this Agreement or the trusts
hereunder or entitle any transferee to an accounting or to the transfer to it
of legal title to any part of the Trust Estate.
SECTION 11.03. LIMITATIONS ON RIGHTS OF OTHERS. Except for
Section 2.07, the provisions of this Agreement are solely for the benefit of the
Eligible Lender Trustee, the Depositor, the Certificateholders, the
Administrator and, to the extent expressly provided herein, the Indenture
Trustee and the Noteholders, and nothing in this Agreement (other than Section
2.07), whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Trust Estate or
under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
SECTION 11.04. NOTICES. (a) Unless otherwise expressly specified
or permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt by the intended recipient or three Business Days after
mailing if mailed by certified mail, postage prepaid (except that notice to the
Eligible Lender Trustee shall be deemed given only upon actual receipt by the
Eligible Lender Trustee), if to the Eligible Lender Trustee, addressed to its
Corporate Trust Office; if to the Depositor, addressed to Key Bank USA, National
Association, 5000 Tiedeman Road, Brooklyn, Ohio 44144, Attention: Senior Vice
President, Education Lending, or, as to each party, at such other address as
shall be designated by such party in a written notice to each other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Certificateholder as shown in the Certificate Register. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
SECTION 11.05. SEVERABILITY. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 11.06. SEPARATE COUNTERPARTS. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
<PAGE> 40
35
SECTION 11.07. SUCCESSORS AND ASSIGNS. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the Depositor and its successors, the Eligible Lender Trustee and its
successors, each Certificateholder and its successors and permitted assigns, all
as herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by a Certificateholder shall bind the successors and
assigns of such Certificateholder.
SECTION 11.08. NO PETITION. (a) The Depositor will
not at any time institute against the Trust any bankruptcy
proceedings under any United States Federal or state bankruptcy
or similar law in connection with any obligations relating to the Trust
Certificates, the Notes, this Agreement or any of the other Basic Documents.
(b) The Eligible Lender Trustee (not in its individual capacity
but solely as Eligible Lender Trustee), by entering into this Agreement, each
Certificateholder, by accepting a Trust Certificate, and the Indenture Trustee
and each Noteholder by accepting the benefits of this Agreement, hereby covenant
and agree that they will not at any time institute against the Depositor or the
Trust, or join in any institution against the Depositor or the Trust of, any
bankruptcy, reorganization, arrangement, insolvency, receivership or liquidation
proceedings, or other proceedings under any United States Federal or state
bankruptcy or similar law in connection with any obligations relating to the
Trust Certificates, the Notes, this Agreement or any of the other Basic
Documents.
SECTION 11.09. NO RECOURSE. Each Certificateholder by accepting
a Trust Certificate acknowledges that such Certificateholder's Trust
Certificates represent beneficial interests in the Trust only and do not
represent interests in or obligations of the Seller, the Servicer, the
Administrator, the Eligible Lender Trustee, the Indenture Trustee or any
Affiliate thereof or any officer, director or employee of any thereof and no
recourse may be had against such parties or their assets, except as may be
expressly set forth or contemplated in this Agreement, the Trust Certificates or
the other Basic Documents.
SECTION 11.10. HEADINGS. The headings of the various Articles
and Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SECTION 11.11. GOVERNING LAW. This Agreement shall be construed
in accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
<PAGE> 41
36
IN WITNESS WHEREOF, the parties hereto have caused this Amended
and Restated Trust Agreement to be duly executed by their respective officers
hereunto duly authorized, as of the day and year first above written.
THE FIRST NATIONAL BANK OF CHICAGO, not in its
individual capacity but solely as Eligible
Lender Trustee,
by
------------------------------------
Name :
Title :
KEY BANK USA, NATIONAL ASSOCIATON,
Depositor,
by
------------------------------------
Name :
Title :
<PAGE> 42
EXHIBIT A
TO THE TRUST AGREEMENT
[FORM OF TRUST CERTIFICATE]
SEE REVERSE FOR CERTAIN DEFINITIONS
Unless this Trust Certificate is presented by an authorized
representative of The Depository Trust Company, a New York Corporation ("DTC"),
to the Issuer (as defined below) or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
the registered owner hereof, Cede & Co., has an interest herein.
THIS TRUST CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF A
BENEFIT PLAN (AS DEFINED BELOW). THIS CERTIFICATE IS NOT GUARANTEED OR INSURED
BY ANY GOVERNMENTAL AGENCY.
[THIS TRUST CERTIFICATE IS NONTRANSFERABLE.]1
NUMBER
R- $_________________________
CUSIP NO.
KEYCORP STUDENT LOAN TRUST 1996-A
FLOATING RATE ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes a pool of law school student loans
sold to the Trust by Key Bank USA, National Association.
(This Trust Certificate does not represent an interest in or obligation
of Key Bank USA, National Association the Servicer (as defined below),
the Eligible Lender Trustee (as defined below) or any of their
respective affiliates, except to the extent described below.)
- --------
(1)To be included only on the Certificates issued to the Seller (as defined
below) on the Closing Date and any Certificates issued in exchange therefor.
<PAGE> 43
38
THIS CERTIFIES THAT _________________________________________
is the registered owner of ______________________________________ dollars
nonassessable, fully-paid, fractional undivided interest in the KeyCorp Student
Loan Trust 1996-A (the "Trust"), a trust formed under the laws of the State of
New York by Key Bank USA, National Association, a national banking association
(the "Seller"). The Trust was created pursuant to a Trust Agreement dated as of
_______________, 1996, as amended and restated as of September 1, 1996 (the
"Trust Agreement"), between the Seller and The First National Bank of Chicago,
a national banking association, not in its individual capacity but solely as
eligible lender trustee on behalf of the Trust (the "Eligible Lender Trustee"),
a summary of certain of the pertinent provisions of which is set forth below.
To the extent not otherwise defined herein, the capitalized terms used herein
have the meanings assigned to them in Appendix A to the Sale and Servicing
Agreement (the "Sale and Servicing Agreement") dated as of September 1, 1996,
among the Trust, the Eligible Lender Trustee, the Seller, Pennsylvania Higher
Education Assistance Agency, as servicer (the "Servicer"), and Key Bank USA,
National Association, as administrator (the "Administrator"); such Appendix A
also contains rules as to usage that shall be applicable herein.
This Certificate is one of the duly authorized Certificates
designated as "Floating Rate Asset Backed Certificates" (herein called the
"Trust Certificates"). Issued under the Indenture dated as of September 1, 1996,
between the Trust and _____________________, as Indenture Trustee, are Notes
designated as "Floating Rate Asset Backed Notes" (the "Notes"). This Trust
Certificate is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the holder of this
Trust Certificate by virtue of the acceptance hereof assents and by which such
holder is bound. The property of the Trust includes a pool of law school student
loans (the "Financed Student Loans"), all moneys paid thereunder on or after
September 1, 1996 (or, in the case of Financed Student Loans that constitute
Additional Student Loans, on or after the respective Subsequent Cutoff Dates),
certain bank accounts and the proceeds thereof and certain other rights under
the Trust Agreement and the Sale and Servicing Agreement and all proceeds of the
foregoing. The rights of the holders of the Trust Certificates to the assets of
the Trust are subordinated to the rights of the holders of the Notes, as set
forth in the Sale and Servicing Agreement.
Under the Trust Agreement, to the extent of funds available
therefor, interest on the Certificate Balance of this Trust Certificate at the
Certificate Rate, and principal and certain other amounts will be distributed on
the twenty-seventh day of each __________, __________, __________ and __________
<PAGE> 44
39
(or, if such twenty-seventh day is not a Business Day, the next succeeding
Business Day) (each a "Distribution Date"), commencing on __________, 1996, to
the person in whose name this Trust Certificate is registered at the close of
business on the twenty-sixth day of the calendar month in which such
Distribution Date occurs (the "Record Date"), in each case to the extent of such
Certificateholder's fractional undivided interest in the amount or amounts to be
distributed to Certificateholders on such Distribution Date pursuant to the Sale
and Servicing Agreement.
Each holder of this Trust Certificate acknowledges and agrees
that its rights to receive distributions in respect of this Trust Certificate
from Available Funds and amounts on deposit in the Reserve Account are
subordinated to the rights of the Noteholders as described in the Sale and
Servicing Agreement and the Indenture.
It is the intent of the Seller, the Servicer, the Administrator,
the Certificateholders and the Certificate Owners that, for purposes of Federal
income, state and local income and franchise and any other income taxes, the
Trust will be treated as a partnership and the Certificateholders (including the
Depositor in its capacity as recipient of distributions from the Reserve
Account) will be treated as partners in that partnership. The Depositor and the
other Certificateholders by acceptance of a Trust Certificate (and the
Certificate Owners by acceptance of a beneficial interest in a Trust
Certificate), agree to treat, and to take no action inconsistent with the
treatment of, the Trust Certificates for such tax purposes as partnership
interests in the Trust.
Each Certificateholder or Certificate Owner, by its acceptance
of a Trust Certificate or, in the case of a Certificate Owner, a beneficial
interest in a Trust Certificate, covenants and agrees that such
Certificateholder or Certificate Owner, as the case may be, will not at any time
institute against the Seller or the Trust, or join in any institution against
the Seller or the Trust of, any bankruptcy, reorganization, arrangement,
insolvency, receivership or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Trust Certificates, the Notes, the Trust
Agreement or any of the other Basic Documents.
Distributions on this Trust Certificate will be made as provided
in the Trust Agreement by the Eligible Lender Trustee by wire transfer or by
check mailed to the Certificateholder of record in the Certificate Register
without the presentation or surrender of this Trust Certificate or the making of
any
<PAGE> 45
40
notation hereon, except that with respect to Trust Certificates registered on
the Record Date in the name of the nominee of the Clearing Agency, unless
Definitive Certificates have been issued (initially, such nominee to be Cede &
Co.), payments will be made by wire transfer in immediately available funds to
the account designated by such nominee. Except as otherwise provided in the
Trust Agreement and notwithstanding the above, the final distribution on this
Trust Certificate will be made after due notice by the Eligible Lender Trustee
of the pendency of such distribution and only upon presentation and surrender of
this Trust Certificate at the office or agency maintained for the purpose by the
Eligible Lender Trustee in the Borough of Manhattan, The City of New York.
Reference is hereby made to the further provisions of this Trust
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Eligible Lender Trustee or its
authenticating agent, by manual signature, this Trust Certificate shall not
entitle the holder hereof to any benefit under the Trust Agreement or the Sale
and Servicing Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Eligible Lender Trustee on behalf of the
Trust and not in its individual capacity has caused this Trust Certificate to be
duly executed as of the date set forth below.
KEYCORP STUDENT LOAN TRUST 1996-A
by THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but
solely as Eligible Lender Trustee,
by
-----------------------------
Authorized Signatory
Date: _________, 1996
<PAGE> 46
41
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the within-mentioned Trust
Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but
solely as Eligible Lender Trustee,
by
-------------------------------
Authorized Signatory
OR
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but
solely as Eligible Lender Trustee,
by FIRST CHICAGO TRUST COMPANY OF NEW
YORK, as Authenticating
Agent,
by
-------------------------------
Authorized Signatory
Date: __________, 1996
<PAGE> 47
42
[Reverse of Trust Certificate]
The Trust Certificates do not represent an obligation of, or an
interest in, the Seller, the Servicer, the Administrator, the Eligible Lender
Trustee or any affiliates of any of them, and no recourse may be had against
such parties or their assets, except as may be expressly set forth or
contemplated herein, in the Trust Agreement or in the other Basic Documents. In
addition, this Trust Certificate is not guaranteed by any governmental agency or
instrumentality and is limited in right of payment to certain collections with
respect to the Financed Student Loans, all as more specifically set forth in the
Sale and Servicing Agreement. A copy of each of the Sale and Servicing Agreement
and the Trust Agreement may be examined during normal business hours at the
principal office of the Seller, and at such other places, if any, designated by
the Seller, by any Certificateholder upon request.
The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Seller and the rights of the Certificateholders under the
Trust Agreement at any time by the Seller and the Eligible Lender Trustee with
the consent of the holders of the Notes and the Trust Certificates each voting
as a class evidencing not less than a majority of the outstanding principal
balance of the Notes and the Certificate Balance. Any such consent by the holder
of this Trust Certificate shall be conclusive and binding on such holder and on
all future holders of this Trust Certificate and of any Trust Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Trust Certificate. The Trust
Agreement also permits the amendment thereof, in certain limited circumstances,
without the consent of the holders of any of the Trust Certificates.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, the transfer of this Trust Certificate is
registerable in the Certificate Register upon surrender of this Certificate for
registration of transfer at the offices or agencies maintained by The First
National Bank of Chicago in its capacity as Certificate Registrar, or by any
successor Certificate Registrar, in the Borough of Manhattan, The City of New
York, accompanied by a written instrument of transfer in form satisfactory to
the Eligible Lender Trustee and the Certificate Registrar duly executed by the
holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Trust Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee.
<PAGE> 48
43
The Trust Certificates are issuable only as registered Trust
Certificates without coupons in denominations of $1,000 or in integral multiples
of $1,000 in excess thereof; PROVIDED, HOWEVER, that the Trust Certificates
issued to the Depositor may be issued in such denominations as to include any
residual amount of the Initial Certificate Balance. As provided in the Trust
Agreement and subject to certain limitations therein set forth, Trust
Certificates are exchangeable for new Trust Certificates of authorized
denominations evidencing the same aggregate 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 Eligible Lender Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge payable in connection therewith.
The Eligible Lender Trustee, the Certificate Registrar and any
agent of the Eligible Lender Trustee or the Certificate Registrar may treat the
person in whose name this Trust Certificate is registered as the owner hereof
for all purposes, and none of the Eligible Lender Trustee or the Certificate
Registrar or any such agent shall be affected by any notice to the contrary.
The Trust Certificates (including any beneficial interests
therein) may not be acquired by or for the account of (i) an employee benefit
plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of
Title I of ERISA, (ii) an individual retirement account described in Section
408(a) of the Internal Revenue Code of 1986, as amended, or (iii) any entity
whose underlying assets include plan assets by reason of a plan's investment in
the entity (each, a "Benefit Plan"). By accepting and holding this Trust
Certificate, the Holder hereof shall be deemed to have represented and warranted
that it is not a Benefit Plan.
The obligations and responsibilities created by the Trust
Agreement and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Trust Agreement and the Sale and Servicing Agreement and the disposition of all
property held as part of the Trust. The Seller may at its option purchase the
corpus of the Trust at a price specified in the Sale and Servicing Agreement,
and such purchase of the Financed Student Loans and other property of the Trust
will effect early retirement of the Trust Certificates; however, such right of
purchase is exercisable only on any Distribution Date on or after the date on
which the Pool Balance is less than or equal to 5% of the Initial Pool Balance.
<PAGE> 49
44
This Trust Certificate shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
<PAGE> 50
45
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells,
assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or type name and address, including postal zip
code, of assignee)
- --------------------------------------------------------------------------------
the within Trust Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
____________________________________________________________________ Attorney to
transfer said Trust Certificate on the books of the Certificate Registrar, with
full power of substitution in the premises.
Dated:
______________________________*
Signature Guaranteed:
______________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Trust Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
<PAGE> 1
Exhibit 10(a)
- --------------------------------------------------------------------------------
SALE AND SERVICING AGREEMENT
among
KEYCORP STUDENT LOAN TRUST 1996-A
as Issuer,
KEY BANK USA, NATIONAL ASSOCIATION
as Seller,
PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY
as Servicer,
THE FIRST NATIONAL BANK OF CHICAGO
not in its individual capacity but solely
as Eligible Lender Trustee,
AND
KEY BANK USA, NATIONAL ASSOCIATION
as Administrator
Dated as of ________________, 1996
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE I
<S> <C>
Definitions and Usage...........................................................................................1
ARTICLE II
Conveyance of Financed Student Loans
------------------------------------
SECTION 2.01. Conveyance of Initial Financed
Student Loans..................................................................................2
SECTION 2.02. Conveyance of Additional Student
Loans..........................................................................................2
SECTION 2.03. Conveyance of Financed Federal Loans
and Financed Private Loans by the
Eligible Lender Trustee to the
Seller in Connection with
Consolidation Loans..............................................................................5
SECTION 2.04. Endorsement......................................................................................6
ARTICLE III
The Financed Student Loans
--------------------------
SECTION 3.01. Representations and Warranties of
Seller with Respect to the Financed
Student Loans..................................................................................6
SECTION 3.02. Repurchase upon Breach;
Reimbursement.................................................................................10
SECTION 3.03. Custody of Financed Student Loan
Files.........................................................................................11
SECTION 3.04. Duties of Servicer as Custodian.................................................................11
SECTION 3.05. Instructions; Authority To Act..................................................................12
SECTION 3.06. Custodian's Indemnification.....................................................................12
SECTION 3.07. Effective Period and Termination................................................................13
</TABLE>
-ii-
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
ARTICLE IV
Administration and Servicing of Financed Student Loans
------------------------------------------------------
<S> <C>
SECTION 4.01. Duties of Servicer..............................................................................14
SECTION 4.02. Collection of Financed Student Loan
Payments......................................................................................16
SECTION 4.03. Realization upon Financed Student
Loans.........................................................................................18
SECTION 4.04. Computation of Note Interest Rate
and Certificate Rate..........................................................................18
SECTION 4.05. No Impairment...................................................................................18
SECTION 4.06. Purchase of Financed Student Loans;
Reimbursement.................................................................................18
SECTION 4.07. Servicing Fee; Excess Servicing Fee.............................................................19
SECTION 4.08. Administrator's Certificate;
Servicer's Report.............................................................................20
SECTION 4.09. Annual Statement as to Compliance;
Notice of Default.............................................................................21
SECTION 4.10. Annual Independent Certified Public
Accountants' Report...........................................................................22
SECTION 4.11. Access to Certain Documentation and
Information Regarding Financed
Student Loans.................................................................................23
SECTION 4.12. Servicer and Administrator Expenses.............................................................23
SECTION 4.13. Appointment of Subservicer......................................................................23
SECTION 4.14. Special Programs................................................................................24
24
ARTICLE V
Distributions; Reserve Account;
-------------------------------
Statements to Certificateholders and Noteholders
------------------------------------------------
SECTION 5.01. Establishment of Trust Accounts.................................................................24
SECTION 5.02. Collections.....................................................................................27
SECTION 5.03. Application of Collections......................................................................28
SECTION 5.04. Additional Deposits.............................................................................28
SECTION 5.05. Distributions...................................................................................29
SECTION 5.06. Reserve Account.................................................................................31
SECTION 5.07. Statements to Certificateholders
and Noteholders...............................................................................35
SECTION 5.08. Pre-Funding Account.............................................................................38
38
</TABLE>
-iii-
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
ARTICLE VI
The Seller and the Administrator
--------------------------------
<S> <C>
SECTION 6.01. Representations of Seller and
Administrator.................................................................................39
SECTION 6.02. Existence.......................................................................................42
SECTION 6.03. Liability of Seller; Indemnities................................................................42
SECTION 6.04. Liability of Administrator;
Indemnities...................................................................................44
SECTION 6.05. Merger or Consolidation of, or
Assumption of the Obligations of,
Seller or Administrator.......................................................................45
SECTION 6.06. Limitation on Liability of Seller,
Administrator and Others......................................................................46
SECTION 6.07. Seller May Own Certificates or
Notes.........................................................................................47
SECTION 6.08. Society National Bank Not to Resign
as Administrator..............................................................................47
ARTICLE VII
The Servicer
------------
SECTION 7.01. Representations of Servicer.....................................................................48
SECTION 7.02. Indemnities of Servicer.........................................................................50
SECTION 7.03. Merger or Consolidation of, or
Assumption of the Obligations of,
Servicer......................................................................................51
SECTION 7.04. Limitation on Liability of Servicer
and Others....................................................................................52
SECTION 7.05. PHEAA Not to Resign as Servicer.................................................................53
ARTICLE VIII
Default
-------
SECTION 8.01. Servicer Default; Administrator
Default.......................................................................................53
SECTION 8.02. Appointment of Successor........................................................................57
SECTION 8.03. Notification to Noteholders and
Certificateholders............................................................................59
SECTION 8.04. Waiver of Past Defaults.........................................................................59
</TABLE>
-iv-
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE IX
Termination
-----------
SECTION 9.01. Termination.....................................................................................59
ARTICLE X
[Reserved]
ARTICLE XI
Miscellaneous
-------------
SECTION 11.01. Amendment.......................................................................................62
SECTION 11.02. Protection of Interests in Trust................................................................64
SECTION 11.03. Notices.........................................................................................67
SECTION 11.04. Assignment......................................................................................68
SECTION 11.05. Limitations on Rights of Others.................................................................68
SECTION 11.06. Severability....................................................................................68
SECTION 11.07. Separate Counterparts...........................................................................68
SECTION 11.08. Headings........................................................................................68
SECTION 11.09. Governing Law...................................................................................69
SECTION 11.10. Assignment to Indenture Trustee.................................................................69
SECTION 11.11. Nonpetition Covenants...........................................................................69
SECTION 11.12. Limitation of Liability of Eligible
Lender Trustee and Indenture
Trustee.......................................................................................69
</TABLE>
APPENDIX A Definitions and Usage
SCHEDULE A Schedule of Financed Student Loans
SCHEDULE B Location of Financed Student Loan
Files
SCHEDULE C Servicing Fee Schedules
SCHEDULE D Provisions to be Audited Regarding
Servicer and Administrator
EXHIBIT A Form of Report to Noteholders
EXHIBIT B Form of Report to Certificateholders
EXHIBIT C Form of Administrator's Certificate
EXHIBIT D Form of Transfer Agreement
EXHIBIT E Form of Assignment on Closing Date
v
<PAGE> 6
SALE AND SERVICING AGREEMENT dated as of
_______ 1, 1996, among KEYCORP STUDENT LOAN TRUST
1996-A, a New York trust (the "Issuer"), KEY BANK
USA, NATIONAL ASSOCIATION, a national banking
association (the "Seller"), PENNSYLVANIA HIGHER
EDUCATION ASSISTANCE AGENCY, an agency of the
Commonwealth of Pennsylvania, as servicer (the
"Servicer"), ______________________, a ________
banking association, solely as eligible lender
trustee and not in its individual capacity (the
"Eligible Lender Trustee"), and KEY BANK USA,
NATIONAL ASSOCIATION, a national banking association,
as administrator (the "Administrator").
WHEREAS, on ______ __, 1996, the Seller assigned to the Issuer
its rights in a portfolio of law school, medical school, dental school, graduate
business school and other graduate school student loans originated in the
ordinary course of business in connection with The Access Group Loan Program by
the Seller (or by Ameritrust Company National Association prior to its merger in
July 1992 with the Seller), subject to revocation by the Seller;
WHEREAS the Seller intends to assign to the Issuer during a
limited period additional student loans it currently owns and student loans it
may originate in the future;
WHEREAS the Issuer desires to purchase, and the Seller
is willing to sell to the Issuer, such student loans;
WHEREAS the Eligible Lender Trustee is willing to hold legal
title to, and serve as eligible lender trustee with respect to, such student
loans on behalf of the Issuer; and
WHEREAS the Servicer and the Administrator are willing to
service such student loans and undertake certain administrative functions with
respect thereto.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto agree as follows:
<PAGE> 7
2
ARTICLE I
Definitions and Usage
---------------------
Capitalized terms used but not defined herein are defined in
Appendix A hereto, which also contains rules as to usage and construction that
shall be applicable herein.
ARTICLE II
Conveyance of Financed Student Loans
------------------------------------
SECTION 2.01. CONVEYANCE OF INITIAL FINANCED STUDENT LOANS. In
consideration of the Issuer's delivery to or upon the order of the Seller on the
Closing Date of $____________ aggregate principal amount of the Notes, the net
proceeds from the sale of the remaining Notes and the Certificates and the other
amounts to be distributed from time to time to the Seller in accordance with the
terms of this Agreement, the Seller does hereby, as evidenced by a duly executed
written assignment in the form of Exhibit E, sell, transfer, assign, set over
and otherwise convey to the Issuer (or, in the case of the Initial Financed
Student Loans (as defined below), to the Eligible Lender Trustee on behalf of
the Issuer), without recourse (subject to the obligations herein):
(i) all right, title and interest in and to the Financed
Student Loans (other than the Additional Student Loans) (the "Initial
Financed Student Loans") and all obligations of the Obligors thereunder,
including all moneys paid thereunder, and all written communications
received by the Seller with respect thereto (including borrower
correspondence, notices of death, disability or bankruptcy and requests for
deferrals or forbearance), on or after the Cutoff Date;
(ii) all right, title and interest of the Seller under the
Assigned Agreements insofar as they relate to the Financed Private Loans but
not with respect to any other loans covered thereby (the "Assigned Rights");
(iii) all right, title and interest in and to all funds on deposit
from time to time in the Trust Accounts, including the Reserve Account
Initial Deposit and the Pre-Funded Amount, and in and to all investments and
proceeds thereof (including all income thereon); and
(iv) the proceeds of any and all of the foregoing.
<PAGE> 8
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SECTION 2.02. CONVEYANCE OF ADDITIONAL STUDENT LOANS. (a)
Subject to the conditions set forth in paragraph (b) below, in consideration of
the Issuer's delivery on the related Transfer Date to or upon the order of the
Seller of the amount described in Section 5.08(a) to be delivered to the Seller,
the Seller does hereby sell, transfer, assign, set over and otherwise convey to
the Issuer (or, in the case of the Additional Student Loans, to the Eligible
Lender Trustee on behalf of the Issuer), without recourse (subject to the
obligations herein) all right, title and interest of the Seller in and to each
Additional Student Loan, and all moneys received thereon, and all written
communications received by the Seller with respect thereto (including borrower
correspondence, notices of death, disability or bankruptcy and requests for
deferrals or forbearances), on and after the related Subsequent Cutoff Date,
made from time to time during the Funding Period.
(b) The Seller shall transfer to the Issuer the Additional
Student Loans for a given Transfer Date and the other property and rights
related thereto described in paragraph (a) above only upon the satisfaction of
each of the following conditions on or prior to such Transfer Date:
(i) the Seller shall have delivered to the Eligible Lender
Trustee and the Indenture Trustee a duly executed written assignment
(including an acceptance by the Eligible Lender Trustee and the Indenture
Trustee) in substantially the form of Exhibit D (each, a "Transfer
Agreement"), which shall include supplements to Schedule A, listing such
Additional Student Loans;
(ii) the Seller shall have delivered, at least two days' prior
to such Transfer Date, notice of such transfer to the Eligible Lender
Trustee, the Indenture Trustee and the Rating Agencies, including a listing
of the designation and the aggregate principal balance of such Additional
Student Loans;
(iii) the Seller shall, to the extent required by Section 5.02,
have deposited in the Collection Account all collections in respect of the
Additional Student Loans on and after each applicable Subsequent Cutoff
Date;
(iv) as of each Transfer Date, the Seller was not insolvent nor
will it have been made insolvent by such transfer nor is it aware of any
pending insolvency;
(v) such addition will not result in a material
adverse Federal or State tax consequence to the Issuer, the
Noteholders or the Certificateholders;
(vi) the Funding Period shall not have terminated;
(vii) the Seller shall have delivered to the Indenture
Trustee and the Eligible Lender Trustee an Officers'
<PAGE> 9
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Certificate confirming the satisfaction of each condition
precedent specified in this paragraph (b);
(viii) the Seller shall have delivered (A) to the Rating Agencies an
Opinion of Counsel with respect to the transfer of the Additional Student
Loans transferred on such Transfer Date, substantially in the form of the
Opinion of Counsel delivered to the Rating Agencies on the Closing Date, and
(B) to the Eligible Lender Trustee and the Indenture Trustee the Opinion of
Counsel required by Section 11.02(i)(1);
(ix) the Seller shall have taken any action required to maintain
the first perfected ownership interest of the Issuer in the Trust Estate and
the first perfected security interest of the Indenture Trustee in the
Collateral;
(x) no selection procedures believed by the Seller to be
adverse to the interests of the Certificateholders or the Noteholders shall
have been utilized in selecting the Additional Student Loans;
(xi) no Private Consolidation Loan will be transferred to the
Issuer unless at least one underlying student loan to be consolidated is a
Financial Student Loan already held by the Eligible Lender Trustee on behalf
of the Issuer; and
(xii) no Consolidation Loan will be transferred to the Issuer if
the purchase price required to be paid for such Consolidation Loan when
added to the aggregate purchase price previously paid by the Eligible Lender
Trustee for all Consolidation Loans during the Funding Period would cause
the aggregate purchase price paid by the Eligible Lender Trustee for
Consolidation Loans transferred to the Issuer to exceed
$___________;
PROVIDED, HOWEVER, that the Seller shall not incur any liability as a result of
transferring Additional Student Loans on any Transfer Date at a time when the
condition set forth in clause (v) was not satisfied, if at the time of such
transfer the Authorized Officers of the Seller, after reasonable inquiry of
in-house counsel to the Seller, were not aware of any fact that would reasonably
suggest that such condition would not be satisfied as of such date.
(c) The Seller covenants to transfer during the Funding Period
to the Eligible Lender Trustee on behalf of the Issuer pursuant to paragraph (a)
above Additional Student Loans with an aggregate principal balance of not less
than $_____________ (less the amount of other Additional Fundings made during
the Funding Period); PROVIDED, HOWEVER, that the Seller shall have no liability
for a breach of the foregoing covenant as a result of the Seller not having made
or owned prior to the date hereof Additional Student Loans equal to the
<PAGE> 10
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amount specified above during the Funding Period, the Seller not being able to
transfer Additional Student Loans because of Section 2.02(b)(xii) or there being
insufficient funds available in the Escrow Account and the Pre-Funding Account
for the Eligible Lender Trustee to consummate such acquisitions.
SECTION 2.03. CONVEYANCE OF FINANCED FEDERAL LOANS AND
FINANCED PRIVATE LOANS BY THE ELIGIBLE LENDER TRUSTEE TO THE SELLER IN
CONNECTION WITH CONSOLIDATION LOANS. On any date (whether or not during the
Funding Period), upon receipt of written notice (or telephonic or facsimile
notice followed by written notice) from the Seller (or from the Servicer on
behalf of the Seller) by the Eligible Lender Trustee and the Indenture Trustee,
the Eligible Lender Trustee will convey to the Seller the Financed Federal Loans
and Financed Private Loans identified in such notice, which are to be repaid
pursuant to the Consolidation Loans to be made by the Seller. Simultaneously
with each such conveyance by the Eligible Lender Trustee and the making by the
Seller of each such Consolidation Loan during the Funding Period, the Seller
shall deposit into the Escrow Account an amount equal to the sum of the
principal balances of such Financed Federal Loans and Financed Private Loans
thereby being consolidated plus accrued interest thereon to the date of such
consolidation.
With respect to each Consolidation Loan made by the Seller
after the end of the Funding Period, the Seller shall deposit, simultaneously
with each such conveyance by the Eligible Lender Trustee and the making of each
such Consolidation Loan, into the Collection Account in accordance with Section
5.04 an amount equal to the aggregate unpaid principal balance of, plus accrued
interest on, each such Financed Federal Loan and Financed Private Loan, as
payment for such conveyance of such Financed Federal Loans and Financed Private
Loans.
SECTION 2.04. ENDORSEMENT. The Seller hereby appoints each of
the Eligible Lender Trustee and the Indenture Trustee as the Seller's true and
lawful attorney-in-fact with full power of substitution to endorse the Seller's
name on any promissory note evidencing the Initial Financed Student Loans and
any Additional Student Loans transferred to the Eligible Lender Trustee on
behalf of the Trust pursuant to Sections 2.01 and 2.02. The Seller acknowledges
and agrees that this power of attorney shall be construed as a power coupled
with an interest, shall be irrevocable as long as the Trust Agreement remains in
effect and shall continue in effect until the Trust Agreement terminates.
<PAGE> 11
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ARTICLE III
The Financed Student Loans
--------------------------
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF SELLER WITH
RESPECT TO THE FINANCED STUDENT LOANS. The Seller makes the following
representations and warranties as to the Financed Student Loans on which the
Issuer is deemed to have relied in acquiring (through the Eligible Lender
Trustee) the Financed Student Loans. Such representations and warranties speak
as of the execution and delivery of this Agreement and as of the Closing Date,
in the case of the Initial Financed Student Loans and the Subsequent Pool
Student Loans, and as of the applicable Transfer Date, in the case of the
Additional Student Loans, but shall survive the sale, transfer and assignment of
the Financed Student Loans to the Eligible Lender Trustee on behalf of the
Issuer and the pledge thereof to the Indenture Trustee pursuant to the
Indenture.
(i) CHARACTERISTICS OF FINANCED STUDENT LOANS. Each Financed
Student Loan (A) was originated in the United States of America, its
territories, its possessions or other areas subject to its jurisdiction by
the Seller in the ordinary course of its business to an eligible borrower
under applicable law and agreements and was fully and properly executed by
the parties thereto and (B) provides or, when the payment schedule with
respect thereto is determined, will provide for payments on a periodic basis
that fully amortize the principal amount of such Financed Student Loan by
its maturity and yield interest at the rate applicable thereto, as such
maturity may be modified in accordance with any applicable deferral or
forbearance periods granted in accordance with applicable laws and
restrictions, including those of the Higher Education Act, any Guarantee
Agreement or the Program. Each Financed Student Loan that is a Financed
Federal Loan qualifies the holder thereof to receive Interest Subsidy
Payments (other than SLS Loans, unsubsidized Stafford Loans and certain
Consolidation Loans) and Special Allowance Payments from the Department and
Guarantee Payments from the applicable Guarantor and qualifies the
applicable Guarantor to receive reinsurance payments thereon from the
Department.
(ii) SCHEDULE OF FINANCED STUDENT LOANS. The information set
forth in Schedules A and B to this Agreement and Schedule A to the related
Transfer Agreement is true and correct in all material respects as of the
opening of business on the Cutoff Date (with respect to Schedules A and B to
this Agreement) or each applicable Subsequent Cutoff Date, as applicable,
and no selection procedures believed to be adverse to the Noteholders or the
Certificateholders were utilized in selecting the Initial Financed Student
Loans or the applicable Additional Student Loans, as applicable. The
computer tape regarding the Initial Financed Student Loans and the
<PAGE> 12
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Subsequent Pool Student Loans made available to the Issuer and its assigns
is true and correct in all respects as of the Cutoff Date.
(iii) COMPLIANCE WITH LAW. Each Financed Student Loan complied at
the time it was originated or made and at the execution of this Agreement or
the applicable Transfer Agreement, as the case may be, complies, and the
Seller and its agents, with respect to each such Financed Student Loan, have
at all times complied, in all material respects with all requirements of
applicable Federal, state and local laws and regulations thereunder,
including the Higher Education Act, usury law, the Federal Truth-in-Lending
Act, the Equal Credit Opportunity Act, the Federal Reserve Board's
Regulation B and other consumer credit laws and equal credit opportunity and
disclosure laws and all applicable requirements of the Guarantee Agreements.
(iv) BINDING OBLIGATION. Each Financed Student Loan represents
the genuine, legal, valid and binding payment obligation in writing of the
borrower thereof, enforceable by or on behalf of the holder thereof in
accordance with its terms, and no Financed Student Loan has been satisfied,
subordinated or rescinded, subject to clause (xiii) below.
(v) NO DEFENSES. No right of rescission, setoff,
counterclaim or defense has been asserted or threatened or
exists with respect to any Financed Student Loan.
(vi) NO DEFAULT. No Financed Student Loan has a payment that is
more than 220 days overdue as of the Cutoff Date or, with respect to the
Other Student Loans, more than 90 days overdue as of the applicable
Subsequent Cutoff Date, as the case may be, and, except as permitted in
this paragraph, no default, breach, violation or event permitting
acceleration under the terms of any Financed Student Loan has occurred;
and, except for payment defaults continuing for a period of not more than
120 days or 90 days, as applicable, no continuing condition that with
notice or the lapse of time or both would constitute a default, breach,
violation or event permitting acceleration under the terms of any Financed
Student Loan has arisen; and the Seller has not waived and shall not waive
any of the foregoing other than as permitted by the Basic Documents.
(vii) TITLE. It is the intention of the Seller that the transfer and
assignment herein contemplated constitute a sale of the Financed Student
Loans from the Seller to the Eligible Lender Trustee on behalf of the Issuer
and that the beneficial interest in and title t such Financed Student Loans
not be part of the debtor's estate in the event of the appointment of a
receiver with respect to the Seller. No Financed Student Loan has been sold,
transferred, assigned or pledged by the Seller to any Person other than the
Eligible Lender Trustee on
<PAGE> 13
8
behalf of the Issuer. Immediately prior to the transfer and assignment
herein contemplated, the Seller had good title to each Financed Student
Loan, free and clear of all Liens and, immediately upon the transfer
thereof, the Eligible Lender Trustee on behalf of the Issuer shall have good
title to each such Financed Student Loan, free and clear of all Liens or the
transfer shall have been perfected under the UCC.
(viii) LAWFUL ASSIGNMENT. No Financed Student Loan has been
originated in, or is subject to the laws of, any jurisdiction under which
the sale, transfer and assignment of such Financed Student Loan or any
Financed Student Loan under this Agreement, each Transfer Agreement or the
Indenture is unlawful, void or voidable.
(ix) ALL FILINGS MADE. All filings (including UCC filings)
necessary in any jurisdiction to give the Eligible Lender Trustee on behalf
of the Issuer a first perfected ownership interest in the Financed Student
Loans, and to give the Indenture Trustee a first perfected security interest
therein, shall have been made.
(x) ONE ORIGINAL. There is only one original
executed copy of the promissory note evidencing each Financed
Student Loan.
(xi) PRINCIPAL BALANCE. The aggregate principal balance of the
Initial Financed Student Loans, plus accrued interest to be capitalized with
respect thereto, as of the Cutoff Date, is $______________, and the
aggregate principal balance of the Subsequent Pool Student Loans, plus
accrued interest to be capitalized with respect thereto, as of the Cutoff
Date, is $ .
(xii) NO CLAIMS. As of the Cutoff Date, no claim for payment
with respect to an Initial Financial Student Loan has been made to a Guarantor,
and as of the related Subsequent Cutoff Date, no claim for payment with respect
to an Additional Student Loan, will have been made to a Guarantor.
(xiii) NO BANKRUPTCIES OR DEATHS. No borrower of any Financed
Student Loan as of the date the Trust was created on ______ __, 199_ (in the
case of the Initial Financed Student Loans), or the applicable Subsequent
Cutoff Date (in the case of Additional Student Loans) was noted in the
related Financed Student Loan File as being currently involved in a
bankruptcy proceeding or as having died.
(xiv) GENERAL INTANGIBLES. Each Financed Student Loan
constitutes "general intangibles" as defined in the UCC.
(xv) U.S. OBLIGORS. Less than 1% of the Financed
Student Loans are due from Persons not having a mailing
address in the United States of America.
(xvi) INTEREST ACCRUING. Each Financed Student Loan is
accruing interest (whether or not such interest is being paid
<PAGE> 14
9
currently, by the borrower or by the Department, or is being capitalized),
except as otherwise expressly permitted by the Basic Documents.
(xvii) SELLER'S REPRESENTATIONS. The representations
and warranties of the Seller contained in Section 6.01 are
true and correct.
SECTION 3.02. REPURCHASE UPON BREACH; REIMBURSEMENT. The
Seller, the Servicer or the Eligible Lender Trustee, as the case may be, shall
inform the other parties to this Agreement and the Indenture Trustee promptly,
in writing, upon the discovery of any breach of the Seller's representations and
warranties made pursuant to Section 3.01 or Section 6.01. Unless any such breach
shall have been cured within 60 days following the discovery thereof by the
Eligible Lender Trustee or receipt by the Eligible Lender Trustee of written
notice from the Seller or the Servicer of such breach, the Seller shall be
obligated to repurchase any Financed Student Loan in which the interests of the
Noteholders or the Certificateholders are materially and adversely affected by
any such breach as of the first day succeeding the end of such 60-day period
that is the last day of a Collection Period; provided that it is understood that
any such breach that does not affect any Guarantor's obligation to guarantee
payment of such Financed Student Loan to the Eligible Lender Trustee will not be
considered to have a material adverse effect for this purpose. In consideration
of and simultaneously with the repurchase of the Financed Student Loan, the
Seller shall remit the Purchase Amount, in the manner specified in Section 5.04,
and the Issuer shall execute such assignments and other documents reasonably
requested by the Seller in order to effect such transfer. Upon any such transfer
of a Financed Student Loan, legal title to, and beneficial ownership and control
of, the related Financed Student Loan File will thereafter belong to the Seller.
In addition, if any such breach by the Seller does not trigger such a repurchase
obligation but does result in the refusal by a Federal Guarantor to guarantee
all or a portion of the accrued interest, or the loss (including any obligation
of the Issuer to repay to the Department) of certain Interest Subsidy Payments
and Special Allowance Payments, with respect to a Financed Federal Loan, then,
unless such breach, if curable, is cured within 60 days, the Seller shall
reimburse the Issuer by remitting an amount equal to the sum of all such
non-guaranteed interest amounts and such forfeited Interest Subsidy Payments and
Special Allowance Payments in the manner specified in Section 5.04. Subject to
the provisions of Section 6.03, the sole remedy of the Issuer, the Eligible
Lender Trustee, the Indenture Trustee, the Noteholders or the Certificateholders
with respect to a breach of representations and warranties pursuant to Section
3.01 and the agreement contained in this Section shall be to require the Seller
to repurchase Financed Student Loans or to reimburse the
<PAGE> 15
10
Issuer as provided above pursuant to this Section, subject to the conditions
contained herein.
SECTION 3.03. CUSTODY OF FINANCED STUDENT LOAN FILES. To
assure uniform quality in servicing the Financed Student Loans and to reduce
administrative costs, the Issuer hereby revocably appoints the Servicer, and the
Servicer hereby accepts such appointment, to act for the benefit of the Issuer
and the Indenture Trustee as custodian of the following documents or instruments
which are hereby constructively delivered to the Indenture Trustee, as pledgee
of the Issuer (or, in the case of the Additional Student Loans, will as of the
applicable Transfer Date be constructively delivered to the Indenture Trustee,
as pledgee of the Issuer) with respect to each Financed Student Loan:
(a) the original fully executed copy of the note
evidencing the Financed Student Loan;
(b) the original loan application fully executed by
the borrower; and
(c) any and all other documents and computerized records that
any of the Servicer, the Administrator or the Seller shall keep on file, in
accordance with its customary procedures, relating to such Financed Student
Loan or any Obligor with respect thereto.
SECTION 3.04. DUTIES OF SERVICER AS CUSTODIAN. (a)
SAFEKEEPING. The Servicer shall hold the Financed Student Loan Files for the
benefit of the Issuer and the Indenture Trustee and maintain such accurate and
complete accounts, records and computer systems pertaining to each Financed
Student Loan File as shall enable the Issuer to comply with this Agreement. In
performing its duties as custodian the Servicer shall act with reasonable care,
using that degree of skill and attention that the Servicer exercises with
respect to the student loan files relating to all comparable student loans that
the Servicer services and shall ensure that it complies fully and completely
with all applicable Federal and State laws, including the Higher Education Act,
with respect thereto. The Servicer shall conduct, or cause to be conducted,
periodic audits of the Financed Student Loan Files held by it under this
Agreement and of the related accounts, records and computer systems, in such a
manner as shall enable the Issuer or the Indenture Trustee to verify the
accuracy of the Servicer's record keeping. The Servicer shall promptly report to
the Issuer and the Indenture Trustee any failure on its part to hold the
Financed Student Loan Files and maintain its accounts, records and computer
systems as herein provided and promptly take appropriate action to remedy any
such failure. Nothing herein shall be deemed to require an initial review or any
<PAGE> 16
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periodic review by the Issuer, the Eligible Lender Trustee or
the Indenture Trustee of the Financed Student Loan Files.
(b) MAINTENANCE OF AND ACCESS TO RECORDS. The Servicer shall
maintain each Financed Student Loan File at one of its offices specified in
Schedule B to this Agreement or at such other office as shall be specified by
written notice to the Issuer and the Indenture Trustee not later than 90 days
after any change in location. Upon reasonable prior notice, the Servicer shall
make available to the Issuer and the Indenture Trustee or their respective duly
authorized representatives, attorneys or auditors a list of locations of the
Financed Student Loan Files and the related accounts, records and computer
systems maintained by the Servicer at such times during normal business hours as
the Issuer or the Indenture Trustee shall instruct.
(c) RELEASE OF DOCUMENTS. Upon instruction from the Indenture
Trustee, the Servicer shall release any Financed Student Loan File to the
Indenture Trustee, the Indenture Trustee's agent, or the Indenture Trustee's
designee, as the case may be, at such place or places as the Indenture Trustee
may designate, as soon as practicable.
SECTION 3.05. INSTRUCTIONS; AUTHORITY TO ACT. The Servicer
shall be deemed to have received proper instructions with respect to the
Financed Student Loan Files upon its receipt of written instructions signed by a
Responsible Officer of the Indenture Trustee.
SECTION 3.06. CUSTODIAN'S INDEMNIFICATION. The Servicer as
custodian shall pay for any loss, liability or expense, including reasonable
attorney's fees, that may be imposed on, incurred by or asserted against the
Issuer, the Eligible Lender Trustee or the Indenture Trustee or any of their
officers, directors, employees and agents as the result of any improper act or
omission in any way relating to the maintenance and custody by the Servicer as
custodian of the Financed Student Loan Files where the final determination that
any such improper act or omission by the Servicer resulted in such loss,
liability or expense is established by a court of law, by an arbitrator or by
way of settlement agreed to by the Servicer; PROVIDED, HOWEVER, that the
Servicer shall not be liable to the Eligible Lender Trustee for any portion of
any such amount resulting from the willful misfeasance, bad faith or negligence
of the Eligible Lender Trustee and the Servicer shall not be liable to the
Indenture Trustee for any portion of any such amount resulting from the willful
misfeasance, bad faith or negligence of the Indenture Trustee. This provision
shall not be construed to limit the sovereign immunity of the Commonwealth of
Pennsylvania or the Servicer's or any other party's rights, obligations,
liabilities, claims or defenses which arise as a matter of law or pursuant to
any other provision of this Agreement.
<PAGE> 17
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SECTION 3.07. EFFECTIVE PERIOD AND TERMINATION. PHEAA's
appointment as custodian shall become effective as of the Closing Date and shall
continue in full force and effect for so long as PHEAA shall remain the Servicer
hereunder. If PHEAA or any successor Servicer shall resign as Servicer in
accordance with the provisions of this Agreement or if all the rights and
obligations of PHEAA or any such successor Servicer shall have been terminated
under Section 8.01, the appointment of PHEAA or such successor Servicer as
custodian shall be terminated simultaneously with the effectiveness of such
termination. As soon as practicable on or after any termination of such
appointment (and in any event within (i) 10 Business Days, with respect to that
portion of the Financed Student Loan Files consisting of electronic records and
information, and (ii) 30 Business Days, with respect to the remaining portion of
the Financed Student Loan Files), the Servicer shall deliver the Financed
Student Loan Files to the Indenture Trustee or the Indenture Trustee's agent at
such place or places as the Indenture Trustee may reasonably designate.
ARTICLE IV
Administration and Servicing of Financed Student Loans
------------------------------------------------------
SECTION 4.01. DUTIES OF SERVICER. The Servicer, for the
benefit of the Issuer (to the extent provided herein), shall manage, service,
administer and make collections on the Financed Student Loans with reasonable
care, using that degree of skill and attention that the Servicer exercises with
respect to all comparable student loans that it services. Without limiting the
generality of the foregoing or of any other provision set forth in this
Agreement and notwithstanding any other provision to the contrary set forth
herein, the Servicer shall manage, service, administer and make collections with
respect to the Financed Student Loans (other than collection of any Interest
Subsidy Payments and Special Allowance Payments, which the Eligible Lender
Trustee will perform on behalf of the Trust) in accordance with, and otherwise
comply with, all applicable Federal and state laws, including all applicable
standards, guidelines and requirements of the Higher Education Act (in the case
of the Financed Federal Loans) and any Guarantee Agreement (in the case of all
the Financed Student Loans), the failure to comply with which would adversely
affect the eligibility of one or more of the Financed Federal Loans for federal
reinsurance or Interest Subsidy Payments or Special Allowance Payments or one or
more of the Financed Student Loans for receipt of Guarantee Payments or would
have an adverse effect on the Certificateholders or the Noteholders. In
addition, without limiting the generality of the foregoing, the Servicer shall
service the Financed Student Loans in accordance with the provisions of the
Supplemental Sale and Servicing Agreement. The Servicer also hereby acknowledges
that its obligation to
<PAGE> 18
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service the Financed Student Loans includes those Additional Student Loans
conveyed by the Seller to the Eligible Lender Trustee on behalf of the Trust
pursuant to Section 2.02 and the related Transfer Agreement, a copy of which
shall be delivered to the Servicer by the Seller promptly upon execution
thereof; PROVIDED that any failure by the Seller to so deliver a Transfer
Agreement shall not affect the Servicer's obligations hereunder to service all
the Financed Student Loans.
The Servicer's duties shall include collection and posting of
all payments, responding to inquiries of borrowers on such Financed Student
Loans, monitoring borrowers' status, making required disclosures to borrowers,
investigating delinquencies, sending payment coupons to borrowers and otherwise
establishing repayment terms, reporting tax information to borrowers, if
applicable, accounting for collections and furnishing monthly and annual
statements with respect thereto to the Administrator. Subject to the provisions
of Section 4.02, the Servicer shall follow its customary standards, policies and
procedures in performing its duties as Servicer. Without limiting the generality
of the foregoing, the Servicer is authorized and empowered to execute and
deliver, on behalf of itself, the Issuer, the Eligible Lender Trustee, the
Indenture Trustee, the Certificateholders and the Noteholders or any of them,
instruments of satisfaction or cancellation, or partial or full release or
discharge, and all other comparable instruments, with respect to such Financed
Student Loans; PROVIDED, HOWEVER, that the Servicer agrees that it will not (a)
permit any rescission or cancellation of a Financed Student Loan except as
ordered by a court of competent jurisdiction or governmental authority or as
otherwise consented to in writing by the Eligible Lender Trustee and the
Indenture Trustee or (b) reschedule, revise, defer or otherwise compromise with
respect to payments due on any Financed Student Loan except pursuant to any
applicable deferral or forbearance periods or otherwise in accordance with all
applicable standards, guidelines and requirements with respect to the servicing
of the Financed Student Loans except as otherwise permitted in accordance with
Section 4.14; PROVIDED FURTHER, HOWEVER, that the Servicer shall not agree to
any decrease of the interest rate on, or the principal amount payable with
respect to, any Financed Student Loan except in accordance with the applicable
standards, guidelines and requirements of the Higher Education Act, any
Guarantee Agreement or the Program and as otherwise permitted in accordance with
Section 4.14. The Eligible Lender Trustee on behalf of the Issuer hereby grants
a power of attorney and all necessary authorization to the Servicer to maintain
any and all collection procedures with respect to the Financed Student Loans,
including filing, pursuing and recovering claims against the Guarantors for
Guarantee Payments and taking any steps to enforce such Financed Student Loan
such as commencing a legal proceeding to enforce a Financed Student Loan in the
name of the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
<PAGE> 19
14
Certificateholders or the Noteholders. The Eligible Lender Trustee or the
Indenture Trustee shall upon the written request of the Servicer or the
Administrator furnish the Servicer or the Administrator with any other powers of
attorney and other documents reasonably necessary or appropriate to enable the
Servicer or the Administrator to carry out their servicing and administrative
duties hereunder.
SECTION 4.02. COLLECTION OF FINANCED STUDENT LOAN PAYMENTS.
(a) The Servicer shall make reasonable efforts (including all efforts that may
be specified under the Higher Education Act or any Guarantee Agreement) to
collect all payments called for under the terms and provisions of the Financed
Student Loans as and when the same shall become due and shall follow such
collection procedures as it follows with respect to all comparable student loans
that it services. The Servicer shall allocate collections with respect to the
Financed Student Loans between principal and interest in accordance with Section
5.03. With the written consent of the Administrator, the Servicer may in its
discretion waive any late payment charge or any other fees that may be collected
in the ordinary course of servicing a Financed Student Loan.
(b) The Servicer shall make reasonable efforts to claim,
pursue and collect all Guarantee Payments from the Guarantors pursuant to the
Guarantee Agreements with respect to any of the Financed Student Loans as and
when the same shall become due and payable, shall comply with all applicable
laws and agreements with respect to claiming, pursuing and collecting such
payments and shall follow such practices and procedures as it follows with
respect to all comparable guarantee agreements and student loans that it
services. In connection therewith, the Servicer is hereby authorized and
empowered to convey to any Guarantor the note and the related Financed Student
Loan File representing any Financed Student Loan in connection with submitting a
claim to such Guarantor for a Guarantee Payment in accordance with the terms of
the applicable Guarantee Agreement.
(c) The Eligible Lender Trustee shall, with the assistance of
the Administrator as set forth below and on behalf of the Issuer, make
reasonable efforts to claim, pursue and collect all Interest Subsidy Payments
and Special Allowance Payments from the Department with respect to any of the
Financed Federal Loans as and when the same shall become due and payable, shall
comply with all applicable laws and agreements with respect to claiming,
pursuing and collecting such payments and shall follow such practices and
procedures as the Administrator follows with respect to its own student loans.
All amounts so collected by the Eligible Lender Trustee shall constitute
Available Funds for the applicable Collection Period and shall be deposited into
the Collection Account in accordance with Section 5.02. In connection therewith,
the Administrator shall prepare and file with the Department on a timely basis
all
<PAGE> 20
15
claims forms and other documents and filings necessary or appropriate in
connection with the claiming of Interest Subsidy Payments and Special Allowance
Payments on behalf of the Eligible Lender Trustee and shall otherwise assist the
Eligible Lender Trustee in pursuing and collecting such Interest Subsidy
Payments and Special Allowance Payments from the Department. The Eligible Lender
Trustee shall upon the written request of the Administrator furnish the
Administrator with any power of attorney and other documents reasonably
necessary or appropriate to enable the Administrator to prepare and file such
claims forms and other documents and filings.
The Eligible Lender Trustee may permit trusts, other than the
Trust, established by the Seller to securitize student loans to use the
Department lender identification number applicable to the Trust. In such event,
the Eligible Lender Trustee may claim and collect Interest Subsidy Payments and
Special Allowance Payments with respect to Financed Student Loans in the Trust
and student loans in such other trusts using such common lender identification
number. Notwithstanding anything herein or in the Basic Documents to the
contrary, any amounts assessed against payments (including , but not limited to,
Interest Subsidy Payments and Special Allowance Payments) due from the
Department or any Guarantor to any such other trust using such common lender
identification number as a result of amounts (including, but not limited to,
Consolidation Fees) owing to the Department or any Guarantor from the Trust will
be deemed for all purposes hereof and of the Basic Documents (including for
purposes of determining amounts paid by the Department or any Guarantor with
respect to the student loans in the Trust and such other trust) to have been
assessed against the Trust and shall be deducted by the Eligible Lender Trustee
or the Servicer and paid to such other trust from any collections made by them
which would otherwise have been payable to the Collection Account for the Trust.
If so specified in the servicing agreement applicable to any such other trust,
any amounts assessed against payments due from the Department or any Guarantor
to the Trust as a result of amounts owing to the Department or any Guarantor
from such other trust using such common lender identification number will be
deemed to have been assessed against such other trust and will be deducted by
the Eligible Lender Trustee or the Servicer from any collections made by them
which would otherwise be payable to the collection account for such other trust
and paid to the Trust.
SECTION 4.03. REALIZATION UPON FINANCED STUDENT LOANS. For the
benefit of the Issuer, the Servicer shall use reasonable efforts consistent with
its customary servicing practices and procedures and including all efforts that
may be specified under the Higher Education Act or any Guarantee Agreement in
its servicing of any delinquent Financed Student Loans.
<PAGE> 21
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SECTION 4.04. COMPUTATION OF NOTE INTEREST RATE AND
CERTIFICATE RATE. Prior to each Determination Date, the Administrator shall
determine the Note Interest Rate and the Certificate Rate that will be
applicable to the Distribution Date following such Determination Date, in
compliance with its obligation to prepare and deliver an Administrator's
Certificate on such Determination Date pursuant to Section 4.08. In connection
therewith, the Administrator shall calculate the T-Bill Rate in accordance with
the definition thereof and shall also determine the Student Loan Rate with
respect to such Distribution Date.
SECTION 4.05. NO IMPAIRMENT. The Servicer shall not
impair the rights of the Issuer, the Eligible Lender Trustee,
the Indenture Trustee, the Certificateholders or Noteholders in
such Financed Student Loans.
SECTION 4.06. PURCHASE OF FINANCED STUDENT LOANS;
REIMBURSEMENT. The Servicer or the Eligible Lender Trustee shall inform the
other party as well as the Indenture Trustee and the Seller promptly, in
writing, upon the discovery of any breach pursuant to Section 4.01, 4.02, 4.03
or 4.05. Unless the breach shall have been cured within 60 days following such
discovery (or, at the Servicer's election, the last day of the first month
following such discovery), the Servicer shall purchase any Financed Student Loan
in which the interests of the Noteholders or the Certificateholders are
materially and adversely affected by such breach as of the first day succeeding
the end of such 60-day period that is the last day of a Collection Period (it
being understood that any such breach that does not affect any Guarantor's
obligation to guarantee payment of such Financed Student Loan will not be
considered to have a material adverse effect for this purpose). If the Servicer
takes any action or fails to take any action during any Collection Period
pursuant to the sections referred to above that impairs the rights of the
Issuer, the Indenture Trustee, the Eligible Lender Trustee, the
Certificateholders or the Noteholders in any Financed Student Loan or otherwise
than as provided in such sections, the Servicer shall purchase such Financed
Student Loan as of the last day of such Collection Period. In consideration of
the purchase of any such Financed Student Loan pursuant to either of the two
preceding sentences, the Servicer shall remit the Purchase Amount in the manner
specified in Section 5.04. In addition, if any such breach by the Servicer does
not trigger such a purchase obligation but does result in the refusal by a
Federal Guarantor to guarantee all or a portion of the accrued interest, or the
loss (including any obligation of the Issuer to repay to the Department) of
certain Interest Subsidy Payments and Special Allowance Payments, with respect
to a Financed Federal Loan, then, unless such breach, if curable, is cured
within 60 days, the Servicer shall reimburse the Issuer by remitting an amount
equal to the sum of all such non-guaranteed interest amounts and such
<PAGE> 22
17
forfeited Interest Subsidy Payments and Special Allowance Payments in the manner
specified in Section 5.04. Subject to Section 7.02, the sole remedy of the
Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders and the Noteholders with respect to a breach pursuant to
Section 4.01, 4.02, 4.03 or 4.05 shall be to require the Servicer to purchase
Financed Student Loans or to reimburse the Issuer as provided above pursuant to
this Section. The Eligible Lender Trustee shall have no duty to conduct any
affirmative investigation as to the occurrence of any condition requiring the
repurchase of any Financed Student Loan or the reimbursement for any interest
penalty pursuant to this Section 4.06.
SECTION 4.07. SERVICING FEE; EXCESS SERVICING FEE. The
Servicing Fee for each calendar month and any Excess Servicing Fees payable on
any Distribution Date shall be equal to the amounts determined by reference to
the schedule of fees attached hereto as Schedule C. Notwithstanding anything to
the contrary contained herein or in any other Basic Document, the Servicer shall
only be entitled to receive any Excess Servicing Fee on any Distribution Date if
and to the extent that sufficient funds are available pursuant to Section
5.05(c)(viii) or 5.06(d).
SECTION 4.08. ADMINISTRATOR'S CERTIFICATE; SERVICER'S REPORT.
(a) On or before (i) the seventh day of each month during the Funding Period
(or, if any such day is not a Business Day, on the next succeeding Business
Day), the Servicer shall deliver to the Seller a Servicer's Report with respect
to the preceding calendar month containing all information necessary for the
preparation of the applicable Transfer Agreement (including Schedule A thereto),
and (ii) the fifteenth day of each month (or, if any such day is not a Business
Day, on the next succeeding Business Day), the Servicer shall deliver to the
Administrator a Servicer's Report with respect to the preceding calendar month
containing all information necessary for the Administrator to receive in
connection with the preparation of the Administrator's Officers' Certificate and
the Administrator's Certificate covering such calendar month referred to in
paragraphs (b) and (c) below.
(b) On each Determination Date prior to a Monthly Servicing
Payment Date that is not a Distribution Date, the Administrator shall deliver to
the Eligible Lender Trustee, the Indenture Trustee and (if the Seller is not the
Administrator) the Seller, an Officer's Certificate of the Administrator
containing all information necessary to pay the Servicer the Servicing Fee due
on such Monthly Servicing Payment Date pursuant to Sections 5.05(b) and 5.06. In
addition, on the Business Day preceding each Transfer Date during the Funding
Period, the Administrator shall deliver to the Eligible Lender Trustee, the
Indenture Trustee and (if the Seller is not the Administrator) the Seller, an
Officer's Certificate of the
<PAGE> 23
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Administrator containing all information necessary to make the transfers from
the Escrow Account and the Pre-Funding Account on such Transfer Date pursuant to
Section 5.08.
(c) (i) On each Determination Date prior to a Distribution
Date, the Administrator shall deliver to the Eligible Lender Trustee, the
Indenture Trustee and (if the Seller is not the Administrator) the Seller, with
a copy to the Rating Agencies, an Administrator's Certificate containing all
information necessary to make the distributions pursuant to Sections 5.05, 5.06
and 5.08(c)(ii), if applicable, for the Collection Period preceding the date of
such Administrator's Certificate. Financed Student Loans to be repurchased by
the Seller (whether pursuant to Section 2.03 or 3.02), purchased by the Servicer
or acquired by any Guarantor shall be identified by the Administrator by type of
loan and borrower social security number with respect to such Financed Student
Loan (as specified in Schedule A).
(ii) On the Special Determination Date, the Administrator
shall deliver to the Eligible Lender Trustee, the Indenture Trustee and (if the
Seller is not the Administrator) the Seller, with a copy to the Rating Agencies,
an Administrator's Certificate containing all information necessary to make the
distributions pursuant to Section 5.08(c)(i) on the Special Distribution Date.
SECTION 4.09. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF
DEFAULT. (a) Each of the Servicer and the Administrator shall deliver to the
Seller, the Eligible Lender Trustee and the Indenture Trustee, on or before
March 30 of each year beginning March 30, 1997, an Officers' Certificate of the
Servicer or the Administrator, as the case may be, dated as of December 31 of
the preceding year, stating that (i) a review of the activities of the Servicer
or the Administrator, as the case may be, during the preceding 12-month period
(or, in the case of the first such certificate, during the period from the
Closing Date to December 31, 1996) and of its performance under this Agreement
has been made under such officers' supervision and (ii) to the best of such
officers' knowledge, based on such review, the Servicer or the Administrator, as
the case may be, has fulfilled all its obligations under this Agreement, or
under this Agreement and the Administration Agreement, respectively, throughout
such year or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officers and the nature
and status thereof. The Indenture Trustee shall send a copy of each such
Officers' Certificate and each report referred to in Section 4.10 to the Rating
Agencies. A copy of each such Officers' Certificate and each report referred to
in Section 4.10 may be obtained by any Certificateholder, Certificate Owner,
Noteholder or Note Owner by a request in writing to the Eligible Lender Trustee
addressed to its Corporate Trust Office, together with evidence
<PAGE> 24
19
satisfactory to the Eligible Lender Trustee that such Person is one of the
foregoing parties. Upon the telephone request of the Eligible Lender Trustee,
the Indenture Trustee will promptly furnish the Eligible Lender Trustee a list
of Noteholders as of the date specified by the Eligible Lender Trustee.
(b) The Servicer shall deliver to the Eligible Lender Trustee,
the Indenture Trustee, the Seller and the Rating Agencies, promptly after having
obtained knowledge thereof, but in no event later than five Business Days
thereafter, written notice in an Officers' Certificate of the Servicer of any
event which with the giving of notice or lapse of time, or both, would become a
Servicer Default under Section 8.01(a)(1) or (2).
(c) The Administrator shall deliver to the Eligible Lender
Trustee, the Indenture Trustee, the Servicer and the Rating Agencies, promptly
after having obtained knowledge thereof, but in no event later than five
Business Days thereafter, written notice in an Officers' Certificate of the
Administrator of any event which with the giving of notice or lapse of time, or
both, would become an Administrator Default under Section 8.01(b)(1) or (2) or
would cause Key Bank USA, National Association, to fail to meet any Rating
Agency Condition pursuant to Section 5.02(iii).
SECTION 4.10. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
REPORT. Each of the Servicer and the Administrator shall cause a firm of
independent certified public accountants, which may also render other services
to the Servicer or the Administrator, as the case may be, to deliver to the
Seller, the Eligible Lender Trustee and the Indenture Trustee on or before March
30 of each year beginning March 30, 1997, a report addressed to the Servicer or
the Administrator, as the case may be, and to the Seller, the Eligible Lender
Trustee and the Indenture Trustee, to the effect that such firm has examined
certain documents and records relating to the servicing of the Financed Student
Loans, or the administration of the Financed Student Loans and of the Trust, as
the case may be, during the preceding calendar year (or, in the case of the
first such report, during the period from the Closing Date to December 31, 1996)
and that, on the basis of the accounting and auditing procedures considered
appropriate under the circumstances, such firm is of the opinion that such
servicing or administration was conducted in compliance with those terms of this
Agreement, or with those terms of this Agreement and the Administration
Agreement, as the case may be, including any applicable statutory provisions
incorporated therein, in each case as specified on Schedule D hereto and such
additional terms and statutes as may be specified from time to time by the
Administrator, except for (i) such exceptions as such firm shall believe to be
immaterial and (ii) such other exceptions as shall be set forth in such report.
<PAGE> 25
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Such report will also indicate that the firm is independent of
the Servicer or the Administrator, as the case may be, within the meaning of the
Code of Professional Ethics of the American Institute of Certified Public
Accountants.
SECTION 4.11. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING FINANCED STUDENT LOANS. Upon reasonable prior notice, the Servicer
shall provide to the Certificateholders and the Noteholders access to the
Financed Student Loan Files in such cases where the Certificateholders or the
Noteholders shall be required by applicable statutes or regulations to review
such documentation, as demonstrated by evidence satisfactory to the Servicer in
its reasonable judgment. Access shall be afforded without charge, but only upon
reasonable request and during the normal business hours at the respective
offices of the Servicer. Nothing in this Section shall affect the obligation of
the Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors and the failure of the Servicer to provide access to
information as a result of such obligation shall not constitute a breach of this
Section.
SECTION 4.12. SERVICER AND ADMINISTRATOR EXPENSES. Each of the
Servicer and the Administrator shall be severally required to pay all expenses
incurred by it in connection with its activities hereunder, including fees and
disbursements of independent accountants, taxes imposed on the Servicer or the
Administrator, as the case may be, and expenses incurred in connection with
distributions and reports to the Administrator or to the Certificateholders and
the Noteholders, as the case may be.
SECTION 4.13. APPOINTMENT OF SUBSERVICER. The Servicer may at
any time, upon the written consent of the Administrator, appoint a subservicer
to perform all or any portion of its obligations as Servicer hereunder;
PROVIDED, HOWEVER, that the Rating Agency Condition shall have been satisfied in
connection therewith; PROVIDED FURTHER that the Servicer shall remain obligated
and be liable to the Issuer, the Eligible Lender Trustee, the Indenture Trustee,
the Certificateholders and the Noteholders for the servicing and administering
of the Financed Student Loans in accordance with the provisions hereof without
diminution of such obligation and liability by virtue of the appointment of such
subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Financed Student Loans.
The fees and expenses of the subservicer shall be as agreed between the Servicer
and its subservicer from time to time and none of the Issuer, the Eligible
Lender Trustee, the Indenture Trustee, the Certificateholders or the Noteholders
shall have any responsibility therefor.
<PAGE> 26
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SECTION 4.14. SPECIAL PROGRAMS. The Servicer shall offer
borrowers of the Financed Student Loans all special incentive programs, whether
or not in existence as of the date of this Agreement, generally offered to the
obligors of comparable loans owned by the Seller; PROVIDED, HOWEVER, that to the
extent such programs are not required by the Higher Education Act and have the
effect of reducing the yield on the Financed Student Loans (either by reducing
borrower payments or reducing principal balance), such special programs shall be
applied to borrowers of Financed Student Loans only if and to the extent the
Issuer receives payment from the Seller in an amount sufficient to offset such
reduction of yield netted against any payments owed by the Trust to the Seller
pursuant to this Agreement.
ARTICLE V
Distributions; Reserve Account;
-------------------------------
Statements to Certificateholders and Noteholders
------------------------------------------------
SECTION 5.01. ESTABLISHMENT OF TRUST ACCOUNTS. (a) (i) The
Administrator, for the benefit of the Issuer, shall establish and maintain in
the name of the Indenture Trustee an Eligible Deposit Account (the "Collection
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Issuer. The Collection Account will
initially be established as a segregated trust account in the name of the
Indenture Trustee with the corporate trust department of Key Bank USA, National
Association.
(ii) The Administrator, for the benefit of the Issuer, shall
establish and maintain in the name of the Indenture Trustee an Eligible Deposit
Account (the "Reserve Account"), bearing a designation clearly indicating that
the funds deposited therein are held for the benefit of the Issuer. The Reserve
Account will initially be established as a segregated trust account in the name
of the Indenture Trustee with the corporate trust department of Key Bank USA,
National Association.
(iii) The Administrator, for the benefit of the Issuer, shall
establish and maintain in the name of the Indenture Trustee an Eligible Deposit
Account (the "Pre-Funding Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the Issuer. The
Pre-Funding Account will initially be established as a segregated trust account
in the name of the Indenture Trustee with the corporate trust department of Key
Bank USA, National Association.
(iv) The Administrator, for the benefit of the Issuer,
shall establish and maintain in the name of the Indenture
<PAGE> 27
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Trustee an Eligible Deposit Account (the "Escrow Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Issuer. The Escrow Account will initially be established as a
segregated trust account in the name of the Indenture Trustee with the corporate
trust department of Key Bank USA, National Association.
(b) Funds on deposit in the Collection Account, the Reserve
Account, the Pre-Funding Account and the Escrow Account (collectively, the
"Trust Accounts") shall be invested by the Indenture Trustee (or any custodian
or designated agent with respect to any amounts on deposit in such accounts) in
Eligible Investments pursuant to written instructions by the Administrator;
PROVIDED, HOWEVER, it is understood and agreed that the Indenture Trustee shall
not be liable for any loss arising from such investment in Eligible Investments.
All such Eligible Investments shall be held by (or by any custodian on behalf
of) the Indenture Trustee for the benefit of the Issuer; provided that on the
Business Day preceding each Distribution Date all interest and other investment
income (net of losses and investment expenses) on funds on deposit therein shall
be deposited into the Collection Account and shall be deemed to constitute a
portion of the Available Funds for such Distribution Date. Other than as
described in the following proviso or as otherwise permitted by the Rating
Agencies, funds on deposit in the Trust Accounts shall be invested in Eligible
Investments that will mature so that such funds will be available at the close
of business on the Business Day preceding the following Distribution Date;
PROVIDED, HOWEVER, that funds on deposit in Trust Accounts may be invested in
Eligible Investments of the Indenture Trustee which may mature so that such
funds will be available on such Distribution Date. Funds deposited in a Trust
Account on a Business Day which immediately precedes a Distribution Date upon
the maturity of any Eligible Investments are not required to be invested
overnight.
(c) (i) The Indenture Trustee shall possess all right, title
and interest in all funds on deposit from time to time in the Trust Accounts and
in all proceeds thereof (including all income thereon) and all such funds,
investments, proceeds and income shall be part of the Trust Estate. Subject to
the Administrator's power to instruct the Indenture Trustee pursuant to
paragraph (b) above and paragraph (c)(iii) below, the Trust Accounts shall be
under the sole dominion and control of the Indenture Trustee for the benefit of
the Issuer. If, at any time, any of the Trust Accounts ceases to be an Eligible
Deposit Account, the Indenture Trustee (or the Administrator on its behalf)
agrees, by its acceptance hereto, that it shall within 10 Business Days (or such
longer period, not to exceed 30 calendar days, as to which each Rating Agency
may consent) establish a new Trust Account as an Eligible Deposit Account and
shall transfer any cash and/or any investments to such new Trust
<PAGE> 28
23
Account. In connection with the foregoing, the Administrator agrees that, in the
event that any of the Trust Accounts are not accounts with the Indenture
Trustee, the Administrator shall notify the Indenture Trustee in writing
promptly upon any of such Trust Accounts ceasing to be an Eligible Deposit
Account.
(ii) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that:
(A) any Trust Account Property that is held in deposit
accounts shall be held solely in Eligible Deposit Accounts, subject to the
last sentence of Section 5.01(c)(i); and, subject to Section 5.01(b), each
such Eligible Deposit Account shall be subject to the exclusive custody and
control of the Indenture Trustee, and the Indenture Trustee shall have sole
signature authority with respect thereto;
(B) any Trust Account Property that constitutes Physical
Property shall be Delivered to the Indenture Trustee in accordance with
paragraph (a) of the definition of "Delivery" and shall be held, pending
maturity or disposition, solely by the Indenture Trustee or a financial
intermediary (as such term is defined in Section 8-313(4) of the UCC) acting
solely for the Indenture Trustee;
(C) any Trust Account Property that is a book-entry security
held through the Federal Reserve System pursuant to Federal book-entry
regulations shall be Delivered in accordance with paragraph (b) of the
definition of "Delivery" and shall be maintained by the Indenture Trustee,
pending maturity or disposition, through continued book-entry registration
of such Trust Account Property as described in such paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by clause (C)
above shall be Delivered to the Indenture Trustee in accordance with
paragraph (c) of the definition of "Delivery" and shall be maintained by the
Indenture Trustee, pending maturity or disposition, through continued
registration of the Indenture Trustee's (or its nominee's) ownership of such
security.
(iii) The Administrator shall have the power, revocable for cause
or upon the occurrence and during the continuance of an Administrator Default by
the Indenture Trustee or by the Eligible Lender Trustee with the consent of the
Indenture Trustee, to instruct the Indenture Trustee to make withdrawals and
payments from the Trust Accounts for the purpose of permitting the Servicer, the
Administrator or the Eligible Lender Trustee to carry out its respective duties
hereunder or permitting the Indenture Trustee to carry out its duties under the
Indenture.
<PAGE> 29
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SECTION 5.02. COLLECTIONS. The Servicer shall remit within two
Business Days of receipt thereof to the Collection Account all payments by or on
behalf of the Obligors with respect to the Financed Student Loans (other than
Purchased Student Loans), and all Liquidation Proceeds, both as collected during
the Collection Period. Notwithstanding the foregoing, for so long as (i) Key
Bank USA, National Association, remains the Administrator, (ii) no Administrator
Default shall have occurred and be continuing and (iii) prior to ceasing daily
remittances to the Collection Account, the Rating Agency Condition shall have
been satisfied (and any conditions or limitations imposed by the Rating Agencies
in connection therewith are complied with), the Servicer shall remit such
collections within two Business Days of receipt thereof to the Administrator,
and the Administrator need not deposit such collections into the Collection
Account until one Business Day immediately prior to the next following
Distribution Date; PROVIDED, HOWEVER, that, notwithstanding the foregoing, on or
before the Business Day preceding each Monthly Servicing Payment Date that is
not a Distribution Date, the Administrator shall deposit into the Collection
Account that portion of such amounts received by it that is equal to the
Servicing Fee payable on such date. In the event that any of the foregoing
conditions for ceasing daily remittances shall no longer be satisfied, then the
Administrator shall deposit all collections held by it into the Collection
Account within five Business Days thereof. For purposes of this Article V, the
phrase "payments by or on behalf of Obligors" shall mean payments made with
respect to the Financed Student Loans by or on behalf of borrowers thereof and
the Guarantors (but excluding the Department).
SECTION 5.03. APPLICATION OF COLLECTIONS. (a) With
respect to each Financed Student Loan, all collections (including all Guarantee
Payments) with respect thereto for the Collection Period shall be applied to
interest and principal on such Financed Student Loan by the Servicer in
accordance with its customary practice by allocating to interest (i) any late
payment charge or any similar fee received with respect to such Financed Student
Loan and (ii) the portion of such collection equal to the product of (A) the
applicable interest rate on such Financed Student Loan, (B) the unpaid principal
balance of such Financed Student Loan and (C) the period of time elapsed since
the preceding payment of interest on such Financed Student Loan was made (over
the actual number of days in a year) ("Interest Collections") and by allocating
the remainder of such collection to principal.
(b) All Liquidation Proceeds shall be applied to the
related Financed Student Loan.
(c) In the event that the Principal Distribution Amount for
any Distribution Date includes any Principal Distribution Adjustment, then
within 30 days after such
<PAGE> 30
25
Distribution Date, the Administrator will deliver in writing to the Indenture
Trustee and the Eligible Lender Trustee a reasonably detailed explanation of
such Principal Distribution Adjustment.
SECTION 5.04. ADDITIONAL DEPOSITS. (a) Within two Business
Days after receipt thereof, the Eligible Lender Trustee shall deposit in the
Collection Account the aggregate amount of Interest Subsidy Payments and Special
Allowance Payments received by it with respect to the Financed Federal Loans.
The Servicer shall deposit or cause to be deposited in the Collection Account
the aggregate Purchase Amount with respect to Purchased Student Loans and all
other amounts to be paid by the Servicer under Section 4.06 when such amounts
are due, and the Seller shall deposit or cause to be deposited therein the
aggregate Purchase Amount with respect to Purchased Student Loans and all other
amounts to be paid by the Seller under Sections 3.02 and 9.01 when such amounts
are due.
(b) Notwithstanding anything to the contrary set forth in
paragraph (a) above, if daily deposits to the Collection Account are not
required pursuant to Section 5.02, the Eligible Lender Trustee, the Seller and
the Servicer shall pay the amounts referred to in paragraph (a) above that would
otherwise be deposited into the Collection Account to the Administrator. The
Administrator shall not be required to deposit such amounts into the Collection
Account until the Business Day preceding each Distribution Date; PROVIDED,
HOWEVER, that, on or before the Business Day preceding each Monthly Servicing
Payment Date that is not a Distribution Date, the Administrator shall deposit
into the Collection Account that portion of such amounts received by it that is
equal to the Servicing Fee payable on such date.
SECTION 5.05. DISTRIBUTIONS. (a) On each Determination Date,
the Administrator shall calculate all amounts required to determine the amounts
to be deposited in the Collection Account from the other Trust Accounts and the
amounts to be distributed therefrom on the related Monthly Servicing Payment
Date or Distribution Date.
(b) On each Monthly Servicing Payment Date that is not a
Distribution Date, the Administrator shall instruct the Indenture Trustee (based
on the information contained in the Administrator's Officer's Certificate and
the related Servicer's report delivered pursuant to Section 4.08(a) and (b)) to
distribute to the Servicer by 11:00 a.m. (New York time), from and to the extent
of the Available Funds on deposit in the Collection Account, the Servicing Fee
due with respect to the preceding calendar month and all unpaid Servicing Fees
from prior months and the Indenture Trustee shall comply with such instructions.
<PAGE> 31
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(c) On each Distribution Date, the Administrator shall
instruct the Indenture Trustee (based on the information contained in the
Administrator's Certificate and the related Servicer's Report delivered pursuant
to Section 4.08(a) and (c)) to make the following deposits and distributions to
the Persons or to the account specified below by 11:00 a.m. (New York time), to
the extent of the amount of Available Funds in the Collection Account, in the
following order of priority, and the Indenture Trustee shall comply with such
instructions:
(i) to the Servicer, the Servicing Fee due with respect to the
preceding calendar month and all unpaid Servicing Fees from prior months;
(ii) to the Administrator, from the amount of Available Funds
remaining after the application of clause (i), the Administration Fee and
all unpaid Administration Fees from prior Collection Periods;
(iii) to the Noteholders, from the amount of Available Funds
remaining after the application of clauses (i) and (ii), the Noteholders'
Interest Distribution Amount;
(iv) to the Noteholders, from the amount of Available Funds
remaining after the application of clauses (i), (ii) and (iii), the
Noteholders' Principal Distribution Amount;
(v) to the Eligible Lender Trustee on behalf of the
Certificateholders, from the amount of Available Funds remaining after the
application of clauses (i) through (iv), the Certificateholders' Interest
Distribution Amount;
(vi) for each Distribution Date on and after the date on which
the Notes have been paid in full, to the Eligible Lender Trustee on behalf
of the Certificateholders, from the amount of Available Funds remaining
after the application of clauses (i) through (v), the Certificateholders'
Principal Distribution Amount;
(vii) to the Reserve Account, from the amount of Available Funds
remaining after the application of clauses (i) through (vi), the amount, if
any, necessary to reinstate the balance of the Reserve Account up to the
Specified Reserve Account Balance;
(viii) if the Overcollateralization Amount is greater than or equal
to the Specified Overcollateralization Amount, to the Servicer, from the
amount of Available Funds remaining after the application of clauses (i)
through (vii), the aggregate unpaid amount of Excess Servicing Fees, if any;
(ix) if the Overcollateralization Amount is greater
than or equal to the Specified Overcollateralization Amount,
<PAGE> 32
27
to the Noteholders, from the amount of Available Funds remaining after the
application of clauses (i) through (viii), the aggregate unpaid amount of
Noteholders' Interest Index Carryover, if any;
(x) if the Overcollateralization Amount is greater than or
equal to the Specified Overcollateralization Amount, to the Eligible Lender
Trustee on behalf of the Certificateholders, from the amount of Available
Funds remaining after the application of clauses (i) through (ix), the
aggregate unpaid amount of Certificateholders' Interest Index Carryover, if
any; and
(xi) to the Reserve Account, the amount of Available Funds
remaining after the application of clauses (i) through (x).
SECTION 5.06. RESERVE ACCOUNT. (a) On the Closing
Date, the Seller shall deposit the Reserve Account Initial
Deposit into the Reserve Account.
(b) (i) In the event that the Servicing Fee for any
Monthly Servicing Payment Date or Distribution Date exceeds the
amount distributed to the Servicer pursuant to Sections 5.05(b)(i) and
5.05(c)(i) on such Monthly Servicing Payment Date or Distribution Date, the
Administrator shall instruct the Indenture Trustee to withdraw from the Reserve
Account on such Monthly Servicing Payment Date or Distribution Date an amount
equal to such excess, to the extent of funds available therein, and to
distribute such amount to the Servicer; PROVIDED, HOWEVER, that, except as
provided in Sections 5.06(d)(A) and 5.06(e), amounts on deposit in the Reserve
Account will not be available to cover any unpaid Excess Servicing Fees to the
Servicer.
(ii) In the event that the Administration Fee for any
Distribution Date exceeds the amount distributed to the Administrator pursuant
to Section 5.05(c)(ii) on such Distribution Date, the Administrator shall
instruct the Indenture Trustee to withdraw from the Reserve Account on each
Distribution Date an amount equal to such excess, to the extent of funds
available therein after giving effect to paragraph (b)(i) above, and to
distribute such amount to the Administrator.
(iii) [Reserved]
(iv) [Reserved]
(v) In the event that the Noteholders' Distribution Amount for
a Distribution Date exceeds the amount distributed to Noteholders pursuant to
Section 5.05(c)(iii) and (c)(iv) on such Distribution Date, the Administrator
shall instruct the
<PAGE> 33
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Indenture Trustee to withdraw from the Reserve Account on such Distribution Date
an amount equal to such excess, to the extent of funds available therein after
giving effect to paragraph (b)(i) above, and to distribute such amount to the
Noteholders entitled thereto, in the same order and priority as is set forth in
Section 5.05(c)(iii) and (c)(iv).
(vi) In the event that the Certificateholders' Distribution
Amount for a Distribution Date exceeds the amount distributed to
Certificateholders pursuant to Section 5.05(c)(v) and (c)(vi) on such
Distribution Date, the Administrator shall instruct the Indenture Trustee on
such Distribution Date to withdraw from the Reserve Account on such Distribution
Date an amount equal to such excess, to the extent of funds available therein
after giving effect to paragraphs (b)(i), (b)(ii) and (b)(v) above, and to
distribute such amount to the Certificateholders entitled thereto, in the same
order and priority as is set forth in Section 5.05(c)(v) and (c)(vi).
(c) (i) On each Distribution Date on which the
Overcollateralization Amount is less than the Specified Overcollateralization
Amount, if the amount on deposit in the Reserve Account (after taking into
account any deposits therein pursuant to Section 5.05(c)(vii) and (c)(xi) and
any withdrawals therefrom pursuant to Section 5.06(b)) is greater than the
Specified Reserve Account Balance for such Distribution Date, the Administrator
shall instruct the Indenture Trustee to distribute the amount of such excess (up
to the amount of cash or cash equivalents in the Reserve Account) to the
Noteholders as an accelerated payment of principal; PROVIDED that the amount of
such distribution shall not exceed the outstanding principal balance of the
Notes after giving effect to all other payments of principal to be made on such
date; PROVIDED FURTHER that such excess shall only be distributed to Noteholders
to the extent necessary to make the Overcollateralization Amount (determined as
of such Distribution Date after giving effect to all distributions made on such
Distribution Date) equal to the Specified Overcollateralization Amount.
(ii) In the event the Financed Student Loans are not sold
pursuant to Section 9.01(c), with respect to any Distribution Date occurring on
or after the ________ ____ Distribution Date, if the Pool Balance is equal to
10% or less of the Initial Pool Balance and the amount on deposit in the Reserve
Account (after taking into account any deposits therein pursuant to Section
5.05(c)(vii) and (c)(xi) and any withdrawals therefrom pursuant to Section
5.06(b)) is greater than the Specified Reserve Account Balance for such
Distribution Date, then the Administrator shall instruct the Indenture Trustee
to distribute such excess (up to the amount of cash or cash equivalents in the
Reserve Account) as an accelerated payment of principal first to the Noteholders
until the principal amount of the Notes is paid in full and then to the
Certificateholders
<PAGE> 34
29
until the Certificate Balance is paid in full; PROVIDED that the amount of such
distribution shall not exceed the outstanding principal balance of the Notes or
the Certificates, as applicable, after giving effect to all other payments of
principal to be made on such date.
(d) After giving effect to Section 5.06(b) and (c) above, if
the amount on deposit in the Reserve Account on any Distribution Date (after
giving effect to all deposits or withdrawals therefrom on such Distribution Date
other than pursuant to this clause (d)) is greater than the Specified Reserve
Account Balance for such Distribution Date and the Overcollateralization Amount
is greater than or equal to the Specified Overcollateralization Amount, the
Administrator shall instruct the Indenture Trustee (A) to pay to the Servicer
out of such excess in the Reserve Account an amount equal to the amount
described in Section 5.05(c)(viii) for such Distribution Date (to the extent not
otherwise paid to the Servicer on such Distribution Date), (B) to pay to the
Noteholders out of such excess an amount equal to the amount described in
Section 5.05(c)(ix) for such Distribution Date (to the extent not otherwise paid
to the Noteholders on such Distribution Date), (C) to pay to the
Certificateholders out of such excess an amount equal to the amount described in
Section 5.05(c)(x) for such Distribution Date (to the extent not otherwise paid
to the Certificateholders on such Distribution Date) and (D) to distribute the
remaining amount of such excess to the Seller. Amounts properly distributed to
the Seller pursuant to this paragraph (d) shall be deemed released from the
Trust Estate and the security interest therein granted to the Indenture Trustee,
and the Seller shall in no event thereafter be required to refund any such
distributed amounts.
(e) Following the payment in full of the aggregate outstanding
principal balance of the Notes and the Certificate Balance and of all other
amounts owing or to be distributed hereunder or under the Indenture or the Trust
Agreement to Noteholders, Certificateholders, the Servicer or the Administrator
and the termination of the Trust (including any Excess Servicing Fees,
Noteholders' Interest Index Carryover and Certificateholders' Interest Index
Carryover), any amount remaining on deposit in the Reserve Account shall be
distributed to the Seller. The Seller shall in no event be required to refund
any amounts properly distributed pursuant to this Section 5.06(e).
SECTION 5.07. STATEMENTS TO CERTIFICATEHOLDERS AND
NOTEHOLDERS. On each Determination Date preceding a Distribution Date, the
Administrator shall provide to the Indenture Trustee (with a copy to the Rating
Agencies) for the Indenture Trustee to forward on such succeeding Distribution
Date to each Noteholder of record and to the Eligible Lender Trustee for the
Eligible Lender Trustee to forward on such
<PAGE> 35
30
succeeding Distribution Date to each Certificateholder of record a statement
substantially in the form of Exhibits A and B, respectively, setting forth at
least the following information as to the Notes and the Certificates to the
extent applicable:
(i) the amount of such distribution allocable to
principal of the Notes;
(ii) the amount of the distribution allocable to
interest on the Notes;
(iii) the amount of the distribution allocable to
principal of the Certificates;
(iv) the amount of the distribution allocable to
interest on the Certificates;
(v) the amount, if any, of the distribution allocable to any
Noteholders' Interest Index Carryover and any Certificateholders' Interest
Index Carryover, together with any remaining outstanding amount of each
thereof;
(vi) the Pool Balance as of the close of business on the last
day of the preceding Collection Period, after giving effect to payments
allocated to principal reported under clauses (i) and (iii) above;
(vii) the aggregate outstanding principal balance of the Notes,
the Note Pool Factor, the Certificate Balance and the Certificate Pool
Factor as of such Distribution Date, after giving effect to payments
allocated to principal reported under clauses (i) and (iii) above;
(viii) the Note Interest Rate and the Certificate Rate applicable
with respect to each distribution referred to in clauses (ii) and (iv)
above, indicating whether such interest rate is calculated based on the
Student Loan Rate or based on the T-Bill Rate and specifying what each such
interest rate would have been using the alternate basis for such
calculation; PROVIDED, HOWEVER, that no such calculation of the Student Loan
Rate shall be required to be made unless the excess of the T-Bill Rate over
_________, expressed as a percentage, is greater than 100 basis points as of
the preceding Determination Date;
(ix) the amount of the Servicing Fee and any Excess Servicing
Fee paid to the Servicer with respect to the three calendar months contained
in the related Collection Period, and the amount, if any, of the Excess
Servicing Fee remaining unpaid after giving effect to any such payment;
(x) the amount of the Administration Fee paid to the
Administrator in respect of the preceding Collection Period;
<PAGE> 36
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(xi) the amount of the aggregate Realized Losses, if any, for
such Collection Period and the balance of Financed Student Loans that are
delinquent in each delinquency period as of the end of such Collection
Period;
(xii) the balance of the Reserve Account on such Distribution
Date, after giving effect to changes therein on such Distribution Date;
(xiii) for Distribution Dates during the Funding Period, the
remaining Pre-Funded Amount after giving effect to changes therein on such
Distribution Date; and
(xiv) for the Distribution Date on or immediately following the
end of the Funding Period, the amount of any remaining Pre-Funded Amount
that has not been used to make Additional Fundings.
Each amount set forth pursuant to clauses (i), (ii), (iii), (iv), (v), (ix) and
(x) above shall be expressed as a dollar amount per $1,000 of original principal
balance of a Certificate or Note, as applicable. A copy of the statements
referred to above may be obtained by any Certificate Owner or Note Owner by a
written request to the Eligible Lender Trustee or the Indenture Trustee,
respectively, addressed to the respective Corporate Trust Office.
SECTION 5.08. PRE-FUNDING ACCOUNT. (a) On the Closing Date,
the Seller will deposit in the Pre-Funding Account $_____________ from the net
proceeds of the sale of the Notes and the Certificates. A portion of such amount
equal to $_________ will be credited on the Closing Date to a designated
sub-account maintained by the Indenture Trustee within the Pre-Funding Account
(the "Subsequent Pool Pre-Funding Subaccount"). Another portion of such amount
equal to $_________ will be credited on the Closing Date to a designated
subaccount maintained by the Indenture Trustee within the Pre-Funding Account
(the "Guarantee Fee Subaccount"). The remainder of such amount equal to
$_________ will be credited on the Closing Date to a designated subaccount
maintained by the Indenture Trustee within the Pre-Funding Account (the "Other
Pre-Funding Subaccount"). On each Transfer Date, the Administrator shall
instruct the Indenture Trustee to withdraw from the Escrow Account, until all
amounts deposited therein during the calendar month immediately preceding such
Transfer Date have been exhausted (provided however, that no funds on deposit
in the Escrow Account may be used to acquire Subsequent Pool Student Loans),
and then from the Other Pre-Funding Subaccount, with respect to Other Student
Loans, and from the Subsequent Pool Pre-Funding Subaccount, with respect to
Subsequent Pool Student Loans, (i) an amount equal to ___% of the sum of (A)
the principal balance of, plus (B) to the extent capitalized or to be
capitalized, accrued interest on, the Additional Student
<PAGE> 37
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Loans (other than Guarantee Fee Advances) (such sum, the "Transferred Balance")
transferred to the Eligible Lender Trustee on behalf of the Issuer on such
Transfer Date and to distribute such amount to or upon the order of the Seller
upon satisfaction of the conditions set forth in Section 2.02(b) with respect to
such transfer, (ii) an amount equal to __% of the Transferred Balance of the
Additional Student Loans transferred to the Eligible Lender Trustee on behalf of
the Issuer on such Transfer Date and to deposit such amount in the Reserve
Account upon satisfaction of the conditions set forth in Section 2.02(b) with
respect to such transfer, (iii) an amount equal to (A) 2% of the principal
balance of each such Additional Student Loan that is a BEL Loan originated prior
to [September 1,] 1996 but on or after [September 1,] 1992, (B) 4% of the
principal balance of each such Additional Student Loan that is a LAL Loan
originated on or after [September 1,] 1996, (C) 3% of the original principal
balance of each such GAL Loan and BEL Loan originated on or after [September 1,]
1996 and (D) 2% of the original principal balance of each other Additional
Student Loan, and in each case to transfer such amount from the Pre-Funding
Account to the Guarantee Fee Subaccount and (iv) an amount equal to any
Additional Fundings other than those representing Additional Student Loans to
be conveyed on such Transfer Date and to deposit such amount into the
Collection Account. In addition, on each Transfer Date on which Guarantee Fee
Advances are to be conveyed to the Eligible Lender Trustee on behalf of the
Issuer, the Administrator shall instruct the Indenture Trustee to withdraw from
the Guarantee Fee Subaccount an amount equal to the principal balance of such
Guarantee Fee Advances and to distribute such amount to or upon the order of
the Seller upon satisfaction of the conditions set forth in Section 2.02(b)
with respect to such transfer of Guarantee Fee Advances.
(b) In the event that any funds deposited in the Escrow
Account during the calendar month immediately preceding any Transfer Date remain
on deposit therein on such Transfer Date, after giving effect to all Additional
Fundings to be made with respect to such Transfer Date pursuant to paragraph (a)
above, the Indenture Trustee shall transfer such remaining funds from the Escrow
Account to the Collection Account, and such funds shall be considered
collections with respect to the Financed Student Loans.
(c)(i)(A) If as of the Special Determination Date (after
giving effect to all Additional Fundings on such date) (x) the Subsequent Pool
Pre-Funding Amount has not been reduced to zero and (y) the total amount
remaining in the Pre-Funding Account as of such date exceeds 25% of the
aggregate principal amount of Notes and principal balance of Certificates as of
the Closing Date, the Administrator shall instruct the Indenture Trustee
pursuant to Section 4.08(c) to withdraw from the Subsequent Pool Pre-Funding
Subaccount on the Special Distribution Date the amount on deposit in such
subaccount and
<PAGE> 38
33
to distribute the Noteholders' Percentage of such amount to Noteholders as a
payment of principal in the same manner as the Noteholders' Principal
Distribution Amount is distributed, and to distribute the Certificateholders'
Percentage of such amount to Certificateholders as a payment of principal in the
same manner as the Certificateholder's Principal Distribution Amount is
distributed.
(B) If the Administrator determines on the Special
Determination Date that no distribution pursuant to subsection (A) above is
necessary, it shall instruct the Indenture Trustee to transfer any amounts
remaining on deposit in the Subsequent Pool Pre-Funding Subaccount (after giving
effect to all Additional Fundings on such date) to the Other Pre-Funding
Subaccount on the Special Distribution Date.
(ii) If (x) the Pre-Funded Amount has not been reduced to zero
on the Distribution Date on which the Funding Period ends (or, if the Funding
Period does not end on a Distribution Date, on the first Distribution Date
following the end of the Funding Period) after giving effect to any reductions
in the Pre-Funded Amount on such Distribution Date pursuant to paragraph (a)
above, the Administrator shall instruct the Indenture Trustee pursuant to
Section 4.08(c) to withdraw from the Pre-Funding Account (including the
Guarantee Fee Subaccount) on such Distribution Date an amount equal to the
Pre-Funded Amount and to distribute such amount to Noteholders as a payment of
principal in the same manner as the Noteholders' Principal Distribution Amount
is distributed.
ARTICLE VI
The Seller and the Administrator
--------------------------------
SECTION 6.01. REPRESENTATIONS OF SELLER AND ADMINISTRATOR. Key
Bank USA, National Association, as Seller and Administrator, makes the following
representations on which the Issuer is deemed to have relied in acquiring the
Financed Student Loans. The representations speak as of the execution and
delivery of this Agreement and the Administration Agreement and as of the
Closing Date, in the case of the Initial Financed Student Loans, and as of the
applicable Transfer Date, in the case of the Additional Student Loans, and shall
survive the sale of the Financed Student Loans to the Eligible Lender Trustee on
behalf of the Issuer and the pledge thereof to the Indenture Trustee pursuant to
the Indenture. As used below, references to Key Bank USA, National Association
shall mean Key Bank USA, National Association in its capacity as both the Seller
and the Administrator.
(a) ORGANIZATION AND GOOD STANDING. Key Bank USA,
National Association is duly organized and validly existing as
<PAGE> 39
34
a national banking association in good standing under the laws of the United
States of America, with the power and authority to own its properties and to
conduct its business as such properties are currently owned and such
business is presently conducted, and had at all relevant times, and has, the
power, authority and legal right to acquire and own the Financed Student
Loans.
(b) POWER AND AUTHORITY OF THE SELLER. The Seller has the
corporate power and authority to execute and deliver this Agreement and to
carry out its terms; the Seller has full corporate power and authority to
sell and assign the property to be sold and assigned to and deposited with
the Issuer (or with the Eligible Lender Trustee on behalf of the Issuer) and
the Seller has duly authorized such sale and assignment to the Issuer (or to
the Eligible Lender Trustee on behalf of the Issuer) by all necessary
corporate action; and the execution, delivery and performance of this
Agreement have been duly authorized by the Seller by all necessary corporate
action.
(c) POWER AND AUTHORITY OF THE ADMINISTRATOR. The
Administrator has the corporate power and authority to execute and deliver
this Agreement and the Administration Agreement and to carry out their
terms, and the execution, delivery and performance of this Agreement and the
Administration Agreement have been duly authorized by the Administrator by
all necessary corporate action.
(d) BINDING OBLIGATION. This Agreement constitutes a legal,
valid and binding obligation of Key Bank USA, National Association and the
Administration Agreement constitutes a legal, valid and binding obligation
of the Administrator, in each case enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization and similar
laws relating to creditors' rights generally or the rights of creditors of
banks the deposit accounts of which are insured by the FDIC and subject to
general principles of equity.
(e) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement or the Administration Agreement and the
fulfillment of the terms hereof or thereof do not conflict with, result in
any breach of any of the terms and provisions of, nor constitute (with or
without notice or lapse of time or both) a default under, the articles of
association or by-laws of Key Bank USA, National Association, or any
indenture, agreement or other instrument to which Key Bank USA, National
Association is a party or by which it shall be bound; nor result in the
creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement or other instrument (other than
pursuant to the Basic Documents); nor violate any law or, to the knowledge
of Key Bank USA, National Association, any order, rule or regulation
applicable to Key
<PAGE> 40
35
Bank USA, National Association of any court or of any Federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over Key Bank USA, National Association or its
properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending against Key Bank USA, National Association or, to its best
knowledge, threatened against Key Bank USA, National Association before any
court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over Key Bank USA, National Association
or its properties: (i) asserting the invalidity of this Agreement, the
Indenture or any of the other Basic Documents, the Notes or the
Certificates, (ii) seeking to prevent the issuance of the Notes or the
Certificates or the consummation of any of the transactions contemplated by
this Agreement, the Indenture or any of the other Basic Documents, (iii)
seeking any determination or ruling that could reasonably be expected to
have a material and adverse effect on the performance by Key Bank USA,
National Association of its obligations under, or the validity or
enforceability of, this Agreement, the Indenture, any of the other Basic
Documents, the Notes or the Certificates or (iv) seeking to affect adversely
the Federal or state income tax attributes of the Issuer, the Notes or the
Certificates.
(g) ALL CONSENTS. All authorizations, consents, orders or
approvals of or registrations or declarations with any court, regulatory
body, administrative agency or other government instrumentality required to
be obtained, effected or given by Key Bank USA, National Association in
connection with the execution and delivery by Key Bank USA, National
Association of this Agreement and the performance by Key Bank USA, National
Association of the transactions contemplated by this Agreement, and in
connection with the execution and delivery by the Administrator of the
Administration Agreement and the performance by the Administrator of its
duties thereunder, have in each case been duly obtained, effected or given
and are in full force and effect.
SECTION 6.02. EXISTENCE. During the term of this Agreement,
the Seller will keep in full force and effect its existence, rights and
franchises as a national banking association under the laws of the jurisdiction
of its organization.
SECTION 6.03. LIABILITY OF SELLER; INDEMNITIES. The Seller
shall be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold
harmless the Issuer, the Eligible Lender Trustee and the
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Indenture Trustee and their officers, directors, employees and agents from
and against any taxes that may at any time be asserted against any such
Person with respect to the transactions contemplated herein and in the other
Basic Documents (except any such income taxes arising out of fees paid to
the Eligible Lender Trustee or the Indenture Trustee), including any sales,
gross receipts, general corporation, tangible personal property, privilege
or license taxes (but, in the case of the Issuer, not including any taxes
asserted with respect to, and as of the date of, the sale of the Financed
Student Loans to the Eligible Lender Trustee on behalf of the Issuer or the
issuance and original sale of the Certificates and the Notes, or asserted
with respect to ownership of the Financed Student Loans or Federal or other
income taxes arising out of distributions on the Certificates and the Notes)
and costs and expenses in defending against the same.
(b) The Seller shall indemnify, defend and hold harmless the
Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders and the Noteholders and the officers, directors,
employees and agents of the Issuer, the Eligible Lender Trustee and the
Indenture Trustee from and against any and all costs, expenses, losses,
claims, damages and liabilities arising out of, or imposed upon such Person
through, (i) the Seller's willful misfeasance, bad faith or negligence in
the performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement and (ii) the
Seller's or the Issuer's violation of Federal or state securities laws in
connection with the offering and sale of the Notes and the Certificates.
(c) The Seller shall be liable as primary obligor for, and
shall indemnify, defend and hold harmless the Eligible Lender Trustee and
its officers, directors, employees and agents from and against, all costs,
expenses, losses, claims, damages, obligations and liabilities arising out
of, incurred in connection with or relating to the Trust Agreement, the
other Basic Documents, the Trust Estate, the acceptance or performance of
the trusts and duties set forth herein and in the Trust Agreement or the
action or the inaction of the Eligible Lender Trustee hereunder and under
the Trust Agreement, except to the extent that such cost, expense, loss,
claim, damage, obligation or liability: (i) shall be due to the willful
misfeasance, bad faith or negligence (except for errors in judgment) of the
Eligible Lender Trustee, (ii) shall arise from any breach by the Eligible
Lender Trustee of its covenants under any of the Basic Documents; or (iii)
shall arise from the breach by the Eligible Lender Trustee of any of its
representations or warranties set forth in Section 7.03 of the Trust
Agreement. In the event of any claim, action or proceeding for which
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37
indemnity will be sought pursuant to this paragraph, the Eligible Lender
Trustee's choice of legal counsel shall be subject to the approval of the
Seller, which approval shall not be unreasonably withheld.
(d) The Seller shall pay any and all taxes levied or assessed
upon all or any part of the Trust Estate (other than those taxes expressly
excluded from the Seller's responsibilities pursuant to the parentheticals
in paragraph (a) above).
Indemnification under this Section shall survive the
resignation or removal of the Eligible Lender Trustee or the Indenture Trustee
and the termination of this Agreement or the Indenture or the Trust Agreement,
as applicable, and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Seller shall have made any indemnity payments
pursuant to this Section and the Person to or on behalf of whom such payments
are made thereafter shall collect any of such amounts from others, such Person
shall promptly repay such amounts to the Seller, without interest.
SECTION 6.04. LIABILITY OF ADMINISTRATOR; INDEMNITIES. The
Administrator shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Administrator under this Agreement,
the Supplemental Sale and Servicing Agreement or the Administration Agreement.
The Administrator shall indemnify, defend and hold harmless
the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the Servicer,
the Certificateholders and the Noteholders and any of the officers, directors,
employees and agents of the Issuer, the Eligible Lender Trustee, the Indenture
Trustee and the Servicer from and against any and all costs, expenses, losses,
claims, damages and liabilities to the extent that such cost, expense, loss,
claim, damage or liability arose out of, or was imposed upon any such Person
through, the negligence, willful misfeasance or bad faith of the Administrator
in the performance of its duties under this Agreement, the Supplemental Sale and
Servicing Agreement or the Administration Agreement or by reason of reckless
disregard of its obligations and duties hereunder or thereunder.
The Administrator shall pay reasonable compensation to the
Indenture Trustee and shall reimburse the Indenture Trustee for all reasonable
expenses, disbursements and advances, and indemnify, defend and hold harmless
the Indenture Trustee and its officers, directors, employees and agents from and
against all costs, expenses, losses, claims, damages and liabilities, to the
extent and in the manner provided in, and subject to the limitations of, Section
6.07 of the Indenture.
<PAGE> 43
38
For purposes of this Section, in the event of the termination
of the rights and obligations of the Administrator (or any successor thereto
pursuant to Section 6.05) as Administrator pursuant to Section 8.01(b), or a
resignation by such Administrator pursuant to this Agreement, such Administrator
shall be deemed to be the Administrator pending appointment of a successor
Administrator pursuant to Section 8.02.
Indemnification under this Section shall survive the
resignation or removal of the Eligible Lender Trustee or the Indenture Trustee
or the termination of this Agreement, the Supplemental Sale and Servicing
Agreement and the Administration Agreement and shall include reasonable fees and
expenses of counsel and expenses of litigation. If the Administrator shall have
made any indemnity payments pursuant to this Section and the Person to or on
behalf of whom such payments are made thereafter collects any of such amounts
from others, such Person shall promptly repay such amounts to the Administrator,
without interest.
SECTION 6.05. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SELLER OR ADMINISTRATOR. Any Person (a) into which the Seller or
the Administrator, as the case may be, may be merged or consolidated, (b) which
may result from any merger or consolidation to which the Seller or the
Administrator, as the case may be, shall be a party or (c) which may succeed to
the properties and assets of the Seller or the Administrator, as the case may
be, substantially as a whole, shall be the successor to the Seller or the
Administrator, as the case may be, without the execution or filing of any
document or any further act by any of the parties to this Agreement or to the
Administration Agreement; PROVIDED, HOWEVER, that each of the Seller and the
Administrator hereby covenant that it will not consummate any of the foregoing
transactions except upon satisfaction of the following: (i) the surviving Seller
or Administrator, as the case may be, if other than Key Bank USA, National
Association, executes an agreement of assumption to perform every obligation of
the Seller under this Agreement or the Administrator under this Agreement and
the Administration Agreement, as the case may be, (ii) immediately after giving
effect to such transaction, no representation or warranty made pursuant to
Section 3.01 or 6.01 shall have been breached and no Administrator Default, and
no event that, after notice or lapse of time, or both, would become an
Administrator Default shall have occurred and be continuing, (iii) the surviving
Seller or Administrator, as the case may be, if other than Key Bank USA,
National Association, shall have delivered to the Eligible Lender Trustee and
the Indenture Trustee an Officers' Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent, if any,
provided for in this Agreement relating to
<PAGE> 44
39
such transaction have been complied with, and that the Rating Agency Condition
shall have been satisfied with respect to such transaction, (iv) the surviving
Seller or Administrator, as the case may be, shall have a consolidated net worth
at least equal to that of the predecessor Seller or Administrator, as the case
may be, (v) unless Key Bank USA, National Association is the surviving entity,
such transaction will not result in a material adverse Federal or state tax
consequence to the Issuer, the Noteholders or the Certificateholders and (vi)
unless Key Bank USA, National Association is the surviving entity, the Seller or
the Administrator, as the case may be, shall have delivered to the Eligible
Lender Trustee and the Indenture Trustee an Opinion of Counsel either (A)
stating that, in the opinion of such counsel, all financing statements and
continuation statements and amendments thereto have been executed and filed that
are necessary fully to preserve and protect the interest of the Eligible Lender
Trustee and Indenture Trustee, respectively, in the Financed Student Loans and
reciting the details of such filings, or (B) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and protect such
interests.
SECTION 6.06. LIMITATION ON LIABILITY OF SELLER, ADMINISTRATOR
AND OTHERS. (a) The Seller and any director or officer or employee or agent of
the Seller may rely in good faith on the advice of counsel or on any document of
any kind, prima facie properly executed and submitted by any Person respecting
any matters arising hereunder (provided that such reliance shall not limit in
any way the Seller's obligations under Section 3.02). The Seller shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its obligations under this Agreement, and that in its
opinion may involve it in any expense or liability.
(b) Neither the Administrator nor any of its directors,
officers, employees or agents shall be under any liability to the Issuer, the
Noteholders or the Certificateholders, the Indenture Trustee or the Eligible
Lender Trustee except as provided under this Agreement or the Administration
Agreement, for any action taken or for refraining from the taking of any action
pursuant to this Agreement or the Administration Agreement or for errors in
judgment; PROVIDED, HOWEVER, that this provision shall not protect the
Administrator or any such person against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties under this Agreement or under the Administration Agreement. The
Administrator and any of its directors, officers, employees or agents may rely
in good faith on the advice of counsel or on any document of any kind, prima
facie properly executed and submitted by any Person
<PAGE> 45
40
respecting any matters arising hereunder or under the Administration Agreement.
Except as provided in this Agreement or the Administration
Agreement, the Administrator shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be incidental to its duties
to administer the Financed Student Loans and the Trust in accordance with this
Agreement and the Administration Agreement, and that in its opinion may involve
it in any expense or liability; PROVIDED, HOWEVER, that the Administrator may
undertake any reasonable action that it may deem necessary or desirable in
respect of this Agreement and the other Basic Documents and the rights and
duties of the parties to this Agreement and the other Basic Documents and the
interests of the Certificateholders under this Agreement and the Noteholders
under the Indenture.
SECTION 6.07. SELLER MAY OWN CERTIFICATES OR NOTES. The Seller
and any Affiliate thereof may in its individual or any other capacity become the
owner or pledgee of Certificates or Notes with the same rights as it would have
if it were not the Seller or an Affiliate thereof, except as expressly provided
herein or in any other Basic Document.
SECTION 6.08. KEY BANK USA, NATIONAL ASSOCIATION NOT TO RESIGN
AS ADMINISTRATOR. Subject to the provisions of Section 6.05, Key Bank USA,
National Association shall not resign from the obligations and duties imposed on
it as Administrator under this Agreement and under the Administration Agreement
except upon determination that the performance of its duties under this
Agreement and under the Administration Agreement shall no longer be permissible
under applicable law or shall violate any final order of a court or
administrative agency with jurisdiction over KEY BANK USA or its properties.
Notice of any such determination permitting the resignation of Key Bank USA,
National Association shall be communicated to the Eligible Lender Trustee and
the Indenture Trustee at the earliest practicable time (and, if such
communication is not in writing, shall be confirmed in writing at the earliest
practicable time) and any such determination shall be evidenced by an Opinion of
Counsel to such effect delivered to the Eligible Lender Trustee and the
Indenture Trustee concurrently with or promptly after such notice. No such
resignation shall become effective until the Indenture Trustee or a successor
Administrator shall have assumed the responsibilities and obligations of Key
Bank USA, national Association in accordance with Section 8.02.
<PAGE> 46
41
ARTICLE VII
The Servicer
------------
SECTION 7.01. REPRESENTATIONS OF SERVICER. The Servicer makes
the following representations on which the Issuer is deemed to have relied in
acquiring (through the Eligible Lender Trustee) the Financed Student Loans and
appointing the Servicer as servicer hereunder. The representations speak as of
the execution and delivery of this Agreement and as of the Closing Date, in the
case of the Initial Financed Student Loans, and as of the applicable Transfer
Date, in the case of the Additional Student Loans, but shall survive the sale,
transfer and assignment of the Financed Student Loans to the Eligible Lender
Trustee on behalf of the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
(a) ORGANIZATION AND GOOD STANDING. The Servicer is duly
organized and validly existing as an agency of the Commonwealth of
Pennsylvania in good standing under the laws of the state of its
incorporation, with the power and authority to own its properties and to
conduct its business as such properties are currently owned and such
business is presently conducted, and had at all relevant times, and has, the
power, authority and legal right to service the Financed Student Loans and
to hold the Financed Student Loan Files as custodian.
(b) DUE QUALIFICATION. The Servicer is duly qualified to do
business and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the conduct of
its business (including the servicing of the Financed Student Loans as
required by this Agreement) shall require such qualifications.
(c) POWER AND AUTHORITY. The Servicer has the power and
authority to execute and deliver this Agreement and to carry out its terms;
and the execution, delivery and performance of this Agreement have been duly
authorized by the Servicer by all necessary action. No registration with or
approval of any governmental agency (except for the approval as to form and
legality by the Deputy Attorney General for the Commonwealth of
Pennsylvania, which approval is evidenced by the approval memorandum
attached hereto) is required for the due execution and delivery by, and
enforceability against, the Servicer of this Agreement.
(d) BINDING OBLIGATION. This Agreement constitutes a
legal, valid and binding obligation of the Servicer
enforceable in accordance with its terms.
(e) NO VIOLATION. The consummation of the
transactions contemplated by this Agreement and the
<PAGE> 47
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fulfillment of the terms hereof shall not conflict with, result in any
breach of any of the terms and provisions of, nor constitute (with or
without notice or lapse of time or both) a default under, its enabling
legislation, any applicable articles of incorporation or by-laws of the
Servicer, or any indenture, agreement or other instrument to which the
Servicer is a party or by which it shall be bound; nor result in the
creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement or other instrument (other than
this Agreement); nor violate any law or, to the best of the Servicer's
knowledge, any order, rule or regulation applicable to the Servicer of any
court or of any Federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Servicer or
its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending, or, to the Servicer's best knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or its properties: (i) asserting the
invalidity of this Agreement, the Indenture, any of the other Basic
Documents, the Notes or the Certificates, (ii) seeking to prevent the
issuance of the Notes or the Certificates or the consummation of any of the
transactions contemplated by this Agreement, the Indenture or any of the
other Basic Documents, (iii) seeking any determination or ruling that could
reasonably be expected to have a material and adverse effect on the
performance by the Servicer of its obligations under, or the validity or
enforceability of, this Agreement, the Indenture, any of the other Basic
Documents, the Notes or the Certificates or (iv) relating to the Servicer
and which might adversely affect the Federal or state income tax attributes
of the Notes or the Certificates.
(g) NO AMENDMENT OR WAIVER. No provision of a Financed Student
Loan has been waived, altered or modified in any respect, except pursuant to
a document, instrument or writing included in the Financed Student Loan
File, and no such amendment, waiver, alteration or modification causes such
Financed Student Loan not to conform to the other warranties contained in
this Section or those of the Seller contained in Section 3.01.
(h) LOCATION OF FINANCED STUDENT LOAN FILES. The Financed
Student Loan Files are kept in the offices of the Servicer specified in
Schedule B, or at such other office specified in accordance with Section
3.04(b).
SECTION 7.02. INDEMNITIES OF SERVICER. The Servicer
shall be liable in accordance herewith only to the extent of the
<PAGE> 48
43
obligations specifically undertaken by the Servicer under this
Agreement.
The Servicer shall pay for any loss, liability or expense,
including reasonable attorney's fees, that may be imposed on, incurred by or
asserted against the Issuer, the Eligible Lender Trustee, the Indenture Trustee,
the Seller, the Administrator, the Certificateholders or the Noteholders or any
of the officers, directors, employees and agents of the Issuer, the Eligible
Lender Trustee, the Indenture Trustee, the Administrator or the Seller to the
extent that such loss, liability or expense arose out of, or was imposed upon
any such Person through, the negligence, willful misfeasance or bad faith of the
Servicer in the performance of its obligations and duties under this Agreement
or the Supplemental Sale and Servicing Agreement or by reason of the reckless
disregard of its obligations and duties under this Agreement or the Supplemental
Sale and Servicing Agreement, where the final determination that any such loss,
liability or expense arose out of, or was imposed upon any such Person through,
any such negligence, willful misfeasance, bad faith or recklessness on the part
of the Servicer is established by a court of law, by an arbitrator or by way of
settlement agreed to by the Servicer. Notwithstanding the foregoing, if the
Servicer is rendered unable, in whole or in part, by a force outside the control
of the parties hereto (including acts of God, acts of war, fires, earthquakes
and other disasters) to satisfy its obligations under this Agreement or the
Supplemental Sale and Servicing Agreement, the Servicer shall not be deemed to
have breached any such obligation upon delivery of written notice of such event
to the other parties hereto, for so long as the Servicer remains unable to
perform such obligation as a result of such event. This provision shall not be
construed to limit the sovereign immunity of the Commonwealth of Pennsylvania or
the Servicer's or any other party's rights, obligations, liabilities, claims or
defenses which arise as a matter of law or pursuant to any other provision of
this Agreement.
For purposes of this Section, in the event of the termination
of the rights and obligations of PHEAA (or any successor thereto pursuant to
Section 7.03) as Servicer pursuant to Section 8.01(a), or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer pursuant to Section 8.02.
Liability of the Servicer under this Section shall survive the
resignation or removal of the Eligible Lender Trustee or the Indenture Trustee
or the termination of this Agreement. If the Servicer shall have made any
payments pursuant to this Section and the Person to or on behalf of whom such
payments are made thereafter collects any of such amounts
<PAGE> 49
44
from others, such Person shall promptly repay such amounts to the Servicer,
without interest.
SECTION 7.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SERVICER. The Servicer hereby agrees that, upon (a) any merger
or consolidation of the Servicer into another Person, (b) any merger or
consolidation to which the Servicer shall be a party resulting in the creation
of another Person or (c) any Person succeeding to the properties and assets of
the Servicer substantially as a whole, the Servicer shall (i) cause such Person
(if other than the Servicer) to execute an agreement of assumption to perform
every obligation of the Servicer hereunder and under the Supplemental Sale and
Servicing Agreement, (ii) deliver to the Eligible Lender Trustee and Indenture
Trustee an Officers' Certificate and an Opinion of Counsel each stating that
such consolidation, merger or succession and such agreement of assumption comply
with this Section and that all conditions precedent provided for in this
Agreement relating to such transaction have been complied with, (iii) cause the
Rating Agency Condition to have been satisfied with respect to such transaction
and (iv) cure any existing Servicer Default or any continuing event which, after
notice or lapse of time or both, would become a Servicer Default. Upon
compliance with the foregoing requirements, such Person shall be the successor
to the Servicer under this Agreement without further act on the part of any of
the parties to this Agreement.
SECTION 7.04. LIMITATION ON LIABILITY OF SERVICER AND OTHERS.
Neither the Servicer nor any of the directors, officers, employees or agents of
the Servicer shall be under any liability to the Issuer, the Noteholders or the
Certificateholders, except as provided under this Agreement or the Supplemental
Sale and Servicing Agreement, for any action taken or for refraining from the
taking of any action pursuant to this Agreement or the Supplemental Sale and
Servicing Agreement or for errors in judgment; PROVIDED, HOWEVER, that this
provision shall not protect the Servicer or any such person against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence in the performance of duties or by reason of reckless
disregard of obligations and duties under this Agreement or the Supplemental
Sale and Servicing Agreement. The Servicer and any director, officer, employee
or agent of the Servicer may rely in good faith on any document of any kind
prima facie properly executed and submitted by any person respecting any matters
arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not
be under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Financed Student Loans in
accordance with this Agreement and the Supplemental Sale and Servicing
<PAGE> 50
45
Agreement, and that in its opinion may involve it in any expense or liability;
PROVIDED, HOWEVER, that the Servicer may undertake any reasonable action that it
may deem necessary or desirable in respect of this Agreement and the other Basic
Documents and the rights and duties of the parties to this Agreement and the
other Basic Documents and the interests of the Certificateholders under this
Agreement and the Noteholders under the Indenture.
SECTION 7.05. PHEAA NOT TO RESIGN AS SERVICER. Subject to the
provisions of Section 7.03, PHEAA shall not resign from the obligations and
duties hereby imposed on it as Servicer under this Agreement and the
Supplemental Sale and Servicing Agreement except upon determination that the
performance of its duties under this Agreement and the Supplemental Sale and
Servicing Agreement shall no longer be permissible under applicable law. Notice
of any such determination permitting the resignation of PHEAA shall be
communicated to the Eligible Lender Trustee and the Indenture Trustee at the
earliest practicable time (and, if such communication is not in writing, shall
be confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Eligible Lender Trustee and the Indenture Trustee concurrently
with or promptly after such notice. No such resignation shall become effective
until the Indenture Trustee or a Successor Servicer shall have assumed the
responsibilities and obligations of PHEAA in accordance with Section 8.02.
ARTICLE VIII
Default
-------
SECTION 8.01. SERVICER DEFAULT; ADMINISTRATOR DEFAULT. (a)
SERVICER DEFAULT. If any one of the following events (a "Servicer Default")
shall occur and be continuing:
(1) any failure by the Servicer (i) to deliver to the
Indenture Trustee for deposit in any of the Trust Accounts any payment
required by the Basic Documents or (ii) in the event that daily deposits
into the Collection Account are not required, to deliver to the
Administrator any payment required by the Basic Documents, which failure in
case of either clause (i) or (ii) continues unremedied for three Business
Days after written notice of such failure is received by the Servicer from
the Eligible Lender Trustee, the Indenture Trustee or the Administrator or
after discovery of such failure by an officer of the Servicer; or
(2) any failure by the Servicer duly to observe or to perform
in any material respect any other covenants or agreements of the Servicer
set forth in this Agreement or any
<PAGE> 51
46
other Basic Document, which failure shall (i) materially and adversely
affect the rights of Noteholders or Certificateholders and (ii) continues
unremedied for a period of 60 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given (A)
to the Servicer by the Indenture Trustee, the Eligible Lender Trustee or the
Administrator or (B) to the Servicer, and to the Indenture Trustee and the
Eligible Lender Trustee by the Noteholders or Certificateholders, as
applicable, representing not less than 25% of the Outstanding Amount of the
Notes or 25% of the outstanding Certificate Balance;
(3) an Insolvency Event occurs with respect to the
Servicer; or
(4) any failure by the Servicer to comply with any
requirements under the Higher Education Act resulting in a loss of its
eligibility as a third-party servicer;
then, and in each and every case, so long as the Servicer Default shall not have
been remedied, either the Indenture Trustee, or the Noteholders of Notes
evidencing not less than 25% of the Outstanding Amount of the Notes, by notice
then given in writing to the Servicer (and to the Indenture Trustee and the
Eligible Lender Trustee if given by the Noteholders) may terminate all the
rights and obligations (other than the obligations set forth in Section 7.02
hereof) of the Servicer under this Agreement and the Supplemental Sale and
Servicing Agreement. On or after the receipt by the Servicer of such written
notice, all authority and power of the Servicer under this Agreement and the
Supplemental Sale and Servicing Agreement, whether with respect to the Notes,
the Certificates or the Financed Student Loans or otherwise, shall, without
further action, pass to and be vested in the Indenture Trustee or such successor
Servicer as may be appointed under Section 8.02; and, without limitation, the
Indenture Trustee and the Eligible Lender Trustee are hereby authorized and
empowered to execute and deliver, for the benefit of the predecessor Servicer,
as attorney-in-fact or otherwise, any and all documents and other instruments,
and to do or accomplish all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, whether to complete the
transfer and endorsement of the Financed Student Loans and related documents, or
otherwise. The predecessor Servicer shall cooperate with the successor Servicer,
the Indenture Trustee and the Eligible Lender Trustee in effecting the
termination of the responsibilities and rights of the predecessor Servicer under
this Agreement and the Supplemental Sale and Servicing Agreement, including the
transfer to the successor Servicer for administration by it of all cash amounts
that shall at the time be held by the predecessor Servicer for deposit, or shall
thereafter be received by it with respect to a Financed Student
<PAGE> 52
47
Loan. All reasonable costs and expenses (including attorneys' fees) incurred in
connection with transferring the Financed Student Loan Files to the successor
Servicer and amending this Agreement and any other Basic Documents to reflect
such succession as Servicer pursuant to this Section shall be paid by the
predecessor Servicer upon presentation of reasonable documentation of such costs
and expenses. Upon receipt of notice of the occurrence of a Servicer Default,
the Eligible Lender Trustee shall give notice thereof to the Rating Agencies.
(b) ADMINISTRATOR DEFAULT. If any one of the
following events (an "Administrator Default") shall occur and be continuing:
(1) (i) in the event that daily deposits into the Collection
Account are not required, any failure by the Administrator to deliver to the
Indenture Trustee for deposit in any of the Trust Accounts any Available
Funds required to be paid on or before the Business Day immediately
preceding any Monthly Servicing Payment Date or Distribution Date, as
applicable, or (ii) any failure by the Administrator to direct the Indenture
Trustee to make any required distributions from any of the Trust Accounts,
which failure in case of either clause (i) or (ii) continues unremedied for
three Business Days after written notice of such failure is received by the
Administrator from the Indenture Trustee or the Eligible Lender Trustee or
after discovery of such failure by an officer of the Administrator; or
(2) any failure by the Administrator duly to observe or to
perform in any material respect any other covenants or agreements of the
Administrator set forth in this Agreement, the Administration Agreement or
any other Basic Document, which failure shall (i) materially and adversely
affect the rights of Noteholders or Certificateholders and (ii) continues
unremedied for a period of 60 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given (A)
to the Administrator by the Indenture Trustee or the Eligible Lender Trustee
or (B) to the Administrator and to the Indenture Trustee and the Eligible
Lender Trustee by the Noteholders or Certificateholders, as applicable,
representing not less than 25% of the Outstanding Amount of the Notes or 25%
of the outstanding Certificate Balance; or
(3) an Insolvency Event occurs with respect to the
Administrator;
then, and in each and every case, so long as the Administrator Default shall not
have been remedied, either the Indenture Trustee, or the Noteholders evidencing
not less than 25% of the Outstanding Amount of the Notes, by notice then given
in writing
<PAGE> 53
48
to the Administrator (and to the Indenture Trustee and the Eligible Lender
Trustee if given by the Noteholders) may terminate all the rights and
obligations (other than the obligations set forth in Section 6.04 hereof) of the
Administrator under this Agreement, the Supplemental Sale and Servicing
Agreement and the Administration Agreement. On or after the receipt by the
Administrator of such written notice, all authority and power of the
Administrator under this Agreement, the Supplemental Sale and Servicing
Agreement and the Administration Agreement, whether with respect to the Notes,
the Certificates or the Financed Student Loans or otherwise, shall, without
further action, pass to and be vested in the Indenture Trustee or such successor
Administrator as may be appointed under Section 8.02; and, without limitation,
the Indenture Trustee and the Eligible Lender Trustee are hereby authorized and
empowered to execute and deliver, for the benefit of the predecessor
Administrator, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination. The
predecessor Administrator shall cooperate with the successor Administrator, the
Indenture Trustee and the Eligible Lender Trustee in effecting the termination
of the responsibilities and rights of the predecessor Administrator under this
Agreement, the Supplemental Sale and Servicing Agreement and the Administration
Agreement. All reasonable costs and expenses (including attorneys' fees)
incurred in connection with amending this Agreement, the Supplemental Sale and
Servicing Agreement and the Administration Agreement to reflect such succession
as Administrator pursuant to this Section shall be paid by the predecessor
Administrator upon presentation of reasonable documentation of such costs and
expenses. Upon receipt of notice of the occurrence of a Administrator Default,
the Eligible Lender Trustee shall give notice thereof to the Rating Agencies.
SECTION 8.02. APPOINTMENT OF SUCCESSOR. (a) Upon receipt by
the Servicer or the Administrator, as the case may be, of notice of termination
pursuant to Section 8.01, or the resignation by the Servicer or the
Administrator, as the case may be, in accordance with the terms of this
Agreement, the predecessor Servicer or Administrator, as the case may be, shall
continue to perform its functions as Servicer or Administrator, as the case may
be, under this Agreement or under this Agreement and the Administration
Agreement, as the case may be, in the case of termination, only until the date
specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice and, in the case of
resignation, until the later of (x) the date 120 days from the delivery to the
Eligible Lender Trustee and the Indenture Trustee of written notice of such
resignation (or written confirmation of such notice) in accordance with the
terms of this Agreement and (y) the date upon which the predecessor
<PAGE> 54
49
Servicer or Administrator, as the case may be, shall become unable to act as
Servicer or Administrator, as the case may be, as specified in the notice of
resignation and accompanying Opinion of Counsel. In the event of the termination
hereunder of the Servicer or the Administrator, as the case may be, the Issuer
shall appoint a successor Servicer or Administrator, as the case may be,
acceptable to the Indenture Trustee, and the successor Servicer or
Administrator, as the case may be, shall accept its appointment by a written
assumption in form acceptable to the Indenture Trustee. In the event that a
successor Servicer or Administrator, as the case may be, has not been appointed
at the time when the predecessor Servicer or Administrator, as the case may be,
has ceased to act as Servicer or Administrator in accordance with this Section,
the Indenture Trustee without further action shall automatically be appointed
the successor Servicer or Administrator, as the case may be, and the Indenture
Trustee shall be entitled to the Servicing Fee and any Excess Servicing Fees, or
the Administration Fee, as the case may be. Notwithstanding the above, the
Indenture Trustee shall, if it shall be unwilling or legally unable so to act,
appoint or petition a court of competent jurisdiction to appoint, any
established institution whose regular business shall include the servicing of
student loans, as the successor to the Servicer under this Agreement or to the
Administrator under this Agreement and the Administration Agreement; PROVIDED,
HOWEVER, that such right to appoint or to petition for the appointment of any
such successor Servicer shall in no event relieve the Indenture Trustee from any
obligations otherwise imposed on it under the Basic Documents until such
successor has in fact assumed such appointment.
(b) Upon appointment, the successor Servicer or Administrator,
as the case may be (including the Indenture Trustee acting as successor Servicer
or Administrator, as the case may be), shall be the successor in all respects to
the predecessor Servicer or Administrator, as the case may be, and shall be
subject to all the responsibilities, duties and liabilities placed on the
predecessor Servicer or Administrator, as the case may be, that arise thereafter
or are related thereto and shall be entitled to an amount agreed to by such
successor Servicer or Administrator (which shall not exceed the Servicing Fee
and any Excess Servicing Fees, or the Administration Fee, as the case may be,
unless such compensation arrangements will not result in a downgrading of the
Notes or the Certificates by any Rating Agency) and all the rights granted to
the predecessor Servicer or Administrator, as the case may be, by the terms and
provisions of this Agreement.
(c) Neither the Servicer nor the Administrator may resign
unless it is prohibited from serving as such by law as evidenced by an Opinion
of Counsel to such effect delivered to the Indenture Trustee and the Eligible
Lender Trustee. Notwithstanding the foregoing or anything to the contrary herein
<PAGE> 55
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or in the other Basic Documents, the Indenture Trustee, to the extent it is
acting as successor Servicer or Administrator pursuant hereto and thereto, shall
be entitled to resign to the extent a qualified successor Servicer or
Administrator has been appointed and has assumed all the obligations of the
Servicer or the Administrator, as the case may be, in accordance with the terms
of this Agreement and the other Basic Documents.
SECTION 8.03. NOTIFICATION TO NOTEHOLDERS AND
CERTIFICATEHOLDERS. Upon any termination of, or appointment of a successor to,
the Servicer or the Administrator, as the case may be, pursuant to this Article
VIII, the Eligible Lender Trustee shall give prompt written notice thereof to
Certificateholders and the Indenture Trustee shall give prompt written notice
thereof to Noteholders and the Rating Agencies (which, in the case of any such
appointment of a successor, shall consist of prior written notice thereof to the
Rating Agencies).
SECTION 8.04. WAIVER OF PAST DEFAULTS. The Noteholders of
Notes evidencing not less than a majority of the Outstanding Amount of the Notes
(or the Certificateholders of Certificates evidencing not less than a majority
of the outstanding Certificate Balance, in the case of any default which does
not adversely affect the Indenture Trustee or the Noteholders) may, on behalf of
all Noteholders and Certificateholders, waive in writing any default by the
Servicer in the performance of its obligations hereunder, and any default by the
Administrator in the performance of its obligations hereunder and under the
Administration Agreement, and any consequences thereof, except a default in
making any required deposits to or payments from any of the Trust Accounts (or
giving instructions regarding the same) in accordance with this Agreement. Upon
any such waiver of a past default, such default shall cease to exist, and any
Servicer Default or Administrator Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement and the Administration
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereto.
ARTICLE IX
Termination
-----------
SECTION 9.01. TERMINATION. (a) OPTIONAL PURCHASE OF
ALL FINANCED STUDENT LOANS. As of the last day of any
Collection Period immediately preceding a Distribution Date as
of which the then outstanding Pool Balance is 5% or less of the
Initial Pool Balance, the Seller shall have the option to
purchase the Trust Estate, other than the Trust Accounts;
PROVIDED, HOWEVER, that, unless Moody's agrees otherwise, the
Seller may not effect any such purchase so long as the rating on
<PAGE> 56
51
its long-term debt obligations is less than Baa3 by Moody's, unless the Eligible
Lender Trustee and the Indenture Trustee shall have received an Opinion of
Counsel to the effect that such purchase would not constitute a fraudulent
conveyance; PROVIDED FURTHER that the Outstanding Amount of the Notes shall have
been paid in full prior to the exercise of such option. To exercise such option,
the Seller shall deposit pursuant to Section 5.04 in the Collection Account an
amount equal to the aggregate Purchase Amount for the Financed Student Loans and
the related rights with respect thereto, plus the appraised value of any such
other property held by the Trust other than the Trust Accounts, such value to be
determined by an appraiser mutually agreed upon by the Seller and the Eligible
Lender Trustee, and shall succeed to all interests in and to the Trust;
PROVIDED, HOWEVER, that the Seller may not effect such purchase if the aggregate
Purchase Amount to be so deposited in the Collection Account does not equal or
exceed an amount equal to the unpaid Certificate Balance, plus accrued and
unpaid interest thereon at the Certificate Rate to the date of exercise and the
amount of unpaid Certificateholders' Interest Index Carryover with respect
thereto.
(b) INSOLVENCY OF THE SELLER. Upon any sale of the assets of
the Trust pursuant to Section 9.02 of the Trust Agreement, the Administrator
shall instruct the Indenture Trustee to deposit the net proceeds from such sale
after all payments and reserves therefrom (including the expenses of such sale)
have been made (the "Insolvency Proceeds") in the Collection Account. On the
Distribution Date, or, if such proceeds are not so deposited on a Distribution
Date, on the first Distribution Date following the date on which the Insolvency
Proceeds are deposited in the Collection Account, the Administrator shall
instruct the Indenture Trustee to make the following distributions (after the
application on such Distribution Date of the amount of Available Funds and
amounts on deposit in the Reserve Account pursuant to Sections 5.05 and 5.06)
from the Insolvency Proceeds and any funds remaining on deposit in the Reserve
Account (including the proceeds of any sale of investments therein as described
in the following sentence):
(i) to the Noteholders, any unpaid Noteholders'
Interest Distribution Amount for such Distribution Date;
(ii) to the Noteholders, the outstanding principal
balance of the Notes;
(iii) to the Certificateholders, any unpaid
Certificateholders' Interest Distribution Amount for such
Distribution Date;
(iv) to the Certificateholders, the Certificate
Balance;
<PAGE> 57
52
(v) to the Servicer, any unpaid Excess Servicing Fees;
(vi) to the Noteholders, any unpaid Noteholders'
Interest Index Carryover; and
(vii) to the Certificateholders, any unpaid
Certificateholders' Interest Index Carryover.
Any investments on deposit in the Reserve Account which will not mature on or
before such Distribution Date shall be sold by the Indenture Trustee at such
time as will result in the Indenture Trustee receiving the proceeds from such
sale not later than the Business Day preceding such Distribution Date. Any
Insolvency Proceeds remaining after the deposits described above shall be paid
to the Seller.
(c) AUCTION OF FINANCED STUDENT LOANS. Any Financed Student
Loans remaining in the Trust as of the end of the Collection Period immediately
preceding the ________ ____ Distribution Date will be offered for sale by the
Indenture Trustee. KeyCorp, its affiliates (other than the Seller), LAI, PHEAA
and unrelated third parties may offer bids to purchase such Financed Student
Loans on such Distribution Date. If at least two bids are received, the
Indenture Trustee will solicit and resolicit bids from all participating bidders
until only one bid remains or the remaining bidders decline to resubmit bids.
The Indenture Trustee shall accept the highest of such remaining bids if it is
equal to or in excess of both the Auction Purchase Amount and the fair market
value of such Financed Student Loans as of the end of the Collection Period
immediately preceding such Distribution Date. If at least two bids are not
received or the highest bid after the resolicitation process is completed is not
equal to or in excess of the Auction Purchase Amount and the fair market value
of the Financed Student Loans, the Indenture Trustee will not consummate such
sale. The Indenture Trustee may consult, and, at the direction of the Seller,
shall consult, with a financial advisor (which may be the Administrator) to
determine if the fair market value of the Financed Student Loans has been
offered. The proceeds of any such sale will be applied in the order of priority
set forth in Section 5.04(b) of the Indenture. If the sale is not consummated in
accordance with the foregoing, the Indenture Trustee may, but shall not be under
any obligation to, solicit bids to purchase the Financed Student Loans on future
Distribution Dates upon terms similar to those described above.
(d) NOTICE. As described in Article IX of the Trust Agreement,
notice of any termination of the Trust shall be given by the Administrator to
the Eligible Lender Trustee and the Indenture Trustee as soon as practicable
after the Administrator has received notice thereof.
<PAGE> 58
53
(e) SUCCESSION. Following the satisfaction and discharge of
the Indenture and the payment in full of the principal of and interest on the
Notes, the Certificateholders will succeed to the rights of the Noteholders
hereunder other than Section 5.06(b) and the Eligible Lender Trustee will
succeed to the rights of, and assume the obligations of, the Indenture Trustee
pursuant to this Agreement and any other Basic Documents.
ARTICLE X
[Reserved]
ARTICLE XI
Miscellaneous
-------------
SECTION 11.01. AMENDMENT. This Agreement may be amended by the
Seller, the Servicer, the Administrator and the Eligible Lender Trustee, with
the consent of the Indenture Trustee, but without the consent of any of the
Noteholders or the Certificateholders, to cure any ambiguity, to correct or
supplement any provisions in this Agreement or for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions in
this Agreement or of modifying in any manner the rights of the Noteholders or
the Certificateholders; PROVIDED, HOWEVER, that such action shall not, as
evidenced by an Opinion of Counsel delivered to the Eligible Lender Trustee and
the Indenture Trustee, adversely affect in any material respect the interests of
any Noteholder or Certificateholder.
This Agreement may also be amended from time to time by the
Seller, the Servicer, the Administrator and the Eligible Lender Trustee, with
the consent of the Indenture Trustee (which consent shall not be unreasonably
withheld), the consent of the Noteholders of Notes evidencing not less than a
majority of the Outstanding Amount of the Notes and the consent of the
Certificateholders of Certificates evidencing not less than a majority of the
Certificate Balance, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the Certificateholders;
PROVIDED, HOWEVER, that no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments with respect to Financed Student Loans or distributions that shall be
required to be made for the benefit of the Noteholders or the Certificateholders
or (b) reduce the aforesaid percentage of the Outstanding Amount of
<PAGE> 59
54
the Notes and the Certificate Balance, the Noteholders or the Certificateholders
of which are required to consent to any such amendment, without the consent of
all outstanding Noteholders and Certificateholders.
Promptly after the execution of any such amendment or consent
(or, in the case of the Rating Agencies, five Business Days prior thereto), the
Eligible Lender Trustee shall furnish written notification of the substance of
such amendment or consent to each Certificateholder, the Indenture Trustee and
each of the Rating Agencies.
It shall not be necessary for the consent of
Certificateholders or Noteholders pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the
Eligible Lender Trustee and the Indenture Trustee shall be entitled to receive
and rely upon an Opinion of Counsel stating that the execution of such amendment
is authorized or permitted by this Agreement and the Opinion of Counsel referred
to in Section 11.02(i)(1). The Eligible Lender Trustee and the Indenture Trustee
may, but shall not be obligated to, enter into any such amendment which affects
the Eligible Lender Trustee's or the Indenture Trustee's, as applicable, own
rights, duties or immunities under this Agreement or otherwise.
SECTION 11.02. PROTECTION OF INTERESTS IN TRUST. (a) The
Seller shall execute and file such financing statements and cause to be executed
and filed such continuation statements, all in such manner and in such places as
may be required by law fully to preserve, maintain, and protect the interest of
the Issuer, the Eligible Lender Trustee and the Indenture Trustee in the
Financed Student Loans and in the proceeds thereof. The Seller shall deliver (or
cause to be delivered) to the Eligible Lender Trustee and the Indenture Trustee
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of ss. 9-402(7) of
the UCC, unless it shall have given the Eligible Lender Trustee and the
Indenture Trustee at least five days' prior written notice thereof and shall
have promptly filed appropriate amendments to all previously filed financing
statements or continuation statements.
<PAGE> 60
55
(c) Each of the Seller and the Servicer shall have an
obligation to give the Eligible Lender Trustee and the Indenture Trustee at
least 60 days' prior written notice of any relocation of its principal executive
office if, as a result of such relocation, the applicable provisions of the UCC
would require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement and shall promptly file
any such amendment. The Servicer shall at all times maintain each office from
which it shall service Financed Student Loans, and its principal executive
office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to
each Financed Student Loan accurately and in sufficient detail to permit (i) the
reader thereof to know at any time the status of such Financed Student Loan,
including payments and recoveries made and payments owing (and the nature of
each) and (ii) reconciliation between payments or recoveries on (or with respect
to) each Financed Student Loan and the amounts from time to time deposited in
the Collection Account in respect of such Financed Student Loan.
(e) The Servicer shall maintain its computer systems so that,
from and after the time of sale under this Agreement of the Financed Student
Loans, the Servicer's master computer records (including any backup archives)
that refer to a Financed Student Loan shall indicate clearly the interest of the
Issuer, the Eligible Lender Trustee and the Indenture Trustee in such Financed
Student Loan and that such Financed Student Loan is owned by the Eligible Lender
Trustee on behalf of the Issuer and has been pledged to the Indenture Trustee.
Indication of the Issuer's, the Eligible Lender Trustee's and the Indenture
Trustee's interest in a Financed Student Loan shall be deleted from or modified
on the Servicer's computer systems when, and only when, the related Financed
Student Loan shall have been paid in full or repurchased.
(f) If at any time the Seller or the Administrator shall
propose to sell, grant a security interest in, or otherwise transfer any
interest in student loans to any prospective purchaser, lender or other
transferee, the Servicer shall give to such prospective purchaser, lender or
other transferee computer tapes, records or printouts (including any restored
from backup archives) that, if they shall refer in any manner whatsoever to any
Financed Student Loan, shall indicate clearly that such Financed Student Loan
has been sold and is owned by the Eligible Lender Trustee on behalf of the
Issuer and has been pledged to the Indenture Trustee.
(g) Upon reasonable notice, the Servicer shall permit the
Indenture Trustee and its agents at any time during normal business hours to
inspect, audit (subject to the timing limitations imposed by paragraph 3 of the
Supplemental Sale and
<PAGE> 61
56
Servicing Agreement) and make copies of and abstracts from the Servicer's
records regarding any Financed Student Loan.
(h) Upon request at any time the Eligible Lender Trustee or
the Indenture Trustee shall have reasonable grounds to believe that such request
would be necessary in connection with its performance of its duties under the
Basic Documents, the Servicer shall furnish to the Eligible Lender Trustee or to
the Indenture Trustee (in each case, with a copy to the Administrator), within
five Business Days, a list of all Financed Student Loans (by borrower social
security number, type of loan and date of issuance) then held as part of the
Trust, and the Administrator shall furnish to the Eligible Lender Trustee or to
the Indenture Trustee, within 20 Business Days thereafter, a comparison of such
list to the list of Initial Financed Student Loans set forth in Schedule A as of
the Closing Date, and, for each Financed Student Loan that has been added to or
removed from the pool of loans held by the Eligible Lender Trustee on behalf of
the Issuer, information as to the date as of which and circumstances under which
each such Financed Student Loan was so added or removed.
(i) The Seller shall deliver to the Eligible Lender
Trustee and the Indenture Trustee:
(1) promptly after the execution and delivery of this
Agreement and of each amendment thereto and on each Transfer Date, an
Opinion of Counsel either (A) stating that, in the opinion of such counsel,
all financing statements and continuation statements have been executed and
filed that are necessary fully to preserve and protect the interest of the
Eligible Lender Trustee and the Indenture Trustee in the Financed Student
Loans, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (B) stating that, in
the opinion of such counsel, no such action shall be necessary to preserve
and protect such interest; and
(2) within 120 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cutoff Date, an Opinion of Counsel, dated as of a date during such
120-day period, either (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements have been executed and
filed that are necessary fully to preserve and protect the interest of the
Eligible Lender Trustee and the Indenture Trustee in the Financed Student
Loans, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (B) stating that, in
the opinion of such counsel, no such action shall be necessary to preserve
and protect such interest; PROVIDED that a single Opinion of Counsel may be
delivered in satisfaction
<PAGE> 62
57
of the foregoing requirement and that of Section 3.06(b) of
the Indenture.
Each Opinion of Counsel referred to in clause (1) or (2) above
shall specify (as of the date of such opinion and given all applicable laws as
in effect on such date) any action necessary to be taken in the following year
to preserve and protect such interest.
(j) The Seller shall, to the extent required by applicable
law, cause the Certificates and the Notes to be registered with the Commission
pursuant to Section 12(b) or Section 12(g) of the Exchange Act within the time
periods specified in such sections.
SECTION 11.03. NOTICES. All demands, notices and
communications upon or to the Seller, the Administrator, the Servicer, the
Eligible Lender Trustee, the Indenture Trustee or the Rating Agencies under this
Agreement shall be in writing, personally delivered or mailed by certified mail,
return receipt requested, (or in the form of telex or facsimile notice, followed
by written notice delivered as aforesaid) and shall be deemed to have been duly
given upon receipt (a) in the case of the Seller or the Administrator, to Key
Bank USA, National Association, 5000 Tiedman Road, Brooklyn, Ohio 44144,
Attention: Senior Vice President, Education Lending (telephone: (216) 813-1325;
facsimile: (216) 813-6511), (b) in the case of the Servicer, to Pennsylvania
Higher Education Assistance Agency, 1200 North 7th Street, Harrisburg,
Pennsylvania 17102- 1398, Attention: Senior Vice President, Marketing and Client
Affairs (telephone: (717) 720-2000; facsimile: (717) 257-5162), (c) in the case
of the Issuer or the Eligible Lender Trustee, at the Corporate Trust Office of
the Eligible Lender Trustee, (d) in the case of the Indenture Trustee, at its
Corporate Trust Office, (e) in the case of Moody's, to Moody's Investors
Service, Inc., 99 Church Street, New York, New York 10007, Attention: ABS
Monitoring Department (telephone: (212) 553-0300; facsimile: (212) 553-4600),
and (f) in the case of Standard & Poor's, to Standard & Poor's Corporation, 25
Broadway (20th Floor), New York, New York 10004, Attention: Asset Backed
Surveillance Department (telephone: (212) 208-8000; facsimile: (212) 412-0225);
or, as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.
SECTION 11.04. ASSIGNMENT. Notwithstanding anything to the
contrary contained herein, except as provided in Sections 6.05 and 7.03 and as
provided in the provisions of this Agreement concerning the resignation of the
Servicer or the Administrator, this Agreement may not be assigned by the Seller,
the Administrator or the Servicer. This Agreement may only be assigned by the
Eligible Lender Trustee to its permitted successor pursuant to the Trust
Agreement.
<PAGE> 63
58
SECTION 11.05. LIMITATIONS ON RIGHTS OF OTHERS. The
provisions of this Agreement are solely for the benefit of the Seller, the
Servicer, the Issuer and the Eligible Lender Trustee and for the benefit of the
Certificateholders, the Indenture Trustee and the Noteholders, as third party
beneficiaries, and nothing in this Agreement, whether express or implied, shall
be construed to give to any other Person any legal or equitable right, remedy or
claim in the Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 11.06. SEVERABILITY. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 11.07. SEPARATE COUNTERPARTS. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 11.08. HEADINGS. The headings of the various
Articles and Sections herein are for convenience of reference
only and shall not define or limit any of the terms or
provisions hereof.
SECTION 11.09. GOVERNING LAW. This Agreement shall be
construed in accordance with the laws of the State of New York, without
reference to its conflict of law provisions, and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.
SECTION 11.10. ASSIGNMENT TO INDENTURE TRUSTEE. The Seller
hereby acknowledges and consents to any mortgage, pledge, assignment and grant
by the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit
of the Noteholders of a security interest in all right, title and interest of
the Issuer in, to and under the Financed Student Loans and/or the assignment of
any or all of the Issuer's rights and obligations hereunder to the Indenture
Trustee.
SECTION 11.11. NONPETITION COVENANTS. (a) Notwithstanding any
prior termination of this Agreement, the Servicer, the Administrator and the
Seller shall not, prior to the date which is one year and one day after the
termination of this Agreement with respect to the Issuer, acquiesce, petition or
otherwise invoke or cause the Issuer to invoke the process of any court or
government authority for the purpose of commencing
<PAGE> 64
59
or sustaining a case against the Issuer under any Federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement,
the Servicer shall not, prior to the date which is one year and one day after
the termination of this Agreement with respect to the Seller, acquiesce,
petition or otherwise invoke or cause the Seller to invoke the process of any
court or government authority for the purpose of commencing or sustaining a case
against the Seller under any insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Seller or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Seller.
SECTION 11.12. LIMITATION OF LIABILITY OF ELIGIBLE LENDER
TRUSTEE AND INDENTURE TRUSTEE. (a) Notwithstanding anything contained herein to
the contrary, this Agreement has been signed by ___________________ not in its
individual capacity but solely in its capacity as Eligible Lender Trustee of the
Issuer and in no event shall ______________________ in its individual capacity
or, except as expressly provided in the Trust Agreement, as beneficial owner of
the Issuer have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto as to all of which
recourse shall be had solely to the assets of the Issuer.
(b) Notwithstanding anything contained herein to the contrary,
this Agreement has been accepted by _____________________ not in its individual
capacity but solely as Indenture Trustee and in no event shall
_______________________ have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the
<PAGE> 65
60
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers as of the day and
year first above written.
KEYCORP STUDENT LOAN TRUST 1996-A,
by
------------------------
__________, not in its
individual capacity but
solely as Eligible Lender
Trustee on behalf of the
Trust,
by
------------------------
Name: _________________
Title: _________________
KEY BANK USA, NATIONAL
ASSOCIATION, Seller,
by
------------------------
Name: _________________
Title: _________________
PENNSYLVANIA HIGHER EDUCATION
ASSISTANCE AGENCY, Servicer,
by
------------------------
Name: _________________
Title: _________________
Approved as to form and legality:
- -------------------------------
PHEAA Chief Counsel
<PAGE> 66
61
Approved as to form and legality:
- --------------------------------
Deputy Attorney General
--------------------------
_______, not in its individual
capacity but solely as Eligible
Lender Trustee,
by
--------------------------
Name:
Title:
KEY BANK USA, NATIONAL
ASSOCIATION, Administrator,
by
--------------------------
Name:
Title:
Acknowledged and accepted
as of the day and year
first above written:
_____________________, not
in its individual capacity
but solely as Indenture Trustee,
by
------------------------
Name:
Title:
<PAGE> 67
[Form of PHEAA Approval Memo
to be supplied by PHEAA]
<PAGE> 68
APPENDIX A
DEFINITIONS AND USAGE
Usage
-----
The following rules of construction and usage shall be
applicable to any instrument that is governed by this Appendix:
(a) All terms defined in this Appendix shall have the defined
meanings when used in any instrument governed hereby and in any certificate or
other document made or delivered pursuant thereto unless otherwise defined
therein.
(b) As used herein, in any instrument governed hereby and in
any certificate or other document made or delivered pursuant thereto, accounting
terms not defined in this Appendix or in any such instrument, certificate or
other document, and accounting terms partly defined in this Appendix or in any
such instrument, certificate or other document to the extent not defined, shall
have the respective meanings given to them under generally accepted accounting
principles as in effect on the date of such instrument. To the extent that the
definitions of accounting terms in this Appendix or in any such instrument,
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Appendix or in any such instrument, certificate or other document shall
control.
(c) The words "hereof", "herein", "hereunder" and words of
similar import when used in an instrument refer to such instrument as a whole
and not to any particular provision or subdivision thereof; references in an
instrument to "Article", "Section" or another subdivision or to an attachment
are, unless the context otherwise requires, to an article, section or
subdivision of or an attachment to such instrument; and the term "including"
means "including without limitation".
(d) The definitions contained in this Appendix are equally
applicable to both the singular and plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or
referred to below or in any agreement or instrument that is
<PAGE> 69
3
governed by this Appendix means such agreement or instrument or statute as from
time to time amended, modified or supplemented, including (in the case of
agreements or instruments) by waiver or consent and (in the case of statutes) by
succession of comparable successor statutes and includes (in the case of
agreements or instruments) references to all attachments thereto and instruments
incorporated therein. References to a Person are also to its permitted
successors and assigns.
Definitions
-----------
"ACT" has the meaning specified in Section 11.03(a)
of the Indenture.
"ADDITIONAL FUNDING" means those expenditures made on behalf
of the Issuer from the Pre-Funding Account and the Escrow Account on Transfer
Dates during the Funding Period, consisting of (i) amounts paid to the Seller to
acquire Additional Student Loans as of the applicable Subsequent Cutoff Dates
and (ii) amounts transferred to the Collection Account representing interest
payments to Noteholders and Certificateholders in lieu of collections of
interest on certain of the Financed Student Loans to the extent such interest is
not paid currently but is capitalized and added to the principal balance of such
loans.
"ADDITIONAL STUDENT LOANS" means the Subsequent Pool
Student Loans and the Other Student Loans.
"ADMINISTRATION AGREEMENT" means the Administration Agreement
dated as of September 1, 1996, among the Issuer, the Indenture Trustee and the
Administrator.
"ADMINISTRATION FEE" has the meaning specified in
Section 3 of the Administration Agreement.
"ADMINISTRATOR" means Key Bank USA, National Association, a
national banking association, in its capacity as administrator of the Issuer and
the Financed Student Loans.
"ADMINISTRATOR DEFAULT" has the meaning specified in
Section 8.01(b) of the Sale and Servicing Agreement.
"ADMINISTRATOR'S CERTIFICATE" means an Officers'
Certificate of the Administrator delivered pursuant to
<PAGE> 70
4
Section 4.08(c) of the Sale and Servicing Agreement, substantially in the form
of Exhibit C thereto.
"AFFILIATE" means, with respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"ASA" means the Massachusetts Higher Education
Assistance Corporation now doing business as American Student Assistance
Corporation, a Massachusetts non-profit corporation.
"ASSIGNED AGREEMENTS" means the following agreements, as the
same may be amended and restated from time to time, (i) the Deposit Agreement
dated as of January 28, 1992, between TERI and the Seller (as successor to
Ameritrust Company National Association), (ii) the Security Agreement dated as
of January 28, 1992, between TERI and the Seller (as successor to Ameritrust
Company National Association), (iii) the 1994 Deposit Agreement, the 1995
Deposit Agreement, the 1996 Deposit Agreement and the 1997 Deposit Agreement,
each dated as of December 21, 1992, between TERI and the Seller, (iv) the 1994
Security Agreement, the 1995 Security Agreement, the 1996 Security Agreement and
the 1997 Security Agreement, each dated as of December 21, 1992, between TERI
and the Seller, (v) the 1998 Deposit Agreement, the 1999 Deposit Agreement, the
2000 Deposit Agreement and the 2001 Deposit Agreement, each dated as of March
23, 1995, between TERI and the Seller, (vi) the 1998 Security Agreement, the
1999 Security Agreement, the 2000 Security Agreement and the 2001 Security
Agreement, each dated March 23, 1995 between TERI and the Seller, (vii) the
Letter Agreement dated as of January 28, 1992, between LSAS and the Seller (as
successor to Ameritrust Company National Association), (viii) the Trust
Agreement dated as of July 14, 1992 and restated as of July 1, 1994, among the
Seller, LSAS and First Bank (N.A.), Milwaukee, Wisconsin, as trustee, (ix) the
LAL/BEL Guarantee Agreements dated as of January 28, 1992 and December 21, 1992,
between the Seller and TERI, and (x) the Private Guarantee Agreement dated as of
March 23, 1995, among the Seller, a TERI, Society National Bank, Indiana and
Wilmington Trust Company, to the
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5
extent necessary to permit the Trust to realize its rights and benefits under
the assignment of the agreements referred to in clauses (i) through (x) above.
"ASSIGNED RIGHTS" has the meaning specified in
Section 2.01 of the Sale and Servicing Agreement.
"AUCTION PURCHASE AMOUNT" with respect to the Financed Student
Loans means the aggregate unpaid principal balance owed by the applicable
borrowers thereon plus accrued interest thereon to the date of purchase less the
amount on deposit in the Reserve Account as of such date.
"AUTHORIZED OFFICER" means (i) with respect to the Issuer, any
officer of the Eligible Lender Trustee who is authorized to act for the Eligible
Lender Trustee in matters relating to the Issuer pursuant to the Basic Documents
and who is identified on the list of Authorized Officers delivered by the
Eligible Lender Trustee to the Indenture Trustee on the Closing Date (as such
list may be modified or supplemented from time to time thereafter), (ii) with
respect to the Administrator, any officer of the Administrator or any of its
Affiliates who is authorized to act for the Administrator in matters relating to
itself or to the Issuer and to be acted upon by the Administrator pursuant to
the Basic Documents and who is identified on the list of Authorized Officers
delivered by the Administrator to the Indenture Trustee on the Closing Date (as
such list may be modified or supplemented from time to time thereafter), (iii)
with respect to the Seller, any officer of the Seller or any of its Affiliates
who is authorized to act for the Seller in matters relating to or to be acted
upon by the Seller pursuant to the Basic Documents and who is identified on the
list of Authorized Officers delivered by the Seller to the Indenture Trustee on
the Closing Date (as such list may be modified or supplemented from time to time
thereafter) and (iv) with respect to the Servicer, any officer of the Servicer
who is authorized to act for the Servicer in matters relating to or to be acted
upon by the Servicer pursuant to the Basic Documents and who is identified on
the list of Authorized Officers delivered by the Servicer to the Indenture
Trustee on the Closing Date (as such list may be modified or supplemented from
time to time thereafter).
"AVAILABLE FUNDS" means, with respect to a Distribution Date,
the sum of the following amounts received with respect to the then elapsed
portion of the related
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6
Collection Period to the extent not previously distributed: (i) all collections
received by the Servicer on the Financed Student Loans (including any Guarantee
Payments received with respect to the Financed Student Loans but net of (x) any
Federal Origination Fee payable to the Department on Federal Consolidation Loans
disbursed after October 1, 1993, and (y) any collections in respect of principal
on the Financed Student Loans applied by the Trust to repurchase guaranteed
loans from the Guarantors in accordance with the Guarantee Agreements; (ii) any
Interest Subsidy Payments and Special Allowance Payments received by the
Eligible Lender Trustee during the then elapsed portion of such Collection
Period with respect to Financed Federal Loans; (iii) all Liquidation Proceeds
from any Financed Student Loans which became Liquidated Student Loans during the
then elapsed portion of such Collection Period in accordance with the Servicer's
customary servicing procedures, and all recoveries in respect of Liquidated
Student Loans which were written off in prior Collection Periods or prior months
of such current Collection Period or prior months of such current Collection
Period; (iv) that portion of amounts released from the Pre-Funding Account with
respect to Additional Fundings relating to those interest costs on the Financed
Student Loans which were, are or will be capitalized for the then elapsed
portion of such Collection Period; (v) amounts, if any, released from the Escrow
Account and deposited into the Collection Account on any Transfer Date; (vi) the
aggregate Purchase Amounts received for those Financed Student Loans repurchased
by the Seller or purchased by the Servicer under an obligation which arose
during the then elapsed portion of such Collection Period; (vii) the aggregate
amounts, if any, received from the Seller or the Servicer, as the case may be,
as reimbursement of non-guaranteed interest amounts, or lost Interest Subsidy
Payments and Special Allowance Payments, with respect to the Financed Student
Loans pursuant to Section 3.02 or 4.06, respectively, of the Sale and Servicing
Agreement; (viii) the aggregate amounts, if any, of Principal Distribution
Adjustments (to the extent not otherwise included in clause (i) above); (ix)
amounts deposited by the Seller into the Collection Account in connection with
the making of Consolidation Loans pursuant to Section 2.03 of the Sale and
Servicing Agreement; and (x) Investment Earnings for such Distribution Date;
PROVIDED, HOWEVER, that Available Funds will exclude (A) all payments and
proceeds (including Liquidation Proceeds) of any Financed Student Loans the
Purchase Amount of which has been included in Available Funds for a prior
Distribution Date and
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7
(B) except as expressly included in clause (iv) above, amounts released from the
Pre-Funding Account.
"BAL LOAN" means a Business Access Loan made by the Seller to
an eligible borrower under the Program.
"BASIC DOCUMENTS" means the Trust Agreement, the Indenture,
the Sale and Servicing Agreement, the Supplemental Sale and Servicing Agreement,
the Administration Agreement, the Certificate Depository Agreement, the Note
Depository Agreement, the Guarantee Agreements and other documents and
certificates delivered in connection with any thereof.
"BEL LOAN" means a Bar Exam Loan made by the Seller to an
eligible borrower under the Program.
"BENEFIT PLAN" has the meaning specified in
Section 3.04 of the Trust Agreement.
"BOOK-ENTRY CERTIFICATE" means a beneficial interest in the
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 3.11 of the Trust
Agreement.
"BOOK-ENTRY NOTE" means a beneficial interest in the Notes,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.10 of the Indenture.
"BUSINESS DAY" means any day other than a Saturday, a Sunday
or a day on which banking institutions or trust companies in The City of New
York, Cleveland, Ohio or Harrisburg, Pennsylvania are authorized or obligated by
law, regulation or executive order to remain closed.
"CERTIFICATE" means a certificate evidencing the beneficial
interest of a Certificateholder in the Trust, substantially in the form of
Exhibit A to the Trust Agreement.
"CERTIFICATE BALANCE" equals, initially, the Initial
Certificate Balance and, thereafter, equals the Initial Certificate Balance
reduced by all amounts allocable to principal previously distributed to
Certificateholders.
"CERTIFICATE DEPOSITORY AGREEMENT" means the agreement dated
as of the Closing Date among the Trust, the Eligible Lender Trustee, the
Administrator and The Depository
<PAGE> 74
8
Trust Company, as the initial Clearing Agency, substantially in the form of
Exhibit B to the Trust Agreement.
"CERTIFICATE FINAL MATURITY DATE" means the
______________ Distribution Date.
"CERTIFICATE OWNER" means, with respect to a Book-Entry
Certificate, the Person who is the beneficial owner of such Book-Entry
Certificate, as reflected on the books of the Clearing Agency, or on the books
of a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"CERTIFICATE PAYING AGENT" means any paying agent or co-paying
agent appointed pursuant to Section 3.09 of the Trust Agreement, which shall
initially be the Eligible Lender Trustee.
"CERTIFICATE POOL FACTOR" as of the close of business on a
Distribution Date means a seven-digit decimal figure equal to the Certificate
Balance divided by the Initial Certificate Balance. The Certificate Pool Factor
will be 1.0000000 as of the Closing Date; thereafter, the Certificate Pool
Factor will decline to reflect reductions in the Certificate Balance.
"CERTIFICATE RATE" means, with respect to any Interest Period,
the interest rate per annum (computed on the basis of the actual number of days
elapsed in such Interest Period over a year of 365 days (or 366 in the case of a
leap year)) equal to the lesser of (i) the weighted average of the T-Bill Rates
within such Interest Period plus __% and (ii) the Student Loan Rate for such
Interest Period.
"CERTIFICATE REGISTER" and "CERTIFICATE REGISTRAR" means the
register mentioned and the registrar appointed pursuant to Section 3.04 of the
Trust Agreement.
"CERTIFICATEHOLDER" means a Person in whose name a
Certificate is registered in the Certificate Register.
"CERTIFICATEHOLDERS' DISTRIBUTION AMOUNT" means, with respect
to any Distribution Date, the Certificateholders' Interest Distribution Amount
for such Distribution Date plus, for each Distribution Date on and after which
the Notes have
<PAGE> 75
9
been paid in full, the Certificateholders' Principal Distribution Amount for
such Distribution Date.
"CERTIFICATEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, with
respect to any Distribution Date, the excess of (i) the sum of the
Certificateholders' Interest Distribution Amount on the preceding Distribution
Date and any outstanding Certificateholders' Interest Carryover Shortfall on
such preceding Distribution Date over (ii) the amount of interest actually
distributed to the Certificateholders on such preceding Distribution Date, plus
interest on the amount of such excess interest due to the Certificateholders, to
the extent permitted by law, at the Certificate Rate from such preceding
Distribution Date to the current Distribution Date.
"CERTIFICATEHOLDERS' INTEREST DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the sum of (i) the amount of interest accrued
at the Certificate Rate for the related Interest Period on the outstanding
Certificate Balance on the immediately preceding Distribution Date, after giving
effect to all distributions of principal to Certificateholders on such
Distribution Date (or, in the case of the first Distribution Date, on the
Closing Date) and (ii) the Certificateholders' Interest Carryover Shortfall for
such Distribution Date; PROVIDED, HOWEVER, that the Certificateholders' Interest
Distribution Amount will not include any Certificateholders' Interest Index
Carryover.
"CERTIFICATEHOLDERS' INTEREST INDEX CARRYOVER" means, with
respect to any Distribution Date as to which the Certificate Rate for such
Distribution Date is based on the Student Loan Rate, the amount equal to the
excess, if any, of (a) the amount of interest on the Certificates that would
have accrued in respect of the related Interest Period had interest been
calculated based on the T-Bill Rate over (b) the amount of interest on the
Certificates actually accrued in respect of such Interest Period based on the
Student Loan Rate, together with the unpaid portion of any such excess from
prior Distribution Dates (and interest accrued thereon, to the extent permitted
by law, calculated based on the T-Bill Rate; PROVIDED, HOWEVER, that, on the
Certificate Final Maturity Date, the Certificateholders' Interest Index
Carryover will be equal to the lesser of (i) the Certificateholders' Interest
Index Carryover on such date determined as described above and (ii) the amount
of funds, if any, required and available to be distributed to Certificateholders
on such date pursuant to
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10
Sections 5.05(c)(xi), 5.06(b)(C) and 5.06(c) of the Sale and Servicing
Agreement.
"CERTIFICATEHOLDERS' PERCENTAGE" means a fraction, expressed
as a percentage, the numerator of which is the principal amount of the
Certificates issued on the Closing Date and the denominator of which is the sum
of the principal amount of the Notes issued on the Closing Date and the
principal balance of the Certificates issued on the Closing Date.
"CERTIFICATEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, as
of the close of any Distribution Date on or after which the Notes have been paid
in full, the excess of (i) the sum of the Certificateholders' Principal
Distribution Amount on such Distribution Date and any outstanding
Certificateholders' Principal Carryover Shortfall for the preceding
Distribution Date over (ii) the amount of principal actually distributed to the
Certificateholders on such Distribution Date.
"CERTIFICATEHOLDERS' PRINCIPAL DISTRIBUTION AMOUNT" means, on
each Distribution Date on and after which the principal balance of the Notes has
been paid in full, the sum of (a) the Principal Distribution Amount for such
Distribution Date (or, in the case of the Distribution Date on which the
principal balance of the Notes is paid in full, any remaining Principal
Distribution Amount not otherwise distributed to Noteholders on such
Distribution Date) and (b) the Certificateholders' Principal Carryover Shortfall
as of the close of the preceding Distribution Date; PROVIDED, HOWEVER, that the
Certificateholders' Principal Distribution Amount will in no event exceed the
Certificate Balance. In addition, on the Certificate Final Maturity Date, the
principal required to be distributed to the Certificateholders will include the
amount required to reduce the outstanding principal balance of the Certificates
to zero.
"CLEARING AGENCY" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of securities deposited
with the Clearing Agency.
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11
"CLOSING DATE" means September 1, 1996.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time, and Treasury Regulations promulgated thereunder.
"COLLATERAL" has the meaning specified in the
Granting Clause of the Indenture.
"COLLECTION ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 5.01 of the Sale and Servicing
Agreement.
"COLLECTION PERIOD" means, with respect to the first
Distribution Date, the period beginning on the Cutoff Date and ending on
____________, 1996 and with respect to each subsequent Distribution Date, the
Collection Period means the three calendar months immediately following the end
of the previous Collection Period.
"COMMISSION" means the Securities and Exchange
Commission.
"CONSOLIDATION LOANS" means Federal Consolidation
Loans and Private Consolidation Loans, collectively.
"CORPORATE TRUST OFFICE" means (i) with respect to the
Indenture Trustee, the principal office of the Indenture Trustee at which at any
particular time its corporate trust business shall be administered, which office
at the Closing Date is located at ______________________________________ _____,
Attention: ________________________________, _______________________ (telephone:
______________; facsimile: ______________) or at such other address as the
Indenture Trustee may designate from time to time by notice to the Noteholders
and the Seller, or the principal corporate trust office of any successor
Indenture Trustee (the address of which the successor Indenture Trustee will
notify the Noteholders and the Seller) and (ii) with respect to the Eligible
Lender Trustee, the principal corporate trust office of the Eligible Lender
Trustee located at One First National Plaza, Suite 0126, Chicago, Illinois
60670, Attention: Corporate Trust Administration (telephone: (312) 407-4110;
facsimile: (312) 407-1708); or at such other address as the Eligible Lender
Trustee may designate by notice to the Certificateholders and the Seller, or the
principal corporate trust office of any successor Eligible Lender Trustee (the
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12
address of which the successor Eligible Lender Trustee will notify the
Certificateholders and the Seller).
"COVERED LOSSES" means the lesser of (a) Realized Losses and
(b) the sum of Excess Interest plus the Reserve Account Covered Amount.
"CUTOFF DATE" means __________, 1996.
"DAL LOAN" means a Dental Access Loan made by the Seller to an
eligible borrower under the Program.
"DEFAULT" means any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
"DEFINITIVE CERTIFICATES" has the meaning specified
in Section 3.11 of the Trust Agreement.
"DEFINITIVE NOTES" has the meaning specified in
Section 2.10 of the Indenture.
"DELIVERY" when used with respect to Trust Account
Property means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that
constitute "instruments" within the meaning of Section 9-105(1)(i) of
the UCC and are susceptible of physical delivery, transfer thereof to
the Indenture Trustee or its nominee or custodian by physical delivery
to the Indenture Trustee or its nominee or custodian endorsed to, or
registered in the name of, the Indenture Trustee or its nominee or
custodian or endorsed in blank, and, with respect to a certificated
security (as defined in Section 8-102 of the UCC) transfer thereof (i)
by delivery of such certificated security endorsed to, or registered in
the name of, the Indenture Trustee or its nominee or custodian or
endorsed in blank to a financial intermediary (as defined in Section
8-313) of the UCC) and the making by such financial intermediary of
entries on its books and records identifying such certificated
securities as belonging to the Indenture Trustee or its nominee or
custodian and the sending by such financial intermediary of a
confirmation of the purchase of such certificated security by the
Indenture Trustee or its nominee or custodian, or (ii) by delivery
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13
thereof to a "clearing corporation" (as defined in Section 8-102(3) of
the UCC) and the making by such clearing corporation of appropriate
entries on its books reducing the appropriate securities account of the
transferor and increasing the appropriate securities account of a
financial intermediary by the amount of such certificated security, the
identification by the clearing corporation of the certificated
securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities by such
clearing corporation or a "custodian bank" (as defined in Section
8-102(4) of the UCC) or the nominee of either subject to the clearing
corporation's exclusive control, the sending of a confirmation by the
financial intermediary of the purchase by the Indenture Trustee or its
nominee or custodian of such securities and the making by such
financial intermediary of entries on its books and records identifying
such certificated securities as belonging to the Indenture Trustee or
its nominee or custodian (all of the foregoing, "Physical Property"),
and, in any event, any such Physical Property in registered form shall
be in the name of the Indenture Trustee or its nominee or custodian;
and such additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such
Trust Account Property to the Indenture Trustee or its nominee or
custodian, consistent with changes in applicable law or regulations or
the interpretation thereof;
(b) with respect to any securities issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the Federal
National Mortgage Association that is a book-entry security held
through the Federal Reserve System pursuant to Federal book-entry
regulations, the following procedures, all in accordance with
applicable law, including applicable Federal regulations and Articles 8
and 9 of the UCC: book-entry registration of such Trust Account
Property to an appropriate book-entry account maintained with a Federal
Reserve Bank by a financial intermediary which is also a "depository"
pursuant to applicable Federal regulations and issuance by such
financial intermediary of a deposit advice or other written
confirmation of such book-entry registration to the Indenture Trustee
or its nominee or custodian of the purchase by the Indenture Trustee or
its nominee or custodian of such book-entry securities; the
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14
making by such financial intermediary of entries in its books and
records identifying such book-entry security held through the Federal
Reserve System pursuant to Federal book-entry regulations as belonging
to the Indenture Trustee or its nominee or custodian and indicating
that such custodian holds such Trust Account Property solely as agent
for the Indenture Trustee or its nominee or custodian; and such
additional or alternative procedures as may hereafter become
appropriate to effect complete transfer of ownership of any such Trust
Account Property to the Indenture Trustee or its nominee or custodian,
consistent with changes in applicable law or regulations or the
interpretation thereof; and
(c) with respect to any item of Trust Account Property that is
an uncertificated security under Article 8 of the UCC and that is not
governed by clause (b) above, registration on the books and records of
the issuer thereof in the name of the financial intermediary, the
sending of a confirmation by the financial intermediary of the purchase
by the Indenture Trustee or its nominee or custodian of such
uncertificated security, the making by such financial intermediary of
entries on its books and records identifying such uncertificated
certificates as belonging to the Indenture Trustee or its nominee or
custodian.
"DEPARTMENT" means the United States Department of
Education, an agency of the Federal government.
"DEPOSITOR" means the Seller in its capacity as
Depositor under the Trust Agreement.
"DETERMINATION DATE" means, with respect to any Monthly
Servicing Payment Date or Distribution Date, as the case may be, the third
Business Day preceding such Monthly Servicing Payment Date or Distribution
Date.
"DISTRIBUTION DATE" means, with respect to each Collection
Period, the twenty-seventh day of each ____________, ___________, ___________ or
___________, or, if such day is not a Business Day, the immediately following
Business Day, commencing on _____________, 1996.
"ELIGIBLE DEPOSIT ACCOUNT" means either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account with the
corporate trust department
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15
of a depository institution organized under the laws of the United States of
America or any one of the States (or any domestic branch of a foreign bank),
having corporate trust powers and acting as trustee for funds deposited in such
account, so long as any of the securities of such depository institution have a
credit rating from each Rating Agency in one of its generic rating categories
which signifies investment grade.
"ELIGIBLE INSTITUTION" means a depository institution
organized under the laws of the United States of America or any one of the
States (or any domestic branch of a foreign bank), which (i) has (A) either a
long-term senior unsecured debt rating of AAA or a short-term senior unsecured
debt or certificate of deposit rating of A-1+ or better by Standard & Poor's and
(B)(1) a long-term senior unsecured debt rating of A1 or better and (2) a
short-term senior unsecured debt rating of P-1 or better by Moody's, or any
other long-term, short-term or certificate of deposit rating acceptable to the
Rating Agencies and (ii) whose deposits are insured by the FDIC. If so
qualified, the Eligible Lender Trustee or the Indenture Trustee may be
considered an Eligible Institution.
"ELIGIBLE INVESTMENTS" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully
guaranteed as to 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 (or any domestic
branch of a foreign bank) and subject to supervision and examination by
Federal or state banking or depository institution authorities
(including depository receipts issued by any such institution or trust
company as custodian with respect to any obligation referred to in
clause (a) above or portion of such obligation for the benefit of the
holders of such depository receipts); PROVIDED, HOWEVER, that at the
time of the investment or contractual commitment to invest therein
(which shall be deemed to be made again each time funds are reinvested
following each Monthly Payment Date or Distribution Date, as the case
may be), the commercial paper or other short-term senior
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16
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 have a credit rating from
both of the Rating Agencies in the highest investment category granted
thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from both of the
Rating Agencies in the highest investment category granted thereby;
(d) investments in money market funds having a rating from
both of the Rating Agencies in the highest investment category granted
thereby (including funds for which the Indenture Trustee, the
Administrator or the Eligible Lender Trustee or any of their respective
Affiliates is investment manager or advisor);
(e) bankers' acceptances issued by any depository
institution or trust company referred to in clause (b)
above;
(f) repurchase obligations with respect to any security that
is a direct obligation of, or fully guaranteed 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 (acting as principal) described in clause (b) above;
and
(g) any other investment permitted by each of the Rating
Agencies as set forth in writing delivered to the Indenture Trustee.
"ELIGIBLE LENDER TRUSTEE" means The First National Bank of
Chicago, a national banking association, not in its individual capacity but
solely as Eligible Lender Trustee under the Trust Agreement.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
"ESCROW ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 5.01 of the Sale and Servicing
Agreement.
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17
"EVENT OF DEFAULT" has the meaning specified in
Section 5.01 of the Indenture.
"EXCESS INTEREST" means, for any Distribution Date, the net
amount of Interest Collections on deposit in the Collection Account after taking
into account any withdrawals therefrom pursuant to Sections 5.05(c)(i) through
(c)(iii) of the Sale and Servicing Agreement on such Distribution Date and any
withdrawals therefrom pursuant to Sections 5.05(b)(i) through (b)(iii) of the
Sale and Servicing Agreement on prior Monthly Payment Dates relating to the
current Collection Period.
"EXCESS SERVICING FEE" has the meaning specified in
Schedule C to the Sale and Servicing Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
"EXPECTED INTEREST COLLECTIONS" means, with respect to any
month in a Collection Period, the sum of (i) the amount of interest accrued, net
of amounts required by the Higher Education Act to be paid to the Department or
to be repaid to borrowers, with respect to the Financed Student Loans for such
month (whether or not such interest is actually paid), (ii) all Interest Subsidy
Payments and Special Allowance Payments expected to be received by the Eligible
Lender Trustee for such month (whether or not actually received) with respect to
the Financed Federal Loans and (iii) Investment Earnings for such month.
"EXPENSES" means any and all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and all reasonable costs,
expenses and disbursements (including reasonable legal fees and expenses) of any
kind and nature whatsoever which may at any time be imposed on, incurred by, or
asserted against the Eligible Lender Trustee or any of its officers, directors
or agents in any way relating to or arising out of the Trust Agreement, the
other Basic Documents, the Trust Estate, the administration of the Trust Estate
or the action or inaction of the Eligible Lender Trustee under the Trust
Agreement or the other Basic Documents.
"EXECUTIVE OFFICER" means, with respect to any
corporation, the Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer, President, any Executive
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18
Vice President, any Senior Vice President, any Vice President, the Secretary or
the Treasurer of such corporation; and with respect to any partnership, any
general partner thereof.
"FDIC" means the Federal Deposit Insurance
Corporation.
"FEDERAL CONSOLIDATION LOAN" means a loan made by the Seller
to an eligible borrower that represents the refinancing of federal student loans
of such borrower and his or her spouse in accordance with the applicable terms
and conditions of the Program and the Higher Education Act.
"FEDERAL GUARANTOR" means PHEAA or ASA.
"FEDERAL ORIGINATION FEE" means the origination fee payable to
the Department by the lender with respect to any Financed Federal Loan
(including Federal Consolidation Loans) made on or after October 1, 1993, equal
to 0.50% of the initial principal balance of such loan.
"FINANCED FEDERAL LOANS" means those Financed Student Loans
that are guaranteed as to the payment of principal and interest by PHEAA or ASA
and are reinsured by the Department.
"FINANCED PRIVATE LOANS" means those Financed Student Loans,
and any Additional Student Loans that are Private Consolidation Loans, that are
guaranteed as to the payment of principal and interest by TERI and are not
reinsured by the Department or any other governmental entity.
"FINANCED STUDENT LOAN" means any law school, medical school,
dental school, graduate business school or other graduate school student loan
listed on the Schedule of Financed Student Loans on the Closing Date as set
forth in Schedule A to the Sale and Servicing Agreement and the Indenture (which
Schedule may be in the form of microfiche) or any Additional Student Loan.
"FINANCED STUDENT LOAN FILES" means the documents specified in
Section 3.03 of the Sale and Servicing Agreement.
"FUNDING PERIOD" means the period beginning on the Closing
Date and ending on the first to occur of (a) the date on which an Event of
Default, a Servicer Default or an Administrator Default occurs, (b) the date on
which an
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Insolvency Event occurs with respect to the Seller and (c) the close of business
on the last day of the Collection Period preceding the ____________ Distribution
Date.
"GAL LOAN" means a Graduate Access Loan made by the Seller to
an eligible borrower under the Program.
"GRANT" means mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, and grant a lien
upon and a security interest in and right of set-off against, deposit, set over
and confirm pursuant to the Indenture. A Grant of the Collateral or of any other
agreement or instrument shall include all rights, powers and options (but none
of the obligations) of the Granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal and interest payments in respect of the Collateral and all other
moneys payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring Proceedings in the name of the Granting party or otherwise and generally
to do and receive anything that the Granting party is or may be entitled to do
or receive thereunder or with respect thereto.
"GUARANTEE AGREEMENTS" means (i) in the case of PHEAA, the
National Guaranty Agreement and the Lender Participation Agreement for
Consolidation Loans, in each case dated as of August 26, 1995, between PHEAA and
the Eligible Lender Trustee on behalf of the Issuer, (ii) in the case of ASA,
the Guarantee Agreement dated as of August 26, 1995, between ASA and the
Eligible Lender Trustee on behalf of the Issuer (together with the Rider to the
Guarantee Agreement and the Certificate of Comprehensive Insurance, each dated
the date thereof) and (iii) in the case of TERI, the Guarantee Agreement dated
as of August 26, 1995, among TERI, the Seller and the Eligible Lender Trustee on
behalf of the Issuer.
"GUARANTEE FEE ADVANCE" means a loan made by the Seller to a
borrower of a Financed Private Loan, at the borrower's option, at the time such
borrower commences repayment of such Financed Private Loan to finance the cost
of the fee imposed with respect to such loan at such time.
"GUARANTEE FEE SUBACCOUNT" has the meaning specified
in Section 5.09(a) of the Sale and Servicing Agreement.
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"GUARANTEE PAYMENT" means any payment made by a Guarantor
pursuant to a Guarantee Agreement in respect of a Financed Student Loan.
"GUARANTORS" means PHEAA, ASA and TERI.
"HIGHER EDUCATION ACT" means the Higher Education Act of 1965,
as amended, together with any rules, regulations and interpretations thereunder.
"INDENTURE" means the Indenture dated as of September 1, 1996,
between the Issuer and the Indenture Trustee.
"INDENTURE TRUST ESTATE" means all money, instruments, rights
and other property that are subject or intended to be subject to the lien and
security interest of the Indenture for the benefit of the Noteholders (including
all property and interests Granted to the Indenture Trustee), including all
proceeds thereof.
"INDENTURE TRUSTEE" means ______________________, a
[________________ banking corporation], not in its individual capacity but
solely as Indenture Trustee under the Indenture.
"INDEPENDENT" means, when used with respect to any specified
Person, that the Person (a) is in fact independent of the Issuer, any other
obligor upon the Notes, the Seller and any Affiliate of any of the foregoing
Persons, (b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the Seller or
any Affiliate of any of the foregoing Persons and (c) is not connected with the
Issuer, any such other obligor, the Seller or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
"INDEPENDENT CERTIFICATE" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.01 of the
Indenture, made by an Independent appraiser or other expert appointed by an
Issuer Order and approved by the Indenture Trustee in the exercise of reasonable
care, and such opinion or certificate shall state that the signer has read the
definition of
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"Independent" in the Indenture and that the signer is Independent within the
meaning thereof.
"INITIAL CERTIFICATE BALANCE" means $__________.
"INITIAL FINANCED STUDENT LOANS" has the meaning specified in
Section 2.01 of the Sale and Servicing Agreement.
"INITIAL POOL BALANCE" means the sum of the Pool Balance as of
the Cutoff Date, which is $______________, plus as of each Subsequent Cutoff
Date, the principal balance of each Additional Student Loan sold to the Eligible
Lender Trustee on behalf of the Issuer on each Transfer Date during the Funding
Period.
"INSOLVENCY EVENT" means, with respect to a specified Person,
(a) the filing of a decree or order for relief by a court having jurisdiction in
the premises in respect of such Person or any substantial part of its property
in an involuntary case under any applicable Federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and such decree
or order shall remain unstayed and in effect for a period of 60 consecutive
days; or (b) the commencement by such Person of a voluntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by such Person to the entry of an order for
relief in an involuntary case under any such law, or the consent by such Person
to the appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
"INTEREST COLLECTIONS" shall have the meaning specified in
Section 5.03 of the Sale and Servicing Agreement.
"INTEREST PERIOD" means, with respect to a Distribution Date,
the period from and including the Closing Date or the most recent Distribution
Date on which interest on
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the Notes or the Certificates, as the case may be, has been
distributed to but excluding the current Distribution Date.
"INTEREST SUBSIDY PAYMENTS" means payments, designated as
such, consisting of interest subsidies by the Department in respect of the
Financed Federal Loans to the Eligible Lender Trustee on behalf of the Trust in
accordance with the Higher Education Act.
"INVESTMENT EARNINGS" means, with respect to any Monthly
Payment Date or Distribution Date, the investment earnings (net of losses and
investment expenses) on amounts on deposit in the Trust Accounts to be deposited
into the Collection Account on or prior to such Monthly Payment Date or
Distribution Date pursuant to Section 5.01(b) of the Sale and Servicing
Agreement.
"ISSUER" means KeyCorp Student Loan Trust 1996-A until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained in the Indenture and required by the TIA, each other
obligor on the Notes.
"ISSUER ORDER" and "ISSUER REQUEST" means a written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Indenture Trustee.
"LAI" means Law Access, Inc., a nonstock corporation organized
under the laws of the State of Delaware.
"LAL LOAN" means a Law Access Loan made by the Seller to an
eligible borrower pursuant to the Program.
"LIEN" means a security interest, lien, charge, pledge, equity
or encumbrance of any kind, other than tax liens and any other liens, if any,
which attach to the respective Financed Student Loan by operation of law as a
result of any act or omission by the related Obligor.
"LIQUIDATED STUDENT LOAN" means any defaulted Financed Student
Loan liquidated by the Servicer (which shall not include any Financed Student
Loan on which Guarantee Payments are received) or which the Servicer has, after
using all reasonable efforts to realize upon such Financed Student Loan,
determined to charge off.
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"LIQUIDATION PROCEEDS" means, with respect to any Liquidated
Student Loan, the moneys collected in respect thereof from whatever source,
other than Recoveries, net of the sum of any amounts expended by the Servicer in
connection with such liquidation and any amounts required by law to be remitted
to the borrower on such Liquidated Student Loan.
"LOCK-IN PERIOD" means the period of days preceding any
Distribution Date during which the Note Interest Rate or Certificate Rate, as
applicable, in effect on the first day of such period shall remain in effect
until the end of the Interest Period related to such Distribution Date.
"MAL LOAN" means a Medical Access Loan made by the Seller to
an eligible borrower under the Program.
"MONTHLY SERVICING PAYMENT DATE" means the twenty-seventh day
of each calendar month, or, if such day is not a Business Day, the immediately
following Business Day, commencing on ____________, 1996.
"MOODY'S" means Moody's Investors Service, Inc.
"91-DAY TREASURY BILLS" means direct obligations of the United
States with a maturity of thirteen weeks.
"NOTE" means a Floating Rate Asset Backed Note issued pursuant
to the Indenture, substantially in the form of Exhibit A thereto.
"NOTE DEPOSITORY AGREEMENT" means the agreement dated as of
the Closing Date relating to the Notes, substantially in the form of Exhibit B
to the Indenture, among the Issuer, the Indenture Trustee, the Administrator and
The Depository Trust Company, as the initial Clearing Agency.
"NOTE FINAL MATURITY DATE" means the _________ _____
Distribution Date.
"NOTE INTEREST RATE" means, with respect to any Interest
Period, the interest rate per annum (computed on the basis of the actual number
of days in such Interest Period over a year of 365 days (or 366 in the case of a
leap year)) equal to the lesser of (i) the weighted average T-Bill Rate within
such Interest Period plus ___% and (ii) the Student Loan Rate for such Interest
Period.
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"NOTE OWNER" means, with respect to a Book-Entry Note, the
Person who is the owner of such Book-Entry Note, as reflected on the books of
the Clearing Agency, or on the books of a Person maintaining an account with
such Clearing Agency (directly as a Clearing Agency Participant or as an
indirect participant, in each case in accordance with the rules of such Clearing
Agency).
"NOTE POOL FACTOR" as of the close of business on a
Distribution Date means a seven-digit decimal figure equal to the outstanding
principal balance of the Notes divided by the original outstanding principal
balance of the Notes. The Note Pool Factor will be 1.0000000 as of the Closing
Date; thereafter, the Note Pool Factor will decline to reflect reductions in the
outstanding principal balance of the Notes.
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective
meanings specified in Section 2.04 of the Indenture.
"NOTEHOLDER" means the Person in whose name a Note
is registered in the Note Register.
"NOTEHOLDERS' DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the sum of the Noteholders' Interest Distribution Amount and
the Noteholders' Principal Distribution Amount for such Distribution Date.
"NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, with
respect to any Distribution Date, the excess of (i) the sum of the Noteholders'
Interest Distribution Amount on the preceding Distribution Date and any
Noteholders' Interest Carryover Shortfall on such preceding Distribution Date
over (ii) the amount of interest actually distributed to the Noteholders on such
preceding Distribution Date, plus interest on the amount of such excess interest
due to the Noteholders, to the extent permitted by law, at the weighted average
interest rate borne by the Notes from such preceding Distribution Date to the
current Distribution Date.
"NOTEHOLDERS' INTEREST DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the sum of (i) the amount of interest accrued
at the Note Interest Rate for the related Interest Period on the outstanding
principal balance of the Notes on the immediately preceding Distribution Date
after giving effect to all principal distributions to Noteholders on such date
(or, in the case of the first
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25
Distribution Date, on the Closing Date) and (ii) the Noteholders' Interest
Carryover Shortfall for such Distribution Date; PROVIDED, HOWEVER, that the
Noteholders' Interest Distribution Amount will not include any Noteholders'
Interest Index Carryover.
"NOTEHOLDERS' INTEREST INDEX CARRYOVER" means, with respect to
any Distribution Date as to which the Note Interest Rate for such Distribution
Date is based on the Student Loan Rate, the amount equal to the excess, if any,
of (a) the amount of interest on the Notes that would have accrued in respect of
the related Interest Period had interest been calculated based on the T-Bill
Rate over (b) the amount of interest on the Notes actually accrued in respect of
such Interest Period based on the Student Loan Rate, together with the unpaid
portion of any such excess from prior Monthly Payment Dates (and interest
accrued thereon, to the extent permitted by law, at the applicable rate
calculated based on the T-Bill Rate); PROVIDED, HOWEVER, that on the Note Final
Maturity Date, the Noteholders' Interest Index Carryover will be equal to the
lesser of (i) the Noteholders' Interest Index Carryover on such date determined
as described above and (ii) the amount of funds, if any, required and available
to be distributed to Noteholders on such date pursuant to Sections 5.05(c)(ix),
5.06(d)(B) and 5.06(e) of the Sale and Servicing Agreement.
"NOTEHOLDERS' PERCENTAGE" means a fraction, expressed as a
percentage, the numerator of which is the principal amount of the Notes issued
on the Closing Date and the denominator of which is the sum of the principal
amount of the Notes issued on the Closing Date and the principal balance of the
Certificates issued on the Closing Date.
"NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, as of the
close of any Distribution Date, the excess of (i) the sum of the Noteholders'
Principal Distribution Amount on such Distribution Date and any outstanding
Noteholders' Principal Carryover Shortfall for the preceding Distribution Date
over (ii) the amount of principal actually distributed to the Noteholders on
such Distribution Date.
"NOTEHOLDERS' PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Distribution Date, the Principal Distribution Amount for such
Distribution Date plus the Noteholders' Principal Carryover Shortfall as of the
close of the preceding Distribution Date; PROVIDED, HOWEVER, that the
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Noteholders' Principal Distribution Amount will not exceed the outstanding
principal balance of the Notes. In addition, on the Note Final Maturity Date,
the principal required to be distributed to the Noteholders will include the
amount required to reduce the outstanding principal balance of the Notes to
zero.
"OBLIGOR" on a Financed Student Loan means the borrower or
co-borrowers of such Financed Student Loan and any other Person who owes
payments in respect of such Financed Student Loan, including the Guarantor
thereof and, with respect to any Interest Subsidy Payment or Special Allowance
Payment, if any, thereon, the Department.
"OFFICERS' CERTIFICATE" means (i) in the case of the Issuer, a
certificate signed by any two Authorized Officers of the Issuer, under the
circumstances described in, and otherwise complying with, the applicable
requirements of Section 11.01 of the Indenture, and delivered to the Indenture
Trustee, (ii) in the case of the Seller or the Administrator, a certificate
signed by any two Authorized Officers of the Seller or the Administrator, as
appropriate and (iii) in the case of the Servicer, a certificate signed by any
two Authorized Officers of the Servicer.
"OPINION OF COUNSEL" means (i) with respect to the Issuer, one
or more written opinions of counsel who may, except as otherwise expressly
provided in the Indenture, be employees of or counsel to the Issuer and who
shall be satisfactory to the Indenture Trustee, and which opinion or opinions
shall be addressed to the Indenture Trustee as Indenture Trustee, shall comply
with any applicable requirements of Section 11.01 of the Indenture, and shall be
in form and substance satisfactory to the Indenture Trustee and (ii) with
respect to the Seller, the Administrator or the Servicer, one or more written
opinions of counsel who may be an employee of or counsel to the Seller, the
Administrator or the Servicer, which counsel shall be acceptable to the
Indenture Trustee, the Eligible Lender Trustee or the Rating Agencies, as
applicable.
"OTHER STUDENT LOANS" means the BEL Loans, REL Loans,
Consolidation Loans (including Private Consolidation Guarantee Fees, if any),
Serial Loans and Guarantee Fee Advances made by the Seller to an eligible
borrower who has one or more existing loans under the Program that are Financed
Student Loans and are transferred or to be transferred to the
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Eligible Lender Trustee on behalf of the Issuer pursuant to Section 2.02 of the
Sale and Servicing Agreement, each of which shall be identified on Schedule A to
the related Transfer Agreement.
"OUTSTANDING" means, as of the date of determination, all
Notes theretofore authenticated and delivered under the Indenture except:
(i) Notes theretofore cancelled by the Note
Registrar or delivered to the Note Registrar for
cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Indenture
Trustee or any Paying Agent in trust for the Noteholders thereof
(PROVIDED, HOWEVER, that if such Notes are to be redeemed, notice of
such redemption has been duly given pursuant to the Indenture); and
(iii) Notes in exchange for or in lieu of other Notes which have
been authenticated and delivered pursuant to the Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes
are held by a bona fide purchaser;
PROVIDED that in determining whether the Noteholders of the requisite
Outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any other Basic
Document, Notes owned by the Issuer, any other obligor upon the Notes, the
Seller or any Affiliate of any of the foregoing Persons shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Indenture
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Notes that a
Responsible Officer of the Indenture Trustee either actually knows to be so
owned or has received written notice thereof shall be so disregarded. Notes so
owned that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Indenture Trustee the pledgee's
right so to act with respect to such Notes and that the pledgee is not the
Issuer, any other obligor upon the Notes, the Seller or any Affiliate of any of
the foregoing Persons.
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"OUTSTANDING AMOUNT" means the aggregate principal amount of
all Notes Outstanding at the date of determination.
"OVERCOLLATERALIZATION ADJUSTMENT" means the excess of (a) the
excess of (i) the Overcollateralization Amount over (ii) the Specified
Overcollateralization Amount over (b) the excess of (x) Realized Losses over (y)
Covered Losses.
"OVERCOLLATERALIZATION AMOUNT" means, with respect to any
Distribution Date, the excess of (i) the sum of the Pool Balance and the
Pre-Funded Amount over (ii) the outstanding principal balance of the Notes and
the Certificate Balance as of the preceding Distribution Date (after giving
effect to any distribution of principal on such date).
"PAYING AGENT" means the Indenture Trustee or any other Person
that meets the eligibility standards for the Indenture Trustee specified in
Section 6.11 of the Indenture and is authorized by the Issuer to make the
payments to and distributions from the Collection Account and payments of
principal of and interest and any other amounts owing on the Notes on behalf of
the Issuer.
"PERSON" means any individual, corporation, estate,
partnership, joint venture, association, joint stock company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.
"PHEAA" means the Pennsylvania Higher Education Assistance
Agency, an agency of the Commonwealth of Pennsylvania.
"PHYSICAL PROPERTY" has the meaning assigned to such
term in the definition of "Delivery" above.
"POOL BALANCE" means, as of the close of business on the last
day of any Collection Period, the aggregate principal balance of the Financed
Student Loans as of such day (including accrued interest thereon for the
immediately preceding Collection Period to the extent such interest will be
capitalized upon commencement of repayment and for which a corresponding
Additional Funding will be made on the related Transfer Date but excluding any
Purchased Student Loans and Liquidated Student Loans).
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"PREDECESSOR NOTE" means, with respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition, any
Note authenticated and delivered under Section 2.05 of the Indenture and in lieu
of a mutilated, lost, destroyed or stolen Note shall be deemed to evidence the
same debt as the mutilated, lost, destroyed or stolen Note.
"PRE-FUNDED AMOUNT" means, with respect to any Distribution
Date, the amount on deposit in the Pre-Funding Account.
"PRE-FUNDING ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 5.01 of the Sale and Servicing
Agreement (including, unless otherwise expressly stated, the Guarantee Fee
Subaccount).
"PRINCIPAL DISTRIBUTION ADJUSTMENT" means, with respect to any
Distribution Date, the amount of Available Funds on such Distribution Date to be
used to make additional principal distributions to Noteholders (and, after the
Notes have been paid in full, Certificateholders) to account for (i) the amount
of any insignificant balance remaining outstanding as of such Distribution Date
on a Financed Student Loan after receipt of a final payment from a borrower or
Guarantor, when such insignificant balances are waived in the ordinary course of
business by the Servicer at the direction of the Administrator in accordance
with the Sale and Servicing Agreement, or (ii) the amount of principal
collections erroneously treated as interest collections including by reason of
the failure by a borrower to capitalize interest that had been expected to be
capitalized or the rebate to borrowers of amounts paid by borrowers as required
by applicable law.
"PRINCIPAL DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the sum of the following amounts with respect to the related
Collection Period: (i) that portion of all collections received by the Servicer
on the Financed Student Loans that is allocable to principal (including the
portion of any Guarantee Payments received that is allocable to principal of the
Financed Student Loans); (ii) all Liquidation Proceeds attributable to the
principal amount of Financed Student Loans which became Liquidated Student Loans
during such Collection Period in accordance with the Servicer's customary
servicing procedures, together with all
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Covered Losses on such Financed Student Loans; (iii) to the extent attributable
to principal, the Purchase Amount received with respect to each Financed Student
Loan repurchased by the Seller or purchased by the Servicer under an obligation
which arose during the related Collection Period; (iv) the Principal
Distribution Adjustment for such Distribution Date, if any; and (v) to the
extent attributable to principal, amounts, if any, released from the Escrow
Account (other than Investment Earnings) and deposited into the Collection
Account on any Transfer Date; PROVIDED, HOWEVER, that the Principal Distribution
Amount will exclude all payments and proceeds (including Liquidation Proceeds)
of any Financed Student Loans the Purchase Amount of which has been included in
Available Funds for a prior Collection Period; and PROVIDED FURTHER, that for
each Distribution Date before the December 2005 Distribution Date and, in the
event the Financed Student Loans are not sold pursuant to the auction process
set forth in Section 9.01(c), on any Distribution Date thereafter on which the
Pool Balance is not equal to 10% or less of the Initial Pool Balance, the
Principal Distribution Amount shall be reduced by an amount equal to the
Overcollateralization Adjustment, if any.
"PRIVATE CONSOLIDATION GUARANTEE FEE" means, with respect to
each Private Consolidation Loan, a fee charged to the borrower to discharge the
underlying Financed Private Loans and included in the original principal amount
of such Private Consolidation Loan.
"PRIVATE CONSOLIDATION LOAN" means a loan made by the Seller
to an eligible borrower that represents the refinancing of BEL Loans or LAL
Loans under the 1990-1991 Program or thereafter of such borrower in accordance
with the terms of the Program.
"PROCEEDING" means any suit in equity, action at law
or other judicial or administrative proceeding.
"PROGRAM" means the The Access Group Loan Program, as in
effect from time to time.
"PURCHASE AMOUNT" means, as of the close of business on the
last day of a Collection Period, ___ % of the amount required to prepay in full
the respective Financed Student Loan under the terms thereof including all
accrued interest thereon and any lost Interest Subsidy Payments and Special
Allowance Payments with respect thereto.
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"PURCHASED STUDENT LOAN" means a Financed Student Loan
purchased as of the close of business on the last day of a Collection Period by
the Servicer pursuant to Section 4.06 of the Sale and Servicing Agreement or
repurchased by the Seller pursuant to Section 3.02 of the Sale and Servicing
Agreement.
"RATING AGENCY" means Moody's and Standard & Poor's. If no
such organization or successor is any longer in existence, "Rating Agency" shall
be a nationally recognized statistical rating organization or other comparable
Person designated by the Seller, notice of which designation shall be given to
the Indenture Trustee, the Eligible Lender Trustee and the Servicer.
"RATING AGENCY CONDITION" means, with respect to any action,
that each Rating Agency shall have been given 10 days' prior notice thereof and
that each of the Rating Agencies shall have notified the Seller, the Servicer,
the Eligible Lender Trustee and the Indenture Trustee in writing that such
action will not result in and of itself in a reduction or withdrawal of the then
current rating of the Notes or the Certificates.
"REALIZED LOSSES" means the excess of the aggregate principal
balance of any Liquidated Student Loan plus accrued but unpaid interest thereon
over Liquidation Proceeds to the extent allocable to principal.
"RECORD DATE" means, with respect to a Monthly Payment Date,
Distribution Date or Redemption Date, the close of business on the twenty-sixth
day of the calendar month in which such Monthly Payment Date, Distribution Date
or Redemption Date occurs.
"RECOVERIES" means, with respect to any Liquidated Student
Loan, moneys collected in respect thereof, from whatever source, during any
Collection Period following the Collection Period in which such Financed Student
Loan became a Liquidated Student Loan, net of the sum of any amounts expended by
the Servicer for the account of any Obligor and any amounts required by law to
be remitted to the Obligor.
"REDEMPTION DATE" means (a) in the case of a redemption of
Notes pursuant to Section 10.01(a) of the Indenture, the Distribution Date on
which the Funding Period ends (or the Distribution Date on or immediately
following the
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last day of the Funding Period, if the Funding Period does not end on a
Distribution Date) or (b) in the case of a payment to Noteholders pursuant to
Section 10.01(b) of the Indenture, the Distribution Date specified by the
Administrator or the Issuer pursuant to Section 10.01(b) of the Indenture.
"REDEMPTION PRICE" means (a) in the case of a redemption of
the Notes pursuant to Section 10.01(a) of the Indenture, an amount equal to the
unpaid principal amount of the Notes, plus accrued and unpaid interest thereon
at the applicable Note Interest Rate to but excluding the Redemption Date and
the amount of the Noteholders' Interest Index Carryover with respect thereto, or
(b) in the case of a payment made to Noteholders pursuant to Section 10.01(b) of
the Indenture, the amount to be so paid, but not in excess of the amount
specified in clause (a) above.
"REL LOAN" means a Residency Loan made by the Seller to an
eligible borrower under the Program.
"RESERVE ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 5.01 of the Sale and Servicing
Agreement.
"RESERVE ACCOUNT COVERED AMOUNT" means, with respect to any
Distribution Date, the excess of Realized Losses over the sum of (a) Excess
Interest and (b) the Overcollateralization Amount.
"RESERVE ACCOUNT INITIAL DEPOSIT" means $__________.
"RESPONSIBLE OFFICER" means, with respect to the Indenture
Trustee, any officer within the Corporate Trust Office of the Indenture Trustee,
including any Vice President, Assistant Vice President, Secretary, Assistant
Secretary, or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers,
with direct responsibility for the administration of the Indenture and the other
Basic Documents on behalf of the Indenture Trustee and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"SALE AND SERVICING AGREEMENT" means the Sale and
Servicing Agreement dated as of September 1, 1996, among the
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Issuer, the Seller, the Administrator, the Eligible Lender Trustee and the
Servicer.
"SCHEDULE OF FINANCED STUDENT LOANS" means the listing of the
Financed Student Loans set forth in Schedule A to the Sale and Servicing
Agreement and to the Indenture (which Schedule may be in the form of
microfiche), as amended or supplemented on each Transfer Date during the Funding
Period to reflect the sale to the Eligible Lender Trustee on behalf of the Trust
of the Additional Student Loans.
"SELLER" means Key Bank USA, National Association, a national
banking association.
"SERIAL LOANS" means additional student loans, other than BEL
Loans and Consolidation Loans, which are made under the Program to a borrower
who is also a borrower under at least one Initial Financed Student Loan.
"SERVICER" means PHEAA, in its capacity as servicer
of the Financed Student Loans.
"SERVICER DEFAULT" means an event specified in Section 8.01(a)
of the Sale and Servicing Agreement.
"SERVICER'S REPORT" means any report of the Servicer delivered
pursuant to Section 4.08(a) or (b) of the Sale and Servicing Agreement,
substantially in the form acceptable to the Administrator.
"SERVICING FEE" has the meaning specified in Schedule C to
the Sale and Servicing Agreement.
"SERVICING PAYMENT DATE" has the meaning specified
in Section 5.05(b) of the Sale and Servicing Agreement.
"SLS LOAN" means a Financed Federal Loan designated as such
that is made under the Federal Supplemental Loans for Students Program pursuant
to the Higher Education Act.
"SPECIAL ALLOWANCE PAYMENTS" means payments, designated as
such, consisting of effective interest subsidies by the Department in respect of
the Financed Federal Loans to the Eligible Lender Trustee on behalf of the Trust
in accordance with the Higher Education Act.
<PAGE> 100
34
"SPECIFIED CREDIT ENHANCEMENT AMOUNT" with respect to any
Distribution Date means the greater of (i) __% of the Pool Balance as of the
close of business on the last day of the related Collection Period and (ii) __%
of the Initial Pool Balance.
"SPECIFIED OVERCOLLATERALIZATION AMOUNT" with respect to any
Distribution Date means the excess of the Specified Credit Enhancement Amount
over the Specified Reserve Account Balance.
"SPECIFIED RESERVE ACCOUNT BALANCE" with respect to any
Distribution Date means the greater of: (a) __% of the Pool Balance as of the
close of business on the last day of the related Collection Period and (b) __%
of the Initial Pool Balance; provided, however, that in no event will such
balance exceed the sum of the outstanding principal amount of the Notes and the
outstanding principal balance of the Certificates.
"STAFFORD LOAN" means a Financed Federal Loan designated as
such that is made under the Federal Stafford Loan Program in accordance with the
Higher Education Act.
"STANDARD & POOR'S" means Standard & Poor's Corporation.
"STATE" means any one of the 50 States of the United
States of America or the District of Columbia.
"STUDENT LOAN RATE" means, with respect to any Interest
Period, the interest rate equal to the product of (a) the quotient obtained by
dividing (i) 360 by (ii) the actual number of days elapsed in such Interest
Period and (b) the percentage equivalent of a fraction, the numerator of which
is equal to Expected Interest Collections for the month of the Collection Period
relating to such Interest Period less the Servicing Fees and the Administration
Fee, if the applicable Monthly Payment Date is also a Distribution Date, with
respect to such month plus the excess of Expected Interest Collections for prior
months in such Collection Period over the Servicing Fees, the Noteholders'
Interest Distribution Amount and the Certificateholders' Interest Distribution
Amount for such prior months and (ii) the denominator of which is the sum of (x)
the Pool Balance as of the first day of such Collection Period and (y) the
principal balance on deposit in the Pre-
<PAGE> 101
35
Funding Account as of the first day of such Collection Period (after giving
effect to all deposits thereto and withdrawals therefrom on the preceding
Distribution Date).
"SUBSEQUENT CUTOFF DATE" means the day as of which principal
and interest accruing with respect to an Additional Student Loan are transferred
to the Eligible Lender Trustee on behalf of the Issuer pursuant to Section 2.02
of the Sale and Servicing Agreement.
"SUBSEQUENT POOL STUDENT LOANS" means any law school, medical
school, dental school, graduate business schoold and other graduate school
student loans listed on the Schedule of Subsequent Pool Student Loans on the
Closing Date as set forth in Schedule B to the Sale and Servicing Agreement
(which Schedule may be in the form of microfiche), which student loans the
Seller intends to transfer to the Eligible Lender Trustee on behalf of the
Issuer pursuant to Section 2.02 of the Sale and Servicing Agreement, each of
which shall be identified on Schedule A to the related Transfer Agreement.
"SUCCESSOR ADMINISTRATOR" has the meaning specified
in Section 3.07(e) of the Indenture.
"SUCCESSOR SERVICER" has the meaning specified in
Section 3.07(e) of the Indenture.
"SUPPLEMENTAL SALE AND SERVICING AGREEMENT" means the
Supplemental Sale and Servicing Agreement dated as of October 1, 1995, among the
Seller, the Administrator, the Trust, the Eligible Lender Trustee, the Indenture
Trustee, the Servicer and LAI.
"T-BILL RATE" means, on any day, the weighted average per
annum discount rate (expressed on a bond equivalent basis and applied on a daily
basis) for 91-day Treasury Bills sold at the most recent 91-day Treasury Bill
auction prior to such date as reported by the U.S. Treasury Department. In the
event that the results of the auctions of 91-day Treasury Bills cease to be
published or reported as provided above, or that no such auction is held in a
particular week, then the "T-Bill Rate" in effect as a result of the last such
publication or report shall remain in effect until such time, if any, as the
results of auctions of 91-day Treasury Bills shall again be so published or
reported or such
<PAGE> 102
36
an auction is held, as the case may be. The T-Bill Rate shall
be subject to a Lock-In Period of six Business Days.
"TERI" means The Education Resources Institute,
Inc., a Massachusetts non-profit corporation.
"TRANSFER AGREEMENT" has the meaning specified in
Section 2.02(b) of the Sale and Servicing Agreement.
"TRANSFER DATE" means the fifteenth day (or, if such day is
not a Business Day, the next succeeding Business Day) of any month during the
Funding Period designated by the Seller as a date on which Additional Student
Loans will be conveyed to the Eligible Lender Trustee on behalf of the Trust
pursuant to Section 2.02 of the Sale and Servicing Agreement.
"TREASURY REGULATIONS" means regulations, including proposed
or temporary regulations, promulgated under the Code. References in any document
or instrument to specific provisions of proposed or temporary regulations shall
include analogous provisions of final Treasury Regulations or other successor
Treasury Regulations.
"TRUST" means the Issuer, established pursuant to
the Trust Agreement.
"TRUST ACCOUNT PROPERTY" means the Trust Accounts, all amounts
and investments held from time to time in any Trust Account (whether in the form
of deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), including the Reserve Account Initial Deposit, and all
proceeds of the foregoing.
"TRUST ACCOUNTS" has the meaning specified in
Section 5.01 of the Sale and Servicing Agreement.
"TRUST AGREEMENT" means the Amended and Restated Trust
Agreement dated as of October 1, 1995, between the Depositor and the Eligible
Lender Trustee.
"TRUST CERTIFICATE" means a Certificate.
"TRUST ESTATE" means all right, title and interest of the
Trust (or the Eligible Lender Trustee on behalf of the Trust) in and to the
property and rights assigned to the Trust pursuant to Article II of the Sale and
Servicing Agreement, all funds on deposit from time to time in the Trust
Accounts
<PAGE> 103
37
and all other property of the Trust from time to time, including any rights of
the Eligible Lender Trustee and the Trust pursuant to the Sale and Servicing
Agreement, the Supplemental Sale and Servicing Agreement and the Administration
Agreement.
"TRUST INDENTURE ACT" or "TIA" means the Trust Indenture Act
of 1939 as in force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the
Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended
from time to time.
<PAGE> 104
38
SCHEDULE A TO THE
SALE AND SERVICING AGREEMENT
Schedule of Financed Student Loans
----------------------------------
[To be supplied by Key Bank at Closing.]
<PAGE> 105
SCHEDULE B
TO THE
SALE AND SERVICING AGREEMENT
Location of Financed Student Loan Files
---------------------------------------
Documents relating to the Financed Student Loans (including
original notes) are stored at PHEAA's facility at 1200 North 7th Street,
Harrisburg, Pennsylvania 17102.
<PAGE> 106
SCHEDULE C
TO THE
SALE AND SERVICING AGREEMENT
Servicing Fee Schedules
-----------------------
As used herein, each capitalized term used but not otherwise
defined herein shall have the respective meaning set forth in Appendix A to the
Sale and Servicing Agreement dated as of _______ __, 1996, among Key Bank USA,
National Association, as Seller and Administrator, KeyCorp Student Loan Trust
1996-A, Pennsylvania Higher Education Assistance Agency, as Servicer, and The
First National Bank of Chicago, as Eligible Lender Trustee (the "Sale and
Servicing Agreement"), except that "Remote Time-Sharing Services Program", "Key
Bank Servicing Agreement" and "Key Bank RT-SS Agreement" shall have the meanings
set forth in the Supplemental Sale and Servicing Agreement.
The Servicing Fee payable on each Monthly Servicing Payment
Date in accordance with Sections 4.07 and 5.05(b)(i) and (c)(i) of the Sale and
Servicing Agreement shall be equal to, subject to the limitations set forth in
the following paragraph, the sum of (i) the Monthly Base Servicing Fees, (ii)
the Forbearance Fees, (iii) the Claims Fees, (iv) the Data Transfer Fees, (v)
the Remote Access Fees, (vi) any Miscellaneous Fees and (vii) any Deconversion
Fees (each as defined below) for the calendar month preceding such Monthly
Servicing Payment Date.
Notwithstanding the foregoing, in the event that the fee
payable to the Servicer calculated as set forth in the preceding paragraph
(other than any Deconversion Fees) for any Monthly Payment Date would exceed
________% of the Pool Balance as of the end of the preceding calendar month (the
"Capped Amount"), then the "Servicing Fee" for such Monthly Payment Date shall
instead be equal to the Capped Amount for such date plus any Deconversion Fees
for such preceding calendar month. The remaining amount in excess of such
Servicing Fee, together with any such excess amounts from prior Monthly Payment
Dates that remain unpaid (the "Excess Servicing Fee"), will be payable on each
succeeding Distribution Date solely to the extent of any available funds
therefor pursuant to Section 5.05(c)(viii), 5.06(d) or 5.06(e) of the Sale and
Servicing Agreement.
1. MONTHLY BASE SERVICING FEES. The "Monthly
Base Servicing Fees" for any given Monthly Payment Date shall equal ________% of
the Pool Balance as of the end of the preceding calendar month, subject to
adjustment as provided in paragraph 8 below.
2. FORBEARANCE FEE. The "Forbearance Fee" for any given
Monthly Servicing Payment Date shall equal a one-time fee of $5.00 for each LAL
Loan and BEL Loan that first went into forbearance during the preceding calendar
month and a one-time fee of $2.00 for each LAL Loan and BEL Loan
<PAGE> 107
2
as to which a forbearance period is renewed during the preceding calendar month,
subject to adjustment as provided in paragraph 8 below.
3. CLAIMS FEES. The "Claim Fee" for any given Monthly
Servicing Payment Date shall equal $10.00 for each Financed Student Loan for
which the Servicer filed a claim for payment with a Guarantor during the
preceding calendar month, subject to adjustment as provided in paragraph 8
below.
4. DATA TRANSFER FEE. The "Data Transfer Fee" for any given
Monthly Servicing Payment Date shall equal $75 for the preceding calendar month
for the electronic transfer of information to be provided by the Servicer under
the Sale and Servicing Agreement and the Supplemental Sale and Servicing
Agreement to the Administrator, the Eligible Lender Trustee and the Indenture
Trustee.
5. REMOTE ACCESS FEE. The "Remote Access Fee" for any given
Monthly Servicing Payment Date shall equal $___ for the preceding calendar month
for the Remote Time-Sharing Services Program provided to the Administrator in
accordance with the Supplemental Sale and Servicing Agreement. The Servicer
reserves the right to increase or decrease the Remote Access Fee upon not less
than thirty (30) days prior written notice to the Administrator; PROVIDED,
HOWEVER, that the Remote Access Fee will in no event be increased annually by
more than 20%, and provided further, that the Servicer may pass along any
increases in long distance telephone charges included in such Remote Access Fee.
The Administrator may cancel its participation in the Remote Time-Share Services
Program at any time.
6. MISCELLANEOUS FEES. The Servicer may charge the fees set
forth below, subject to adjustment as provided in paragraph 8 below, based on
actual time expended (plus the actual costs incurred for mail and shipping
charges) for any management information services or additional services, such as
document transferral, special computer reports and projects, which are requested
by the Administrator with respect to the Financed Student Loans that are not
otherwise required to be provided by the Servicer ("Miscellaneous Fees").
<TABLE>
<CAPTION>
Employee/Expense Rate Per Hour
---------------- -------------
<S> <C>
Senior Management $ 60
Portfolio/SLSC Manager $ 40
SLSC Supervisor $ 25
Support Staff $ 20
Computer Programmer $ 75
Computer Analyst $ 75
</TABLE>
<PAGE> 108
3
Computer Processing Time $350 (per wallclock hour)
7. DECONVERSION FEES. In the event of (i) any sale of the
Financed Student Loans on behalf of the Trust to any Person (other than the
Seller, the Administrator, PHEAA or the Servicer and prior to the ______
Distribution Date) in which the purchaser elects to deconvert the Financed
Student Loans and not retain PHEAA as Servicer or (ii) any termination by the
Trust of PHEAA as Servicer of the Financed Student Loans, except for any
termination for cause, as a result of PHEAA failing to maintain its eligibility
as a third-party servicer under the Higher Education Act or as a result of any
Servicer Default, the Trust shall pay to PHEAA the following deconversion fee
(the "Deconversion Fee"), per loan, based on the status of the loan at the time
of deconversion:
<TABLE>
<CAPTION>
Loan Status Per Loan Fees
----------- -------------
<S> <C>
In-School Stafford Loans
In-School Deferred SLS Loans $115.00
LAL and BEL Loans
Any other status or type of loan $62.50
</TABLE>
In the event that the Seller repurchases or otherwise
reacquires any or all of the Financed Student Loans, the only fees payable to
the Servicer in connection with the transfer of any Financed Student Loan to the
Seller shall be the miscellaneous fees set forth in paragraph 6 incurred to
accomplish such transfer; PROVIDED, HOWEVER, that all such fees shall be the
obligation solely of the Seller and shall in no event be the obligation of the
Trust or the Eligible Lender Trustee.
8. ADJUSTMENTS. (a) If a demonstrable and significant increase
occurs in the costs incurred by the Servicer in providing the services to be
provided under this Agreement and the Supplemental Sale and Servicing Agreement,
whether due to changes in applicable governmental regulations, guarantor program
requirements or regulations, United States Postal Service postage rates or some
other identifiable cost increasing event, the parties to the Sale and Servicing
Agreement shall negotiate in good faith a reasonable increase in the Monthly
Base Servicing Fee to reflect the increased costs of the Servicer; PROVIDED,
HOWEVER, that the foregoing shall not be construed to apply to cost increases
that result directly or indirectly from a reduction in the volume or amount of
loans serviced by the Servicer or serviced pursuant to remote time-sharing
services provided by the Servicer.
<PAGE> 109
4
(b) The Forbearance Fees, the Claims Fees and Miscellaneous
Fees set forth above shall be adjusted, effective June 1, 1997, and each June 1
thereafter, by adding to the applicable fee then in effect the product of (i)
the fee then in effect and (ii) the percentage increase in the Consumer Price
Index for Urban Wage Earners and Clerical Workers (CPI/W) for the preceding
twelve-month period, provided that the fees then in effect shall not be
increased by more than eight percent (8%).
(c) The Monthly Base Servicing Fees will be subject to
reduction or rebate in accordance with paragraph 7 of the Supplemental Sale and
Servicing Agreement.
9. CERTAIN WAIVERS. The Servicer agrees to waive the Remote
Access Fee set forth above as long as the Seller is the Administrator and is
paying a remote access fee pursuant to the Key Bank RT-SS Agreement.
<PAGE> 110
SCHEDULE D
TO THE
SALE AND SERVICING AGREEMENT
Servicing Provisions to be Audited
----------------------------------
Sections 3.03, 3.04, 4.01, 4.02, 4.03, 4.06, 4.08, 5.02 and 5.03 of the Sale and
Servicing Agreement.
Administrative Provisions to be Audited
---------------------------------------
Sections 4.04, 4.08, 5.05, 5.06, 5.07 and 5.08 of the Sale and Servicing
Agreement.
Sections 1(a)(B), 1(a)(D), 1(a)(G), 1(a)(J), 1(a)(S) (to the extent of filings
with the Securities and Exchange Commission), 1(a)(T), 1(b)(iii), 2 and 3 of the
Administration Agreement.
<PAGE> 111
EXHIBIT A
TO THE
SALE AND SERVICING AGREEMENT
Form of Noteholders' Statement
pursuant to Section 5.07(b) of Sale
and Servicing Agreement (capitalized
terms used herein are defined in
Appendix A Thereto)
- -------------------------------------
Distribution Date:___________________
(i) Amount of principal being paid or distributed in
respect of the Notes:___________
($_______ per $1,000 original principal amount of
Notes)
(ii) Amount of interest being paid or distributed in
respect of the Notes:___________
($_______ per $1,000 original principal amount of
Notes)
(iii) Amount of Noteholders' Interest Index Carryover
being paid or distributed (if any) and amount
remaining (if any):
(1) Distributed: ___________
($_______ per $1,000 original principal
amount of Notes)
(2) Balance: __________
($_______ per $1,000 original principal
amount of Notes)
(iv) Pool Balance at end of related Collection
Period:________
(v) After giving effect to distributions on this
Distribution Date:
(a) (1) outstanding principal amount of
Notes:____________
(2) Note Pool Factor:____________
(b) (1) Certificate Balance:________________
<PAGE> 112
2
(2) Certificate Pool Factor:____________
(vi) Note Interest Rate:
(a) In general:1/
(1) T-Bill Rate for the period from the previous
Distribution Date to this Distribution Date
was _____%; and
(2) the Student Loan Rate was _____%.
(b) Note Interest Rate:______% (based on [T-Bill Rate]
[Student Loan Rate])
(vii) (a) Amount of Servicing Fee
for related Collection Period:____________ ($_______
per $1,000 original principal amount of Notes)
(b) Amount of Excess Servicing Fee being distributed and
remaining balance (if any):
(1) Distributed: __________ ($_______ per $1,000
original principal amount of Notes)
(2) Balance: ____________ ($_______ per
$1,000 original principal amount of Notes)
(viii) Amount of Administration Fee for related Collection
Period:____________ ($_______ per $1,000 original principal
amount of Notes)
(ix) (a) Aggregate amount of Realized Losses (if any)
for the related Collection
Period:____________
- --------
[1/ This calculation not required unless the excess of the T-Bill Rate over
_________, expressed as a percentage, is greater than 100 basis points as of the
preceding Determination Date.]
<PAGE> 113
3
(b) Balance of Financed Student Loans that are
delinquent in each delinquency period as of
the end of the related Collection
Period:____________
(x) Amount in the Reserve Account:____________
[(xi) Amount in the Pre-Funding Account:_________]2/
[(xii) Amount in the Pre-Funding Account at the end of
the Funding Period to be distributed as a payment
of principal in respect of the
Notes:__________]3/
- --------
2/ To be included for each Distribution Date during the
Funding Period.
3/ To be included for the Distribution Date on or
immediately following the end of the Funding Period.
<PAGE> 114
EXHIBIT B
TO THE
SALE AND SERVICING AGREEMENT
Form of Certificateholders' Statement pursuant to Section 5.07(b) of Sale and
Servicing Agreement (capitalized terms used herein are defined in APPENDIX A
THERETO)
Distribution Date:___________________
(i) Amount of principal being paid or distributed in
respect of the Certificates:___________ ($_______
per $1,000 original
principal amount of the
Certificates)4/
(ii) Amount of interest being paid or distributed in
respect of the Certificates:______________ ($_______
per $1,000
original principal
amount of Certificates)
(iii) Amount of Certificateholders' Interest Index Carryover being
paid or distributed (if any) and amount remaining (if any):
(1) Distributed: ______________ ($_______ per
$1,000 original principal amount of
Certificates)
(2) Balance: ______________ ($_______ per $1,000
original principal amount of
Certificates)
(iv) Pool Balance at end of related Collection
Period:________
- --------
4/ Only after the Notes have been paid in full.
<PAGE> 115
2
(v) After giving effect to distributions on this
Distribution Date:
(a) (1) outstanding principal amount of Class A-
1 Notes:____________
(2) Note Pool Factor:____________
(b) (1) Certificate Balance:________________
(2) Certificate Pool Factor:____________
(vi) Applicable Interest Rate:
(a) In general:5/
(1) T-Bill Rate for the period from the
previous Distribution Date to this
Distribution Date was _____%; and
(2) the Student Loan Rate was _____%.
(b) Certificate Rate:______% (based on [T-Bill
Rate]
[Student Loan Rate])
(vii) (a) Amount of Servicing Fee
for related Collection
Period:____________ ($_______ per $1,000
original principal amount of
Certificates)
(b) Amount of Excess Servicing
Fee being distributed and
remaining balance (if any):
(1) Distributed: ______________ ($_______
per $1,000 original
principal amount of
Certificates)
(2) Balance: ______________ ($_______ per
$1,000
of original principal amount
Certificates)
- --------
5/ To be included for each Distribution Date
during the Funding Period.
<PAGE> 116
3
(viii) Amount of Administration Fee
for related Collection
Period:____________ ($_______ per $1,000
original principal amount of
Certificates)
(ix) (a) Aggregate amount of Realized Losses (if any)
for the related Collection
Period:____________
(b) Balance of Financed Student Loans that are
delinquent in each delinquency period as of
the end of the related Collection
Period:____________
(x) Amount in the Reserve Account:____________
[(xi) Amount in the Pre-Funding Account:_________]6/
- --------
6/ To be included for each Distribution Date during the Funding Period.
<PAGE> 117
EXHIBIT C
TO THE
SALE AND SERVICING AGREEMENT
FORM OF ADMINISTRATOR'S CERTIFICATE
-----------------------------------
[To be provided]
<PAGE> 118
EXHIBIT D
TO THE
SALE AND SERVICING AGREEMENT
TRANSFER AGREEMENT
TRANSFER No. ____ OF
ADDITIONAL STUDENT LOANS dated as of
_________, 199_, among KEYCORP
STUDENT LOAN TRUST 1996-A, a New
York trust (the "Issuer"), KEY BANK
USA, NATIONAL ASSOCIATION, a
national banking association, as
seller (the "Seller"), THE FIRST
NATIONAL BANK OF CHICAGO, a national
banking association, as seller, not
in its individual capacity but
solely as Eligible Lender Trustee of
the Issuer (the "Eligible Lender
Trustee"), and KEY BANK USA,
NATIONAL ASSOCIATION, a national
banking association, as
administrator (the "Administrator").
W I T N E S S E T H:
WHEREAS the Issuer, the Seller, the Eligible Lender Trustee,
the Administrator and the Servicer (as defined in the Appendix A to the Sale and
Servicing Agreement) are parties to the Sale and Servicing Agreement dated as of
September 1, 1996 (as amended or supplemented, the "Sale and Servicing
Agreement");
WHEREAS the Seller, as depositor, and the Eligible Lender
Trustee are parties to the Amended and Restated Trust Agreement dated as of
September 1, 1996 (as amended or supplemented, the "Trust Agreement");
WHEREAS pursuant to the Sale and Servicing Agreement, the
Seller wishes to convey the Additional Student Loans referred to in Section 2
(the "Additional Student Loans") to the Eligible Lender Trustee on behalf of the
Issuer; and
WHEREAS, the Eligible Lender Trustee and the Issuer are
willing to accept such conveyance subject to the terms and conditions hereof.
<PAGE> 119
2
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. DEFINITIONS AND USAGE. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings ascribed to them in
Appendix A to the Sale and Servicing Agreement, which also contains rules of
construction and usage that shall be applicable herein.
In addition, the following terms have the following meanings:
"SUBSEQUENT CUTOFF DATE" means, with respect to each
Additional Student Loan, the date specified as such on Schedule A
hereto.
"TRANSFER DATE" means, with respect to the Additional Student
Loans, ______________, 199_.
2. SCHEDULE OF FINANCED STUDENT LOANS. Attached hereto as
Schedule A is a supplement to Schedule A to the Sale and Servicing Agreement
listing the Additional Student Loans to be conveyed on the Transfer Date to the
Eligible Lender Trustee on behalf of the Issuer pursuant to this Agreement.
3. CONVEYANCE OF ADDITIONAL STUDENT LOANS. In consideration of
the Issuer's delivery to or upon the order of the Seller of $__________, the
Seller does hereby sell, transfer, assign, set over and otherwise convey,
without recourse (except as expressly provided in the Sale and Servicing
Agreement), to the Eligible Lender Trustee on behalf of the Issuer:
(a) all right, title and interest of the Seller in and to each
Additional Student Loan, and all moneys received thereon, on and after
the related Subsequent Cutoff Date; and
(b) the proceeds of any and all of the foregoing.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
hereby represents and warrants to the Issuer as of the date of this Agreement
and as of the Transfer Date that:
(a) ORGANIZATION AND GOOD STANDING. The Seller is duly
organized and validly existing as a national banking association in
good standing under the laws of the United States of America, with the
power and
<PAGE> 120
3
authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently
conducted, and had at all relevant times, and has, the power, authority
and legal right to acquire and own the Additional Student Loans.
(b) POWER AND AUTHORITY. The Seller has the corporate power
and authority to execute and deliver this Agreement and to carry out
its terms; the Seller has full corporate power and corporate authority
to sell and assign the property to be sold and assigned to and
deposited with the Issuer (or with the Eligible Lender Trustee on
behalf of the Issuer) and the Seller has duly authorized such sale and
assignment to the Issuer (or to the Eligible Lender Trustee on behalf
of the Issuer) by all necessary corporate action; and the execution,
delivery and performance of this Agreement have been duly authorized by
the Seller by all necessary corporate action.
(c) BINDING OBLIGATION. This Agreement constitutes a legal,
valid and binding obligation of the Seller enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency,
reorganization and similar laws relating to creditors' rights generally
or the rights of creditors of banks the deposit accounts of which are
insured by the FDIC and subject to general principles of equity.
(d) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof
do not conflict with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of time
or both) a default under, the articles of association or by-laws of the
Seller, or any indenture, agreement or other instrument to which the
Seller is a party or by which it shall be bound; nor result in the
creation or imposition of any Lien upon any of its properties pursuant
to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Basic Documents); nor violate any law or,
to the knowledge of the Seller, any order, rule or regulation
applicable to the Seller of any court or of any Federal or State
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties.
(e) NO PROCEEDINGS. There are no proceedings or investigations
pending against the Seller or, to its best knowledge, threatened
against the Seller, before
<PAGE> 121
4
any court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties:
(i) asserting the invalidity of this Agreement, the Indenture or any of
the other Basic Documents, the Notes or the Certificates, (ii) seeking
to prevent the issuance of the Notes or the Certificates or the
consummation of any of the transactions contemplated by this Agreement,
the Indenture or any of the other Basic Documents, (iii) seeking any
determination or ruling that could reasonably be expected to have a
material and adverse effect on the performance by the Seller of its
obligations under, or the validity or enforceability of, this
Agreement, the Indenture, any of the other Basic Documents, the Notes
or the Certificates or (iv) seeking to affect adversely the Federal or
State income tax attributes of the Issuer, the Notes or the
Certificates.
(f) ALL CONSENTS. All authorizations, consents, orders or
approvals of or registrations or declarations with any court,
regulatory body, administrative agency or other government
instrumentality required to be obtained, effected or given by the
Seller in connection with the execution and delivery by the Seller of
this Agreement and the performance by the Seller of the transactions
contemplated by this Agreement have been duly obtained, effected or
given and are in full force and effect.
(g) PRINCIPAL BALANCE. The aggregate principal balance of the
Additional Student Loans listed on Schedule A attached hereto and
conveyed to the Eligible Lender Trustee on behalf of the Issuer
pursuant to this Agreement as of their respective Subsequent Cutoff
Dates is $___________.
5. CONDITIONS PRECEDENT. The obligation of the Issuer to
acquire the Additional Student Loans hereunder is subject to the satisfaction,
on or prior to the Transfer Date, of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Seller in Section 4 of this
Agreement and in Section 3.01 of the Sale and Servicing Agreement shall
be true and correct as of the date of this Agreement and as of the
Transfer Date.
(b) SALE AND SERVICING AGREEMENT CONDITIONS. Each of the
conditions set forth in Section 2.02(b) of
<PAGE> 122
5
the Sale and Servicing Agreement shall have been satisfied.
(c) DELIVERY OF ASSIGNMENT. The Seller shall have delivered an
Assignment substantially in the form of Annex A hereto.
(d) ADDITIONAL INFORMATION. The Seller shall have delivered to
the Issuer such information as was reasonably requested by the Issuer
to satisfy itself as to (i) the accuracy of the representations and
warranties set forth in Section 4 of this Agreement and in Section 3.01
of the Sale and Servicing Agreement and (ii) the satisfaction of the
conditions set forth in this Section 5.
6. RATIFICATION OF AGREEMENT. As supplemented by this
Agreement, the Sale and Servicing Agreement is in all respects ratified and
confirmed and the Sale and Servicing Agreement as so supplemented by this
Agreement shall be read, taken and construed as one and the same instrument.
7. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which together shall constitute but one and the same instrument.
8. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
<PAGE> 123
6
9. HEADINGS. The section headings hereof have been inserted
for convenience of reference only and shall not be construed to affect the
meaning, construction or effect of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective duly authorized
officers as of the day and the year first above written.
KEYCORP STUDENT LOAN TRUST
1996-A,
by THE FIRST NATIONAL BANK
OF CHICAGO, not in its
individual capacity but
solely as Eligible Lender
Trustee,
by
-----------------------
Name:
Title:
THE FIRST NATIONAL BANK OF
CHICAGO, not in its
individual capacity but
solely as
Eligible Lender Trustee,
by
-----------------------
Name:
Title:
KEY BANK USA, NATIONAL
ASSOCIATION, Seller,
by
-----------------------
Name:
Title:
<PAGE> 124
7
KEY BANK USA, NATIONAL
ASSOCIATION, Administrator,
by
------------------------
Name:
Title:
Acknowledged and accepted as
of the date first above written:
- --------------------,
not in its individual
capacity but solely as
Indenture Trustee,
by
--------------------------
Name:
Title:
<PAGE> 125
SCHEDULE A
TO THE
TRANSFER AGREEMENT NO. ___
[List of Additional Student Loans
and their related Subsequent Cutoff Dates]
<PAGE> 126
ANNEX A
TO THE TRANSFER AGREEMENT
ASSIGNMENT
For value received, in accordance with the Sale and Servicing
Agreement (the "Sale and Servicing Agreement") dated as of ________ __, 1996,
among the undersigned, as seller (the "Seller") and as administrator (the
"Administrator"), KeyCorp Student Loan Trust 1996-A (the "Trust"), The First
National Bank of Chicago, not in its individual capacity but solely as Eligible
Lender Trustee (the "Eligible Lender Trustee"), and Pennsylvania Higher
Education Assistance Agency, as servicer (the "Servicer"), and the Transfer
Agreement No.__ dated as of __ , 199_ , (the "Transfer Agreement") among the
Seller, the Administrator, the Trust and the Eligible Lender Trustee, the
undersigned does hereby sell, assign, transfer and otherwise convey unto the
Eligible Lender Trustee on behalf of the Trust, without recourse (subject to
the obligations set forth in the Sale and Servicing Agreement), all right,
title and interest of the undersigned in and to (i) the Additional Student
Loans (as such term is defined in the Transfer Agreement) and all monies
received thereon, on and after each applicable Subsequent Cutoff Date (as such
term is defined in the Transfer Agreement) and (ii) the proceeds of any and all
of the foregoing (including but not limited to proceeds derived from the
voluntary or involuntary conversion of any of the Additional Student Loans into
cash or other liquidated property, such as proceeds from the applicable
Guarantee Agreement (as such term is defined in the Transfer Agreement)). The
foregoing sale does not constitute and is not intended to result in any
assumption by the Eligible Lender Trustee or the Trust of any obligation of the
Seller to the borrowers of such Additional Student Loans or any other person in
connection with the Additional Student Loans or any agreement or instrument
relating to any of them.
In addition, the undersigned, by execution of this instrument,
hereby endorses the promissory notes evidencing each Additional Student Loan
described in Schedule A to the Transfer Agreement in favor of the Eligible
Lender Trustee on behalf of the Trust, without recourse (subject to the
obligations set forth in the Sale and Servicing Agreement) against the
undersigned. This endorsement may be effected by attaching a facsimile hereof to
each or any of such promissory notes.
This Assignment is made pursuant to and upon the
representations, warranties and agreements on the part of
<PAGE> 127
2
the undersigned contained in the Sale and Servicing Agreement and the Transfer
Agreement and is to be governed by the Sale and Servicing Agreement and the
Transfer Agreement.
Capitalized terms used but not defined herein shall have the
meaning assigned to them in the Transfer Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment
to be duly executed as of __ , 199_.
KEY BANK USA, NATIONAL
ASSOCIATION,
as Seller
by
------------------------
Name:
Title:
<PAGE> 128
EXHIBIT E
TO THE
SALE AND SERVICING AGREEMENT
ASSIGNMENT
For value received, in accordance with the Sale and Servicing
Agreement (the "Sale and Servicing Agreement") dated as of _______ __, 1996,
among the undersigned, as seller (the "Seller") and as administrator (the
"Administrator"), KeyCorp Student Loan Trust 1996-A (the "Trust"), The First
National Bank of Chicago, not in its individual capacity but solely as Eligible
Lender Trustee (the "Eligible Lender Trustee"), and Pennsylvania Higher
Education Assistance Agency, as servicer (the "Servicer"), the undersigned does
hereby sell, assign, transfer and otherwise convey unto the Eligible Lender
Trustee on behalf of the Trust, without recourse (subject to the obligations set
forth in the Sale and Servicing Agreement), all right, title and interest of the
undersigned in and to (i) the Initial Financed Student Loans and all obligations
of the Obligors thereunder, including all monies paid thereunder on or after the
Cutoff Date, (ii) the Assigned Rights, (iii) all funds on deposit from time to
time in the Trust Accounts, including the Reserve Account Initial Deposit and
the Pre-Funded Amount, and in all investments and proceeds thereof (including
all income thereon) and (iv) the proceeds of any and all of the foregoing
(including proceeds derived from the voluntary or involuntary conversion of any
of the Initial Financed Student Loans into cash or other liquidated property,
such as proceeds from the applicable Guarantee Agreement). The foregoing sale
does not constitute and is not intended to result in any assumption by the
Eligible Lender Trustee or the Trust of any obligation of the Seller to the
borrowers of Initial Financed Student Loans or any other person in connection
with the Initial Financed Student Loans or any agreement or instrument relating
to any of them.
In addition, the undersigned, by execution of this instrument,
hereby endorses the promissory notes evidencing each Initial Financed Student
Loan described in Schedule A to the Sale and Servicing Agreement in favor of the
Eligible Lender Trustee on behalf of the Trust, without recourse (subject to the
obligations set forth in the Sale and Servicing Agreement) against the
undersigned. This endorsement may be effected by attaching a facsimile hereof to
each or any of such promissory notes.
This Assignment is made pursuant to and upon the
representations, warranties and agreements on the part of the undersigned
contained in the Sale and Servicing Agreement and is to be governed by the Sale
and Servicing Agreement.
<PAGE> 129
2
Capitalized terms used but not defined herein shall have the
meaning assigned to them in Appendix A to the Sale and Servicing Agreement,
which also contains rules as to usage that shall be applicable herein.
IN WITNESS WHEREOF, the undersigned has caused this Assignment
to be duly executed as of _______ __, 1996.
KEY BANK USA, NATIONAL
ASSOCIATION, as Seller
by
-----------------------
Name:
Title:
<PAGE> 1
Exhibit 10(c)
ADMINISTRATION AGREEMENT dated as of______
________ , 1996, among KEYCORP STUDENT LOAN
TRUST 1996-A, a New York trust (the "Issuer"), KEY
BANK USA, NATIONAL ASSOCIATION, a national banking
association, as administrator (the "Administrator"),
and _______________________________________________
__________________ , a New York banking corporation,
not in its individual capacity but solely as
Indenture Trustee (the "Indenture Trustee").
W I T N E S S E T H
WHEREAS the Issuer is issuing the Floating Rate Asset Backed
Notes (the "Notes") pursuant to the Indenture dated as of September 1, 1996 (the
"Indenture"), between the Issuer and the Indenture Trustee (capitalized terms
used herein and not defined herein shall have the meanings assigned to such
terms in Appendix A to the Indenture, which also contains rules of usage and
construction that shall be applicable herein);
WHEREAS the Issuer has entered into certain agreements in
connection with the issuance of the Notes and the Certificates, including the
Sale and Servicing Agreement, the Supplemental Sale and Servicing Agreement, the
Note Depository Agreement, the Certificate Depository Agreement (the Certificate
Depository Agreement and the Note Depository Agreement being collectively
referred to herein as the "Depository Agreement"), the Guarantee Agreements and
the Indenture (all such agreements being collectively referred to herein as the
"Related Agreements");
WHEREAS, pursuant to the Related Agreements, the Issuer and
the Eligible Lender Trustee are required to perform certain duties in connection
with (a) the Notes and the Collateral therefor pledged pursuant to the Indenture
and (b) the Certificates (the registered holders of the Certificates being
referred to herein as the "Owners");
WHEREAS the Issuer and the Eligible Lender Trustee desire to
have the Administrator perform certain of the duties of the Issuer and the
Eligible Lender Trustee referred to in the preceding clause, and to provide such
additional services consistent with the terms of this Agreement and the Related
Agreements as the Issuer and the Eligible Lender Trustee may from time to time
request;
<PAGE> 2
2
WHEREAS the Administrator has the capacity to provide the
services required hereby and is willing to perform such services for the Issuer
and the Eligible Lender Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
1. DUTIES OF THE ADMINISTRATOR.
----------------------------
(a) DUTIES WITH RESPECT TO THE INDENTURE AND DEPOSITORY
AGREEMENT. The Administrator shall perform all its duties as Administrator and
the duties of the Issuer under the Depository Agreement. In addition, the
Administrator shall consult with the Eligible Lender Trustee as the
Administrator deems appropriate regarding the duties of the Issuer under the
Indenture and the Depository Agreement. The Administrator shall monitor the
performance of the Issuer and shall advise the Eligible Lender Trustee when
action is necessary to comply with the Issuer's duties under the Indenture and
the Depository Agreement. The Administrator shall prepare for execution by the
Issuer or shall cause the preparation by other appropriate Persons of all such
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Issuer to prepare, file or deliver pursuant to the Indenture
and the Depository Agreement. In furtherance of the foregoing, the Administrator
shall take all appropriate action that is the duty of the Issuer to take
pursuant to the Indenture, including such of the foregoing as are required with
respect to the following matters (references are to sections of the Indenture):
(A) the duty to cause the Note Registrar to keep the Note
Register and to give the Indenture Trustee notice of any appointment of
a new Note Registrar and the location, or change in location, of the
Note Register (Section 2.04);
(B) the fixing or causing to be fixed of any specified record
date and the notification of the Indenture Trustee and Noteholders with
respect to special payment dates, if any (Section 2.07(c));
(C) the preparation of or obtaining of the documents and
instruments required for authentication of
<PAGE> 3
3
the Notes and delivery of the same to the Indenture Trustee (Section
2.02);
(D) the preparation, obtaining or filing of the instruments,
opinions and certificates and other documents required for the release
of collateral (Section 2.09);
(E) the duty to cause the Note Registrar to maintain on behalf
of the Issuer an office in the Borough of Manhattan, City of New York,
for registration of transfer or exchange of Notes
(Section 3.02);
(F) the duty to cause newly appointed Paying Agents, if any,
to deliver to the Indenture Trustee the instrument specified in the
Indenture regarding funds held in trust (Section 3.03);
(G) the direction to the Paying Agents to deposit
moneys with the Indenture Trustee (Section 3.03);
(H) the obtaining and preservation of the Issuer's
qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of the Indenture, the Notes, the Collateral and each
other instrument and agreement included in the Indenture Trust Estate
(Section 3.04);
(I) the preparation of all supplements, amendments, financing
statements, continuation statements, instruments of further assurance
and other instruments, in accordance with Section 3.05 of the
Indenture, necessary to protect the Indenture Trust Estate (Section
3.05);
(J) the delivery by the Issuer of the Opinion of Counsel on
the Closing Date and the annual delivery of Opinions of Counsel, in
accordance with Section 3.06 of the Indenture, as to the Indenture
Trust Estate, and the annual delivery of the Officers' Certificate of
the Issuer and certain other statements, in accordance with Section
3.09 of the Indenture, as to compliance with the Indenture (Sections
3.06 and 3.09);
(K) the identification to the Indenture Trustee in an
Officers' Certificate of the Issuer of a Person with whom the Issuer
has contracted to perform its duties under the Indenture (Section
3.07(b));
<PAGE> 4
4
(L) the notification of the Indenture Trustee and the Rating
Agencies of a Servicer Default known to the Administrator pursuant to
the Sale and Servicing Agreement and, if such Servicer Default arises
from the failure of the Servicer to perform any of its duties under the
Sale and Servicing Agreement or the Supplemental Sale and Servicing
Agreement, the taking of all reasonable steps available to enforce the
Issuer's rights under the Basic Documents in respect of such failure
(Section 3.07(d));
(M) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligations under the
Indenture (Section 3.10);
(N) the delivery of notice to the Indenture Trustee of each
Event of Default, any Default under Section 5.01(iii) of the Indenture
and each default by the Servicer, the Administrator or the Seller under
the Sale and Servicing Agreement known to the Administrator (Section
3.18);
(O) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an
Officers' Certificate of the Issuer and the obtaining of the Opinion of
Counsel and the Independent Certificate relating thereto
(Section 4.01);
(P) the compliance with any written directive of the Indenture
Trustee with respect to the sale of the Indenture Trust Estate in a
commercially reasonable manner if an Event of Default shall have
occurred and be continuing (Section 5.04);
(Q) the preparation of any written instruments required to
confirm more fully the authority of any co-trustee or separate trustee
and any written instruments necessary in connection with the
resignation or removal of any co-trustee or separate trustee (Sections
6.08 and 6.10);
(R) the furnishing of the Indenture Trustee with the names and
addresses of Noteholders during any period when the Indenture Trustee
is not the Note Registrar (Section 7.01);
(S) the preparation and, after execution by the Issuer, the
filing with the Commission, any applicable State agencies and the
Indenture Trustee of documents
<PAGE> 5
5
required to be filed on a periodic basis with, and summaries thereof as
may be required by rules and regulations prescribed by, the Commission
and any applicable State agencies and the transmission of such
summaries, as necessary, to the Noteholders (Section 7.03);
(T) the opening of one or more accounts in the Issuer's name,
the preparation of Issuer Orders, Officers' Certificates of the Issuer
and Opinions of Counsel and all other actions necessary with respect to
investment and reinvestment of funds in the Trust Accounts (Sections
8.02 and 8.03);
(U) the preparation of an Issuer Request and Officers'
Certificate of the Issuer and the obtaining of an Opinion of Counsel
and Independent Certificates, if necessary, for the release of the
Indenture Trust Estate (Sections 8.04 and 8.05);
(V) the preparation of Issuer Orders and the obtaining of
Opinions of Counsel with respect to the execution of supplemental
indentures and the mailing to the Noteholders of notices with respect
to such supplemental indentures (Sections 9.01, 9.02 and 9.03);
(W) the preparation of or obtaining of the documents and
instruments required for the execution and authentication of new Notes
conforming to any supplemental indenture and the delivery of the same
to the Eligible Lender Trustee and the Indenture Trustee, respectively
(Section 9.06);
(X) the notification of Noteholders of redemption of the Notes
or the duty to cause the Indenture Trustee to provide such notification
(Section 10.02);
(Y) the preparation of all Officers' Certificates of the
Issuer, Opinions of Counsel and Independent Certificates with respect
to any requests by the Issuer to the Indenture Trustee to take any
action under the Indenture (Section 11.01(a));
(Z) the preparation and delivery of Officers' Certificates of
the Issuer and the obtaining of Independent Certificates, if necessary,
for the release of property from the lien of the Indenture (Section
11.01(b));
<PAGE> 6
6
(AA) the preparation and delivery to Noteholders and the
Indenture Trustee of any agreements with respect to alternate payment
and notice provisions (Section 11.06);
(BB) the recording of the Indenture, if applicable
(Section 11.15); and
(CC) conducting on behalf of the Indenture Trustee any auction
of the Financed Student Loans (Section 4.04).
(b) DUTIES WITH RESPECT TO THE ISSUER. (i) In addition to the
duties of the Administrator set forth above and in the other Related Agreements,
the Administrator shall perform such calculations and shall prepare for
execution by the Issuer or the Eligible Lender Trustee or shall cause the
preparation by other appropriate Persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of the
Issuer or the Eligible Lender Trustee to prepare, file or deliver pursuant to
the Related Agreements, and at the request of the Eligible Lender Trustee
shall take all appropriate action that it is the duty of the Issuer to take
pursuant to the Related Agreements. Subject to Section 5 of this Agreement, and
in accordance with the directions of the Eligible Lender Trustee, the
Administrator shall administer, perform or supervise the performance of such
other activities in connection with the Collateral (including the Related
Agreements) as are not covered by any of the foregoing provisions and as are
expressly requested by the Eligible Lender Trustee and are reasonably within the
capability of the Administrator.
(ii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for promptly
notifying the Eligible Lender Trustee in the event that any withholding tax is
imposed on the Issuer's payments (or allocations of income) to an Owner as
contemplated in Section 5.01(c) of the Trust Agreement. Any such notice shall
specify the amount of any withholding tax required to be withheld by the
Eligible Lender Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the
Related Agreements to the contrary, the Administrator shall be responsible for
performance of the duties of the Eligible Lender Trustee set forth in Section
5.04(a), (b), (c) and (d) of the Trust Agreement with respect to, among other
things, accounting and reports to Owners; PROVIDED,
<PAGE> 7
7
HOWEVER, that the Eligible Lender Trustee shall retain responsibility for the
distribution of the Schedule K-1s necessary to enable each Owner to prepare its
Federal and state income tax returns.
(iv) The Administrator shall perform the duties of the
Administrator specified in Section 10.02 of the Trust Agreement required to be
performed in connection with the resignation or removal of the Eligible Lender
Trustee, and any other duties expressly required to be performed by the
Administrator under the Trust Agreement, the Sale and Servicing Agreement and
the other Related Agreements.
(v) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into transactions
with or otherwise deal with any of its Affiliates; PROVIDED, HOWEVER, that the
terms of any such transactions or dealings shall be in accordance with any
directions received from the Issuer and shall be, in the Administrator's
opinion, no less favorable to the Issuer than would be available from
unaffiliated parties.
(c) NON-MINISTERIAL MATTERS. With respect to matters that in
the reasonable judgment of the Administrator are non-ministerial, the
Administrator shall not take any action unless within a reasonable time before
the taking of such action, the Administrator shall have notified the Eligible
Lender Trustee of the proposed action and the Eligible Lender Trustee shall not
have withheld consent or provided an alternative direction. For the purpose of
the preceding sentence, "non-ministerial matters" shall include:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and
the compromise of any action, claim or lawsuit brought by or against
the Issuer (other than in connection with the collection of the
Financed Student Loans);
(C) the amendment, change or modification of the
Related Agreements;
(D) the appointment of successor Note Registrars, successor
Paying Agents and successor Indenture Trustees pursuant to the
Indenture or the appointment of Successor Administrators or Successor
Servicers, or the consent to the assignment by the Note Registrar,
Paying
<PAGE> 8
8
Agent or Indenture Trustee of its obligations under the
Indenture; and
(E) the removal of the Indenture Trustee.
(d) EXCEPTIONS. Notwithstanding anything to the contrary in
this Agreement, except as expressly provided herein or in the other Basic
Documents, the Administrator shall not be obligated to, and shall not, (1) make
any payments to the Noteholders under the Related Agreements, (2) sell the
Indenture Trust Estate pursuant to Section 5.04 of the Indenture, (3) take any
other action that the Issuer directs the Administrator not to take on its
behalf, (4) in connection with its duties hereunder assume any indemnification
obligation of any other Person or (5) service the Financed Student Loans.
2. RECORDS. The Administrator shall maintain appropriate books
of account and records relating to services performed hereunder, which books of
account and records shall be accessible for inspection by the Issuer at any time
during normal business hours.
3. COMPENSATION. As compensation for the performance of the
Administrator's obligations under this Agreement and as reimbursement for its
expenses related thereto, the Administrator shall be entitled to $3,000 per
quarter payable in arrears on each Distribution Date which shall be solely an
obligation of the Issuer.
4. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER. The
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
5. INDEPENDENCE OF THE ADMINISTRATOR. For all purposes of this
Agreement, the Administrator shall be an independent contractor and shall not be
subject to the supervision of the Issuer or the Eligible Lender Trustee with
respect to the manner in which it accomplishes the performance of its
obligations hereunder. Unless expressly authorized by the Issuer, the
Administrator shall have no authority to act for or represent the Issuer or the
Eligible Lender Trustee in any way and shall not otherwise be deemed an agent of
the Issuer or the Eligible Lender Trustee.
6. NO JOINT VENTURE. Nothing contained in this Agreement (i)
shall constitute the Administrator and either of the Issuer or the Eligible
Lender Trustee as members of any partnership, joint venture, association,
syndicate,
<PAGE> 9
9
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
7. OTHER ACTIVITIES OF ADMINISTRATOR. Nothing herein shall
prevent the Administrator or its Affiliates from engaging in other businesses
or, in its sole discretion, from acting in a similar capacity as an
administrator for any other person or entity even though such person or entity
may engage in business activities similar to those of the Issuer, the Eligible
Lender Trustee or the Indenture Trustee.
8. TERM OF AGREEMENT; RESIGNATION AND REMOVAL OF
ADMINISTRATOR. (a) This Agreement shall continue in force until the dissolution
of the Issuer, upon which event this Agreement shall automatically terminate.
(b) The provisions of Article VI and Article VIII of the Sale
and Servicing Agreement relating to the resignation or removal of the
Administrator and the failure of the Administrator to perform its duties under
this Agreement are hereby incorporated by reference herein.
9. ACTION UPON TERMINATION, RESIGNATION OR REMOVAL. Promptly
upon the effective date of termination of this Agreement pursuant to Section
8(a) or the resignation or removal of the Administrator pursuant to Section 8(b)
and the Sale and Servicing Agreement, the Administrator shall be entitled to be
paid all fees and reimbursable expenses accruing to it to the date of such
termination, resignation or removal. The Administrator shall forthwith upon such
termination pursuant to Section 8(a) deliver to the Issuer all property and
documents of or relating to the Collateral then in the custody of the
Administrator. In the event of the resignation or removal of the Administrator,
the Administrator shall cooperate with the Issuer and take all reasonable steps
requested to assist the Issuer in making an orderly transfer of the duties of
the Administrator.
10. NOTICES. Any notice, report or other communication given
hereunder shall be in writing and addressed as follows:
<PAGE> 10
10
(a) if to the Issuer or the Eligible Lender
Trustee, to
KeyCorp Student Loan Trust 1996-A
c/o The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, Illinois 60670
Attention:
(b) if to the Administrator, to
Key Bank USA, National Association
5000 Tiedman Road
Brooklyn, Ohio 44144
Attention:
(c) if to the Indenture Trustee, to
_______________________________________
_______________________________________
_______________________________________
Attention:_____________________________
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed given
if such notice is mailed by certified mail, postage prepaid, or hand-delivered
to the address of such party as provided above.
11. AMENDMENTS. This Agreement may be amended from time to
time by a written amendment duly executed and delivered by the Issuer, the
Administrator and the Indenture Trustee, with the written consent of the
Eligible Lender Trustee, without the consent of the Noteholders and the
Certificateholders, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or Certificateholders;
provided that such amendment will not, in an Opinion of Counsel obtained on
behalf of the Issuer and satisfactory to the Indenture Trustee and the Eligible
Lender Trustee, materially and adversely affect the interest of any Noteholder
or Certificateholder. This Agreement may also be amended by the Issuer, the
Administrator and the Indenture Trustee with the written consent of the Eligible
Lender Trustee, the Noteholders of at least a majority in the Outstanding Amount
of the Notes and the Certificateholders
<PAGE> 11
11
of at least a majority of the Certificate Balance for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of Noteholders or the
Certificateholders; PROVIDED, HOWEVER, that no such amendment may (i) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments with respect to Financed Student Loans or distributions
that are required to be made for the benefit of the Noteholders or
Certificateholders or (ii) reduce the aforesaid percentage of the Noteholders
and the Certificateholders which are required to consent to any such amendment,
without the consent of all Outstanding Noteholders and Certificateholders.
Notwithstanding the foregoing, the Administrator may not amend this Agreement
without the permission of the Depositor, which permission shall not be
unreasonably withheld. Prior to the execution of any such amendment, the
Administrator shall furnish written notification of the substance of such
amendment to each of the Rating Agencies.
12. SUCCESSORS AND ASSIGNS. Notwithstanding anything to the
contrary contained herein, except as provided in Sections 6.05 and 6.08 of the
Sale and Servicing Agreement, this Agreement may not be assigned by the
Administrator. Subject to the foregoing, this Agreement shall bind any
successors or assigns of the parties hereto.
l3. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
14. HEADINGS. The section headings hereof have been inserted
for convenience of reference only and shall not be construed to affect the
meaning, construction or effect of this Agreement.
15. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which when so executed shall together constitute but one
and the same agreement.
16. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
<PAGE> 12
12
17. NOT APPLICABLE TO KEY BANK USA, NATIONAL ASSOCIATION IN
OTHER CAPACITIES. Nothing in this Agreement shall affect any obligation Key Bank
USA, National Association may have in any other capacity under the Basic
Documents.
18. PROVISIONS OF SALE AND SERVICING AGREEMENT CONTROL. The
provisions of the Sale and Servicing Agreement relating to the Administrator and
to this Agreement shall in all events govern and are hereby incorporated herein
and, to the extent any provision herein shall be inconsistent with any such
provision of the Sale and Servicing Agreement, the Sale and Servicing Agreement
shall govern.
19. LIMITATION OF LIABILITY OF ELIGIBLE LENDER TRUSTEE AND
INDENTURE TRUSTEE. (a) Notwithstanding anything contained herein to the
contrary, this instrument has been countersigned by ___________________________
not in its individual capacity but solely in its capacity as Eligible Lender
Trustee of the Issuer and in no event
shall______________________________________________________________ in its
individual capacity or any Owner of the Issuer have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder, as to all of which recourse shall be had solely to the assets
of the Issuer. For all purposes of this Agreement, in the performance of any
duties or obligations of the Issuer thereunder, the Eligible Lender Trustee
shall be subject to, and entitled to the benefits of, the terms and provisions
of Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary,
this Agreement has been countersigned by Bankers Trust Company not in its
individual capacity but solely as Indenture Trustee and in no event shall
Bankers Trust Company have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
20. THIRD-PARTY BENEFICIARIES. The Eligible Lender Trustee is
a third-party beneficiary to this
<PAGE> 13
13
Agreement and is entitled to the rights and benefits hereunder and may enforce
the provisions hereof as if it were a party hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day and year first above
written.
KEYCORP STUDENT LOAN TRUST
1996-A,
by ________________________
_______________, not in its
individual capacity but
solely as Eligible Lender
Trustee,
by
------------------------
Name:
Title:
________________________, not
in its individual capacity but
solely as Indenture Trustee,
by
----------------------
Name:
Title:
KEY BANK USA, NATIONAL
ASSOCIATION, as Administrator,
by
------------------------
Name:
Title:
