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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) February 3, 1999
Key Bank USA, National Association (as Seller) under a Sale and Servicing
Agreement dated as of January 1, 1999 in connection with the
issuance of KeyCorp Student Loan Trust 1999-A Asset Backed Notes
and Asset Backed Certificates.
Key Bank USA, National Association
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
United States 333-58073 34-1804148
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) ID Number)
</TABLE>
Key Tower, 127 Public Square, Cleveland, Ohio 44114
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number,
including area code: (216) 689-6300
N/A
(Former name or former address, if changed since last report)
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Item 5. Other Event
Due to an error in Edgar Filing on January 29, 1999, Exhibit 5.1 (Opinion
of Forrest F Stanley, Esq. with respect to legality) and Exhibit 23.2 (Consent
of Forrest F. Stanley, Esq) were omitted. Attached for filing as Exhibit 99.2
and Exhibit 99.3 please find the Opinion of Forrest F Stanley, Esq. with respect
to legality and the Consent of Forrest F. Stanley, Esq.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
Exhibit No. Description of Exhibit
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1.1 Note Underwriting Agreement dated February 3,
1999.
1.2 Certificate Underwriting Agreement dated February
3, 1999.
4.1 Indenture between KeyCorp Student Loan Trust
1999-A (the "Trust") and Bankers Trust Company
(the "Indenture Trustee") dated as of January
1, 1999.
4.2 Amended and Restated Trust Agreement between Key
Bank USA, National Association and The First
National Bank of Chicago (the "Eligible Lender
Trustee") dated as of January 1, 1999.
4.3 Sale and Servicing Agreement among Key Bank, USA
National Association, the Trust, Pennsylvania
Higher Education Assistance Agency and EFS
Services, Inc. (the "Servicers") and the Eligible
Lender Trustee dated as of January 1, 1999.
99.1 Administration Agreement among Key Rank USA,
National Association (the "Administrator"), the
Servicers, the Trust and the Indenture Trustee
dated as of January 1, 1999.
99.2 Opinion of Forrest F Stanley, Esq. with respect to
legality
99.3 Consent of Forrest F. Stanley, Esq. (included as
Exhibit 99.2).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KEY BANK USA, NATIONAL ASSOCIATION
By: /s/ CRAIG T. PLATT
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Name: Craig T. Platt
Title: Senior Vice President
Dated: February 17, 1999
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Exhibit Index
Exhibit No. Description of Exhibit
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1.1 Note Underwriting Agreement dated February 3,
1999.
1.2 Certificate Underwriting Agreement dated February
3, 1999.
4.1 Indenture between KeyCorp Student Loan Trust
1999-A (the "Trust") and Bankers Trust Company
(the "Indenture Trustee") dated as of January
1, 1999.
4.2 Amended and Restated Trust Agreement between Key
Bank USA, National Association and The First
National Bank of Chicago (the "Eligible Lender
Trustee") dated as of January 1, 1999.
4.3 Sale and Servicing Agreement among Key Bank, USA
National Association, the Trust, Pennsylvania
Higher Education Assistance Agency and EFS
Services, Inc. (the "Servicers") and the Eligible
Lender Trustee dated as of January 1, 1999.
99.1 Administration Agreement among Key Rank USA,
National Association (the "Administrator"), the
Servicers, the Trust and the Indenture Trustee
dated as of January 1, 1999.
99.2 Opinion of Forrest F Stanley, Esq. with respect to
legality
99.3 Consent of Forrest F. Stanley, Esq. (included as
Exhibit 99.2).
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EXHIBIT 1.1
Execution Copy
KEYCORP STUDENT LOAN TRUST 1999-A
$260,000,000
FLOATING RATE CLASS A-1 ASSET BACKED NOTES
$570,400,000
FLOATING RATE CLASS A-2 ASSET BACKED NOTES
KEY BANK USA, NATIONAL ASSOCIATION
(SELLER)
NOTE UNDERWRITING AGREEMENT
February 3, 1999
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Credit Suisse First Boston Corporation
As Representative of the
several Underwriters
11 Madison Avenue
New York, N.Y. 10010
Dear Sirs:
1. Introductory. Key Bank USA, National Association, a
national banking association (the "Seller"), proposes to cause KeyCorp Student
Loan Trust 1999-A (the "Trust") to issue and sell $260,000,000 principal amount
of its Floating Rate Asset Backed Notes (the "Class A-1 Notes"), and
$570,400,000 principal amount of its Floating Rate Class A-2 Asset Backed Notes
(the "Class A-2 Notes" and together with the Class A-1 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, medical school, dental
school, graduate business school and other graduate school student loans (the
"Financed Student Loans") and certain monies due thereunder on and after January
1, 1999 (the "Cutoff Date"). Such 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" and, in its capacity as a
servicer, "Servicer") and EFS Services, Inc., a wholly-owned subsidiary of EFS,
Inc. of Indiana ("EFS" or a "Servicer"). The Notes will be issued pursuant to
the Indenture to be dated as of January 1, 1999 (as amended and supplemented
from time to time, the "Indenture"), between the Trust and Bankers Trust
Company, a New York banking corporation (the "Indenture Trustee").
Simultaneously with the issuance and sale of the Notes as
contemplated herein, the Trust will issue $34,600,000 principal amount of its
Floating Rate Asset Backed Certificates (the "Certificates"), representing a
fractional undivided ownership interest in the Trust, which will be sold
pursuant to an underwriting agreement dated the date hereof (the "Certificate
Underwriting Agreement") between the Seller and the Representative.
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. 333-58073), including a form
of prospectus, on Form S-3 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
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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 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
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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 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 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 Financed Student Loans to
the Indenture Trustee pursuant to the Indenture will vest in the
Indenture Trustee, for the benefit of the holders of the Notes, a first
priority perfected security interest therein, subject to no prior lien,
mortgage, security interest, pledge, adverse claim, charge or other
encumbrance.
(viii) The Seller is not, and after giving effect to the offering
and sale of the Notes, will not be an "investment company" or an entity
"controlled" by an "investment company",
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as such terms are defined in the United States Investment Company Act
of 1940, as amended (the "Investment Company Act");
(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 third paragraph and the second to
last paragraph on the cover 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 99.78% of the
principal amount of the Class A-1 Notes and at a purchase price of 99.675% of
the principal amount of the Class A-2 Notes, the respective principal amounts of
each class of Notes set forth opposite the names of the Underwriters in Schedule
I hereto. In addition, the Seller agrees to cause the Underwriters to be paid an
aggregate structuring fee in connection with the structuring of the Notes and
the Certificates of $864,587.
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 LLP, 180 Maiden
Lane, New York, New York 10038, on February 9, 1999, 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 initially represented by one or more Notes of
each class 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).
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(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 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 the holders of the Notes 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 York, Hawaii and Washington D.C.
and will continue such qualifications in effect so long as required for the
distribution.
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(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 the holders of the
Notes 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 each Servicer to mark the computer records of such
Servicer relating to the Financed Student Loans to show the absolute ownership
by the Eligible Lender Trustee on behalf of the Trust of the Financed Student
Loans, and from and after the Closing Date the Seller shall not and shall
require that any Servicer shall not 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 at the time of issuance of the Notes 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 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
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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 Thompson Hine & Flory LLP 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 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 LLP on behalf of the Seller and
(ii) KPMG Peat Marwick LLP with respect to certain agreed-upon procedures with
respect to the Programs, 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.
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(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, a Servicer or KeyCorp which, in the
judgment of the Representative, materially impairs the investment quality of the
Notes or makes it impractical or 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 hostilities involving the United States or the declaration by the
United States of a national emergency or war, if the effect of any such event
specified in this clause (vi) in the judgment of the Representative makes it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Notes on the terms and in the manner contemplated in the Prospectus.
(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
Thompson Hine & Flory LLP, 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
Kirkpatrick & Lockhart LLP, 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 "Income Tax Consequences--Pennsylvania Income and
Franchise Tax Consequences with Respect to the Notes" accurately describe the
material Pennsylvania tax consequences to holders of the Notes.
(h) The Representative shall have received an opinion
addressed to the several Underwriters of Thompson Hine & Flory LLP, 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 "Income Tax Consequences--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"
to the extent that they constitute statements of matters of law or legal
conclusions with respect thereto, have been prepared or
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reviewed by such counsel and accurately describe the material consequences to
holders of the Notes under ERISA. Thompson Hine & Flory LLP, 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 LLP, 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 Representative 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
(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
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<PAGE> 11
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 it is servicing, 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
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
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<PAGE> 12
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
PHEAA 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 EFS, dated the Closing Date and satisfactory in form and substance to
the Representative and its counsel, to the effect that:
(i) EFS has been duly organized and is validly existing as an
Indiana corporation 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 and
the Supplemental Sale and Servicing Agreement, and had at all relevant
times, and now has, the power, authority and legal right to service the
Financed Student Loans it is servicing.
(ii) Each of the Sale and Servicing Agreement and the
Supplemental Sale and Servicing Agreement has been duly authorized,
executed and delivered by EFS and is the legal, valid and binding
obligation of EFS enforceable against EFS 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.
(iii) Neither the execution and delivery by EFS of the Sale
and Servicing Agreement or the Supplemental Sale and Servicing
Agreement, nor the consummation by EFS of the transactions contemplated
therein nor the fulfillment of the terms thereof by EFS 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 EFS or of any indenture or other agreement
or instrument to which EFS is a party or by which EFS is bound, or
result in a violation of or contravene the terms of any statute, order
or regulation applicable to EFS of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
EFS.
(iv) There are no actions, proceedings or investigations
pending or, to the best of such counsel's knowledge after due inquiry,
threatened against EFS before or by any governmental authority that
might materially and adversely affect the performance by EFS
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<PAGE> 13
of its obligations under, or the validity or enforceability of, the
Sale and Servicing Agreement or the Supplemental Sale and Servicing
Agreement.
(v) Nothing has come to such counsel's attention that would
lead such counsel to believe that the representations and warranties of
EFS contained in the Sale and Servicing Agreement and the Supplemental
Sale and Servicing Agreement are other than as stated therein.
(m) The Representative shall have received an opinion of
counsel to the Massachusetts Higher Education Assistance Corporation, now doing
business as American Student Assistance, 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.
(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
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<PAGE> 14
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.
(n) The Representative shall have received an opinion of
counsel to the Nebraska Student Loan Program ("NSLP"), dated the Closing Date
and satisfactory in form and substance to the Representative and its counsel, to
the effect that:
(i) NSLP has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Nebraska
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 NSLP'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) NSLP 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 NSLP'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 NSLP's obligations under such Guarantee Agreement) to which
NSLP is a party has been duly authorized, executed and delivered by
NSLP and is the legal, valid and binding obligation of NSLP enforceable
against NSLP 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
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<PAGE> 15
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 NSLP of the
Guarantee Agreement to which it is a party, nor the consummation by
NSLP of the transactions contemplated therein nor the fulfillment of
the terms thereof by NSLP 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 NSLP or
of any indenture or other agreement or instrument to which NSLP is a
party or by which NSLP is bound, or result in a violation of or
contravene the terms of any statute, order or regulation applicable to
NSLP of any court, regulatory body, administrative agency or
governmental body having jurisdiction over NSLP.
(v) There are no actions, proceedings or investigations
pending or, to the best of such counsel's knowledge after due inquiry,
threatened against NSLP before or by any governmental authority that
might materially and adversely affect the performance by NSLP 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 NSLP's obligations
under such Guarantee Agreement) to which it is a party.
(o) The Representative shall have received an opinion of
counsel to the Educational Credit Management Corporation ("ECMC"), dated the
Closing Date and satisfactory in form and substance to the Representative and
its counsel, to the effect that:
(i) ECMC has been duly incorporated and is validly existing as
a non-profit corporation in good standing under the laws of the State
of Minnesota 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 ECMC'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) ECMC 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 ECMC's obligation under its Guarantee Agreement
to guarantee the Financed Federal Loans covered thereby unenforceable
by or on behalf of the Trust.
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<PAGE> 16
(iii) The Guarantee Agreement (and the agreements with the
Department under Section 428 of the Higher Education Act to the extent
relevant to ECMC's obligations under such Guarantee Agreement) to which
ECMC is a party has been duly authorized, executed and delivered by
ECMC and is the legal, valid and binding obligation of ECMC enforceable
against ECMC 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 ECMC of the
Guarantee Agreement to which it is a party, nor the consummation by
ECMC of the transactions contemplated therein nor the fulfillment of
the terms thereof by ECMC 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 ECMC or
of any indenture or other agreement or instrument to which ECMC is a
party or by which ECMC is bound, or result in a violation of or
contravene the terms of any statute, order or regulation applicable to
ECMC of any court, regulatory body, administrative agency or
governmental body having jurisdiction over ECMC.
(v) There are no actions, proceedings or investigations
pending or, to the best of such counsel's knowledge after due inquiry,
threatened against ECMC before or by any governmental authority that
might materially and adversely affect the performance by ECMC 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 ECMC's obligations
under such Guarantee Agreement) to which it is a party.
(p) 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.
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<PAGE> 17
(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.
(q) The Representative shall have received an opinion of counsel to
HEMAR Insurance Company of America, an indirect subsidiary of SLM Holding
Corporation ("HICA"), dated the Closing Date and satisfactory in form and
substance to the Representative and its counsel, to the effect that:
(i) HICA has been duly incorporated and is validly existing as
a for profit insurance corporation in good standing under the laws of
the state of South Dakota 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 Surety Bonds and the Endorsement described in the preliminary
prospectus dated January 29, 1999 and the Prospectus dated February 3,
1999 and had at all relevant times, and now has, the power, authority
and legal right to insure the Financed Private Loans covered by such
Surety Bonds and the Endorsement thereto. The Financed Private Loans
are subject to the terms and conditions of the Surety Bonds and the
Endorsement under which they have been insured.
(ii) HICA 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
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<PAGE> 18
qualify or to obtain such license or approval would render HICA's
obligation under the Surety Bonds and the Endorsement thereto to insure
the Financed Private Loans unenforceable by or on behalf of the Trust.
(iii) The Surety Bonds and the Endorsement thereto to which
HICA is a party have been duly authorized, executed and delivered by
HICA and are the legal, valid and binding obligations of HICA
enforceable against HICA 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 HICA of the Surety
Bonds and the Endorsement thereto to which it is a party, nor the
consummation by HICA of the transactions contemplated therein nor the
fulfillment of the terms thereof by HICA 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
HICA or of any indenture or other agreement or instrument to which HICA
is a party or by which HICA is bound, or result in a violation of or
contravene the terms of any statute, order or regulation applicable to
HICA of any court, regulatory body, administrative agency or
governmental body having jurisdiction over HICA.
(v) There are no actions, proceedings or investigations
pending or, to the best of such counsel's knowledge after due inquiry,
threatened against HICA before or by any governmental authority that
might materially and adversely affect the performance by HICA of its
obligations under, or the validity or enforceability of, the Surety
Bonds and the Endorsement thereto to which it is a party.
(r) The Representative shall have received an opinion of
Seward & Kissel, 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.
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<PAGE> 19
(iv) The Indenture, the Sale and Servicing Agreement, the
Supplemental Sale and Servicing 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 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.
(s) 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:
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<PAGE> 20
(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.
(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.
(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
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<PAGE> 21
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 or 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.
(t) 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 Servicers 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 Servicers, 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 Servicers, 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 September 30, 1998, 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 Servicers, as applicable, has
occurred.
(u) 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.
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<PAGE> 22
(v) Each class of Notes shall be rated at least at least "Aaa"
by Moody's Investors Service, Inc., and "AAA" by Fitch IBCA, Inc. and none of
the foregoing shall have placed either class of Notes under surveillance or
review with possible negative implications.
(w) 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.
(x) On the Closing Date, $34,600,000 principal amount of the
Asset Backed Certificates shall have been issued and sold.
(y) TERI shall have furnished to the Representative a
certificate of TERI, signed by the President or any Executive Vice President,
dated the Closing Date, to the effect that the signer of such certificate has
carefully examined the Prospectus (excluding any documents incorporated by
reference therein) and this Agreement and that, to the best of his knowledge any
information with respect to TERI in the Prospectus, as of its date, did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(z) PHEAA shall have furnished to the Representative a
certificate of PHEAA, signed by the President or any Senior Vice President,
dated the Closing Date, to the effect that the signer of such certificate has
carefully examined the Prospectus (excluding any documents incorporated by
reference therein) and this Agreement and that, to the best of his knowledge any
information with respect to PHEAA in the Prospectus, as of its date, did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(aa) ASA shall have furnished to the Representative a
certificate of ASA, signed by the President or any Senior Vice President, dated
the Closing Date, to the effect that the signer of such certificate has
carefully examined the Prospectus (excluding any documents incorporated by
reference therein) and this Agreement and that, to the best of his knowledge any
information with respect to ASA in the Prospectus, as of its date, did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(bb) EFS shall have furnished to the Representative a
certificate of EFS, signed by the President or any Executive Vice President,
dated the Closing Date, to the effect that the signer of such certificate has
carefully examined the Prospectus (excluding any documents incorporated by
reference therein) and this Agreement and that, to the best of his knowledge any
information with respect to EFS in the Prospectus, as of its date, did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
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<PAGE> 23
(cc) NSLP shall have furnished to the Representative a
certificate of NSLP, signed by the President or any Senior Vice President, dated
the Closing Date, to the effect that the signer of such certificate has
carefully examined the Prospectus (excluding any documents incorporated by
reference therein) and this Agreement and that, to the best of his knowledge any
information with respect to NSLP in the Prospectus, as of its date, did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(dd) ECMC shall have furnished to the Representative a
certificate of ECMC, signed by the President or any Senior Vice President, dated
the Closing Date, to the effect that the signer of such certificate has
carefully examined the Prospectus (excluding any documents incorporated by
reference therein) and this Agreement and that, to the best of his knowledge any
information with respect to ECMC in the Prospectus, as of its date, did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(ee) HICA shall have furnished to the Representative a
certificate of HICA, signed by the President or any Senior Vice President, dated
the Closing Date, to the effect that the signer of such certificate has
carefully examined the Prospectus (excluding any documents incorporated by
reference therein) and this Agreement and that, to the best of his knowledge any
information with respect to HICA in the Prospectus, as of its date, did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
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
(x) the Registration Statement, 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 (y) 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 necessary in order to make the statements
therein, in light of the circumstances under which that were made, 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
-23-
<PAGE> 24
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 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
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
-24-
<PAGE> 25
potential parties to such claim or action) unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 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 Company and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities 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;
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<PAGE> 26
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 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 pursuant to Section
9), 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.Failure to Purchase the Notes. If any Underwriter or
Underwriters default in their obligations to purchase its portion of the Notes
hereunder and the aggregate principal amount of the Notes that such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of
the total principal amount of the Notes, the Representative may make
arrangements satisfactory to the Seller for the purchase of such Notes by other
persons, including any of the Underwriters, but if no such arrangements are made
by the Closing Date, the non-defaulting Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the Notes that such defaulting Underwriters agreed but failed to purchase. If
any Underwriter or Underwriters so default and the aggregate principal amount of
the Notes with respect to such default or defaults exceeds 10% of the total
principal amount of the Notes and arrangements satisfactory to the
Representative and the Seller for the purchase of such Notes by other persons
are not made within 36 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter or the Seller,
except as provided in Section 7. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter or Underwriters
from liability for its default.
10. 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 11 Madison Avenue, New York, NY 10010,
Attention: Joseph Fashano; if sent to the Seller, will be mailed, delivered or
telegraphed and confirmed to it at Key Bank USA, National Association, 800
Superior Avenue, Cleveland, 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.
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<PAGE> 27
11. 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.
12. 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.
13. 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.
14. Applicable Law. This Agreement will be governed by, and
construed in accordance with, the laws of the State of New York.
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<PAGE> 28
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.
CREDIT SUISSE FIRST BOSTON CORPORATION
By:
----------------------------------------
Name:
Title:
Acting on behalf of itself and
as Representative of the
several Underwriters.
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<PAGE> 29
SCHEDULE I
<TABLE>
<CAPTION>
Class A-1 Class A-2
--------- ---------
<S> <C> <C>
Credit Suisse First Boston Corporation.......... $130,000,000 $285,200,000
McDonald Investments Inc., A KeyCorp Company.... $130,000,000 $285,200,000
Total........................................... $260,000,000 $570,400,000
</TABLE>
<PAGE> 30
APPENDIX A
[See Appendix A to Sale and Servicing Agreement]
<PAGE> 31
EXHIBIT A
[Key Bank opinion]
<PAGE> 32
EXHIBIT B
[Thompson Hine & Flory LLP opinions]
<PAGE> 1
EXHIBIT 1.2
Execution Copy
KEYCORP STUDENT LOAN TRUST 1999-A
$34,600,000
FLOATING RATE ASSET BACKED CERTIFICATES
KEY BANK USA, NATIONAL ASSOCIATION
(SELLER)
CERTIFICATE UNDERWRITING AGREEMENT
February 3, 1999
<PAGE> 2
Credit Suisse First Boston Corporation
As Representative of the
several Underwriters
11 Madison Avenue
New York, N.Y. 10010
Dear Sirs:
1. Introductory. Key Bank USA, National Association, a
national banking association (the "Seller"), proposes to cause KeyCorp Student
Loan Trust 1999-A (the "Trust") to issue and sell $34,600,000 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, medical school, dental school,
graduate business school and other graduate school student loans (the "Financed
Student Loans") and certain monies due thereunder on and after January 1, 1999
(the "Cutoff Date"). Such 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" and, in such capacity as a servicer,
"Servicer") and EFS Services, Inc., a wholly owned subsidiary of EFS, Inc. of
Indiana ("EFS" and, in such capacity as a servicer, a "Servicer"). The
Certificates will be issued pursuant to the Amended and Restated Trust Agreement
to be dated as of January 1, 1999 (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 $260,000,000 principal amount of
its Floating Rate Class A-1 Asset Backed Notes (the "Class A-1 Notes") and
$570,400,000 principal amount of its Floating Rate Class A-2 Asset Backed Notes
(the "Class A-2 Notes" and, with the Class A-1 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 Representative.
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. 333-58073), including a form
of prospectus, on Form S-3 relating to the Certificates, 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
-2-
<PAGE> 3
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."
(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
-3-
<PAGE> 4
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 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 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 Financed Student Loans to
the Indenture Trustee pursuant to the Indenture will vest in the
Indenture Trustee, for the benefit of the holders of the Notes, a first
priority perfected security interest therein, subject to no prior lien,
mortgage, security interest, pledge, adverse claim, charge or other
encumbrance.
-4-
<PAGE> 5
(viii) The Seller is not, and after giving effect to the
offering and sale of the Certificates, will not be an "investment
company" or an entity "controlled" by an "investment company," as such
terms are defined in the United States Investment Company Act of 1940,
as amended (the "Investment Company Act");
(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 third paragraph and the second to
last paragraph of the cover 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 99.515% of the
principal amount of the Certificates the respective principal amounts of
Certificates set forth opposite the names of the Underwriters in Schedule I
hereto. In addition, the Seller agrees to cause the Underwriters to be paid an
aggregate structuring fee in connection with the structuring of the Notes and
the Certificates of $864,567.
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 LLP, 180 Maiden
Lane, New York, New York 10038, on February 9, 1999, 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 Certificates
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 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.
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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 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 the holders of the Certificates 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.
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<PAGE> 7
(f) The Seller will arrange for the qualification of the
Certificates for sale under the laws of the States of New York, Hawaii and
Washington, D.C. 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.
(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 the holders
of the Certificates 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 each Servicer to mark the computer records of such
Servicer relating to the Financed Student Loans to show the absolute ownership
by the Eligible Lender Trustee on behalf of the Trust of the Financed Student
Loans, and from and after the Closing Date neither the Seller shall not and
shall require that any Servicer shall not 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 at the time of the issuance of the Certificates
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.
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<PAGE> 8
(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."
(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 Thompson Hine & Flory LLP 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
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 LLP on behalf of the Seller and
(ii) KPMG Peat Marwick LLP with
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<PAGE> 9
respect to certain agreed-upon procedures with respect to the Programs, 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, a 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 hostilities involving the United States or
the declaration by the United States of a national emergency or war, if the
effect of any such event specified in this clause (vi) in the judgment of the
Representative makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Certificates on the terms and in the manner
contemplated in the Prospectus.
(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
Thompson Hine & Flory LLP, 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
Kirkpatrick & Lockhart LLP, 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 "Tax Consequences--Pennsylvania 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 Thompson Hine & Flory LLP, in its
capacity as Federal tax and ERISA counsel
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<PAGE> 10
for the Trust, to the effect that the statements in the Prospectus under the
headings "Summary of Terms--Tax Considerations" and "Income Tax
Consequences--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" 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. Thompson Hine & Flory LLP, 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 LLP, 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 Representative 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
(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.
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<PAGE> 11
(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 it is servicing,
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
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
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<PAGE> 12
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
PHEAA 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
EFS, dated the Closing Date and satisfactory in form and substance to the
Representative and its counsel, to the effect that:
(i) EFS has been duly organized and is validly existing as an
Indiana corporation 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 and
the Supplemental Sale and Servicing Agreement, and had at all relevant
times, and now has, the power, authority and legal right to service the
Financed Student Loans it is servicing.
(ii) Each of the Sale and Servicing Agreement and the
Supplemental Sale and Servicing Agreement has been duly authorized,
executed and delivered by EFS and is the legal, valid and binding
obligation of EFS enforceable against EFS 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.
(iii) Neither the execution and delivery by EFS of the Sale
and Servicing Agreement or the Supplemental Sale and Servicing
Agreement, nor the consummation by EFS of the transactions contemplated
therein nor the fulfillment of the terms thereof by EFS 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 EFS or of any indenture or other agreement
or instrument to which EFS is a party or by which EFS is bound, or
result in a violation of or contravene the terms of any statute, order
or regulation
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<PAGE> 13
applicable to EFS of any court, regulatory body, administrative agency
or governmental body having jurisdiction over EFS.
(iv) There are no actions, proceedings or investigations
pending or, to the best of such counsel's knowledge after due inquiry,
threatened against EFS before or by any governmental authority that
might materially and adversely affect the performance by EFS of its
obligations under, or the validity or enforceability of, the Sale and
Servicing Agreement or the Supplemental Sale and Servicing Agreement.
(v) Nothing has come to such counsel's attention that would
lead such counsel to believe that the representations and warranties of
EFS contained in the Sale and Servicing Agreement and the Supplemental
Sale and Servicing Agreement are other than as stated therein.
(m) The Representative shall have received an opinion of
counsel to the Massachusetts Higher Education Assistance Corporation, now doing
business as American Student Assistance, 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.
(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
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<PAGE> 14
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 Higher Education Act to the extent relevant to ASA's obligations
under such Guarantee Agreement) to which it is a party.
(n) The Representative shall have received an opinion of
counsel to the Nebraska Student Loan Program ("NSLP"), dated the Closing Date
and satisfactory in form and substance to the Representative and its counsel, to
the effect that:
(i) NSLP has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Nebraska
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 NSLP'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) NSLP 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 NSLP'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 NSLP's obligations under such Guarantee Agreement) to which
NSLP is a party has been duly authorized, executed
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<PAGE> 15
and delivered by NSLP and is the legal, valid and binding obligation of
NSLP enforceable against NSLP 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 NSLP of the
Guarantee Agreement to which it is a party, nor the consummation by
NSLP of the transactions contemplated therein nor the fulfillment of
the terms thereof by NSLP 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 NSLP or
of any indenture or other agreement or instrument to which NSLP is a
party or by which NSLP is bound, or result in a violation of or
contravene the terms of any statute, order or regulation applicable to
NSLP of any court, regulatory body, administrative agency or
governmental body having jurisdiction over NSLP.
(v) There are no actions, proceedings or investigations
pending or, to the best of such counsel's knowledge after due inquiry,
threatened against NSLP before or by any governmental authority that
might materially and adversely affect the performance by NSLP 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 NSLP's obligations
under such Guarantee Agreement) to which it is a party.
(o) The Representative shall have received an opinion of
counsel to the Educational Credit Management Corporation ("ECMC"), dated the
Closing Date and satisfactory in form and substance to the Representative and
its counsel, to the effect that:
(i) ECMC has been duly incorporated and is validly existing as
a non-profit corporation in good standing under the laws of the State
of Minnesota 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 ECMC'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) ECMC 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 ECMC's obligation under its Guarantee
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<PAGE> 16
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 ECMC's obligations under such Guarantee Agreement) to which
ECMC is a party has been duly authorized, executed and delivered by
ECMC and is the legal, valid and binding obligation of ECMC enforceable
against ECMC 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 ECMC of the
Guarantee Agreement to which it is a party, nor the consummation by
ECMC of the transactions contemplated therein nor the fulfillment of
the terms thereof by ECMC 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 ECMC or
of any indenture or other agreement or instrument to which ECMC is a
party or by which ECMC is bound, or result in a violation of or
contravene the terms of any statute, order or regulation applicable to
ECMC of any court, regulatory body, administrative agency or
governmental body having jurisdiction over ECMC.
(v) There are no actions, proceedings or investigations
pending or, to the best of such counsel's knowledge after due inquiry,
threatened against ECMC before or by any governmental authority that
might materially and adversely affect the performance by ECMC 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 ECMC's obligations
under such Guarantee Agreement) to which it is a party.
(p) 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
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<PAGE> 17
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 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.
(q) The Representative shall have received an opinion of,
counsel to HEMAR Insurance Company of America, an indirect subsidiary of SLM
Holding Corporation ("HICA"), dated the Closing Date and satisfactory in form
and substance to the Representative and its counsel, to the effect that:
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<PAGE> 18
(i) HICA has been duly incorporated and is validly existing as
a for profit insurance corporation in good standing under the laws of
the state of South Dakota 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 Surety Bonds and the Endorsement described in the preliminary
prospectus dated January 29, 1999 and the Prospectus dated February 3,
1999 and had at all relevant times, and now has, the power, authority
and legal right to insure the Financed Private Loans covered by such
Surety Bonds and the Endorsement thereto. The Financed Private Loans
are subject to the terms and conditions of the Surety Bonds and the
Endorsement under which they have been insured.
(ii) HICA 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 HICA's obligation under the Surety Bonds and the
Endorsement thereto to insure the Financed Private Loans unenforceable
by or on behalf of the Trust.
(iii) The Surety Bonds and the Endorsement thereto to which
HICA is a party have been duly authorized, executed and delivered by
HICA and are the legal, valid and binding obligations of HICA
enforceable against HICA 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 HICA of the Surety
Bonds and the Endorsement thereto to which it is a party, nor the
consummation by HICA of the transactions contemplated therein nor the
fulfillment of the terms thereof by HICA 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
HICA or of any indenture or other agreement or instrument to which HICA
is a party or by which HICA is bound, or result in a violation of or
contravene the terms of any statute, order or regulation applicable to
HICA of any court, regulatory body, administrative agency or
governmental body having jurisdiction over HICA.
(v) There are no actions, proceedings or investigations
pending or, to the best of such counsel's knowledge after due inquiry,
threatened against HICA before or by any governmental authority that
might materially and adversely affect the performance by HICA of its
obligations under, or the validity or enforceability of, the Surety
Bonds and the Endorsement thereto to which it is a party.
(r) 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:
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(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.
(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.
(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
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<PAGE> 20
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.
(s) 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 September 30, 1998, 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.
(t) 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.
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<PAGE> 21
(u) The Certificates shall be rated in one of the four highest
investment rating categories by Moody's Investors Service, Inc. and Fitch IBCA,
Inc. and none of the foregoing shall have placed the Certificates under
surveillance or review with possible negative implications.
(v) 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.
(w) On the Closing Date, $260,000,000 aggregate principal
amount of the Class A-1 Notes and $570,400,000 aggregate principal amount of the
Class A-2 Notes shall have been issued and sold.
(x) TERI shall have furnished to the Representative a
certificate of TERI, signed by the President or any Executive Vice President,
dated the Closing Date, to the effect that the signer of such certificate has
carefully examined the Prospectus (excluding any documents incorporated by
reference therein) and this Agreement and that, to the best of his knowledge any
information with respect to TERI in the Prospectus, as of its date, did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(y) PHEAA shall have furnished to the Representative a
certificate of PHEAA, signed by the President or any Senior Vice President,
dated the Closing Date, to the effect that the signer of such certificate has
carefully examined the Prospectus (excluding any documents incorporated by
reference therein) and this Agreement and that, to the best of his knowledge any
information with respect to PHEAA in the Prospectus, as of its date, did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(z) ASA shall have furnished to the Representative a
certificate of ASA, signed by the President or any Senior Vice President, dated
the Closing Date, to the effect that the signer of such certificate has
carefully examined the Prospectus (excluding any documents incorporated by
reference therein) and this Agreement and that, to the best of his knowledge any
information with respect to ASA in the Prospectus, as of its date, did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(aa) EFS shall have furnished to the Representative a
certificate of EFS, signed by the President or any Executive Vice President,
dated the Closing Date, to the effect that the signer of such certificate has
carefully examined the Prospectus (excluding any documents incorporated by
reference therein) and this Agreement and that, to the best of his knowledge any
information with respect to EFS in the Prospectus, as of its date, did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
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<PAGE> 22
(bb) NSLP shall have furnished to the Representative a
certificate of NSLP, signed by the President or any Senior Vice President, dated
the Closing Date, to the effect that the signer of such certificate has
carefully examined the Prospectus (excluding any documents incorporated by
reference therein) and this Agreement and that, to the best of his knowledge any
information with respect to NSLP in the Prospectus, as of its date, did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(cc) ECMC shall have furnished to the Representative a
certificate of ECMC, signed by the President or any Senior Vice President, dated
the Closing Date, to the effect that the signer of such certificate has
carefully examined the Prospectus (excluding any documents incorporated by
reference therein) and this Agreement and that, to the best of his knowledge any
information with respect to ECMC in the Prospectus, as of its date, did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(dd) HICA shall have furnished to the Representative a
certificate of HICA, signed by the President or any Senior Vice President, dated
the Closing Date, to the effect that the signer of such certificate has
carefully examined the Prospectus (excluding any documents incorporated by
reference therein) and this Agreement and that, to the best of his knowledge any
information with respect to HICA in the Prospectus, as of its date, did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
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
(x) the Registration Statement, 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 (y) 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 necessary in order to make the statements
therein, in light of the circumstances under which that were made, 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
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<PAGE> 23
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 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
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
(i)
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<PAGE> 24
includes an unconditional release of each indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 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 Company and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities 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. 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
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<PAGE> 25
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
pursuant to Section 9), 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. Failure to Purchase the Certificates. If any Underwriter or
Underwriters default in their obligations to purchase its portion of the
Certificates hereunder and the aggregate principal amount of the Certificates
that such defaulting Underwriter or Underwriters agreed but failed to purchase
does not exceed 10% of the total principal amount of the Certificates, the
Representative may make arrangements satisfactory to the Seller for the purchase
of such Certificates by other persons, including any of the Underwriters, but if
no such arrangements are made by the Closing Date, the non-defaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments hereunder, to purchase the Certificates that such defaulting
Underwriters agreed but failed to purchase. If any Underwriter or Underwriters
so default and the aggregate principal amount of the Certificates with respect
to such default or defaults exceeds 10% of the total principal amount of the
Certificates and arrangements satisfactory to the Representative and the Seller
for the purchase of such Certificates by other persons are not made within 36
hours after such default, this Agreement will terminate without liability on the
part of any non-defaulting Underwriter or the Seller, except as provided in
Section 7. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. Nothing herein will relieve a
defaulting Underwriter or Underwriters from liability for its default.
10. 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 11 Madison Avenue, New York, NY 10010,
Attention: Joseph Fashano; if sent to the Seller, will be mailed, delivered or
telegraphed and confirmed to it at Key Bank USA, National Association, 800
Superior Avenue, Cleveland, OH 44144, Attention: Senior Vice President,
Education Lending; provided, however, that any notice to an Underwriter pursuant
to Section 7 will be
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<PAGE> 26
mailed, delivered or telegraphed and confirmed to such Underwriter. Any such
notice will take effect at the time of receipt.
11. 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.
12. 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.
13. 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.
14. Applicable Law. This Agreement will be governed by, and
construed in accordance with, the laws of the State of New York.
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<PAGE> 27
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.
CREDIT SUISSE FIRST BOSTON CORPORATION
By:
---------------------------------
Name:
Title:
Acting on behalf of itself and as Representative of the
several Underwriters.
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<PAGE> 28
SCHEDULE I
Class B
Credit Suisse First Boston Corporation................... $17,300,000
McDonald Investments Inc. A KeyCorp Company.............. $17,300,000
Total.................................................... $34,600,000
===========
<PAGE> 29
APPENDIX A
<PAGE> 30
[See Appendix A to Sale and Servicing Agreement]
<PAGE> 31
EXHIBIT A
[Key Bank opinion]
<PAGE> 32
EXHIBIT B
[Thompson Hine & Flory LLP opinions]
<PAGE> 1
EXHIBIT 4.1
EXECUTION COPY
================================================================================
INDENTURE
between
KEYCORP STUDENT LOAN TRUST 1999-A,
as Issuer
and
BANKERS TRUST COMPANY,
not in its individual capacity but
solely as Indenture Trustee
Dated as of January 1, 1999
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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ARTICLE I
Definitions and Usage
---------------------
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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..................................................3
SECTION 2.03. Temporary Notes.........................................................................4
SECTION 2.04. Registration; Registration of Transfer and Exchange.....................................4
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes..............................................6
SECTION 2.06. Persons Deemed Owner....................................................................6
SECTION 2.07. Payment of Principal and Interest; Defaulted Interest; Noteholders' Interest
Index Carryover.........................................................................7
SECTION 2.08. Cancellation............................................................................8
SECTION 2.09. Release of Collateral...................................................................8
SECTION 2.10. Book-Entry Notes........................................................................9
SECTION 2.11. Notices to Clearing Agency..............................................................9
SECTION 2.12. Definitive Notes........................................................................9
ARTICLE III
Covenants
---------
SECTION 3.01. Payment to Noteholders.................................................................10
SECTION 3.02. Maintenance of Office or Agency........................................................10
SECTION 3.03. Money for Payments To Be Held in Trust.................................................11
SECTION 3.04. Existence..............................................................................12
SECTION 3.05. Protection of Indenture Trust Estate...................................................12
SECTION 3.06. Opinions as to Indenture Trust Estate..................................................13
</TABLE>
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<TABLE>
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SECTION 3.07. Performance of Obligations; Servicing of Financed Student Loans........................13
SECTION 3.08. Negative Covenants.....................................................................16
SECTION 3.09. Annual Statement as to Compliance......................................................17
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms....................................17
SECTION 3.11. Successor or Transferee................................................................19
SECTION 3.12. No Other Business......................................................................19
SECTION 3.13. No Borrowing...........................................................................19
SECTION 3.14. Obligations of Servicer and Administrator..............................................19
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities......................................19
SECTION 3.16. Capital Expenditures...................................................................20
SECTION 3.17. Restricted Payments....................................................................20
SECTION 3.18. Notice of Events of Default............................................................20
SECTION 3.19. Further Instruments and Acts...........................................................20
ARTICLE IV
Satisfaction and Discharge
--------------------------
SECTION 4.01. Satisfaction and Discharge of Indenture................................................21
SECTION 4.02. Application of Trust Money.............................................................22
SECTION 4.03. Repayment of Moneys Held by Paying Agent...............................................22
SECTION 4.04. Auction of Financed Student Loans......................................................22
ARTICLE V
Remedies
--------
SECTION 5.01. Events of Default......................................................................23
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment.....................................24
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee..............25
SECTION 5.04. Remedies; Priorities...................................................................27
SECTION 5.05. Optional Preservation of the Financed Student Loans....................................29
SECTION 5.06. Limitation of Suits....................................................................29
SECTION 5.07. Unconditional Rights of Noteholders To Receive Principal and Interest..................30
SECTION 5.08. Restoration of Rights and Remedies.....................................................30
SECTION 5.09. Rights and Remedies Cumulative.........................................................30
SECTION 5.10. Delay or Omission Not a Waiver.........................................................31
SECTION 5.11. Control by Noteholders.................................................................31
SECTION 5.12. Waiver of Past Defaults................................................................31
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 5.13. Undertaking for Costs..................................................................32
SECTION 5.14. Waiver of Stay or Extension Laws.......................................................32
SECTION 5.15. Action on Notes........................................................................32
SECTION 5.16. Performance and Enforcement of Certain Obligations.....................................32
ARTICLE VI
The Indenture Trustee
---------------------
SECTION 6.01. Duties of Indenture Trustee............................................................33
SECTION 6.02. Rights of Indenture Trustee............................................................35
SECTION 6.03. Individual Rights of Indenture Trustee.................................................36
SECTION 6.04. Indenture Trustee's Disclaimer.........................................................36
SECTION 6.05. Notice of Defaults.....................................................................36
SECTION 6.06. Reports by Indenture Trustee to Noteholders............................................36
SECTION 6.07. Compensation and Indemnity.............................................................36
SECTION 6.08. Replacement of Indenture Trustee.......................................................37
SECTION 6.09. Successor Indenture Trustee by Merger..................................................38
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee..........................................39
SECTION 6.11. Eligibility; Disqualification..........................................................40
SECTION 6.12. Preferential Collection of Claims Against Issuer.......................................40
ARTICLE VII
Noteholders' Lists and Reports
------------------------------
SECTION 7.01. Issuer To Furnish Indenture Trustee Names and Addresses of Noteholders.................40
SECTION 7.02. Preservation of Information; Communications to Noteholders.............................40
SECTION 7.03. Reports by Issuer......................................................................41
ARTICLE VIII
Accounts, Disbursements and Releases
------------------------------------
SECTION 8.01. Collection of Money....................................................................42
SECTION 8.02. Trust Accounts.........................................................................42
SECTION 8.03. General Provisions Regarding Accounts..................................................43
SECTION 8.04. Release of Indenture Trust Estate......................................................44
SECTION 8.05. Opinion of Counsel.....................................................................44
</TABLE>
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<TABLE>
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ARTICLE IX
Supplemental Indentures
-----------------------
SECTION 9.01. Supplemental Indentures Without Consent of Noteholders.................................45
SECTION 9.02. Supplemental Indentures with Consent of Noteholders....................................46
SECTION 9.03. Execution of Supplemental Indentures...................................................47
SECTION 9.04. Effect of Supplemental Indenture.......................................................48
SECTION 9.05. Conformity with Trust Indenture Act....................................................48
SECTION 9.06. Reference in Notes to Supplemental Indentures..........................................48
ARTICLE X
Redemption of Notes
-------------------
SECTION 10.01. Redemption.............................................................................48
SECTION 10.02. Form of Redemption Notice..............................................................49
SECTION 10.03. Notes Payable on Redemption Date.......................................................49
ARTICLE XI
Miscellaneous
-------------
SECTION 11.01. Compliance Certificates and Opinions, etc..............................................50
SECTION 11.02. Form of Documents Delivered to Indenture Trustee.......................................52
SECTION 11.03. Acts of Noteholders....................................................................53
SECTION 11.04. Notices, etc., to Indenture Trustee, Issuer and Rating Agencies........................53
SECTION 11.05. Notices to Noteholders; Waiver.........................................................54
SECTION 11.06. Alternate Payment and Notice Provisions................................................54
SECTION 11.07. Conflict with Trust Indenture Act......................................................55
SECTION 11.08. Effect of Headings and Table of Contents...............................................55
SECTION 11.09. Successors and Assigns.................................................................55
SECTION 11.10. Separability...........................................................................55
SECTION 11.11. Benefits of Indenture..................................................................55
SECTION 11.12. Legal Holidays.........................................................................55
SECTION 11.13. Governing Law..........................................................................55
SECTION 11.14. Counterparts...........................................................................56
SECTION 11.15. Recording of Indenture.................................................................56
SECTION 11.16. Trust Obligations......................................................................56
SECTION 11.17. No Petition............................................................................56
</TABLE>
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<TABLE>
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SECTION 11.18. Inspection.............................................................................57
APPENDIX A Definitions and Usage
SCHEDULE A Schedule of Initial Financed Student Loans
SCHEDULE B Schedule of Subsequent Pool Student Loans
SCHEDULE C Location of Financed Student Loan Files
EXHIBIT A-1 Form of Class A-1 Note
EXHIBIT A-2 Form of Class A-2 Note
EXHIBIT B Form of Note Depository Agreement
</TABLE>
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<PAGE> 7
INDENTURE dated as of January 1, 1999,
between KEYCORP STUDENT LOAN TRUST 1999-A, a New
York trust (the "Issuer"), and BANKERS TRUST
COMPANY, a New York 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 Class A-1 Asset Backed Notes (the "Class A-1 Notes"), the Issuer's
Class A-2 Asset Backed Notes (the "Class A-2 Notes", and together with the Class
A-1 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 holders of the Notes, 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 a 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
(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
<PAGE> 8
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
holders of the Notes, 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 holders of the Notes 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 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 holder of the Notes.
"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.
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<PAGE> 9
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 Class A-1 Notes and the Class A-2
Notes, together with the Indenture Trustee's certificate of authentication,
shall be in substantially the forms set forth in Exhibits A-1 and A-2,
respectively, 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 Class A-1 Notes and the Class A-2 Notes set forth in Exhibits A-1
and A-2 are part of the terms of this Indenture.
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
$260,000,000, with respect to the Class A-1 Notes and $570,400,000 with respect
to the Class A-2 Notes, 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.
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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 agency
of the Issuer to be maintained as provided in Section 3.02, without charge to
the holder of the Notes. 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 holders of the Notes 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
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<PAGE> 11
holder of the Notes 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 holder of the Notes, Notes may be
exchanged for other Notes in any authorized denominations, a like class 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 requirements of Section 8-401(1) of the UCC are met, the Issuer shall
execute, and the Indenture Trustee shall authenticate and the holder of the
Notes shall obtain from the Indenture Trustee, the Notes which the holder of the
Notes 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.
The Issuer initially appoints The Depository Trust Company
("DTC") to act as depositary (the "Depositary") with respect to the Note(s).
The Issuer initially appoints the Indenture Trustee to act as
custodian with respect to the Notes.
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 holder of the Notes thereof or such holder'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 holder of the Notes 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.
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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 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 holder of the Notes 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.
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
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<PAGE> 13
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 Class A-1 Notes and the
Class A-2 Notes shall accrue interest as provided in the forms of the Class A-1
Note and the Class A-2 Note set forth in Exhibits A-1 and A-2 respectively, 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 applicable 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 the Class A-1
Note and the Class A-2 Note set forth in Exhibits A-1 and A-2, respectively.
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 holders 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
each class of Notes shall be made pro rata to the holders of the Notes entitled
thereto. The 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 for
such Notes) 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 the holders of the Notes 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 applicable Note Interest Rate in any
lawful manner. The Issuer may pay such defaulted interest
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<PAGE> 14
to the persons who are holders of the Notes 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 holder of the Notes 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 such Notes for prior Distribution Dates and interest accrued thereon at the
applicable Note Interest Rate for each applicable Interest Period) shall be
payable to each class of such Notes, pro rata based on the amount of
Noteholders' Interest Index Carryover then owing on each class of such Notes, on
each Distribution Date solely to the extent of funds required and available to
be distributed to the holders of the Notes by the Indenture Trustee pursuant to
Section 5.05(c)(ix) 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 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)(l) or
an Opinion of Counsel in lieu of such Independent Certificates to the effect
that the TIA does not require any such Independent Certificates.
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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;
(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 the holders of the 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 holders of the Notes 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 the holders of the
Notes 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
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successor, (ii) the Administrator at its option advises the Indenture 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, 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 the holders of the Notes.
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 each class of Notes in accordance with the terms of such Notes and this
Indenture. Without limiting the foregoing, subject to Section 8.02(c), the
Issuer will cause to be distributed to the holders of the Class A-1 Notes and to
the holders of the Class A-2 Notes 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 holders of the Notes are entitled to receive
pursuant to the Sale and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a payment to any holder of the Notes of interest
(including any Noteholders' Interest Index Carryover) and/or principal shall be
considered as having been paid by the Issuer to such holder of the Notes 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. 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 may be made
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or served at the Corporate Trust Office, and the Issuer hereby appoints the
Indenture Trustee as its agent to receive all such surrenders in respect of the
Notes.
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 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
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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 Issuer Request; and the holder of the
Notes 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 the holders of the Notes 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 holder of the Notes).
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:
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(i) maintain or preserve the lien and security interest (and
the priority thereof) of this Indenture or carry out more effectively
the purposes hereof;
(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 holders of the Notes 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
2000, 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.
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
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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 each 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 holders 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 a 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
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 a Servicer of such 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 a 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
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automatically be appointed a Successor Servicer or Administrator, as the case
may be. The Indenture Trustee may resign as a 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
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 a 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 predecessor 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 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 a Servicer's duties with respect to 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 a 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 a 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 or agents, 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 such
Servicer or the Administrator in accordance with the terms hereof.
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(f) Upon any termination of a 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.
(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 holders 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 therein, or waive timely
performance or observance by any 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 holders of the Notes, or (ii) reduce the aforesaid
percentage of the Notes which are required to consent to any such amendment,
without the consent of the holders of all the Outstanding Notes. If any such
amendment, modification, supplement or waiver shall be so consented to by the
Indenture Trustee or such holders of the Notes, 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 holder of the
Notes by reason of the payment of the taxes levied or assessed upon any
part of the Indenture Trust Estate; or
(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
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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 arise 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 1999), 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,
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;
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(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 holder of the
Notes or any holder of the Certificates;
(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 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 holders of the Notes, (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
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not have any material adverse Federal or Pennsylvania state tax
consequence to the Issuer, any holder of the Notes or any holder of the
Certificates;
(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 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
1999-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 1999-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.
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 each 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
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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.
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 any 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 Servicers, the Eligible
Lender Trustee, the Indenture Trustee, the holders of the Certificates, the
holders of the Notes, 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, a 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 acts as may be reasonably necessary or proper to
carry out more effectively the purpose of this Indenture.
ARTICLE IV
Satisfaction and Discharge
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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 holders of the Notes
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 holders of the Notes 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
Class A-1 Final Maturity or the Class A-2 Final
Maturity Date, as the case may be, within one year,
or
(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
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to the Class A-1 Final Maturity Date or the Class A-2 Final
Maturity Date, as the case may be;
(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 holders 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 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 March 2009 Distribution Date will be offered for sale
by the Indenture Trustee. KeyCorp, its affiliates (other than the Seller),
PHEAA, TERI and unrelated third parties may offer bids to purchase such Financed
Student Loans on such Distribution Date; provided, however, that KeyCorp and its
affiliates may not bid more than an amount determined by KeyCorp in good faith
to be equal to 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 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 the Minimum
Purchase Amount 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
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process is completed is not equal to or in excess of the Minimum Purchase
Amount, the Indenture Trustee will not consummate such sale. In connection with
the determination of the Minimum Purchase Amount, 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 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 holders 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
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(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
(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 holders of the 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 holders of the Notes), 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 holders of the 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 of the Indenture Trustee and its
agents and counsel; and
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(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 holders of the Notes, 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
holders of the Notes, 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
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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
holders of the Notes allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the holders of the Notes in any election of a
trustee, a standby trustee or Person performing similar functions in
any such Proceedings;
(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 holders of the Notes 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 holders of the Notes 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 holders of the Notes 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 holders of the
Notes, 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 holder of the Notes any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights
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of any holder of the Notes thereof or to authorize the Indenture Trustee to vote
in respect of the claim of any holder of the Notes 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 holders of the Notes.
(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 holders of the Notes, and it shall
not be necessary to make any holder of the Notes 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 holders of the Notes; 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 (i) the holders
of all outstanding Notes consent to such sale, (ii) the proceeds of such sale
are sufficient to pay in full the principal of and the accrued interest on the
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outstanding Notes at the date of such sale or (iii) the Indenture Trustee
determines that the collections on the Financed Student Loans would not be
sufficient on an ongoing basis to make all payments on the Notes as such
payments would have become due if such obligations had not been declared due and
payable, and the Indenture Trustee obtains the consent of the holders of 66 2/3%
of the aggregate principal amount of the Notes then outstanding; provided,
further, that the Indenture Trustee may not sell or otherwise liquidate the
Trust Estate following an Event of Default, other than an Event of Default
described in Section 5.01(i) or (ii) unless (i) the proceeds of the sale or
liquidation of the Trust Estate distributable to the holders of the Certificates
are sufficient to pay to the holders of the Certificates the outstanding
principal balance of the Certificates plus accrued and unpaid return thereon or
(ii) after receipt of notice from the Eligible Lender Trustee that the proceeds
of such sale or liquidation distributable to the holders of the Certificates
would not be sufficient to pay to the holders of the Certificates the
outstanding principal balance of the Certificates plus accrued and unpaid return
thereon, the holders of the Certificates of at least a majority of the
outstanding principal balance of the Certificates consent thereto. 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 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 Servicers for due and unpaid Servicing Fees;
THIRD: to the holders of the Notes 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 the holders of the Notes 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 holders of the Certificates;
SIXTH: [Reserved];
SEVENTH: to the Servicers, for any unpaid Excess Servicing
Fees;
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EIGHTH: to the holders of the Notes for any unpaid
Noteholders' Interest Index Carryover, ratably, without preference or
priority of any kind, according to the amount of Noteholders' Interest
Index Carryover attributable to each Note;
NINTH: to the Issuer for distribution to the holders of the
Certificates for any unpaid Certificateholders' Interest Index
Carryover; and
TENTH: 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 the holders of the Notes pursuant to this Section. At least
15 days before such record date, the Issuer shall mail to each holder of the
Notes 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 holders of the Notes 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 holder of the Notes
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 holder of the Notes has previously given written
notice to the Indenture Trustee of a continuing Event of Default;
(ii) the holders 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 holder of the Notes have offered to the Indenture
Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in complying with such request;
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(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
holders of a majority of the Outstanding Amount of the Notes;
it being understood and intended that no one or more holders of the Notes 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 holders of the Notes or to obtain or to seek to obtain priority or
preference over any other holders of the Notes 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 holders of the
Notes, 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 holder of the Notes 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 holder of the Notes.
SECTION 5.08. Restoration of Rights and Remedies. If the
Indenture Trustee or any holder of the Notes 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 holder of the Notes, then and in every such case
the Issuer, the Indenture Trustee and the holders of the Notes shall, subject to
any determination in such Proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Indenture Trustee and the holders of the Notes 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
holders of the Notes 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.
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SECTION 5.10. Delay or Omission Not a Waiver. No delay or
omission of the Indenture Trustee or any holder of the Notes 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 holders of the Notes may be exercised from time to time, and as often as
may be deemed expedient, by the Indenture Trustee or by the holders of the
Notes, as the case may be.
SECTION 5.11. Control by Noteholders. The holders 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 holders 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 holders of less than 100% of the Outstanding
Amount 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 (i) any holders of the Notes 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 holders 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 holder of
the Notes. In the case of any such waiver, the Issuer, the Indenture Trustee and
the holders of the Notes 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.
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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 holder of the Notes 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 to (a) any suit instituted by
the Indenture Trustee, (b) any suit instituted by any holder of the Notes, or
group of holders of the Notes, in each case holding in the aggregate more than
10% of the Outstanding Amount of the Notes or (c) any suit instituted by any
holder of the Notes 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 holders of the Notes 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
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Servicers, 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 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 a Servicer thereunder and the institution of legal or administrative actions
or proceedings to compel or secure performance by the Seller, the Administrator
or the Servicers 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 holders 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 any 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 Servicers 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.
(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
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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 6.01.
(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 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.
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(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 6.01.
(k) Notwithstanding any other provision in this Agreement or
the other Basic Documents, nothing in this Agreement or the other Basic
Documents shall be construed to limit the legal responsibility of the Indenture
Trustee to the U.S. Secretary of Education or a Guarantor for any violations of
statutory or regulatory requirements that may occur with respect to loans held
by the Indenture Trustee pursuant to, or to otherwise comply with their
obligations under, the Higher Education Act or implementing regulations, it
being expressly understood that the Indenture Trustee has no obligation or duty
pursuant to this Section except in the event of Foreclosure or pursuant to
Section 8.02 of the Sale and Servicing Agreement as a successor Servicer.
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, 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.
(f) In the event that the Person acting as Indenture Trustee
is also acting as securities intermediary all the rights, powers, immunities and
indemnities afforded to the Indenture Trustee under the Basic Documents shall
also be afforded to the securities intermediary.
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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 holder of the Notes 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 holders of the Notes.
SECTION 6.06. Reports by Indenture Trustee to Noteholders. The
Indenture Trustee shall deliver to each holder of the Notes (and to each Person
who was a holder of the Notes 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 holder of the Notes a brief report as of such December 31
that complies with TIA Section 313(a) if required by said section. The Indenture
Trustee shall also comply with TIA Section 313(b). A copy of each such report
required pursuant to TIA Sections 313(a) or (b) shall, at the time of such
transmission to holders of the Notes, 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.
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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, 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 or the
earlier resignation or removal of the Indenture Trustee. 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 holders 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.
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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 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 the holders
of the Notes. The retiring Indenture Trustee shall promptly transfer all
property held by it as Indenture Trustee to the successor Indenture Trustee upon
payment of all monies due and owing to the retiring 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 holders 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 holder of the Notes 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 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
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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 holders
of the Notes, 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 holders of the Notes 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;
(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
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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 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 holders of the Notes 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
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names and addresses of the holders of the Notes contained in the most recent
list furnished to the Indenture Trustee as provided in Section 7.01 and the
names and addresses of the holders of the Notes 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) Holders of the Notes may communicate pursuant to TIA
Section 312(b) with other holders of the Notes with respect to their rights
under this Indenture or under the Notes. Upon receipt by the Indenture Trustee
of any request by a holder of the Notes to receive a copy of the current list of
holders of the Notes (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 copy of such request and a copy of the list of holders of
the Notes 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 holders of the
Notes 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 holders of the Notes 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.
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(b) Unless the Issuer otherwise determines, the fiscal year of
the Issuer shall end on December 31 of each year.
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 the holders of the Notes 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 holders of the Notes and
the holders of the Certificates, 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 holders of the Notes 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 the holders of the Notes pursuant to paragraph (b)
above to the holders of the Notes to the extent of amounts due and unpaid on the
Notes for principal, interest and any Noteholders' Interest Index Carryover in
the following amounts and in the following order of priority (except as
otherwise provided in Section 5.04(b)):
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(i) the Noteholders' Interest Distribution Amount, to the
holders of the Class A-1 Notes and the holders of the Class A-2 Notes
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
holders of the Class A-1 Notes until the Outstanding Amount of the
Class A-1 Notes is reduced to zero, and then to the holders of the
Class A-2 Notes until the Outstanding Amount of the Class A-2 Notes is
reduced to zero; and
(iii) the Noteholders' Interest Index Carryover, if any, to
the holders of the Class A-1 Notes and the holders of the Class A-2
Notes; 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 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
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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 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 TIA) Independent Certificates in accordance with TIA
Sections 314(c) and 314(d)(1) and meeting the applicable requirements of
Section 11.01.
(c) Each holder of the Notes, 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 holder of the Notes 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
holders of the Notes 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.
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ARTICLE IX
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without Consent of
Noteholders. (a) Without the consent of any holders of the Notes 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 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 holders of the Notes, 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 holders of the Notes;
(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 holders of the
Notes 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 holders of the Notes 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 holder of the Notes.
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 holders of not less than a majority of the Outstanding Amount of the
Notes, by Act of such holders of the Notes 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 holders of the Notes under this Indenture; provided,
however, that no such supplemental indenture shall, without the consent of the
holder 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, 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 holders of the Notes of which is required for
any such supplemental indenture, or the consent of the holders of the
Notes 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;
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(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 holder 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 holders of the Notes 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 holder of any Note
of the security provided by the lien of this Indenture.
It shall not be necessary for any Act of holders of the Notes
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 holders of the Notes to which such amendment or
supplemental indenture relates a notice prepared by the Issuer 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
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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 holders of the Notes
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 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 the Subsequent Pool Pre-Funded Amount, after giving
effect to the purchase of any Subsequent Pool Student Loans on such date is
greater than $10,000,000, each class of Notes will be redeemed in part, on a pro
rata basis, in an aggregate principal amount equal to the Noteholders'
Percentage of such Subsequent Pool Pre-Funded Amount on the following
Distribution Date. In the event that on the Special Determination Date the
Subsequent Pool Pre-Funded Amount, after giving effect to the purchase of any
Subsequent Pool Student Loans on such date, is greater than zero but less than
or equal to $10,000,000, the Class A-1 Notes will be redeemed in an amount equal
to such Subsequent Pool Pre-Funded Amount.
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(ii) In the event that 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) any amount remains on deposit in the Pre-Funding Account after giving
effect to the making of all Additional Fundings during the Funding Period,
including any such Additional Fundings on such Redemption Date, the Class A-1
Notes will be redeemed until the principal amount thereof is reduced to zero,
and then the Class A-2 Notes will be redeemed in part to the extent of any
remaining funds, in each case 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 be distributed to the holders of the Notes
shall be paid to the holders of the Notes 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 holders of the
Notes pursuant to this Section 10.01(b), the Servicers, 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 holder of the Notes, 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 holder 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
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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.
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 shall, in addition to any obligation imposed in
Section 11.01(a) or elsewhere in this Indenture, furnish to the
Indenture Trustee an
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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 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
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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 April 1, 1999, 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 relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
any Servicer, the Seller, the Issuer or the Administrator, stating that the
information with respect to such factual matters is in the possession of such
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.
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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 holders of the Notes may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such holders of the Notes 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 holders of the
Notes 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 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 holder of any Notes shall bind the holder
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 holders of the Notes 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 holders of the Notes
is to be made upon, given or furnished to or filed with:
(a) the Indenture Trustee by any holder of the Notes 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 holder of
the Notes 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 1999-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, 800 Superior Avenue, Fourth Floor, Cleveland, Ohio
44114, Attention: KeyCorp Education Resources, KeyCorp Student Loan
Trust 1999-A, or at any other address previously furnished in writing
to the Indenture Trustee by the Issuer or the Administrator. The
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Issuer shall promptly transmit any notice received by it from the
holders of the Notes to the Indenture Trustee.
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; (ii) in the case of Standard & Poor's, at the following address:
Standard & Poor's Rating Services, 25 Broadway (20th Floor), New York, New York
10004, Attention of Asset Backed Surveillance Department; and (iii) Fitch IBCA,
Inc., Municipal Structured Finance Group, One State Street Plaza, New York, New
York, 10004; 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 holders of the Notes 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 holder of the Notes
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 holders of the Notes
is given by mail, neither the failure to mail such notice nor any defect in any
notice so mailed to any particular holder of the Notes shall affect the
sufficiency of such notice with respect to other holders of the Notes, 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 holders of the Notes 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 holders of the Notes 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 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 holder of the Notes
providing for a method of payment, or notice by the
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Indenture Trustee or any Paying Agent to such holder of the Notes, 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 holders of the
Notes, and any other 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
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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 holders of the Notes 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, any 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, any 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
Administrator, any 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, any 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 holder of the Notes, 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.
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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 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.
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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 Jeffrey L. Kinney,
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 1999-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 9th day of
February, 1999.
------------------------------
Notary Public in and for
the State of New York.
My commission expires:
November 24, 1999
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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 BANKERS TRUST COMPANY, a New York 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 9th day of
February, 1999.
------------------------------
Notary Public in and for
the State of New York.
My commission expires:
November 24, 1999
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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 1999-A,
By: THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but
solely as Eligible Lender Trustee,
By: _____________________________________
Name:
Title:
BANKERS TRUST COMPANY, 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 FIRST NATIONAL BANK OF CHICAGO, a national 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 9th day of
February, 1999.
------------------------------
Notary Public in and for
the State of New York.
My commission expires:
November 24, 1999
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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.
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(e) Any agreement, instrument or statute defined or referred
to below or in any agreement or instrument that is 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 Student Loans" means the Subsequent Pool Student
Loans, the Other Subsequent Student Loans, Guarantee Fee Advances and the
fundings of accrued interest to be capitalized.
"Administration Agreement" means the Administration Agreement
dated as of January 1, 1999, 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 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
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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.
"Applicable Note Margin" means with respect to the Class A-1 Notes,
0.14% and with respect to the Class A-2 Notes, 0.33%.
"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 Letter Agreement dated as of January
28, 1992, between LSAS and the Seller (as successor to Ameritrust Company
National Association), (iv) 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, (v) the LAL/BEL Guarantee Agreements dated as
of January 28, 1992 and December 21, 1992, between the Seller and TERI, and (vi)
the Private Guarantee Agreement dated as of March 23, 1995, among the Seller,
TERI, Society National Bank, Indiana and Wilmington Trust Company, (vii) the
Consolidated Deposit Agreement and Consolidated Security Agreement each dated
November 1, 1995 between TERI and Society National Bank, (viii) Alternative DEAL
Surety Bond Numbers 1994-A, 1994-B, 1995-A and 1996-A, dated February 23, 1994,
October 4, 1994, July 1, 1995 and July 1, 1996, respectively, issued by HICA to
KeyBank of Maine, Society National Bank, Society National Bank and Seller,
respectively; and (ix) the Pledged Collateral Account Control Agreement dated as
of January 1, 1999, among TERI, Seller and McDonald Investments Inc., A KeyCorp
Company, to the 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.
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"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
or any Monthly Servicing Payment Date, the sum of the following amounts received
with respect to the then elapsed portion of the related Collection Period to the
extent not previously distributed:
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(i) all collections received by the Servicers on the Financed
Student Loans (including any Guarantee Payments received with respect
to such Financed Student Loans), but net of (x), any Federal
Origination Fee and Federal Consolidation Loan Rebate 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 the Financed
Federal Loans;
(iii) all Liquidation Proceeds and all recoveries in respect
of Liquidated Student Loans which were written off in prior Collection
Periods or prior months of such Collection Period;
(iv) the aggregate Purchase Amounts received for those
Financed Student Loans repurchased by the Seller or purchased by a
Servicer under an obligation which arose during the elapsed portion of
such Collection Period;
(v) the aggregate amounts, if any, received from the Seller or
a 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 Federal Student Loans
pursuant to Section 3.02 or 4.06, respectively of the Sale and
Servicing Agreement;
(vi) 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;
(vii) with respect to the initial Distribution Date, the
amount deposited in the Collection Account on the Closing Date pursuant
to Section 5.01(a)(i) of the Sale and Servicing Agreement;
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(viii) Investment Earnings for such Distribution Date;
(ix) amounts withdrawn from the Reserve Account in excess of
the Specified Reserve Account Balance and deposited into the Collection
Account;
(x) amounts withdrawn from the Escrow Account and deposited
into the Collection Account; and
(xi) with respect to the Distribution Date on or immediately
after the end of the Funding Period, the amount transferred from the
Pre-Funding Account to the Collection Account.
provided, however, that Available Funds 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 Distribution Date; provided, further, that if on any
Distribution Date there would not be sufficient funds, after
application of Available Funds and amounts available from the Reserve
Account and the Pre-Funding Account (1) to pay any of the items
specified in clauses (i) through (iii) of Section 5.05(c) of the Sale
and Servicing Agreement for such Distribution Date and (2) if the
principal balance of the Notes (after giving effect to any
distributions thereon on such Distribution Date) is less than or equal
to the Note Collateralization Amount, to pay the Certificateholders'
Interest Distribution Amount for such Distribution Date, then Available
Funds for such Distribution Date will include, in addition to the
Available Funds amounts on deposit in the Collection Account on the
Determination Date relating to such Distribution Date which would have
constituted Available Funds for the Distribution Date succeeding such
Distribution Date up to the amount necessary to pay, in the case of
clause (1) above such items and in the case of clause (2) above such
Certificateholders' Interest Distribution Amount, and the Available
Funds for such succeeding Distribution Date will be adjusted
accordingly.
"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,
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the Guarantee Agreements and other documents and certificates delivered in
connection with any thereof.
"Bar Exam Loan" means a Bar Examination Loan made by the
Seller to an eligible borrower pursuant to the Programs.
"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 New York, New York
or Cleveland, Ohio, are authorized or obligated by law, regulation or executive
order to remain closed.
"Certificate" means a Floating Rate Asset Backed Certificate
issued pursuant to the Trust Agreement, substantially in the Form of Exhibit A
thereto.
"Certificate Balance" means as of the Closing Date the Initial
Certificate Balance for the Certificates and, thereafter, the Initial
Certificate Balance for the Certificates, reduced by all amounts allocable to
principal previously distributed to the holders of the Certificates.
"Certificate Depository Agreement" means the agreement dated
as of the Closing Date among the Trust, the Eligible Lender Trustee, the
Administrator and The Depository Trust Company, as the initial Clearing Agency,
substantially in the form of Exhibit B to the Trust Agreement.
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"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 Rate" means, with respect to any Interest Period,
the interest rate per annum equal to the lesser of (i) the sum of (x) in the
case of any Certificates that are T-Bill Indexed Securities, the weighted
average of the T-Bill Rates within such Interest Period and in the case of any
Certificates that are LIBOR Indexed Securities, Three-Month LIBOR for such
Interest Period plus (y) 0.75% and (ii) the Student Loan Rate for such Interest
Period. The interest rate per annum for any Certificates that are T-Bill Indexed
Securities will be computed on the basis of the actual number of days elapsed in
such Interest Period over a period of 365 days (or 366 in a leap year) and in
the case of any Certificates that are LIBOR Indexed Securities will be computed
on the basis of the actual number of days elapsed in the related Interest Period
divided by 360.
"Certificate Register" and "Certificate Registrar" means the
register mentioned and the registrar appointed pursuant to Section 3.04 of the
Trust Agreement.
"Certificate Underwriting Agreement" means the Certificate
Underwriting Agreement dated as of February 3, 1999 between the Seller and the
Underwriters.
"Certificateholder" means a Person in whose name a Certificate
is registered in the Certificate Register.
"Certificateholders' Available Interest Distribution Amount"
means for the Certificates on any Distribution Date, an amount equal to (x) the
sum of (1) Available Funds for such Distribution Date, (2) the amount, if any,
withdrawn from the Pre-Funding Account pursuant to Section 5.08(d) of the Sale
and
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Servicing Agreement on such Distribution Date, and (3) the amounts withdrawn
from the Reserve Account pursuant to Section 5.06(b)(vi) of the Sale and
Servicing Agreement on such Distribution Date minus (y) the amount required to
be distributed pursuant to clauses (i) through (iii) of Section 5.05(c) of the
Sale and Servicing Agreement, including any Noteholders' Priority Principal
Distribution Amount actually distributed.
"Certificateholders' Available Principal Distribution Amount"
means on the Final Maturity Date for the Certificates, an amount equal to (x)
the sum of (1) the Available Funds for such Distribution Date, and (2) the
amounts withdrawn from the Reserve Account pursuant to Section 5.06(b)(ix) of
the Sale and Servicing Agreement minus (y) the amounts required to be
distributed pursuant to clauses (i) through (vii) of Section 5.05(c) of the Sale
and Servicing Agreement.
"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 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 Certificateholders'
Interest Distribution Amount on the preceding Distribution Date over (ii) the
amount of interest actually distributed to the holders of the Certificates on
such preceding Distribution Date, plus interest on the amount of such excess
interest due to the holders of the Certificates, 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 holders of the Certificates 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,
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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, if such Certificates are T-Bill Indexed
Securities and/or Three-Month LIBOR if such Certificates are LIBOR Indexed
Securities over (b) the amount of interest on such 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 in the case of T-Bill Indexed Securities or Three-Month LIBOR,
in the case of LIBOR Indexed Securities); provided, however, that, on the 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 the holders of the Certificates on such date
pursuant to Sections 5.05(c)(x) of the Sale and Servicing Agreement.
"Certificateholders' Percentage" means, a fraction, expressed
as a percentage, the numerator of which is the principal balance 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 Distribution Amount" means, on
each Distribution Date on and after which the principal balance of the Notes has
been paid in full, 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 the holders of such Notes on such Distribution Date); provided,
however, that the Certificateholders' Principal Distribution Amount for the
Certificates will in no event exceed the Certificate Balance for the
Certificates. In addition, on the Final Maturity Date for the
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Certificates, the principal required to be distributed to the holders of the
Certificates will include the amount required to reduce the outstanding
principal balance of the Certificates to zero.
"Class A-1 Note" means a Floating Rate Class A-1 Asset Backed
Note issued pursuant to the Indenture, substantially in the form of Exhibit A-1
thereto.
"Class A-2 Note" means a Floating Rate Class A-2 Asset Backed
Note issued pursuant to the Indenture, substantially in the form of Exhibit A-2
thereto.
"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.
"Closing Date" means February 9, 1999.
"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 May 31,
1999 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.
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"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 Four Albany Street, New York, New York 10006,
Attention: Corporate Trust and Agency Group, Structured Finance Team (telephone:
(212) 250-6652; facsimile: (212) 250-6439) 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) 407-1892;
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
address of which the successor Eligible Lender Trustee will notify the
Certificateholders and the Seller).
"Cumulative TERI Claims Ratio" means, with respect to any
Distribution Date, the fraction, expressed as a percentage, the numerator of
which is equal to the aggregate dollar amount of claims filed against TERI under
its Guarantee Agreement from the Closing Date through and including the last day
of the Collection Period preceding such Distribution Date and the denominator of
which is equal to the dollar amount of the Financed Private Loans guaranteed by
TERI as of the Closing Date.
"Cutoff Date" means January 1, 1999.
"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.
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"Definitive Notes" has the meaning specified in Section 2.10
of the Indenture.
"Delivery" or "Deliver" when used with respect to Trust
Account Property means the following and such additional or alternative
procedures as may hereafter become appropriate to effect the complete transfer
of ownership of any such Collateral to the Indenture Trustee, free and clear of
any adverse claims, consistent with changes in applicable law or regulations or
the interpretation thereof:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute instruments and
are susceptible of physical delivery ("Physical Property"):
(i) transfer of possession thereof to the Indenture Trustee
endorsed to, or registered in the name of, the Indenture Trustee, or
its nominee or endorsed in blank;
(b) with respect to a certificated security:
(i) delivery thereof in bearer form to the Indenture Trustee;
or
(ii) delivery thereof in registered form to the Indenture
Trustee and
(A) the certificate is endorsed to the Indenture
Trustee or in blank by effective endorsement; or
(B) the certificate is registered in the name of the
Indenture Trustee, upon original issue or registration of transfer by
the issuer;
(c) with respect to an uncertificated security:
(i) the delivery of the uncertificated security to the
Indenture Trustee; or
(ii) the issuer has agreed that it will comply with
instructions originated by the Indenture Trustee, without further
consent by the registered owner;
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(d) with respect to any security 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:
(i) a Federal Reserve Bank by book entry credits the
book-entry security to the securities account (as defined in 31 CFR
Part 357) of a participant (as defined in 31 CFR Part 357) which is
also a securities intermediary; and
(ii) the participant indicates by book entry that the
book-entry security has been credited to the Indenture Trustee's
securities account, as applicable;
(e) with respect to a security entitlement:
(i) the Indenture Trustee, becomes the entitlement holder; or
(ii) the securities intermediary has agreed that it will
comply with entitlement orders originated by the Indenture Trustee;
(f) without further consent by the entitlement holder for the purpose
of clauses (b) and (c) hereof "delivery" means:
(i) with respect to a certificated security:
(A) the Indenture Trustee, acquires possession
thereof;
(B) another person (other than a securities
intermediary) either acquires possession thereof on behalf of
the Indenture Trustee or, having previously acquired
possession thereof, acknowledges that it holds for the
Indenture Trustee; or
(C) a securities intermediary acting on behalf of the
Indenture Trustee acquires possession of thereof, only if the
certificate is in registered form and has been specially
endorsed to the Indenture Trustee by an effective endorsement;
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(ii) with respect to an uncertificated security:
(A) the issuer registers the Indenture Trustee as the
registered owner, upon original issue or registration of
transfer; or
(B) another person (other than a securities
intermediary) either becomes the registered owner thereof on
behalf of the Indenture Trustee, or, having previously become
the registered owner, acknowledges that it holds for the
Indenture Trustee;
(g) for purposes of this definition, except as otherwise indicated, the
following terms shall have the meaning assigned to each such term in the UCC:
(i) "certificated security"
(ii) "effective endorsement"
(iii) "entitlement holder"
(iv) "instrument"
(v) "securities account"
(vi) "securities entitlement"
(vii) "securities intermediary"
(viii) "uncertificated security"
(h) in each case of Delivery contemplated herein, the Indenture Trustee
shall make appropriate notations on its records, and shall cause same to be made
of the records of its nominees, indicating that securities are held in trust
pursuant to and as provided in this Agreement.
"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.
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"Depository" has the meaning specified in Section 2.04 of the
Indenture.
"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 March, June, September and December or,
if such day is not a Business Day, the immediately following Business Day,
commencing on June 28, 1999.
"DTC" means the Depository Trust Company, a New York
Corporation.
"ECMC" means Educational Credit Management Corporation.
"EFS" means EFS Services, Inc., an Indiana corporation.
"EFS Fee Schedule" means the fee schedule setting forth the
Servicing Fee and Excess Servicing Fee of EFS.
"Eligible Deposit Account" means either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account with the
corporate trust department 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 at least two nationally
recognized Rating Agencies in one of their respective generic rating categories
which signifies investment grade.
"Eligible Institution" means a depository institution (which
may be the Seller (or any Affiliate of the Seller), the Eligible Lender Trustee
(or any Affiliate of the Eligible Lender Trustee) or the Indenture Trustee)
organized under the laws of the United States of America or any one of the
States (or any domestic branch of a foreign bank), (a) which has (i) 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) if rated by Fitch (A)
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a long term senior unsecured debt rating of AAA by Fitch and (B) short-term
senior of F-1+ by Fitch and (b) whose deposits are insured by the FDIC. If so
qualified, the Seller, any Affiliate of the Seller, the Eligible Lender Trustee,
or any Affiliate of the Eligible Lender Trustee or 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 Distribution Date, as the case may be), the commercial
paper or other short-term senior 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 Moody's in the highest investment category
granted thereby and, if rated by Fitch, in the highest investment
category granted by Fitch;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from Moody's in the
highest investment category granted thereby and, if rated by Fitch, in
the highest investment category granted by Fitch;
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(d) investments in money market funds (including funds for
which the Indenture Trustee or the Eligible Lender Trustee or any of
their respective Affiliates or any of Seller's Affiliates is an
investment manager or advisor) having a rating from Moody's of Aaa and
if rated by Fitch from Fitch of AAA;
(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.
"Event of Default" has the meaning specified in Section 5.01
of the Indenture.
"Excess Servicing Fee" has the meaning specified in the EFS
Fee Schedule and the PHEAA Fee Schedule, respectively.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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"Executive Officer" means, with respect to any corporation,
the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, any Executive 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.
"Expected Interest Collections" means, with respect to any
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
Collection Period (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 Collection Period (whether or not
actually received) with respect to the Financed Student Loans and (iii)
Investment Earnings for such Collection Period.
"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.
"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 Financed Federal
Loans of such borrower in accordance with the applicable terms and conditions of
the Program and the Higher Education Act.
"Federal Consolidation Loan Rebate" means the monthly fee
payable to the Department by the holder of Federal Consolidation Loans made (x)
on or after October 1, 1993 equal to 1.05% per annum and (y) on or after October
1, 1998 but before
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February 1, 1999 equal to .62% per annum, in each case on the outstanding
balance of such Federal Consolidation Loan.
"Federal Guarantor" means PHEAA, ASA, ECMC and NSLP.
"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.
"52 Week T-Bill Rate" means, on any date of determination, the
bond equivalent rate of 52-week Treasury bills auctioned at the final auction
held prior to the preceding June 1.
"Final Maturity Date" means (i) for the Class A-1 Notes, the
December 2006 Distribution Date, (ii) for the Class A-2 Notes the December 2029
Distribution Date and (iii) for the Certificates, the December 2035 Distribution
Date.
"Final Subsequent Transfer Date" means the last Transfer Date
on which Subsequent Pool Student Loans are transferred to the Trust but no later
than the Special Determination Date.
"Financed Federal Loans" means those Financed Student Loans
that are guaranteed as to the payment of principal and interest by PHEAA, ASA,
ECMC or NSLP and are reinsured by the Department and are listed on Schedule A to
the Sale and Servicing Agreement, as such Schedule may be supplemented from time
to time.
"Financed Private Loans" means those Financed Student Loans
that are guaranteed as to the payment of principal and interest by TERI or HICA
and are not reinsured by the Department or any other governmental entity and are
listed on Schedule A to the Sale and Servicing Agreement, as such Schedule may
be supplemented from time to time.
"Financed Student Loan" means any law school, medical school,
dental school, graduate business school or other graduate school student loan
listed on Schedule A of the Sale and
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Servicing Agreement as such Schedule may be supplemented from time to time.
"Financed Student Loan Files" means the documents specified in
Section 3.03 of the Sale and Servicing Agreement.
"Fitch" means Fitch IBCA, Inc.
"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 Insolvency Event occurs with respect to the Seller, (c) the first date
on which the amounts on deposit in each Pre-Funding Account is zero, and (d) the
close of business on the last day of the Collection Period preceding the March
2001 Distribution Date.
"Graduate Loan Programs" means the loan programs, under which
the Seller made Student Loans to students enrolled in or recently graduated from
approved or accredited law schools, medical schools, dental schools, graduate
business schools or other graduate level certificate or degree programs.
"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 June 13, 1998, between PHEAA and
the Eligible Lender Trustee on behalf
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of the Issuer, (ii) in the case of ASA, the Holder Guarantee Agreement dated as
of July 13, 1998, between ASA and the Eligible Lender Trustee on behalf of the
Issuer, (iii) in the case of ECMC, the Holder Agreement for Payment on Guarantee
dated as of January 1, 1999, between ECMC and the Eligible Lender Trustee on
behalf of the Issuer, (iv) in the case of NSLP, the Lender Agreement for
Guaranteed Educational Loans With Federal Reinsurance and the Lender Agreement
for Guarantee of Federal Consolidation Loans with Federal Reinsurance, each
dated as of July 13, 1998 between NSLP and the Eligible Lender Trustee on behalf
of the Issuer, (v) in the case of TERI, the Guarantee Agreement dated as of July
13, 1998, among TERI, the Seller and the Eligible Lender Trustee on behalf of
the Issuer and (vi) in the case of HICA, the Endorsement to Alternative Dental
Educational Assistance Loan Surety Bond Numbers 1994-A, 1994-B, 1995-A and
1996-A dated as of July 13, 1998 and executed by HICA, relative to such Surety
Bonds which were assigned by the Seller to 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 Payment" means any payment made by a Guarantor
pursuant to a Guarantee Agreement in respect of a Financed Student Loan.
"Guarantors" means PHEAA, ASA, ECMC, NSLP, TERI and HICA.
"HICA" means HEMAR Insurance Company of America, a South
Dakota corporation.
"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 January 1, 1999,
between the Issuer and the Indenture Trustee.
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"Indenture Trustee" means Bankers Trust Company, a New York
banking corporation, not in its individual capacity but solely as Indenture
Trustee under the Indenture.
"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.
"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 "Independent" in the Indenture and that the signer is Independent
within the meaning thereof.
"Index Maturity" shall have the meaning set forth in the
definition of "Three-Month LIBOR".
"Initial Certificate Balance" means $34,600,000.
"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 $767,111,823.09, plus as
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of each Subsequent Cutoff Date the principal balance of each Subsequent Pool
Student Loan sold to the Eligible Lender Trustee on behalf of the Issuer on each
Transfer Date during the Funding Period (but no later than the Special
Determination Date).
"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 the Notes or the Certificates, as the case may be, has
been distributed to but excluding the current Distribution Date. In the case of
any LIBOR Indexed Securities and the initial Interest Period, interest will
accrue for the period from the Closing Date to but excluding March 29, 1999
(computed on the basis of the actual number of days elapsed in a year of 360
days) based on Three Month LIBOR as determined on the initial LIBOR
Determination Date and interest will accrue for the period from March 29, 1999
to but excluding June 28, 1999 (computed on the basis of the actual
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number of days elapsed in a year of 360 days) based on Three Month LIBOR as
determined on the LIBOR Determination Date in March 1999.
"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 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 Distribution Date pursuant to Section 5.01(b) of the Sale and
Servicing Agreement.
"Issuer" means KeyCorp Student Loan Trust 1999-A (formerly
named KeyCorp Student Loan Trust 1998-A) until a successor replaces it and,
thereafter, means the successor.
"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.
"Law Loan" means a Law School Loan made by the Seller to an
eligible borrower pursuant to the Programs.
"LIBOR Determination Date" means (x) with respect to each
Interest Period other than the initial Interest Period, the second Business Day
prior to the commencement of each Interest Period and (y) with respect to the
initial Interest Period, as determined pursuant to clause (x) for the period
from the Closing Date to but excluding March 29, 1999 and as determined on the
second Business Day prior to March 29, 1999 for the period from March 29, 1999
to but excluding June 28, 1999. For purposes of this definition a "Business Day"
is any day on which banks in London and New York City are open for the
transaction of business.
"LIBOR Indexed Securities" means the Class A-1 Notes, the
Class A-2 Notes and the Certificates.
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"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 services such Financed Student Loan (which
shall not include any Financed Student Loan on which Guarantee Payments are
received) or which such Servicer has, after using all reasonable efforts to
realize upon such Financed Student Loan, determined to charge off.
"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
which serviced such Liquidated Student Loan 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 Rates or Certificate Rates, 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.
"Maximum TERI Payments Amount" means an amount equal to 19% of
the Initial Pool Balance.
"Minimum Purchase Amount" means the greatest of (i) the
Auction Purchase Amount, (ii) the fair market value of the Financed Student
Loans as of the end of the Collection Period immediately preceding such
Distribution Date, and (iii) the aggregate unpaid principal amount of the Notes
and unpaid principal balance of the Certificates plus, in each case, accrued and
unpaid interest thereon on the related Distribution Date and any amount to be
paid pursuant to Section 5.04(b) FIRST and SECOND of the Indenture.
"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 March 1, 1999.
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"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.
"Net Government Receivable" means, with respect to any
Distribution Date, the sum of the amount of Interest Subsidy Payments and
Special Allowance Payments due from the Department less the amount owed to the
Department for Federal Origination Fee and Federal Consolidation Loan Rebate as
of the end of the related Collection Period.
"Note Collateralization Amount" means, with respect to any
Distribution Date, the sum of (i) the Pool Balance as of the end of the related
Collection Period, (ii) the Pre-Funded Amount as of the end of the related
Collection Period, (iii) the amount on deposit in the Reserve Account after
giving effect to distributions on such Distribution Date, and (iv) the Net
Government Receivable.
"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 Interest Rate" means, with respect to any Interest
Period, (w) in the case of any Class of Notes, the interest rate per annum equal
to the lesser of (i) the sum of (x) in the case of any class of Notes that are
T-Bill Indexed Securities, the weighted average of the T-Bill Rates within such
Interest Period and in the case of any class of Notes that are LIBOR Indexed
Securities, Three-Month LIBOR plus (y) the Applicable Note Margin and (ii) the
Student Loan Rate for such Interest Period. The interest rate per annum for any
class of Notes that are T-Bill Indexed Securities will be computed on the basis
of the actual number of days elapsed in such Interest Period over a period of
365 days (or 366 in a leap year) and in the case of any class of Notes that are
LIBOR Indexed Securities, will be computed on the basis of the actual number of
days elapsed in the related Interest Period divided by 360. In the case of any
LIBOR Indexed Securities and the initial Interest Period, the Note Interest Rate
will equal the interest rate per
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annum equal to the lesser of (i) the weighted average of (x) Three-Month LIBOR
for the period from the Closing Date to but excluding March 29, 1999 (computed
on the basis of the actual number of days elapsed in such period divided by 360)
as determined on the initial LIBOR Determination Date and (y) Three-Month LIBOR
for the period from March 29, 1999 to but excluding June 28, 1999 (computed on
the basis of the actual number of days elapsed in such period divided by 360) as
determined on the LIBOR Determination Date in March 1999, in each case plus the
Applicable Note Margin and (ii) the Student Loan Rate for the initial Interest
Period.
"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 Register" and "Note Registrar" have the respective
meanings specified in Section 2.04 of the Indenture.
"Note Underwriting Agreement" means the Note Underwriting
Agreement dated as of February 3, 1999 between the Seller and the Underwriters.
"Noteholder" means the Person in whose name a Note is
registered in the Note Register.
"Noteholders' Available Interest Distribution Amount" means on
any Distribution Date, an amount equal to (x) the sum of (1) Available Funds for
such Distribution Date, (2) the amounts withdrawn from the Pre-Funding Account
pursuant to Section 5.08(d) of the Sale and Servicing Agreement on such
Distribution Date, and (3) the amounts withdrawn from the Reserve Account
pursuant to Section 5.06(b)(v) of the Sale and Servicing Agreement on such
Distribution Date minus (y) the amount required to be distributed pursuant to
clauses (i) and (ii) of Section 5.05(c) of the Sale and Servicing Agreement,
including any Noteholders' Priority Principal Distribution Amount actually
distributed.
"Noteholders' Available Principal Distribution Amount" means
on the Final Maturity Date for each class of Notes, an
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amount equal to (x) the sum of (1) the Available Funds for such Distribution
Date and (2) the amount, if any, withdrawn from the Reserve Account pursuant to
Sections 5.06(b)(vii) or (viii) of the Sale and Servicing Agreement minus (y)
the amounts required to be distributed pursuant to clauses (i) through (v) of
Section 5.05(c) of the Sale and Servicing Agreement, including the Noteholders'
Priority Principal Distribution Amount for such class of Notes actually
distributed.
"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 over (ii) the
amount of interest actually distributed to the holders of the Notes on such
preceding Distribution Date, plus interest on the amount of such excess interest
due to the holders of the Notes, to the extent permitted by law, at the weighted
average of the Note Interest Rates for 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 aggregate amount of
interest accrued at the applicable Note Interest Rate for the related Interest
Period on the outstanding principal balance of each class of Notes on the
immediately preceding Distribution Date after giving effect to all principal
distributions to Noteholders of such class on such date (or, in the case of the
first Distribution Date, on the Closing Date) and (ii) the Noteholders' Interest
Carryover Shortfall for such Distribution Date; provided, 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 the Notes 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 such Notes that would have
accrued in respect of the related Interest Period had interest been
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calculated based on the T-Bill Rate, if such Notes are T-Bill Indexed Securities
or Three-Month LIBOR if such Notes are LIBOR Indexed Securities, over (b) the
amount of interest on such 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 Distribution Dates (and interest accrued thereon, to the
extent permitted by law, at the applicable rate calculated based on the T-Bill
Rate, in the case of T-Bill Indexed Securities or Three-Month LIBOR, in the case
of LIBOR Indexed Securities); provided, however, that on the Final Maturity Date
for such Notes, the Noteholders' Interest Index Carryover for such Notes 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 the holders for such Notes on such
date pursuant to Sections 5.05(c)(x) 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 Distribution Amount" means, with
respect to any Distribution Date, the Principal Distribution Amount for such
Notes for such Distribution Date; provided, however, that the Noteholders'
Principal Distribution Amount for the Notes will not exceed the outstanding
principal balance of the Notes. In addition, (i) on the Final Maturity Date for
each related class of Notes, the principal required to be distributed to such
class of Notes will include the amount required to reduce the outstanding
principal balance of such class of Notes to zero, and (ii) on the related
Distribution Date following a sale of the Financed Student Loans pursuant to
Section 9.01(a) or (c) of the Sale and Servicing Agreement, the principal
required to be distributed to the holders of Class A-2 Notes will include the
amount required to reduce the outstanding principal balance of the Class A-2
Notes to zero. In the event that the outstanding balance of the Notes is in
excess of the Note Collateralization Amount, the Noteholders' Principal
Distribution Amount will be reduced by the amount of any Noteholders' Priority
Principal Distribution Amount.
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"Noteholders' Priority Principal Distribution Amount" means,
with respect to any Distribution Date, the excess of (i) the aggregate
outstanding principal balance of the Notes (after giving effect to any
distributions on such Distribution Date) over (ii) the Note Collateralization
Amount.
"Notes" means the Class A-1 Notes and Class A-2 Notes.
"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 Eligible Lender
Trustee, 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 a Servicer, one or more written
opinions of counsel who may be an employee of or counsel to the Seller, the
Administrator or such Servicer, which counsel shall be acceptable to the
Indenture Trustee, the Eligible Lender Trustee or the Rating Agencies, as
applicable.
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"Other Additional Pre-Funded Amount" means, with respect to
any Distribution Date, the amount on deposit in the Other Additional Pre-Funding
Subaccount.
"Other Additional Pre-Funding Subaccount" has the meaning set
forth in Section 5.08 of the Sale and Servicing Agreement.
"Other Subsequent Student Loans" means the Serial Loans
(including Consolidation Loans but not including Subsequent Pool Student Loans),
Guarantee Fees Advances and the funding of accrued interest to be capitalized
made by the Seller to an eligible borrower who has one or more existing loans
under the Programs that are Financed Student Loans and are transferred or to be
transferred to the Eligible Lender Trustee on behalf of the Issuer during the
Funding Period 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 which Schedule A may be in the form of microfiche or computer tape.
"Outstanding" means, as of the date of determination, all
Notes theretofore authenticated and delivered under the Indenture except:
(i) Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;
ADVANCE \L 7.20 (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
ADVANCE \L 14.40 (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
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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.
"Outstanding Amount" means the aggregate principal amount of
all Notes Outstanding at the date of determination.
"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.
"PHEAA Fee Schedule" means the fee schedule setting forth the
Servicing Fee and Excess Servicing Fee of PHEAA.
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"Physical Property" has the meaning assigned to such term in
the definition of "Delivery" above.
"Pool Balance" means, at any time, the aggregate principal
balance of the Financed Student Loans at the end of the preceding Collection
Period (including accrued interest thereon for such Collection Period to the
extent such interest will be capitalized upon commencement of repayment), after
giving effect to the following without duplication: (i) all payments received by
the Trust related to the Financed Student Loans during such Collection Period
from or on behalf of borrowers, Guarantors and the Department, (ii) all Purchase
Amounts received by the Trust related to the Financed Student Loans for such
Collection Period from the Seller or the Servicers, (iii) all Additional
Fundings made from the Escrow Account and the Pre-Funding Account with respect
to such Collection Period and (iv) all losses realized on Financed Student Loans
liquidated during such Collection Period.
"Pool Factor" means as of the close of business on a
Distribution Date (i) for the Class A-1 Notes, a seven-digit decimal figure
equal to the outstanding principal balance of the Class A-1 Notes divided by the
original outstanding principal balance of the Class A-1 Notes, (ii) for the
Class A-2 Notes, a seven-digit decimal figure equal to the outstanding principal
balance of the Class A-2 Notes divided by the original outstanding principal
balance of the Class A-2 Notes and (iii) for the Certificates, a seven-digit
decimal figure equal to the Certificate Balance of the Certificates divided by
the Initial Certificate Balance of the Certificates. The Pool Factor for each
class of Securities will be 1.0000000 as of the Closing Date; thereafter, the
Pool Factor for each class of Securities will decrease to reflect reductions in
the outstanding principal balance of such classes of Securities.
"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
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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 Subsequent Pool
Pre-Funding Subaccount and the Other Additional Pre-Funding Subaccount).
"Principal Distribution Amount" means, with respect to any
Distribution Date, the amount by which the sum of the outstanding principal
balance of the Notes and the Certificates exceeds the Specified Collateral
Balance for such Distribution Date.
"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 Private Financed
Loans of such borrower in accordance with the terms of the Programs.
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Programs" means the Graduate Loan Programs, as in effect from
time to time.
"Purchase Amount" means, as of the close of business on the
last day of a Collection Period, 102.85% of the amount required to prepay in
full the respective Financed Student Loan, if it is an Initial Financed Student
Loan, 102.85% of the amount required to prepay in full the respective Financed
Student Loan, if it is a Subsequent Pool Student Loan and 100% of the amount
required to prepay in
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full the respective Financed Student Loan if it is an Other Subsequent Student
Loan, in each case under the terms thereof including all accrued interest
thereon and any lost Interest Subsidy Payments and Special Allowance Payments
with respect thereto.
"Purchased Student Loan" means a Financed Student Loan
purchased as of the close of business on the last day of a Collection Period by
a 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 each of Moody's and Fitch. If any such
organization or successor is no 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 (or
such shorter period as shall be acceptable to the Rating Agencies) and that
neither of the Rating Agencies shall have notified the Seller, the Servicers,
the Eligible Lender Trustee and the Indenture Trustee in writing that such
action will in and of itself result 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 Distribution Date or
Redemption Date, the close of business on the twenty-sixth day of the calendar
month in which such 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
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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 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.]
"Reference Bank" means a leading bank (i) engaged in
transactions in Eurodollar deposits in the international Eurocurrency market,
(ii) not controlling, controlled by or under common control with the
Administrator and (iii) having an established place of business in London.
"Reserve Account" means the account designated as such,
established and maintained pursuant to Section 5.01 of the Sale and Servicing
Agreement.
"Reserve Account Initial Deposit" means $2,595,000.
"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
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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 January 1, 1999 among the Issuer, the Seller, the
Administrator, the Eligible Lender Trustee and the Servicers.
"Schedules of Financed Student Loans" means the listing of the
Financed Student Loans set forth in Schedules A and B to the Sale and Servicing
Agreement and to the Indenture (which Schedules may be in the form of
microfiche), as amended or supplemented on each Transfer Date to reflect the
sale to the Eligible Lender Trustee on behalf of the Trust of the Additional
Student Loans.
"Securities" means the Class A-1 Notes, Class A-2 Notes and
the Certificates.
"Seller" means Key Bank USA, National Association, a national
banking association.
"Seller Optional Deposit" has the meaning specified in Section
5.09 of the Sale and Servicing Agreement.
"Serial Loans" means additional student loans, including
Consolidation Loans, which are made under the Programs to a borrower who is also
a borrower under at least one Initial Financed Student Loan or Subsequent Pool
Student Loan.
"Servicer" means PHEAA, in its capacity as servicer of the
Financed Student Loans it services or EFS, as servicer of the Financed Student
Loans it services, as applicable.
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"Servicer Default" means an event specified in Section 8.01(a)
of the Sale and Servicing Agreement.
"Servicer's Report" means any report of a 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 the EFS Fee
Schedule and the PHEAA Fee Schedule, respectively.
"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.
"Special Determination Date" means March 1, 1999.
"Specified Collateral Balance" means, with respect to any
Distribution Date, the sum of (a) the Pool Balance as of the last day of the
related Collection Period plus (b) the Pre-Funded Amount, as of the last day of
the related Collection Period for such Distribution Date. In the event that the
Financed Student Loans are not sold pursuant to Section 9.01(c) of the Sale and
Servicing Agreement with respect to any Distribution Date occurring on or after
the March 2009 Distribution Date, the Specified Collateral Balance will be zero.
Following a TERI Trigger Event, the Specified Collateral Balance will equal
zero.
"Specified Reserve Account Balance" means with respect to any
Distribution Date an amount equal to the greater of (i) 0.30% of the aggregate
outstanding principal amount of the Notes and the Certificate Balance on such
Distribution Date before giving effect to any distributions on such Distribution
Date and (ii) $1,297,500; provided, however, that in no event will such balance
exceed the sum of the outstanding principal amount of the Notes and the
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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.
"State" means any one of the 50 States of the United States of
America or the District of Columbia.
"Statistical Cutoff Date" means January 1, 1999.
"Student Loan Rate" means for any class of Securities for any
Interest Period a rate equal to 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
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
outstanding principal balance of the Securities as of the first day of such
Interest Period.
"Subsequent Cutoff Date" means the day specified in the
related Transfer Agreement as of which principal and interest accruing with
respect to an Additional Student Loan is to be transferred to the Eligible
Lender Trustee on behalf of the Issuer pursuant to Section 2.02 of the Sale and
Servicing Agreement.
"Subsequent Pool Pre-Funded Amount" means, with respect to any
Distribution Date, the amount on deposit in the Subsequent Pool Pre-Funding
Subaccount.
"Subsequent Pool Pre-Funding Subaccount" has the meaning set
forth in Section 5.08 of the Sale and Servicing Agreement.
"Subsequent Pool Student Loans" means any law school, medical
school, dental school, graduate business school and other graduate school
student loans listed on the
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Schedule of Subsequent Pool Student Loans on the Closing Date as set forth in
Schedule B to the Sale and Servicing Agreement (which Schedules 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 January 1, 1999, among the
Seller, the Administrator, the Trust, the Eligible Lender Trustee, the Indenture
Trustee and the Servicers.
"T-Bill Indexed Securities" means none.
"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.
"Telerate Page 3750 XE "Telerate Page 3750"" means the
display page so designated on the Dow Jones Telerate Service (or such other page
as may replace that page on that service for the purpose of displaying
comparable rates or prices).
-41-
<PAGE> 109
"TERI" means The Education Resources Institute, Inc., a
Massachusetts non-profit corporation.
A "TERI Trigger Event" shall occur when (i) the Cumulative
TERI Claims Ratio exceeds 20% and (ii) a claim has been made under the TERI
Guarantee Agreement and TERI has failed to fully satisfy such claim.
Notwithstanding the foregoing, no TERI Trigger Event will be deemed to occur if
each Rating Agency rating the Securities waives the TERI Trigger Event.
"Three-Month LIBOR XE "Three-Month LIBOR"" means the London
interbank offered rate for deposits in U.S. dollars having a maturity of three
months commencing on the related LIBOR Determination Date (the "Index Maturity
XE "Index Maturity"") which appears on Telerate Page 3750 as of 11:00 a.m.,
London time, on such LIBOR Determination Date. If such rate does not appear on
Telerate Page 3750, the rate for that day will be determined on the basis of the
rates at which deposits in U.S. dollars, having the Index Maturity and in a
principal amount of not less than U.S. $1,000,000, are offered at approximately
11:00 a.m., London time, on such LIBOR Determination Date to prime banks in the
London interbank market by the Reference Banks. The Administrator will request
the principal London office of each of such Reference Banks to provide a
quotation of its rate. If at least two such quotations are provided, the rate
for that day will be the arithmetic mean of the quotations. If fewer than two
quotations are provided, the rate for that day will be the arithmetic mean of
the rates quoted by major banks in New York City, selected by the Administrator,
at approximately 11:00 a.m., New York City time, on such LIBOR Determination
Date for loans in U.S. dollars to leading European banks having the Index
Maturity and in a principal amount equal to an amount of not less than U.S.
$1,000,000; provided that if the banks selected as aforesaid are not quoting as
mentioned in this sentence, Three-Month LIBOR in effect for the applicable
Interest Period will be Three-Month LIBOR in effect for the previous Interest
Period.
"TIA" means the Trust Indenture Act of 1939, as amended.
-42-
<PAGE> 110
"Transfer Agreement" has the meaning specified in Section
2.02(b) of the Sale and Servicing Agreement.
"Transfer Date" means the Closing Date, the fifteenth day (or,
if such day is not a Business Day, the next succeeding Business Day) of any
month or any other date 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.
"Transferred Balance" has the meaning assigned to such term in
Sections 5.05(d) and 5.08 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 the
Pre-Funded Amount 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 January 1, 1999, 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
-43-
<PAGE> 111
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 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.
"Underwriters" shall mean Credit Suisse First Boston
Corporation and McDonald Investments Inc., A Keycorp Company.
"Underwriting Agreement" shall mean the Note Underwriting
Agreement or the Certificate Underwriting Agreement, as applicable.
-44-
<PAGE> 112
SCHEDULE A
TO THE INDENTURE
Schedule of Initial Financed Student Loans
Delivered to Indenture Trustee.
A-1
<PAGE> 113
SCHEDULE B
TO THE INDENTURE
Schedule of Subsequent Pool Student Loans
Delivered to Indenture Trustee.
B-1
<PAGE> 114
SCHEDULE C
TO THE INDENTURE
Location of Financed Student Loan Files - PHEAA
Documents relating to the Financed Student Loans (including original notes) are
stored at PHEAA's facility at 1200 North 7th Street, Harrisburg, Pennsylvania
17102.
Location of Financed Student Loan Files - EFS
Documents relating to the Financed Student Loans (including original notes)
which are serviced by EFS are stored at EFS's facility at 8425 Woodfield
Crossing Boulevard, Suite 401, Indianapolis, Indiana 46240-2495.
C-1
<PAGE> 115
EXHIBIT A-1
TO THE INDENTURE
[FORM OF CLASS A-1 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 AS SET FORTH IN THE
INDENTURE AND THE SALE AND SERVICING AGREEMENT. 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 1999-A
FLOATING RATE CLASS A-1 ASSET BACKED NOTES
KeyCorp Student Loan Trust 1999-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 no later than
on the December 2006 Distribution Date (the "Final Maturity Date").
- - --------------
(1) Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
A-1-1
<PAGE> 116
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) for the
Class A-1 Notes, 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 the Closing Date). 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.
A-1-2
<PAGE> 117
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 1999-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: _______________, 1999
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY, not in its individual
capacity but solely as Indenture Trustee,
By: ____________________________________
Authorized Signatory
Date: _______________, 1999
A-1-3
<PAGE> 118
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its Floating Rate Class A-1 Asset Backed Notes (herein
called the "Class A-1 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 holders of the Notes. The Class A-1 Notes are subject
to all terms of the Indenture. Capitalized but undefined terms shall have the
meanings set forth in the Indenture dated as of January 1, 1999 between KeyCorp
Student Loan Trust 1999-A and Bankers Trust Company as Trustee including
Appendix A to the Indenture.
The Class A-1 Notes and the Issuer's Floating Rate Class A-2
Asset Backed Notes (the "Class A-2 Notes" and, with the Class A-1 Notes, 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 to the extent set forth in the Sale and Servicing Agreement and the
Indenture. "Distribution Date" means the twenty-seventh day of each March, June,
September and December, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing June 28, 1999.
As described on the face hereof, the entire unpaid principal
amount of this Note shall be due and payable on its 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 holders of the
Notes 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 of the same class shall be made pro rata to the holders of such Notes
entitled thereto.
Interest on the Notes will be payable on each Distribution
Date on the principal amount outstanding of each class of Notes until the
principal amount thereof is paid in full, at a rate per annum equal to the Note
Interest Rate for such class of Notes.
The "Note Interest Rate" means, with respect to any Interest
Period, (x) in the case of the Class A-1 Notes, the interest rate per annum
(computed on the basis of the actual number of days elapsed in the related
Interest Period divided by 360) equal to the lesser of (i) Three-Month LIBOR
plus 0.14% and (ii) the Student Loan Rate for such Interest Period, (y) in the
case of the Class A-2 Notes, the interest rate per annum (computed on the basis
of the actual number of days elapsed in the related Interest Period divided by
360) equal to the lesser of (i) Three-Month LIBOR plus 0.33% and (ii) the
Student Loan Rate for such Interest Period.
A-1-4
<PAGE> 119
The "Student Loan Rate" means for any class of Securities 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
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
outstanding principal balance of the Securities as of the first day of such
Interest Period.
Pursuant to the Sale and Servicing Agreement, the
Administrator shall determine the Three-Month LIBOR for purposes of calculating
the Note Interest Rates for each given Interest Period. "Three-Month LIBOR"
means the London interbank offered rate for deposits in U.S. dollars having a
maturity of three months commencing on the related LIBOR Determination Date (the
"Index Maturity") which appears on Telerate Page 3750 as of 11:00 a.m., London
time, on such LIBOR Determination Date. If such rate does not appear on Telerate
Page 3750, the rate for that day will be determined on the basis of the rates at
which deposits in U.S. dollars, having the Index Maturity and in a principal
amount of not less than U.S. $1,000,000, are offered at approximately 11:00
a.m., London time, on such LIBOR Determination Date to prime banks in the London
interbank market by the Reference Banks. The Administrator will request the
principal London office of each of such Reference Banks to provide a quotation
of its rate. If at least two such quotations are provided, the rate for that day
will be the arithmetic mean of the quotations. If fewer than two quotations are
provided, the rate for that day will be the arithmetic mean of the rates quoted
by major banks in New York City, selected by the Administrator, at approximately
11:00 a.m., New York City time, on such LIBOR Determination Date for loans in
the U.S. dollars to leading European banks having the Index Maturity and in a
principal amount equal to an amount of not less than U.S. $1,000,000; provided
that if the banks selected as aforesaid are not quoting as mentioned in this
sentence, Three-Month LIBOR in effect for the applicable Interest Period will be
Three-Month LIBOR in effect for the previous Interest Period. For purposes of
calculating Three-Month LIBOR, a Business Day is any day on which banks in
London and New York City are open for the transaction of business. Interest due
for any Interest Period will be determined based on the actual number of days in
such Interest Period over a 360 day year.
"Reference Bank" means a leading bank (i) engaged in
transactions in Eurodollar deposits in the international Eurocurrency market,
(ii) not controlling, controlled by or under common control with the
Administrator and (iii) having an established place of business in London.
"LIBOR" Determination Date" means (x) with respect to each
Interest Period other than the initial Interest Period, the second Business Day
prior to the commencement of such Interest Period and (y) with respect to the
initial Interest Period, as determined pursuant to clause (x) for the period
from the Closing Date to but
A-1-5
<PAGE> 120
excluding March 29, 1999 and as determined on the second Business Day prior to
March 29, 1999 for the period from March 29, 1999 to but excluding June 28,
1999. For purposes of this definition, a "Business Day" is any day on which
banks in London and New York City are open for the transaction of business.
Any Noteholders' Interest Index Carryover that may exist on
any Distribution Date attributable to each class of Notes shall be payable to
the holders of such classes of Notes on a pro rata basis, based on the amount of
Noteholders' Interest Index Carryover then owing on each class of Notes, 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 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 for this Note to the extent lawful.
As provided in the Indenture, the Class A-1 Notes may be
redeemed in part, on a pro rata basis among all the holders of such Notes, 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 amounts remain
on deposit in the Pre-Funding Account after giving
A-1-6
<PAGE> 121
effect to all Additional Fundings, including any occurring on such Distribution
Date.
As provided in the Indenture, if as of the Special
Determination Date, the Subsequent Pool Pre-Funded Amount is greater than
$10,000,000, such amount will be distributed on the first Distribution Date
thereafter to redeem each class of Notes and prepay the Certificates on a pro
rata basis, based on the initial principal balance of each class of Notes and
the Initial Certificate Balance; if such amount is $10,000,000 or less, it will
be distributed on such Distribution Date only to the holders of the Class A-1
Notes to redeem such Class A-1 Notes.
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 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 holder of the Notes 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 holder of the Notes 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 holder of
the Notes or Note Owner will
A-1-7
<PAGE> 122
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.
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 holders of the Notes 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 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 holder of the Notes
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 holder of
the Notes shall have no claim against any of
A-1-8
<PAGE> 123
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.
A-1-9
<PAGE> 124
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.
A-1-10
<PAGE> 125
EXHIBIT A-2
TO THE INDENTURE
[FORM OF CLASS A-2 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 AS SET FORTH IN THE
INDENTURE AND THE SALE AND SERVICING AGREEMENT. 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 1999-A
FLOATING RATE CLASS A-2 ASSET BACKED NOTES
KeyCorp Student Loan Trust 1999-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 no later than on the December
2029 Distribution Date (the "Final Maturity Date").
- - ----------------
(1) Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
A-4-1
<PAGE> 126
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) for the
Class A-2 Notes, 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 the Closing Date. 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.
A-4-2
<PAGE> 127
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 1999-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: _______________, 1999
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY, not in its individual
capacity but solely as Indenture Trustee,
By: ____________________________________
Authorized Signatory
Date: _______________, 1999
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<PAGE> 128
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its Floating Rate Class A-2 Asset Backed Notes (herein
called the "Class A-2 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 holders of the Notes. The Class A-2 Notes are subject
to all terms of the Indenture. Capitalized but undefined terms shall have the
meanings set forth in the Indenture dated as of January 1, 1999 between KeyCorp
Student Loan Trust 1999-A and Bankers Trust Company as Trustee including
Appendix A to the Indenture.
The Class A-2 Notes and the Issuer's Floating Rate Class A-1
Asset Backed Notes (the "Class A-1 Notes" and, with the Class A-2 Notes, 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 to the extent set forth in the Sale and Servicing Agreement and the
Indenture. "Distribution Date" means the twenty-seventh day of each March, June,
September and December, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing June 28, 1999.
As described on the face hereof, the entire unpaid principal
amount of this Note shall be due and payable on its 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 holders of the
Notes 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 of the same class shall be made pro rata to the holders of such Notes
entitled thereto.
Interest on the Notes will be payable on each Distribution
Date on the principal amount outstanding of each class of Notes until the
principal amount thereof is paid in full, at a rate per annum equal to the Note
Interest Rate for such class of Notes.
The "Note Interest Rate" means, with respect to any Interest
Period, (x) in the case of the Class A-1 Notes, the interest rate per annum
(computed on the basis of the actual number of days elapsed in the related
Interest Period divided by 360) equal to the lesser of (i) Three-Month LIBOR
plus 0.14% and (ii) the Student Loan Rate for such Interest Period, (y) in the
case of the Class A-2 Notes, the interest rate per annum (computed on the basis
of the actual number of days elapsed in the related Interest Period divided by
360) equal to the lesser of (i) Three Monthly LIBOR plus 0.33% and (ii) the
Student Loan Rate for such Interest Period.
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<PAGE> 129
The "Student Loan Rate" means for any class of Securities 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
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
outstanding principal balance of the Securities as of the first day of such
Interest Period.
Pursuant to the Sale and Servicing Agreement, the
Administrator shall determine the Three-Month LIBOR for purposes of calculating
the Note Interest Rates for each given Interest Period. "Three-Month LIBOR"
means the London interbank offered rate for deposits in U.S. dollars having a
maturity of three months commencing on the related LIBOR Determination Date (the
"Index Maturity") which appears on Telerate Page 3750 as of 11:00 a.m., London
time, on such LIBOR Determination Date. If such rate does not appear on Telerate
Page 3750, the rate for that day will be determined on the basis of the rates at
which deposits in U.S. dollars, having the Index Maturity and in a principal
amount of not less than U.S. $1,000,000, are offered at approximately 11:00
a.m., London time, on such LIBOR Determination Date to prime banks in the London
interbank market by the Reference Banks. The Administrator will request the
principal London office of each of such Reference Banks to provide a quotation
of its rate. If at least two such quotations are provided, the rate for that day
will be the arithmetic mean of the quotations. If fewer than two quotations are
provided, the rate for that day will be the arithmetic mean of the rates quoted
by major banks in New York City, selected by the Administrator, at approximately
11:00 a.m., New York City time, on such LIBOR Determination Date for loans in
the U.S. dollars to leading European banks having the Index Maturity and in a
principal amount equal to an amount of not less than U.S. $1,000,000; provided
that if the banks selected as aforesaid are not quoting as mentioned in this
sentence, Three-Month LIBOR in effect for the applicable Interest Period will be
Three-Month LIBOR in effect for the previous Interest Period.
"Reference Bank" means a leading bank (i) engaged in
transactions in Eurodollar deposits in the international Eurocurrency market,
(ii) not controlling, controlled by or under common control with the
Administrator and (iii) having an established place of business in London.
"LIBOR" Determination Date" means (x) with respect to each
Interest Period other than the initial Interest Period, the second Business Day
prior to the commencement of such Interest Period and (y) with respect to the
initial Interest Period, as determined pursuant to clause (x) for the period
from the Closing Date to but excluding March 29, 1999 and as determined on the
second Business Day prior to March 29, 1999 for the period from March 29, 1999
to but excluding June 28, 1999. For
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<PAGE> 130
purposes of this definition, a "Business Day" is any day on which Banks in
London and New York City are open for the transaction of business.
Any Noteholders' Interest Index Carryover that may exist on
any Distribution Date attributable to each class of Notes shall be payable to
the holders of such classes of Notes on a pro rata basis, based on the amount of
Noteholders' Interest Index Carryover then owing on each class of Notes, 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 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 for this Note to the extent lawful.
As provided in the Indenture, if as of the Special
Determination Date, the Subsequent Pool Pre-Funded Amount is greater than
$10,000,000, such amount will be distributed on the first Distribution Date
thereafter to redeem each class of Notes and prepay the Certificates on a pro
rata basis, based on the initial principal balance of each class of Notes and
the Initial Certificate Balance; if such amount is $10,000,000 or less, it will
be distributed on such Distribution Date only to the holders of the Class A-1
Notes to redeem such Class A-1 Notes.
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<PAGE> 131
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 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 holder of the Notes 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 holder of the Notes 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 holder of
the Notes 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
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<PAGE> 132
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.
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 holders of the Notes 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 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 holder of the Notes
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 holder of
the Notes 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.
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<PAGE> 133
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.
A-4-9
<PAGE> 1
EXHIBIT 4.2
Execution Copy
================================================================================
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 January 1, 1999
================================================================================
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
<TABLE>
<CAPTION>
Page
----
<S> <C>
Definitions and Usage.............................................................................................1
</TABLE>
ARTICLE II
Organization
<TABLE>
<S> <C>
SECTION 2.01. Name......................................................................................1
SECTION 2.02. Office....................................................................................2
SECTION 2.03. Purposes and Powers.......................................................................2
SECTION 2.04. Appointment of Eligible Lender Trustee....................................................2
SECTION 2.05. Initial Capital Contribution of Trust Estate..............................................2
SECTION 2.06. Declaration of Trust......................................................................3
SECTION 2.07. Liability of the Certificateholders.......................................................3
SECTION 2.08. Title to Trust Property...................................................................3
SECTION 2.09. Representations and Warranties of the Depositor...........................................4
</TABLE>
ARTICLE III
Trust Certificates and Transfer of Interests
<TABLE>
<S> <C>
SECTION 3.01. Initial Beneficial Ownership..............................................................5
SECTION 3.02. The Trust Certificates....................................................................5
SECTION 3.03. Authentication of Trust Certificates......................................................5
SECTION 3.04. Registration of Transfer and Exchange of Trust Certificates...............................6
SECTION 3.05. Mutilated, Destroyed, Lost or Stolen Trust Certificates...................................7
SECTION 3.06. Persons Deemed Owners.....................................................................7
SECTION 3.07. Access to List of Certificateholders' Names and Addresses.................................7
SECTION 3.08. Maintenance of Office or Agency...........................................................8
SECTION 3.09. Appointment of Certificate Paying Agent...................................................8
SECTION 3.10. Disposition by Depositor..................................................................9
SECTION 3.11. Book-Entry Certificates...................................................................9
SECTION 3.12. Notices to Clearing Agency...............................................................10
SECTION 3.13. Definitive Certificates..................................................................10
</TABLE>
<PAGE> 3
ARTICLE IV
Actions by Eligible Lender Trustee
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 4.01. Prior Notice to Certificateholders with Respect to Certain Matters.......................11
SECTION 4.02. Action by Certificateholders with Respect to Certain Matters.............................11
SECTION 4.03. Action by Certificateholders with Respect to Bankruptcy..................................12
SECTION 4.04. Restrictions on Certificateholders' Power................................................12
SECTION 4.05. Majority Control.........................................................................12
</TABLE>
ARTICLE V
Application of Trust Funds; Certain Duties
<TABLE>
<CAPTION>
<S> <C>
SECTION 5.01. Application of Trust Funds...............................................................12
SECTION 5.02. Method of Payment........................................................................13
SECTION 5.03. No Segregation of Moneys; No Interest....................................................13
SECTION 5.04. Accounting and Reports to the Noteholders, Certificateholders, the Internal
Revenue Service and Others.......................................................13
SECTION 5.05. Signature on Returns; Tax Matters Partner................................................14
</TABLE>
ARTICLE VI
Authority and Duties of Eligible Lender Trustee
<TABLE>
<CAPTION>
<S> <C>
SECTION 6.01. General Authority........................................................................14
SECTION 6.02. General Duties...........................................................................14
SECTION 6.03. Action upon Instruction..................................................................15
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.....................................................................16
SECTION 6.05. No Action Except Under Specified Documents or Instructions...............................16
SECTION 6.06. Restrictions.............................................................................16
</TABLE>
ARTICLE VII
Concerning the Eligible Lender Trustee
<TABLE>
<CAPTION>
<S> <C>
SECTION 7.01. Acceptance of Trusts and Duties..........................................................17
SECTION 7.02. Furnishing of Documents..................................................................18
SECTION 7.03. Representations and Warranties...........................................................18
SECTION 7.04. Reliance; Advice of Counsel..............................................................19
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 7.05. Not Acting in Individual Capacity........................................................19
SECTION 7.06. Eligible Lender Trustee Not Liable for Trust Certificates or Financed Student
Loans............................................................................20
SECTION 7.07. Eligible Lender Trustee May Own Trust Certificates and Notes.............................20
</TABLE>
ARTICLE VIII
Compensation of Eligible Lender Trustee
<TABLE>
<CAPTION>
<S> <C>
SECTION 8.01. Eligible Lender Trustee's Fees and Expenses..............................................20
SECTION 8.02. Payments to the Eligible Lender Trustee..................................................20
</TABLE>
ARTICLE IX
Termination of Trust Agreement
<TABLE>
<CAPTION>
<S> <C>
SECTION 9.01. Termination of Trust Agreement...........................................................21
SECTION 9.02. Dissolution upon Insolvency of the Depositor.............................................22
</TABLE>
ARTICLE X
Successor Eligible Lender Trustees and
Additional Eligible Lender Trustees
<TABLE>
<CAPTION>
<S> <C>
SECTION 10.01. Eligibility Requirements for Eligible Lender Trustee....................................22
SECTION 10.02. Resignation or Removal of Eligible Lender Trustee.......................................23
SECTION 10.03. Successor Eligible Lender Trustee.......................................................23
SECTION 10.04. Merger or Consolidation of Eligible Lender Trustee......................................24
SECTION 10.05. Appointment of Co-Eligible Lender Trustee or Separate Eligible Lender Trustee...........24
</TABLE>
ARTICLE XI
Miscellaneous
<TABLE>
<CAPTION>
<S> <C>
SECTION 11.01. Supplements and Amendments..............................................................26
SECTION 11.02. No Legal Title to Trust Estate in Certificateholders....................................27
SECTION 11.03. Limitations on Rights of Others.........................................................27
SECTION 11.04. Notices.................................................................................27
SECTION 11.05. Severability............................................................................27
SECTION 11.06. Separate Counterparts...................................................................27
SECTION 11.07. Successors and Assigns..................................................................28
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 11.08. No Petition.............................................................................28
SECTION 11.09. No Recourse.............................................................................28
SECTION 11.10. Headings................................................................................29
SECTION 11.11. Governing Law...........................................................................29
EXHIBIT A Certificate
EXHIBIT B Form of Certificate Depository Agreement.
</TABLE>
-iv-
<PAGE> 6
AMENDED AND RESTATED TRUST AGREEMENT (the "Trust Agreement")
dated as of January 1, 1999, 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, amending and restating that certain trust
agreement (the "Original Trust Agreement") dated July 13, 1998 between the
parties hereto.
WHEREAS the Original Trust Agreement was entered into as of
July 13, 1998;
WHEREAS the Original Trust Agreement is hereby amended and
restated in its entirety as of January 1, 1999, in order to, inter alia, change
the name of the Trust from "KeyCorp Student Loan Trust 1998-A" to "KeyCorp
Student Loan Trust 1999-A" and to make such other 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 the Original
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 Allowance
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.
ARTICLE II
Organization
------------
SECTION 2.01. Name. The Trust created under the Original Trust
Agreement shall be known as "KeyCorp Student Loan Trust 1999-A" (which was
formerly named KeyCorp Student Loan Trust 1998-A under the Original Trust
Agreement) 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.
<PAGE> 7
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
holders of the Trust Certificates 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 holders of the Trust Certificates 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
holders of the Trust Certificates, the holders of the Notes and the
others specified in Section 5.05 of the Sale and Servicing Agreement.
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.
Pursuant to the Original Trust Agreement, the Depositor has sold, assigned,
transferred, conveyed and set over to the Eligible Lender Trustee, as of the
date thereof, the sum of $1.00. The Eligible Lender Trustee hereby acknowledges
receipt in trust from the Depositor, as of the date thereof, of the foregoing
contribution, which shall constitute the initial Trust Estate and shall be
deposited in the
-2-
<PAGE> 8
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
holders of the Trust Certificates, 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 holders of the Trust Certificates (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, 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 holder of the Trust Certificates or a Certificate Owner in
the capacity of an investor in the Trust Certificates or a holder of the Notes
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
separate classes 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 holder of a Trust Certificate, 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.
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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 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 with respect to any Loan Group 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 holders of the Trust Certificates 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
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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 distributed to such
holders of the Trust Certificates 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 holders of the Trust Certificates 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 holders of the Trust Certificates, 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 in the form of
Exhibit A hereto and shall be executed on behalf of the Trust by manual or
facsimile signature of an authorized officer of the Eligible Lender Trustee.
Trust 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.
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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 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 holder of the Trust
Certificates, 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 holder of the Trust Certificates
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.
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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 holder of the Trust
Certificates thereof or Certificate Owner thereof shall be deemed to have
represented and warranted that it is not a Benefit Plan.
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 the same
class in authorized denominations of like aggregate amount. 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
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list, in such form as the Depositor may reasonably require, of the names and
addresses of the holders of the Trust Certificates as of the most recent Record
Date. If three or more holders of the Trust Certificates or one or more holders
of the Trust Certificates 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 holders of the Trust
Certificates 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 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 the holders of the Trust Certificates. 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 the holders of the Trust
Certificates produced in response thereto. Each holder of the Trust
Certificates, 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 holders of
the Trust Certificates 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 the holders of the Trust
Certificates 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 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
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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 holders of the Trust Certificates in trust for the benefit of the
holders of the Trust Certificates entitled thereto until such sums shall be paid
to such holders of the Trust Certificates. 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 Certificates,
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 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 holder of the Trust Certificates 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;
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(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 the holders of the 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 holders of the Trust Certificates 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 all such notices and communications specified herein to be given to
the holders of the Trust Certificates 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 Owners of 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 the holders of the Trust Certificates. The
Definitive Certificates shall, at the expense of the Depositor, be printed,
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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 Eligible Lender Trustee shall have notified the holders of the Trust
Certificates in writing of the proposed action and the holders of the Trust
Certificates shall not have notified the Eligible Lender Trustee in writing
prior to the 30th day after such notice is given that such holders of the Trust
Certificates 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 aforementioned 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 holder of the Notes is
required;
(c) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any holder of the Notes is not
required and such amendment materially adversely affects the interest
of the holders of the Trust Certificates;
(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 holders of the
Trust Certificates; 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 holders of the Trust Certificates, 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
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Eligible Lender Trustee shall take the actions referred to in the preceding
sentence only upon written instructions signed by the holders of the Trust
Certificates.
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 holders of the Trust Certificates and the delivery to the
Eligible Lender Trustee by each such holder of the Trust Certificates of a
certificate certifying that such holder of the Trust Certificates reasonably
believes that the Trust is insolvent.
SECTION 4.04. Restrictions on Certificateholders' Power. The
holders of the Trust Certificates 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 obligations of the Trust or the Eligible Lender Trustee under
the Higher Education Act or 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 holders of the Trust Certificates
under this Agreement may be taken by the holders of Trust Certificates
evidencing not less than a majority of the sum of the Certificate Balances.
Except as expressly provided herein, any written notice of the holders of the
Trust Certificates delivered pursuant to this Agreement shall be effective if
signed by holders of the 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 holders of the
Certificates, 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 holder of the Trust Certificates 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 holder of the Trust
Certificates, such tax shall reduce the amount otherwise distributable
to such holder in accordance with this Section. The Eligible Lender
Trustee is hereby authorized and directed to retain from amounts
otherwise distributable to the holders of the Trust Certificates
sufficient funds for the payment of any tax that is legally owed by the
Trust (but such authorization shall not
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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 holder of the Trust
Certificates shall be treated as cash distributed to such holder of the
Trust Certificates 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. holder of the Trust Certificates), 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 holder of
the Trust Certificates wishes to apply for a refund of any such
withholding tax, the Eligible Lender Trustee shall reasonably cooperate
with such holder in making such claim so long as such holder of the
Trust Certificates 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 the holders of the Trust Certificates on
any Distribution Date shall be made to each such holder of record on the
preceding Record Date either by wire transfer, in immediately available funds,
to the account of such holder at a bank or other entity having appropriate
facilities therefor, if such holder 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
holder's Trust Certificates in the aggregate evidence a denomination of not less
than $1,000,000, or, if not, by check mailed to such holder at the address of
such holder 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 its 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 other location specified in writing to the holder 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
holder of the Trust Certificates (and to each Person who was a holder of the
Trust Certificates 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
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(including Schedule K-1) to enable each such holder of the Trust Certificates 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 the holders of the Trust Certificates. 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 holder of the Trust Certificates 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.
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 $830,400,000. 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.
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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 holders of the Trust Certificates, 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
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
holders of the Trust Certificates 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 holders of the Trust Certificates
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 holders of the Trust Certificates 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 holders of the Trust Certificates 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 holders of the Trust
Certificates, and shall have no liability to any Person for such action
or inaction.
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(d) In the event that the Eligible Lender Trustee is unsure as
to the application of any provision of this Agreement 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 holders of the Trust
Certificates 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 holders of the Trust Certificates, 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 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.
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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 holders of the Trust Certificates 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 it in accordance
with the direction or instructions of the Administrator or any holder
of the Trust Certificates;
(c) subject to Section 7.07 hereof, 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
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Trustee shall in no event assume or incur any liability, duty, or
obligation to any holder of the Notes or to any holder of the Trust
Certificates, other than as expressly provided for herein and in the
other Basic Documents;
(f) subject to Section 7.07 hereof, 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
any 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 any 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 request, order or direction of any of the holders of
the Trust Certificates, unless such holders 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 holders of the Trust Certificates 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 holders of the Trust Certificates, 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.
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<PAGE> 24
(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 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, resolution, 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 this
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Agreement or any other Basic Document shall look only to the Trust Estate for
payment or satisfaction thereof.
Notwithstanding any other provision in this Agreement or the
other Basic Documents, nothing in this Agreement or the other Basic Documents
shall be construed to limit the legal responsibility of the Eligible Lender
Trustee or the Indenture Trustee to the U.S. Secretary of Education or a
Guarantor for any violations of statutory or regulatory requirements that may
occur with respect to loans held by the Eligible Lender Trustee or the Indenture
Trustee, pursuant to or to otherwise comply with their obligations under the
Higher Education Act or implementing regulations.
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. Subject to
Section 7.07 hereof, 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 holders of the Trust Certificates under this Agreement or the
holders of the Notes 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 any 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 any 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
any Servicer in banking transactions with the same rights as it would have if it
were not Eligible Lender Trustee.
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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 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 holder of the Trust Certificates, 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 holder'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 holder of the Trust Certificates shall be entitled to
revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the
Distribution Date upon which the holders of the Trust Certificates
shall 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 the holders
of the Trust Certificates 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
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<PAGE> 27
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 the holders of the Trust Certificates.
Upon presentation and surrender of the Trust Certificates, the
Certificate Paying Agent shall cause to be distributed to the holders
of the Trust Certificates amounts distributable to such holders on such
Distribution Date pursuant to Section 5.01.
In the event that all the holders of the Trust Certificates
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 holders of
the Trust Certificates 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 holders of the Trust Certificates 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 the
holders of the Trust Certificates (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 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 holders of the Trust Certificates
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 holders of the Notes 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.
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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 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. 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
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<PAGE> 29
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 to each of the Rating Agencies.
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 holders of the Trust
Certificates, the Indenture Trustee, all holders of the Notes 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
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<PAGE> 30
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.
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
(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
-25-
<PAGE> 31
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 holders of the
Notes or the holders of the Trust Certificates, 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
holders of the Notes or the holders of the Trust Certificates; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any holder of the
Notes or holder of the Trust Certificates.
This Agreement may also be amended from time to time by the
Depositor and the Eligible Lender Trustee, with prior written notice to the
Rating Agencies, (i) with the consent of the holders of Notes evidencing not
less than a majority of the Outstanding Amount of the Notes and (ii) with the
consent of the holders of the Trust 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 holders of the Notes or the
holders of the Trust Certificates; 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 holders
of any class of Notes or the holders of any class of Trust Certificates or (b)
reduce the aforesaid percentage of the Outstanding Amount of the Notes and the
Certificate Balances required to consent to any such amendment,
-26-
<PAGE> 32
without the consent of all the outstanding holders of the Notes and holders of
the Trust Certificates.
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 holder of the Trust Certificates, the
Indenture Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of the holders of
the Trust Certificates, the holders of the Notes 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 the holders of the Trust Certificates provided for in this Agreement
or in any other Basic Document) and of evidencing the authorization of the
execution thereof by holders of the Trust Certificates 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 holders of the Trust Certificates shall not have legal
title to any part of the Trust Estate. The holders of the Trust Certificates
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 holders of the Trust Certificates to and in their beneficial ownership
interest 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 holders of the Trust Certificates,
the Administrator and, to the extent expressly provided herein, the Indenture
Trustee and the holders of the Notes, 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,
-27-
<PAGE> 33
800 Superior Avenue, Cleveland, Ohio 44114, 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 holder
of the Trust Certificates shall be given by first-class mail, postage
prepaid, at the address of such holder 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 such holder 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.
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 holder of the Trust Certificates and its successors and
permitted assigns, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by a holder of the Trust
Certificates shall bind the successors and assigns of such holder.
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 holder of the Trust Certificates, by accepting a Trust
Certificate, and the Indenture Trustee and each holder of the Notes 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 holder of the Trust
Certificates by accepting a Trust Certificate acknowledges that such holder's
Trust Certificates represent beneficial interests in the Trust only and do not
represent interests in or obligations of the Seller,
-28-
<PAGE> 34
any 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.
-29-
<PAGE> 35
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 ASSOCIATION,
Depositor,
By:
-----------------------------------
Name: Darlene Dimitrijevs
Title: Vice President
-30-
<PAGE> 36
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 1999-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, medical
school, dental school, graduate business school and other graduate
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.
1
<PAGE> 37
THIS CERTIFIES THAT _______________ is the registered owner of
dollars nonassessable, fully-paid, fractional undivided interest in the KeyCorp
Student Loan Trust 1999-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 July 13, 1998, as amended and restated as of January 1, 1999 (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 January 1, 1999, among the
Trust, the Eligible Lender Trustee, the Seller, Pennsylvania Higher Education
Assistance Agency, as servicer ( "Servicer"), EFS Services, Inc., as servicer
("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 January 1, 1999,
between the Trust and Bankers Trust Company, 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,
medical school, dental school, graduate business school and other graduate
school student loans (the "Financed Student Loans"), all moneys paid thereunder
(except from the proceeds on any Guarantee Payments made by TERI) on or after
January 1, 1999 (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 for this Trust Certificate, and principal and certain other
amounts will be distributed on the twenty-seventh day of each March, June,
September and December (or, if such twenty-seventh day is not a Business Day,
the next succeeding Business Day) (each a "Distribution Date"), commencing on
June 28, 1999 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 holder's fractional undivided interest in the amount or amounts to be
distributed to the holders of the Trust Certificates on such Distribution Date
pursuant to the Sale and Servicing Agreement.
<PAGE> 38
The Trust Certificates may be paid in part, in certain
circumstances on a pro rata basis among all holders of Securities, on June 28,
1999 to the extent the Subsequent Pool Pre-Funded Amount is greater than
$10,000,000 as of the Special Determination Date after giving effect to the
purchase of any Subsequent Pool Student Loans on such date.
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 holders of the Notes as described in the Sale
and Servicing Agreement and the Indenture.
It is the intent of the Seller, each Servicer, the
Administrator, the holders of the Trust Certificates 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
holders of the Trust Certificates (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 holders of the Trust
Certificates 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 holder of a Trust Certificate 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
holder 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.
The Trust Certificates do not represent an obligation of, or
an interest in, the Seller, any 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 holder of the Trust Certificates upon request.
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
<PAGE> 39
"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.
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.
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 1999-A
By: THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but
solely as Eligible Lender Trustee,
By:
-----------------------------
Authorized Signatory
Date: February , 1999
--
<PAGE> 40
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: February , 1999
--
<PAGE> 41
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 4.3
EXECUTION COPY
SALE AND SERVICING AGREEMENT
among
KEYCORP STUDENT LOAN TRUST 1999-A
as Issuer,
KEY BANK USA, NATIONAL ASSOCIATION
as Seller,
PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY
as Servicer,
EFS SERVICES, INC.,
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 January 1, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I Definitions and Usage...............................................................................1
ARTICLE II Conveyance of Financed Student Loans................................................................2
SECTION 2.01. Conveyance of Initial Financed Student Loans......................................2
SECTION 2.02. Conveyance of Subsequent Pool Student Loans and Other Subsequent 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.......................................................................5
ARTICLE III The Financed Student Loans..........................................................................5
SECTION 3.01. Representations and Warranties of Seller with Respect to the Financed
Student Loans.....................................................................5
SECTION 3.02. Repurchase upon Breach; Reimbursement.............................................8
SECTION 3.03. Custody of Financed Student Loan Files............................................9
SECTION 3.04. Duties of Servicer as Custodian...................................................9
SECTION 3.05. Instructions; Authority To Act...................................................10
SECTION 3.06. Custodian's Indemnification......................................................10
SECTION 3.07. Effective Period and Termination.................................................10
SECTION 3.08. Schedule of Financed Student Loans...............................................11
ARTICLE IV Administration and Servicing of Financed Student Loans.............................................11
SECTION 4.01. Duties of Servicer...............................................................11
SECTION 4.02. Collection of Financed Student Loan Payments.....................................13
SECTION 4.03. Realization upon Financed Student Loans..........................................14
SECTION 4.04. Computation of Note Interest Rate and Certificate Rate...........................15
SECTION 4.05. No Impairment....................................................................15
SECTION 4.06. Purchase of Financed Student Loans; Reimbursement................................15
SECTION 4.07. Servicing Fee; Excess Servicing Fee..............................................16
SECTION 4.08. Administrator's Certificate; Servicer's Report...................................16
SECTION 4.09. Annual Statement as to Compliance; Notice of Default.............................17
SECTION 4.10. Annual Independent Certified Public Accountants' Report..........................17
SECTION 4.11. Access to Certain Documentation and Information Regarding Financed
Student Loans....................................................................18
SECTION 4.12. Servicer and Administrator Expenses..............................................18
SECTION 4.13. Appointment of Subservicer.......................................................18
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 4.14. Special Programs.................................................................19
ARTICLE V Distributions; Reserve Account; Statements to Certificateholders
and Noteholders....................................................................................19
SECTION 5.01. Establishment of Trust Accounts..................................................19
SECTION 5.02. Collections......................................................................21
SECTION 5.03. Application of Collections.......................................................22
SECTION 5.04. Additional Deposits..............................................................22
SECTION 5.05. Distributions....................................................................23
SECTION 5.06. Reserve Account..................................................................24
SECTION 5.07. Statements to Certificateholders and Noteholders.................................27
SECTION 5.08. Pre-Funding Account..............................................................28
SECTION 5.09. Seller Optional Deposit..........................................................31
ARTICLE VI The Seller and the Administrator...................................................................31
SECTION 6.01. Representations of Seller and Administrator......................................31
SECTION 6.02. Existence........................................................................33
SECTION 6.03. Liability of Seller; Indemnities.................................................33
SECTION 6.04. Liability of Administrator; Indemnities..........................................34
SECTION 6.05. Merger or Consolidation of, or Assumption of the Obligations of, Seller
or Administrator.................................................................35
SECTION 6.06. Limitation on Liability of Seller, Administrator and Others......................36
SECTION 6.07. Seller May Own Certificates or Notes.............................................36
SECTION 6.08. Key Bank USA, National Association Not To Resign as Administrator................36
ARTICLE VII The Servicer.......................................................................................37
SECTION 7.01. Representations of Servicer......................................................37
SECTION 7.02. Indemnities of Servicer..........................................................39
SECTION 7.03. Merger or Consolidation of, or Assumption of the Obligations of, Servicer........39
SECTION 7.04. Limitation on Liability of Servicer and Others...................................40
SECTION 7.05. Neither PHEAA Nor EFS To Resign as Servicer......................................41
ARTICLE VIII Default............................................................................................41
SECTION 8.01. Servicer Default; Administrator Default..........................................41
SECTION 8.02. Appointment of Successor.........................................................43
SECTION 8.03. Notification to Noteholders and Certificateholders...............................44
SECTION 8.04. Waiver of Past Defaults..........................................................44
ARTICLE IX Termination........................................................................................45
</TABLE>
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<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 9.01. Termination......................................................................45
ARTICLE X [Reserved].........................................................................................47
ARTICLE XI Miscellaneous......................................................................................47
SECTION 11.01. Amendment........................................................................47
SECTION 11.02. Protection of Interests in Trust.................................................48
SECTION 11.03. Notices..........................................................................51
SECTION 11.04. Assignment.......................................................................51
SECTION 11.05. Limitations on Rights of Others..................................................51
SECTION 11.06. Severability.....................................................................51
SECTION 11.07. Separate Counterparts............................................................52
SECTION 11.08. Headings.........................................................................52
SECTION 11.09. Governing Law....................................................................52
SECTION 11.10. Assignment to Indenture Trustee..................................................52
SECTION 11.11. Nonpetition Covenants............................................................52
SECTION 11.12. Limitation of Liability of Eligible Lender Trustee and Indenture Trustee.........52
</TABLE>
APPENDIX A Definitions and Usage
SCHEDULE A Schedule of Initial Financed Student Loans
SCHEDULE B Schedule of Subsequent Pool Student Loans
SCHEDULE C Location of Financed Student Loan Files
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 Assignment on Closing Date
EXHIBIT E Form of Transfer Agreement
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<PAGE> 5
SALE AND SERVICING AGREEMENT dated as of January 1, 1999,
among KEYCORP STUDENT LOAN TRUST 1999-A, a New York trust (the "Issuer"), KEY
BANK USA, NATIONAL ASSOCIATION, a national banking association and successor in
interest to Society National Bank (the "Seller"), PENNSYLVANIA HIGHER EDUCATION
ASSISTANCE AGENCY, an agency of the Commonwealth of Pennsylvania, as servicer (a
"Servicer"), EFS SERVICES, INC., an Indiana corporation (a "Servicer"), THE
FIRST NATIONAL BANK OF CHICAGO, a national 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 July 13, 1998, the Seller assigned to the Issuer
(formerly known as KeyCorp Student Loan Trust 1998-A) 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 by
the Seller or its predecessors, 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 or acquire 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 each Servicer and the Administrator are willing to
service the portion of such student loans it services 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:
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.
<PAGE> 6
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 the net proceeds from the sale of the 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 D, 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 of the Seller 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 forbearances), 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 of the Seller in and to
all funds on deposit from time to time in the Trust Accounts,
including, but not limited to, the Reserve Account Initial Deposit and
the Pre-Funded Amount (including all income thereon); and
(iv) the proceeds of any and all of the foregoing.
SECTION 2.02. Conveyance of Subsequent Pool Student Loans and
Other Subsequent 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 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 Subsequent Pool
Student Loan and each Other Subsequent Student Loan, 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 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 Eligible Lender Trustee
on behalf of the Issuer the Subsequent Pool Student Loans and/or the Other
Subsequent Student Loans for a
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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 E (each, a
"Transfer Agreement"), which shall include supplements to Schedule B
listing such Subsequent Pool Student Loans and/or the Other Subsequent
Student Loans, as applicable;
(ii) except for the Additional Student Loans transferred on
the Closing Date, 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 Subsequent Pool Student Loans or Other Subsequent
Student Loans, as the case may be;
(iii) the Seller shall, to the extent required by Section
5.02, have deposited in the Collection Account all collections in
respect of the Subsequent Pool Student Loans and/or Other Subsequent
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 holders of Notes or
the holders of Certificates;
(vi) the Funding Period shall not have terminated and, with
respect to Subsequent Pool Student Loans, the Transfer Date is on or
prior to the Special Determination Date;
(vii) the Seller shall have delivered to the Indenture Trustee
and the Eligible Lender Trustee an Officers' 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
Subsequent Pool Student Loans and/or Other Subsequent 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);
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<PAGE> 8
(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 holders of Certificates or the holders
of Notes shall have been utilized in selecting the Subsequent Pool
Student Loans or the Other Subsequent Student Loans;
(xi) no Consolidation Loan will be transferred to the Issuer
unless at least one underlying student loan to be consolidated is a
Financed Student Loan already held by the Eligible Lender Trustee on
behalf of the Issuer; and
(xii) the Issuer may not purchase any Other Subsequent Student
Loans which are (a) Stafford Loans, if after giving effect to such
purchase Stafford Loans which are Other Subsequent Student Loans in an
aggregate principal amount of $30,000,000 have been purchased by the
Issuer, (b) Federal Consolidation Loans, if after giving effect to such
purchase Federal Consolidation Loans which are Other Subsequent Student
Loans in an aggregate principal amount of $30,000,000 have been
purchased by the Issuer, (c) Private Consolidation Loans, if after
giving effect to such purchase Private Consolidation Loans which are
Other Subsequent Student Loans in an aggregate principal amount of
$30,000,000 have been purchased by the Issuer and (d) Private Loans,
which are not Private Consolidation Loans, if after giving effect to
such purchase Private Loans, which are not Private Consolidation Loans
and are Other Subsequent Student Loans, in an aggregate principal
amount of $30,000,000 have been purchased by the Issuer, in each case
without giving effect to any capitalized interest accrued thereon;
provided, however, that the Seller shall not incur any liability as a result of
transferring Subsequent Pool Student Loans or Other Subsequent 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 Other Subsequent Student Loans with an aggregate principal balance of not
less than $30,000,000 (less the Pre-Funded Amount thereof, if any, used by the
Trust to fund shortfalls in the payment of interest on the Notes and the
Certificates); 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 Other Subsequent Student Loans equal to the
amount specified above during the Funding Period, the Seller not being able to
transfer Other Subsequent 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.
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<PAGE> 9
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, 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.
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.
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 Other
Subsequent 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 Programs. 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
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<PAGE> 10
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. Each Financed Student
Loan that is a Financed Private Loan qualifies the holder thereof to
receive Guarantee Payments from the applicable Guarantor pursuant to
the applicable Guarantee Agreement.
(ii) Schedules 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 holders of Notes or the holders of Certificates 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 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 Initial Financed Student Loan or
Subsequent Pool Student Loan has a payment that is more than 180 days
overdue as of the Cutoff Date or, with respect to the Other Subsequent
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 150 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;
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<PAGE> 11
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
to 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 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) Security Interest Perfected. All filings (including UCC
filings) and/or delivery requirements 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, have
been made or satisfied, as the case may be.
(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 January 1, 1999, is $767,111,823.09, and
the aggregate principal balance of the Subsequent Pool Student Loans,
plus accrued interest to be capitalized with respect thereto, as of
January 1, 1999 is $32,180,803.50.
(xii) No Claims. As of the Cutoff Date, no claim for payment
with respect to an Initial Financed 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.
(xiii) No Bankruptcies or Deaths. No borrower of any Financed
Student Loan as of January 1, 1999 (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.
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<PAGE> 12
(xiv) 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.
(xv) Interest Accruing. Each Financed Student Loan is accruing
interest (whether or not such interest is being paid currently, by the
borrower or by the Department, or is being capitalized), except as
otherwise expressly permitted by the Basic Documents.
(xvi) 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, any 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 any Servicer of such breach, the Seller shall be
obligated to repurchase any Financed Student Loan in which the interests of the
holders of Notes or the holders of Certificates 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 in accordance with the Guarantee Agreements 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 holders of Notes or the holders of
Certificates 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 Issuer as
provided above pursuant to this Section, subject to the conditions contained
herein.
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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 (x) PHEAA, in its
capacity as a Servicer and PHEAA hereby accepts such appointment, to act for the
benefit of the Issuer and the Indenture Trustee as custodian of the following
documents or instruments related to the Financed Student Loans it services (as
set forth in Schedules A and B hereto) and (y) EFS and EFS hereby accepts such
appointment, to act for the benefit of the Issuer and the Indenture Trustee as
custodian of the following documents or instruments related to the Financed
Student Loans it services (as set forth in Schedules A and B hereto), in each
case, 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 applicable 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.
Unless otherwise specified, all references to actions to be
taken by "the Servicer" as "custodian" under this Article III or any other
provision of this Agreement with respect to the Financed Student Loans or the
Financed Student Loan Files shall be deemed to refer to actions to be taken by
each Servicer with respect to the Financed Student Loans serviced by such
Servicer, as specified on Schedules A and B hereto, or with respect to the
Financed Student Loan Files held by such Servicer. Consistent with the
foregoing, but only insofar as the context so permits, this Article III is to be
read with respect to each custodian as if such custodian alone was holding its
respective Financed Student Loans hereunder.
SECTION 3.04. Duties of Servicer as Custodian. (a)
Safekeeping. The Servicer, as custodian, 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
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<PAGE> 14
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
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, as
custodian, shall maintain each Financed Student Loan File at one of its offices
specified in Schedule C 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, as custodian, 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, as
custodian, 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,
as it relates to PHEAA, 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.
SECTION 3.07. Effective Period and Termination. Each of
PHEAA's and EFS'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
and EFS, respectively, shall remain a Servicer hereunder. If PHEAA, EFS or any
successor Servicer shall resign as Servicer in accordance with the
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provisions of this Agreement or if all the rights and obligations of PHEAA, EFS
or any such successor Servicer shall have been terminated under Section 8.01,
the appointment of PHEAA, EFS 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 it holds consisting of electronic records and information,
and (ii) 30 Business Days, with respect to the remaining portion of the Financed
Student Loan Files it holds), such Servicer shall deliver the Financed Student
Loan Files it holds to the Indenture Trustee or the Indenture Trustee's agent at
such place or places as the Indenture Trustee may reasonably designate.
SECTION 3.08. Schedule of Financed Student Loans. Schedules A
and B hereto shall indicate by name the Servicer whose obligation it is to
service each Financed Student Loan set forth on each such schedule. Such
indication shall be conclusive evidence of the applicable Servicer's obligation
to service such Financed Student Loans absent manifest error.
ARTICLE IV
Administration and Servicing of Financed Student Loans
SECTION 4.01. Duties of Servicers. Unless otherwise specified,
all references to actions to be taken by "the Servicer" under this Article IV or
any other provision of this Agreement with respect to Financed Student Loans or
with respect to Financed Student Loan Files shall be deemed to refer to actions
to be taken by each Servicer with respect to Financed Student Loans serviced by
such Servicer, as specified on Schedules A and B hereto, or with respect to
Financed Student Loan Files held by such Servicer. In addition, unless otherwise
specified, all references to actions previously taken by "the Servicer" under
this Article IV or any other provision of this Agreement with respect to
Financed Student Loans or with respect to Financed Student Loan Files shall be
deemed to refer to actions previously taken by the related Servicer with respect
to such Financed Student Loan or Financed Student Loans or with respect to
Financed Student Loan Files. Further, unless otherwise specified, all references
to actions to be taken by "the Servicer" under this Article IV or any other
provision of this Agreement with respect to a Trust Account or the preparation
or delivery of any report or Officers' Certificate shall be deemed to refer to
actions to be taken by each Servicer with respect to such Trust Account or
preparation or delivery of such report or Officers' Certificate, and all
references to actions previously taken by "the Servicer" under this Article IV
or any other provision of this Agreement with respect to a Trust Account or the
preparation or delivery of any report or Officers' Certificate shall be deemed
to refer to actions previously taken by the related Servicer with respect to
such Trust Account or preparation or delivery of such report or Officers'
Certificate. Consistent with the foregoing, but only insofar as the context so
permits, this Article IV is to be read with respect to each Servicer as if such
Servicer alone were servicing and administering its respective Financed Student
Loans hereunder. Further still, unless otherwise specified, all references to
"the Servicer" under this Article IV or any other provision of this Agreement
with respect to representations, warranties or covenants of the Servicer shall
be deemed to refer to representations, warranties or covenants made by each
Servicer, except that
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representations, warranties or covenants with respect to the Financed Student
Loans are hereby made by each Servicer only with respect to the Financed Student
Loans it services. Further still, unless otherwise specified, all references to
"the Servicer" in Sections 7.01, 7.02, 7.03, 7.04, 8.01 and 11.02 shall be
references to each Servicer as if each Servicer was referred to alone.
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 holders of
Certificates or the holders of Notes. 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 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 holders of Certificates and the holders of Notes 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)
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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 of the Higher Education Act, any Guarantee Agreement
or the Programs with respect to the servicing of the Financed Student Loans and
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 Programs 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 each Servicer to maintain any and all collection procedures
with respect to the Financed Student Loans it services, 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 holders of Certificates
or the holders of Notes. 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
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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 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 Federal Guarantor to any such other trust using such common
lender identification number as a result of amounts (including, but not limited
to, the Federal Consolidation Loan Rebate) owing to the Department or any
Federal 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 Federal 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 Federal Guarantor to the Trust as a
result of amounts owing to the Department or any Federal 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.
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SECTION 4.04. Computation of Note Interest Rate and
Certificate Rate. Prior to each Determination Date, the Administrator shall
determine each 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 calculate Three-Month LIBOR in accordance with the
definition thereof and shall also determine the Student Loan Rate with respect
to such Distribution Date; provided, however, that no such calculation of the
Student Loan Rate shall be required to be made unless the T-Bill Rate or
Three-Month LIBOR for such Interest Period is 100 basis points greater than the
T-Bill Rate of the preceding Determination Date or Three-Month LIBOR of the
preceding Determination Date, respectively, or with respect to T-Bill Indexed
Securities only, the 52 Week Treasury Bill Rate is 100 basis points less than
the T-Bill Rate as of such Determination Date.
SECTION 4.05. No Impairment. The Servicer shall not impair the
rights of the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
holders of Certificates or the holders of Notes 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 holders of Notes or the holders of Certificates
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 in
accordance with Guarantee Agreements 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 holders of Certificates or the holders of Notes 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 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 holders of Certificates and the holders of Notes with respect to a
breach pursuant to
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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
purchase 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 payable on each Monthly Servicing Payment
Date and any Excess Servicing Fees payable on any Distribution Date shall be
equal to the amounts determined by reference to the schedule of fees as set
forth in the PHEAA Fee Schedule and the EFS Fee Schedule. 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)(ix).
SECTION 4.08. Administrator's Certificate; Servicer's Report.
(a) On or before (i) the seventh 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 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), and (ii) the Closing Date or the
fifteenth day of each month (or, if any such day is not a Business Day, on the
next succeeding Business Day) or any other Transfer Date, 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's
preparation of the Administrator's Officer's 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 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) 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)(i) and (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
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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).
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, the and the Indenture Trustee, on or before
March 30 of each year beginning March 30, 2000, 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, 1999) 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 holder of Certificates, Certificate
Owner, holder of Notes or Note Owner by a request in writing to the Eligible
Lender Trustee addressed to its Corporate Trust Office, together with evidence
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 holders of Notes 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 such Servicer of any
event which with the giving of notice or lapse of time, or both, would become a
Servicer Default with respect to such Servicer 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, 2000, (a) a report expressing a summary of
findings based upon a comparison of the mathematical calculations of certain
amounts set forth
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in the Servicer's Reports during the preceding calendar year (or, in the case of
the first such report, the period from the Closing Date to December 31, 1999)
with the Servicer's computer reports that were the source of such amounts and a
report with regard to the assertions by the Servicer's management about the
Servicer's compliance with this Agreement during the preceding calendar year
(or, in the case of the first such report, the period from the Closing Date to
December 31, 1999) and (b) a report addressed to the Servicer, the Seller, the
Eligible Lender Trustee, the Indenture Trustee and each Rating Agency to the
effect that (i) such accountants have relied upon the assertions by the
Servicer's management about the Servicer's compliance with this Agreement during
the preceding calendar year (or, in the case of the first such report, during
the period from the Closing Date to December 31, 1999) and (ii) in such
accountants' opinion, such assertions are fairly stated in all material
respects, except for such exceptions as such firm shall believe to be immaterial
and such other exceptions as shall be set forth in such report. In the event
such firm requires the Indenture Trustee and the Eligible Lender Trustee to
agree to the procedures performed by such firm, the Servicer shall direct the
Indenture Trustee in writing to so agree; it being understood and agreed that
the Indenture Trustee and the Eligible Lender Trustee will deliver such letter
of agreement in conclusive reliance upon the direction of the Servicer, and the
Indenture Trustee and the Eligible Lender Trustee make no independent inquiry or
investigation as to, and shall have no obligation or liability in respect of,
the sufficiency, validity or correctness of such procedures.
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 holders of Certificates and the holders of Notes access to
the Financed Student Loan Files in such cases where the holders of Certificates
or the holders of Notes 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
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 such Servicer or the
Administrator, as the case may be, and expenses incurred in connection with
distributions and reports to the Administrator or to the holders of Certificates
and the holders of Notes, as the case may be.
SECTION 4.13. Appointment of Subservicer. Each Servicer may at
any time, upon the written consent of the Administrator, appoint a subservicer
to perform all or any portion
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of its obligations as Servicer hereunder; provided, however, that the Rating
Agency Condition shall have been satisfied in connection therewith; provided
further that each Servicer shall remain obligated and be liable to the Issuer,
the Eligible Lender Trustee, the Indenture Trustee, the holders of Certificates
and the holders of Notes for the servicing and administering of the Financed
Student Loans it services, as specified on Schedules A and B hereto 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 it services. The fees and
expenses of the subservicer shall be as agreed between the applicable Servicer
and its subservicer from time to time and none of the Issuer, the Eligible
Lender Trustee, the Indenture Trustee, the holders of Certificates or the
holders of Notes shall have any responsibility therefor.
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 (in the case
of the Financed Federal Loans) 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 at KeyBank National Association in the name of
the Indenture Trustee. The Seller will make an initial deposit into the
Collection Account on the Closing Date of cash or certain Eligible
Investments equal to $6,614,533.55.
(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 at KeyBank National Association in the name of
the Indenture Trustee.
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(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 at KeyBank National
Association in the name of the Indenture Trustee.
(iv) The Administrator, for the benefit of the Issuer, shall
establish and maintain in the name of the Indenture 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 at KeyBank National Association in the name of
the Indenture Trustee.
(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 neither the Administrator
nor the Indenture Trustee shall 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
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Trust Account as an Eligible Deposit Account and shall transfer any
cash and/or any investments to such new Trust 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 shall be Delivered to the
Indenture Trustee in accordance with the definition of "Delivery" and shall be
held, pending maturity or disposition, solely by the Indenture Trustee or such
other Person acting solely for the Indenture Trustee as required for Delivery;
(C) In the event that the Indenture Trustee, in its capacity
as securities intermediary has or subsequently obtains by agreement, operation
of law or otherwise a security interest in the Trust Accounts or any security
entitlement credited thereto, the Indenture Trustee, in its capacity as
securities intermediary hereby agrees that such security interest shall be
subordinate to the security interest of the Indenture Trustee. The financial
assets and other items deposited to the Trust Accounts will not be subject to
deduction, set-off, banker's lien, or any other right in favor of any person
other than the Indenture Trustee (except that the Indenture Trustee, in its
capacity as securities intermediary may set off (i) all amounts due to it in
respect of its customary fees and expenses for the routine maintenance and
operation of the Trust Accounts, and (ii) the face amount of any checks which
have been credited to the Trust Accounts but are subsequently returned unpaid
because of uncollected or insufficient funds).
(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 Servicers, 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.
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, 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
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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 (i) Guarantee Payments made by TERI in excess of the Maximum TERI
Payments Amount and (ii) 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,
but subject to the Maximum TERI Payments Amount with respect to TERI 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.
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)
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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.
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
each related Servicer's report delivered pursuant to Section 4.08(a) and (b)) to
distribute (i) to the Seller any amounts on deposit in the Collection Account
which consist of Guarantee Payments made by TERI in excess of the Maximum TERI
Payments Amount and (ii) to the Servicers 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.
(c) On each Distribution Date, the Administrator shall
instruct the Indenture Trustee (based on the information contained in the
Administrator's Certificate and each 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 Seller, any amounts on deposit in the Collection
Account which consist of Guarantee Payments made by TERI in excess of
the Maximum TERI Payments Amount;
(ii) to the Servicers, the Servicing Fee due with respect to
the preceding calendar month and all unpaid Servicing Fees from prior
months;
(iii) to the Administrator, from the amount of Available Funds
remaining after the application of clauses (i) and (ii), the
Administration Fee and all unpaid Administration Fees from prior
Collection Periods;
(iv) to the holders of the Notes, from the amount of Available
Funds remaining after the application of clauses (i), (ii) and (iii),
the Noteholders' Interest Distribution Amount pursuant to Section
8.02(c)(i) of the Indenture;
(v) to the Eligible Lender Trustee on behalf of the holders of
the Certificates, from the amount of Available Funds remaining after
the application of clauses (i), (ii), (iii) and (iv), the
Certificateholders' Interest Distribution Amount;
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(vi) to the Reserve Account from the amount of Available Funds
remaining after the application of clauses (i) through (v), an amount,
up to the amount, if any, necessary to reinstate the balance of the
Reserve Account up to the Specified Reserve Account Balance;
(vii) to the holders of the Notes, from the amount of
Available Funds remaining after the application of clauses (i) through
(vi), the Noteholders' Principal Distribution Amount to be allocated
pursuant to Section 8.02(c)(ii) of the Indenture;
(viii) on 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 holders of the related Certificates, from the amount
of Available Funds remaining after the application of clauses (i)
through (vii), the Certificateholders' Principal Distribution Amount;
(ix) to the Servicers, from the amount of Available Funds
remaining after the application of clauses (i) through (viii), the
aggregate unpaid amount, if any, of the Excess Servicing Fee;
(x) to the holders of the Notes on a pro rata basis, based on
the amount of Noteholders' Interest Index Carryover owing on each class
of Notes, from the amount of Available Funds remaining after the
application of clauses (i) through (ix), the aggregate unpaid amount of
Noteholders' Interest Index Carryover, if any;
(xi) to the Eligible Lender Trustee on behalf of the holders
of the Certificates, from the amount of Available Funds remaining after
the application of clauses (i) through (x), the aggregate unpaid amount
of the Certificateholders' Interest Index Carryover, if any;
(xii) to or upon the order of the Seller, the amount of
Available Funds remaining after the application of clauses (i) through
(xi).
Notwithstanding anything to the contrary contained in this
Section 5.05(c), if the outstanding principal balance of the Notes
(after giving effect to any amounts to be distributed to the holders of
the Notes pursuant to Section 5.05(c) (vii) above) is in excess of the
Note Collateralization Amount, the holders of the Notes shall receive
the Noteholders' Priority Principal Distribution Amount prior to any
payment to the holders of the Certificates of the Certificateholders'
Interest Distribution Amount pursuant to Section 5.05(c) (v) above.
SECTION 5.06. Reserve Account. (a) On the Closing Date, the
Seller shall deposit the Reserve Account Initial Deposit into the Reserve
Account. On the Closing Date, the Reserve Account Initial Deposit will equal the
Specified Reserve Account Balance as of the Closing Date.
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(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)(ii) and 5.05(c)(ii) 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
Servicers; provided, however, that, amounts on deposit in the Reserve Account
will not be available to cover any unpaid Excess Servicing Fees to the
Servicers.
(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)(iii) 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' Interest Distribution
Amount for a Distribution Date exceeds the amount distributed to the
holders of Notes pursuant to Section 5.05(c)(iv) on such Distribution
Date, the Administrator shall instruct the 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) and (b)(ii) above, and to distribute
such amount to the holders of Notes entitled thereto, in the same order
and priority as is set forth in Section 5.05(c)(iv); provided, however,
that, amounts on deposit in the Reserve Account will not be available
to cover any unpaid Noteholders' Interest Index Carryover.
(vi) In the event that (A) the Certificateholders' Interest
Distribution Amount for a Distribution Date exceeds the amount
distributed to holders of Certificates pursuant to Section 5.05(c)(v)
on such Distribution Date and (B) the Note Collateralization Amount is
equal to or greater than the outstanding principal balance of the Notes
(after giving effect to distributions on the Notes 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 the excess described in clause (A)
above, 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 holders of Certificates entitled thereto, in the same
order and priority as is set forth in Section 5.05(c)(v); provided,
however, that amounts on deposit in the Reserve Account will not be
available to cover any unpaid Certificateholders' Interest Index
Carryover.
(vii) In the event that on the Final Maturity Date for the
Class A-1 Notes, the outstanding principal balance of the Class A-1
Notes (prior to giving effect to any
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distribution of principal thereon on such date) exceeds the amount of
principal distributed to the holders of the Class A-1 Notes on such
date pursuant to Section 5.05(c)(vii), the Administrator shall instruct
the Indenture Trustee on such date to withdraw from the Reserve Account
on such date an amount equal to such excess, to the extent of funds
available therein, after giving effect to paragraphs (b)(i), (b)(ii),
(b)(v) and (b)(vi) above, and to distribute such amount to the holders
of the Class A-1 Notes, in the same order and priority as is set forth
in Section 5.05(c)(vii).
(viii) In the event that on the Final Maturity Date for the
Class A-2 Notes the outstanding principal balance of the Class A-2
Notes (prior to giving effect to any distribution of principal thereon
on such date), exceeds the amount of principal distributed to the
holders of the Class A-2 Notes on such date pursuant to Section
5.05(c)(vii), the Administrator shall instruct the Indenture Trustee on
such date to withdraw from the Reserve Account on such date an amount
equal to such excess, to the extent of funds available therein, after
giving effect to paragraphs (b)(i), (b)(ii), (b)(v), (b)(vi) and
(b)(vii) above, and to distribute such amount to the holders of the
Class A-2 Notes, in the same order and priority as set forth in Section
5.05 (c)(vii).
(ix) In the event that on the Final Maturity Date for the
Certificates the Certificateholders' Principal Distribution Amount
exceeds the amount distributed to the holders of the Certificates
pursuant to Section 5.05(c)(viii), the Administrator shall instruct the
Indenture Trustee on such date to withdraw from the Reserve Account on
such date an amount equal to such excess, to the extent of funds
available therein after giving effect to paragraphs (b)(i), (b)(ii),
(b)(v), (b)(vi), (b)(vii) and (b)(viii) above, and to distribute such
amount to the holders of Certificates entitled thereto, in the same
order and priority as is set forth in Section 5.05 (c)(viii).
(c) [Reserved]
(d) If the amount on deposit in the Reserve Account on any
Distribution Date (without giving effect to all deposits or withdrawals
therefrom on such Distribution Date) is greater than the Specified Reserve
Account Balance for such Distribution Date, the Administrator shall instruct the
Indenture Trustee to deposit the amount of such excess into the Collection
Account for distribution on such Distribution Date.
(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 holders of Notes and Certificates, the Servicer or the
Administrator (including any Excess Servicing Fees, Noteholders' Interest Index
Carryover and Certificateholders' Interest Index Carryover) and the termination
of the Trust, 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).
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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 holder of record of the Notes and to the Eligible Lender Trustee
for the Eligible Lender Trustee to forward on such succeeding Distribution Date
to each holder of record of the Certificates 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 the distribution allocable to principal of
each of the Class A-1 Notes, the Class A-2 Notes and the Certificates;
(ii) the amount of the distribution allocable to interest on
each of the Class A-1 Notes, the Class A-2 Notes and the Certificates
together with the interest rates applicable with respect thereto
(indicating whether such interest rates are based on (x) the T-Bill
Rate, in the case of T-Bill Indexed Securities or Three-Month LIBOR in
the case of LIBOR Indexed Securities or (y) the Student Loan Rate and
specifying what each such interest rate would have been if it had been
calculated using the alternate basis; provided that no such calculation
of the Student Loan Rate will be required to be made unless the T-Bill
Rate or Three-Month LIBOR for such Interest Period is 100 basis points
greater than the T-Bill Rate of the preceding Determination Date or
Three-Month LIBOR, of the preceding Determination Date, respectively,
or with respect to T-Bill Indexed Securities only, the 52 Week Treasury
Bill Rate is 100 basis points less than the T-Bill Rate as of such
Determination Date);
(iii) the amount of the distribution, if any, allocable to any
Noteholders' Interest Index Carryover and any Certificateholders'
Interest Index Carryover together with the outstanding amount, if any,
of each thereof after giving effect to any such distribution;
(iv) 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 as described in clause (i) above;
(v) the aggregate outstanding principal balance of each class
of Notes, the Certificate Balance and each Pool Factor as of such
Distribution Date, after giving effect to payments allocated to
principal reported under clause (i) above;
(vi) the amount of the Servicing Fee and any Excess Servicing
Fee paid to the Servicers and the amount of the Administration Fee paid
to the Administrator, respectively, with respect to such Collection
Period, and the amount, if any, of the Excess Servicing Fee remaining
unpaid after giving effect to any such payment;
(vii) 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;
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(viii) the balance of the Reserve Account on such Distribution
Date, after giving effect to changes therein on such Distribution Date;
(ix) for Distribution Dates during the Funding Period, the
remaining Pre-Funded Amount on such Distribution Date, after giving
effect to changes therein during the related Collection Period;
(x) for the first Distribution Date, the Subsequent Pool
Pre-Funded Amount, if any, remaining in the Subsequent Pool Pre-Funding
Subaccount that has not been used to acquire Subsequent Pool Student
Loans and is being paid out to the holders of the Notes and holders of
the Certificates;
(xi) for the first Distribution Date on or following the end
of the Funding Period, the amount of any remaining Pre-Funded Amount
that has not been used to make Additional Fundings and is being paid
out to the holders of the Notes; and
(xii) the amount of the Cumulative TERI Claims Ratio on such
Distribution Date and whether a TERI Trigger Event has occurred.
Each amount set forth pursuant to clauses (i), (ii), (iii), (v) and (vi) 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 $62,180,803.50 from the net
proceeds of the sale of the Notes and the Certificates. A portion of the amount
on deposit in the Pre-Funding Account equal to $32,180,803.50 (the "Subsequent
Pool Pre-Funded Amount") will be credited on the Closing Date to a designated
subaccount maintained by the Indenture Trustee within the Pre-Funding Account
(the "Subsequent Pool Pre-Funding Subaccount"). The remainder of the amount on
deposit in the Pre-Funding Account equal to $30,000,000 will be credited on the
Closing Date to a designated subaccount maintained by the Indenture Trustee
within the Pre-Funding Account (the "Other Additional Pre-Funding Subaccount").
No funds in the Other Additional Pre-Funding Subaccount may be used to purchase
Subsequent Pool Student Loans until the Subsequent Pool Pre-Funded Amount has
been reduced to zero. On each Transfer Date during the Funding Period on which
Subsequent Pool Student Loans are to be conveyed to the Eligible Lender Trustee
on behalf of the Issuer, the Administrator shall instruct the Indenture Trustee
to withdraw an amount equal to 102.85% of the sum of (x) the principal balance
of, plus (y) to the extent capitalized or to be capitalized, accrued interest
on, such Subsequent Pool Student Loans, first from the Subsequent Pool
Pre-Funding Subaccount until the Subsequent Pool Pre-Funded Amount has been
reduced to zero and then any remainder from the Other Additional Pre-Funding
Subaccount. On each Transfer Date during the Funding Period on which Other
Subsequent Student Loans are to be conveyed to the Eligible Lender Trustee on
behalf of the Issuer, the Administrator shall instruct the Indenture Trustee to
withdraw an amount equal to 100.00% of the sum of (x) the principal balance of,
plus (y) to the extent capitalized or to be capitalized, accrued interest on,
such Other Subsequent Student Loans (each sum of clauses (x) and (y) set forth
in this sentence and the previous sentence being, a "Transferred Balance"),
first from the Escrow Account until all amounts deposited therein during the
calendar month immediately preceding the Transfer Date have been reduced to zero
and then any remainder from the Other Additional Pre-Funding Subaccount. The
Administrator shall instruct the Indenture Trustee to distribute any Transferred
Balance 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. On each Transfer
Date on which Subsequent Pool Student Loans are to be conveyed to the Eligible
Lender Trustee on behalf of the Issuer, the
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Administrator shall instruct the Indenture Trustee to withdraw an amount equal
to 102.85% of the Transferred Balance of such Subsequent Pool Student Loans,
first from the Subsequent Pre-Funding Subaccount until the Subsequent Pool
Pre-Funded Amount has been reduced to zero and then any remainder from the Other
Additional Pre-Funding Subaccount and to deposit such amount into the Reserve
Account upon satisfaction of the conditions set forth in Section 2.02(b) with
respect to such transfer. 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 Other
Additional Pre-Funding 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 or Section 5.05(d), as applicable, 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) If as of the Special Determination Date (after giving
effect to all Additional Fundings on such date) the Subsequent Pool Pre-Funded
Amount has not been reduced to zero, the Administrator shall instruct the
Indenture Trustee pursuant to Section 4.08(c) to withdraw from the Subsequent
Pool Pre-Funding Subaccount on the first Distribution Date the remaining
Subsequent Pool Pre-Funded Amount on deposit in such subaccount and, (x) if such
amount is greater than $10,000,000, distribute the applicable Noteholders'
Percentage of such amount to the holders of Class A-1 Notes and Class A-2 Notes
on a pro rata basis, based on the initial principal amount of the Class A-1
Notes and the Class A-2 Notes, as a payment of principal in the same manner as
the Noteholders' Principal Distribution Amount is distributed, and distribute
the Certificateholders' Percentage of such amount to the holders of Certificates
as a payment of principal in the same manner as the Certificateholders'
Principal Distribution Amount is distributed, and (y) if such amount is
$10,000,000 or less, distribute such amount to the holders of Class A-1 Notes as
a payment of principal in the same manner as the Noteholders' Principal
Distribution Amount is distributed.
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(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 on such Distribution Date an amount equal to the
Pre-Funded Amount and shall transfer such remaining funds from the
Pre-Funding Account to the Collection Account and such funds shall be
considered collections with respect to the Financed Student Loans.
(d) (i) In the event that the Servicing Fee for any Monthly
Servicing Payment Date or Distribution Date during the Funding Period
exceeds the amount distributed to the Servicer pursuant to Sections
5.05(b)(ii), 5.05(c)(ii) and 5.06(b)(i) on such Monthly Servicing
Payment Date or Distribution Date, the Administrator shall instruct the
Indenture Trustee to withdraw from the Other Additional Pre-Funding
Subaccount 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 Servicers; provided,
however, that, amounts on deposit in the Other Additional Pre-Funding
Subaccount will not be available to cover any unpaid Excess Servicing
Fees to the Servicers.
(ii) In the event that the Administration Fee for any
Distribution Date during the Funding Period exceeds the amount
distributed to the Administrator pursuant to Sections 5.05(c)(iii) and
5.06(b)(ii) on such Distribution Date, the Administrator shall instruct
the Indenture Trustee to withdraw from the Other Additional Pre-Funding
Subaccount on each Distribution Date an amount equal to such excess, to
the extent of funds available therein after giving effect to paragraph
(d)(i) above, and to distribute such amount to the Administrator.
(iii) In the event that the Noteholders' Interest Distribution
Amount for a Distribution Date during the Funding Period exceeds the
amount distributed to the holders of Notes pursuant to Sections
5.05(c)(iv) and 5.06(b)(v) on such Distribution Date, the Administrator
shall instruct the Indenture Trustee to withdraw from the Other
Additional Pre-Funding Subaccount on such Distribution Date an amount
equal to such excess, to the extent of funds available therein after
giving effect to paragraph (d)(i) and (d)(ii) above, and to distribute
such amount to the holders of Notes entitled thereto, in the same order
and priority as is set forth in Section 5.05(c)(iv).
(iv) In the event that (x) the Certificateholders' Interest
Distribution Amount for a Distribution Date exceeds the amount
distributed to the holders of Certificates pursuant to Sections
5.05(c)(v) and 5.06(b)(vi) on such Distribution Date and (y) the Note
Collateralization Amount is equal to or greater than the outstanding
principal balance of the Notes (after giving effect to distributions on
the Notes, on such Distribution Date), the Administrator shall instruct
the Indenture Trustee on such Distribution Date to withdraw from the
Other Additional Pre-Funding Subaccount on such Distribution Date an
amount
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equal to the excess described in clause (x) above, to the extent of
funds available therein after giving effect to paragraphs (d)(i),
(d)(ii) and (d)(iii) above, and to distribute such amount to the
holders of Certificates entitled thereto, in the same order and
priority as is set forth in Section 5.05(c)(v).
SECTION 5.09. Seller Optional Deposit. On or prior to any Distribution
Date, the Seller may, but shall not be obligated to, make an optional deposit
(each, a "Seller Optional Deposit") to the Reserve Account from funds to be
released to the Seller pursuant to Section 5.05(c)(xii) on such Distribution
Date or otherwise. Any Seller Optional Deposit shall be applied on the related
Distribution Date in the same manner as other funds on deposit in the Reserve
Account on the related Distribution Date in accordance with Section 5.06.
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 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
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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, which breach or default would reasonably be expected to
have a material adverse effect on the condition of Key Bank USA, National
Association, financial or otherwise, or adversely affect the transactions
contemplated by this Agreement or the Administration Agreement; 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 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, to its best
knowledge, 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
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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, subject, however, to Section 6.05 hereof.
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 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 Servicers, the
holders of Certificates and the holders of Notes and the officers, directors,
employees and agents of the Issuer, the Eligible Lender Trustee, the Indenture
Trustee and the Servicers 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
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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 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 Section 6.03(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 Servicers,
the holders of Certificates and the holders of Notes and any of the officers,
directors, employees and agents of the Issuer, the Eligible Lender Trustee, the
Indenture Trustee and the Servicers 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.
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
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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 (or affiliate thereof), 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 (or affiliate
thereof), 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 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 (or affiliate thereof) is the surviving entity, such transaction
will not result in a material adverse Federal or state tax consequence to the
Issuer, the holders of Notes or the holders of Certificates and (vi) unless Key
Bank USA, National Association (or affiliate thereof) 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
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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
holders of Notes or the holders of Certificates, 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 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 holders of Certificates under this Agreement and the holders of
Notes 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
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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, National Association 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.
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, in the case
of PHEAA, is duly organized and validly existing as an agency of the
Commonwealth of Pennsylvania and in the case of EFS, is duly organized and
validly existing as a corporation in the State of Indiana, in each case 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
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action. No registration with or approval of any governmental agency (except, in
the case of PHEAA, 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 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
C hereto, or at such other office specified in accordance with Section 3.04(b).
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SECTION 7.02. Indemnities of Servicer. The Servicer shall be
liable in accordance herewith only to the extent of the 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 holders of Certificates or the holders of
Notes 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 (in the case of PHEAA) 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 EFS (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 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
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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 holders of Notes or
the holders of Certificates, 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
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 holders of Certificates under
this Agreement and the holders of Notes under the Indenture.
SECTION 7.05. Neither PHEAA Nor EFS To Resign as Servicer.
Subject to the provisions of Section 7.03, neither PHEAA nor EFS shall 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 or EFS 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
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the Indenture Trustee or a Successor Servicer shall have assumed the
responsibilities and obligations of PHEAA or EFS 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 other Basic Document, which failure shall (i)
materially and adversely affect the rights of the holders of Notes or the
holders of Certificates 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, the other Servicer or the Administrator or (B) to
the Servicer, and to the Indenture Trustee and the Eligible Lender Trustee by
the holders of Notes or the holders of Certificates, 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 holders 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 holders of Notes) 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
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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 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 the holders of Notes or the holders of Certificates 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 holders of Notes or the holders of Certificates, 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;
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then, and in each and every case, so long as the Administrator Default shall not
have been remedied, either the Indenture Trustee, or the holders of Notes
evidencing not less than 25% of the Outstanding Amount of the Notes, by notice
then given in writing to the Administrator (and to the Indenture Trustee and the
Eligible Lender Trustee if given by the holders of Notes) 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 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 a
Servicer or the Administrator, as the case may be, of notice of termination
pursuant to Section 8.01, or the resignation by a 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 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 a 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
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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 applicable portion of the Servicing
Fee and the applicable portion of 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 a 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 applicable
portion of the Servicing Fee and the applicable portion of any Excess Servicing
Fees, or the Administration Fee, as the case may be, unless such compensation
arrangements will not result in a downgrading of 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
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, a
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
the holders of Certificates and the Indenture Trustee shall give prompt written
notice thereof to holders of Notes 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 holders of Notes
evidencing not less than a majority of the Outstanding Amount of the Notes (or
the holders 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 holders of Notes) may, on
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behalf of all the holders of Notes and the holders of Certificates, 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 sum of 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 its long-term debt obligations is less
than Baa3 by Moody's, unless the Eligible Lender Trustee and the Indenture
Trustee shall have given notice to each of the Rating Agencies and shall have
received an Opinion of Counsel to the effect that such purchase would not
constitute a fraudulent conveyance. 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 sum of (i) the unpaid principal amount of the Notes then outstanding plus
accrued and unpaid interest thereon at the applicable Note Interest Rates to the
date of exercise and the amount of unpaid Noteholders' Interest Index Carryover
with respect thereto and (ii) 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
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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 holders of the Notes, any unpaid Noteholders'
Interest Distribution Amount for such Distribution Date;
(ii) to the holders of the Notes, the outstanding principal
balance of the Notes;
(iii) to the holders of the Certificates, any unpaid
Certificateholders' Interest Distribution Amount for such Distribution
Date;
(iv) to the holders of the Certificates, the Certificate
Balance;
(v) to the Servicers, any unpaid Excess Servicing Fees;
(vi) to the holders of the Notes, any unpaid Noteholders'
Interest Index Carryover; and
(vii) to the holders of the Certificates, 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 related to Financial Student Loans 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 March 2009 Distribution Date will be offered for sale by the
Indenture Trustee. KeyCorp, its affiliates (other than the Seller), PHEAA, TERI
and unrelated third parties may offer bids to purchase such Financed Student
Loans on such Distribution Date; provided, however, that KeyCorp and its
affiliates may not bid more than an amount determined by KeyCorp in good faith
to be equal to 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 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 the Minimum Purchase
Amount. 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 Minimum
Purchase Amount, the Indenture Trustee will not consummate such sale. In
connection with the determination of the Minimum Purchase Amount, 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
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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.
(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 holders of Certificates will succeed to the rights of the holders of
Notes hereunder other than Section 5.06(b) and the Eligible Lender Trustee will
succeed to the rights of (except for the rights of the Indenture Trustee which
have accrued prior to the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes), 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 Servicers, the Administrator and the Eligible Lender Trustee, with
the consent of the Indenture Trustee, but without the consent of any of the
holders of Notes or the holders of Certificates (which shall not be unreasonably
withheld), 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 holders of Notes or the holders of Certificates;
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 holder of Notes or
holder of Certificates; provided, further, any such amendment which affects only
one Servicer shall be deemed to be agreed to by the unaffected Servicer and such
unaffected Servicer hereby agrees to execute appropriate instruments to document
such agreement.
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This Agreement may also be amended from time to time by the
Seller, the Servicers, the Administrator and the Eligible Lender Trustee, with
the consent of the Indenture Trustee, the consent of the holders of Notes
evidencing not less than a majority of the Outstanding Amount of the Notes, the
consent of the holders 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 holders of Notes or the holders of
Certificates; 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 holders of Notes or the
holders of Certificates or (b) reduce the aforesaid percentage of the
Outstanding Amount of the Notes and the Certificate Balance, holders of Notes or
the holders of Certificates of which are required to consent to any such
amendment, without the consent of all outstanding holders of Notes and holders
of Certificates; provided, further, any such amendment which affects only one
Servicer shall be deemed to be agreed to by the unaffected Servicer and such
unaffected Servicer hereby agrees to execute appropriate instruments to document
such agreement.
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 holder of Certificates, the Indenture Trustee
and each of the Rating Agencies.
It shall not be necessary for the consent of holders of
Certificates or holders of Notes 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
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continuation statement filed in accordance with paragraph (a) above seriously
misleading within the meaning of Section 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.
(c) 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. Each 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 it services, as specified on Schedules A and B,
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 it services, as specified on Schedules A and B 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 it services, 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 a 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 Servicing Agreement) and
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make copies of and abstracts from such Servicer's records regarding any Financed
Student Loan it services.
(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
commencing April 30, 2000, 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 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.
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(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, instructions,
directions and communications upon or to the Seller, the Administrator, the
Servicers, 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, 800 Superior Avenue,
Fourth Floor, Cleveland, Ohio 44114, Attention: Key Education Resources, KeyCorp
Student Loan Trust 1999-A (telephone: (216) 828-9342; facsimile: (216)
828-9301), (b) in the case of PHEAA, as 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 EFS,
to EFS Services, Inc., 8425 Woodfield Crossing Boulevard, Suite 401,
Indianapolis, Indiana 46240-2495, Attention: Executive Director, Operations; (d)
in the case of the Issuer or the Eligible Lender Trustee, at the Corporate Trust
Office of the Eligible Lender Trustee, (e) in the case of the Indenture Trustee,
at its Corporate Trust Office, (f) 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) 553-4948; facsimile: (212) 553-4600),
and (g) in the case of Fitch, to Fitch IBCA, Inc., One State Street Plaza, New
York, New York 10004, telephone: (212) 908-0500, facsimile: (212) 480-4435) 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 a
Servicer or the Administrator, this Agreement may not be assigned by the Seller,
the Administrator or any Servicer. This Agreement may only be assigned by the
Eligible Lender Trustee to its permitted successor pursuant to the Trust
Agreement.
SECTION 11.05. Limitations on Rights of Others. The provisions
of this Agreement are solely for the benefit of the Seller, the Servicers, the
Issuer and the Eligible Lender Trustee and for the benefit of the holders of
Certificates, the Indenture Trustee and the holders of Notes, 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
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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 holders of the Notes 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 Servicers, 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 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 Servicers 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 The First National Bank of
Chicago not in its individual capacity but solely in its capacity as Eligible
Lender Trustee of the Issuer and, subject to the succeeding paragraph, in no
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event shall The First National Bank of Chicago 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) Except as provided in subsection (d) of this section,
notwithstanding anything contained herein to the contrary, this Agreement has
been signed by The First National Bank of Chicago not in its individual capacity
but solely in its capacity as Eligible Lender Trustee of the Issuer and in no
event shall The First National Bank of Chicago 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.
(c) Notwithstanding anything contained herein to the contrary,
this Agreement has been accepted 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.
(d) Notwithstanding any other provision in this Agreement or
the other Basic Documents, nothing in this Agreement or the other Basic
Documents shall be construed to limit the legal responsibility of the Eligible
Lender Trustee or the Indenture Trustee to the U.S. Secretary of Education or a
Guarantor for any violations of statutory or regulatory requirements that may
occur with respect to loans held by the Eligible Lender Trustee or the Indenture
Trustee, pursuant to or to otherwise comply with their obligations under the
Higher Education Act or implementing regulations, it being expressly understood
that the Indenture Trustee has no obligation or duty pursuant to this Section
except in the event of Foreclosure or pursuant to Section 8.01 as a successor
Servicer.
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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 1999-A,
By: THE FIRST NATIONAL BANK OF
CHICAGO, 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
Approved as to form and legality:
- - ---------------------------------
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Deputy Attorney General
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EFS SERVICES, INC., Servicer,
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,
Administrator,
By:
_____________________________
Name: __________________________
Title: _________________________
Acknowledged and accepted
as of the day and year
first above written:
BANKERS TRUST COMPANY, not
in its individual capacity
but solely as Indenture Trustee,
By:
_____________________________
Name: __________________________
Title: _________________________
Acknowledged and accepted
as of the day and year
first above written:
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BANKERS TRUST COMPANY, not in its
individual capacity but solely
in its capacity as securities
intermediary under Section 5.01,
By:
_____________________________
Name:
Title:
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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.
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(e) Any agreement, instrument or statute defined or referred
to below or in any agreement or instrument that is 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 Student Loans" means the Subsequent Pool Student
Loans, the Other Subsequent Student Loans, Guarantee Fee Advances and the
fundings of accrued interest to be capitalized.
"Administration Agreement" means the Administration Agreement
dated as of January 1, 1999, 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 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
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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.
"Applicable Note Margin" means with respect to the Class A-1
Notes, 0.14% and with respect to the Class A-2 Notes, 0.33%.
"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 Letter Agreement dated as of January
28, 1992, between LSAS and the Seller (as successor to Ameritrust Company
National Association), (iv) 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, (v) the LAL/BEL Guarantee Agreements dated as
of January 28, 1992 and December 21, 1992, between the Seller and TERI, and (vi)
the Private Guarantee Agreement dated as of March 23, 1995, among the Seller,
TERI, Society National Bank, Indiana and Wilmington Trust Company, (vii) the
Consolidated Deposit Agreement and Consolidated Security Agreement each dated
November 1, 1995 between TERI and Society National Bank, (viii) Alternative DEAL
Surety Bond Numbers 1994-A, 1994-B, 1995-A and 1996-A, dated February 23, 1994,
October 4, 1994, July 1, 1995 and July 1, 1996, respectively, issued by HICA to
KeyBank of Maine, Society National Bank, Society National Bank and Seller,
respectively; and (ix) the Pledged Collateral Account Control Agreement dated as
of January 1, 1999, among TERI, Seller and McDonald Investments Inc., A KeyCorp
Company, to the 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.
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"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
or any Monthly Servicing Payment Date, the sum of the following amounts received
with respect to the then elapsed portion of the related Collection Period to the
extent not previously distributed:
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(i) all collections received by the Servicers on the Financed
Student Loans (including any Guarantee Payments received with respect
to such Financed Student Loans), but net of (x), any Federal
Origination Fee and Federal Consolidation Loan Rebate 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 the Financed
Federal Loans;
(iii) all Liquidation Proceeds and all recoveries in respect
of Liquidated Student Loans which were written off in prior Collection
Periods or prior months of such Collection Period;
(iv) the aggregate Purchase Amounts received for those
Financed Student Loans repurchased by the Seller or purchased by a
Servicer under an obligation which arose during the elapsed portion of
such Collection Period;
(v) the aggregate amounts, if any, received from the Seller or
a 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 Federal Student Loans
pursuant to Section 3.02 or 4.06, respectively of the Sale and
Servicing Agreement;
(vi) 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;
(vii) with respect to the initial Distribution Date, the
amount deposited in the Collection Account on the Closing Date pursuant
to Section 5.01(a)(i) of the Sale and Servicing Agreement;
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(viii) Investment Earnings for such Distribution Date;
(ix) amounts withdrawn from the Reserve Account in excess of
the Specified Reserve Account Balance and deposited into the Collection
Account;
(x) amounts withdrawn from the Escrow Account and deposited
into the Collection Account; and
(xi) with respect to the Distribution Date on or immediately
after the end of the Funding Period, the amount transferred from the
Pre-Funding Account to the Collection Account.
provided, however, that Available Funds 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 Distribution Date; provided, further, that if on any
Distribution Date there would not be sufficient funds, after
application of Available Funds and amounts available from the Reserve
Account and the Pre-Funding Account (1) to pay any of the items
specified in clauses (i) through (iii) of Section 5.05(c) of the Sale
and Servicing Agreement for such Distribution Date and (2) if the
principal balance of the Notes (after giving effect to any
distributions thereon on such Distribution Date) is less than or equal
to the Note Collateralization Amount, to pay the Certificateholders'
Interest Distribution Amount for such Distribution Date, then Available
Funds for such Distribution Date will include, in addition to the
Available Funds amounts on deposit in the Collection Account on the
Determination Date relating to such Distribution Date which would have
constituted Available Funds for the Distribution Date succeeding such
Distribution Date up to the amount necessary to pay, in the case of
clause (1) above such items and in the case of clause (2) above such
Certificateholders' Interest Distribution Amount, and the Available
Funds for such succeeding Distribution Date will be adjusted
accordingly.
"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,
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the Guarantee Agreements and other documents and certificates delivered in
connection with any thereof.
"Bar Exam Loan" means a Bar Examination Loan made by the
Seller to an eligible borrower pursuant to the Programs.
"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 New York, New York
or Cleveland, Ohio, are authorized or obligated by law, regulation or executive
order to remain closed.
"Certificate" means a Floating Rate Asset Backed Certificate
issued pursuant to the Trust Agreement, substantially in the Form of Exhibit A
thereto.
"Certificate Balance" means as of the Closing Date the Initial
Certificate Balance for the Certificates and, thereafter, the Initial
Certificate Balance for the Certificates, reduced by all amounts allocable to
principal previously distributed to the holders of the Certificates.
"Certificate Depository Agreement" means the agreement dated
as of the Closing Date among the Trust, the Eligible Lender Trustee, the
Administrator and The Depository Trust Company, as the initial Clearing Agency,
substantially in the form of Exhibit B to the Trust Agreement.
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"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 Rate" means, with respect to any Interest Period,
the interest rate per annum equal to the lesser of (i) the sum of (x) in the
case of any Certificates that are T-Bill Indexed Securities, the weighted
average of the T-Bill Rates within such Interest Period and in the case of any
Certificates that are LIBOR Indexed Securities, Three-Month LIBOR for such
Interest Period plus (y) 0.75% and (ii) the Student Loan Rate for such Interest
Period. The interest rate per annum for any Certificates that are T-Bill Indexed
Securities will be computed on the basis of the actual number of days elapsed in
such Interest Period over a period of 365 days (or 366 in a leap year) and in
the case of any Certificates that are LIBOR Indexed Securities will be computed
on the basis of the actual number of days elapsed in the related Interest Period
divided by 360.
"Certificate Register" and "Certificate Registrar" means the
register mentioned and the registrar appointed pursuant to Section 3.04 of the
Trust Agreement.
"Certificate Underwriting Agreement" means the Certificate
Underwriting Agreement dated as of February 3, 1999 between the Seller and the
Underwriters.
"Certificateholder" means a Person in whose name a Certificate
is registered in the Certificate Register.
"Certificateholders' Available Interest Distribution Amount"
means for the Certificates on any Distribution Date, an amount equal to (x) the
sum of (1) Available Funds for such Distribution Date, (2) the amount, if any,
withdrawn from the Pre-Funding Account pursuant to Section 5.08(d) of the Sale
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and Servicing Agreement on such Distribution Date, and (3) the amounts withdrawn
from the Reserve Account pursuant to Section 5.06(b)(vi) of the Sale and
Servicing Agreement on such Distribution Date minus (y) the amount required to
be distributed pursuant to clauses (i) through (iii) of Section 5.05(c) of the
Sale and Servicing Agreement, including any Noteholders' Priority Principal
Distribution Amount actually distributed.
"Certificateholders' Available Principal Distribution Amount"
means on the Final Maturity Date for the Certificates, an amount equal to (x)
the sum of (1) the Available Funds for such Distribution Date, and (2) the
amounts withdrawn from the Reserve Account pursuant to Section 5.06(b)(ix) of
the Sale and Servicing Agreement minus (y) the amounts required to be
distributed pursuant to clauses (i) through (vii) of Section 5.05(c) of the Sale
and Servicing Agreement.
"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 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 Certificateholders'
Interest Distribution Amount on the preceding Distribution Date over (ii) the
amount of interest actually distributed to the holders of the Certificates on
such preceding Distribution Date, plus interest on the amount of such excess
interest due to the holders of the Certificates, 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 holders of the Certificates 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,
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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, if such Certificates are T-Bill Indexed
Securities and/or Three-Month LIBOR if such Certificates are LIBOR Indexed
Securities over (b) the amount of interest on such 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 in the case of T-Bill Indexed Securities or Three-Month LIBOR,
in the case of LIBOR Indexed Securities); provided, however, that, on the 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 the holders of the Certificates on such date
pursuant to Sections 5.05(c)(x) of the Sale and Servicing Agreement.
"Certificateholders' Percentage" means, a fraction, expressed
as a percentage, the numerator of which is the principal balance 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 Distribution Amount" means, on
each Distribution Date on and after which the principal balance of the Notes has
been paid in full, 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 the holders of such Notes on such Distribution Date); provided,
however, that the Certificateholders' Principal Distribution Amount for the
Certificates will in no event exceed the Certificate Balance for the
Certificates. In addition, on the Final Maturity Date for the
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Certificates, the principal required to be distributed to the holders of the
Certificates will include the amount required to reduce the outstanding
principal balance of the Certificates to zero.
"Class A-1 Note" means a Floating Rate Class A-1 Asset Backed
Note issued pursuant to the Indenture, substantially in the form of Exhibit A-1
thereto.
"Class A-2 Note" means a Floating Rate Class A-2 Asset Backed
Note issued pursuant to the Indenture, substantially in the form of Exhibit A-2
thereto.
"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.
"Closing Date" means February 9, 1999.
"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 May 31,
1999 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.
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"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 Four Albany Street, New York, New York 10006,
Attention: Corporate Trust and Agency Group, Structured Finance Team (telephone:
(212) 250-6652; facsimile: (212) 250-6439) 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) 407-1892;
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
address of which the successor Eligible Lender Trustee will notify the
Certificateholders and the Seller).
"Cumulative TERI Claims Ratio" means, with respect to any
Distribution Date, the fraction, expressed as a percentage, the numerator of
which is equal to the aggregate dollar amount of claims filed against TERI under
its Guarantee Agreement from the Closing Date through and including the last day
of the Collection Period preceding such Distribution Date and the denominator of
which is equal to the dollar amount of the Financed Private Loans guaranteed by
TERI as of the Closing Date.
"Cutoff Date" means January 1, 1999.
"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.
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"Definitive Notes" has the meaning specified in Section 2.10
of the Indenture.
"Delivery" or "Deliver" when used with respect to Trust
Account Property means the following and such additional or alternative
procedures as may hereafter become appropriate to effect the complete transfer
of ownership of any such Collateral to the Indenture Trustee, free and clear of
any adverse claims, consistent with changes in applicable law or regulations or
the interpretation thereof:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute instruments and
are susceptible of physical delivery ("Physical Property"):
(i) transfer of possession thereof to the Indenture Trustee
endorsed to, or registered in the name of, the Indenture Trustee, or
its nominee or endorsed in blank;
(b) with respect to a certificated security:
(i) delivery thereof in bearer form to the Indenture Trustee;
or
(ii) delivery thereof in registered form to the Indenture
Trustee and
(A) the certificate is endorsed to the Indenture
Trustee or in blank by effective endorsement; or
(B) the certificate is registered in the name of the
Indenture Trustee, upon original issue or registration of
transfer by the issuer;
(c) with respect to an uncertificated security:
(i) the delivery of the uncertificated security to the
Indenture Trustee; or
(ii) the issuer has agreed that it will comply with
instructions originated by the Indenture Trustee, without further
consent by the registered owner;
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(d) with respect to any security 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:
(i) a Federal Reserve Bank by book entry credits the
book-entry security to the securities account (as defined in 31 CFR
Part 357) of a participant (as defined in 31 CFR Part 357) which is
also a securities intermediary; and
(ii) the participant indicates by book entry that the
book-entry security has been credited to the Indenture Trustee's
securities account, as applicable;
(e) with respect to a security entitlement:
(i) the Indenture Trustee, becomes the entitlement holder; or
(ii) the securities intermediary has agreed that it will
comply with entitlement orders originated by the Indenture Trustee;
(f) without further consent by the entitlement holder for the purpose
of clauses (b) and (c) hereof "delivery" means:
(i) with respect to a certificated security:
(A) the Indenture Trustee, acquires possession
thereof;
(B) another person (other than a securities
intermediary) either acquires possession thereof on behalf of
the Indenture Trustee or, having previously acquired
possession thereof, acknowledges that it holds for the
Indenture Trustee; or
(C) a securities intermediary acting on behalf of the
Indenture Trustee acquires possession of thereof, only if the
certificate is in registered form and has been specially
endorsed to the Indenture Trustee by an effective endorsement;
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(ii) with respect to an uncertificated security:
(A) the issuer registers the Indenture Trustee as the
registered owner, upon original issue or registration of
transfer; or
(B) another person (other than a securities
intermediary) either becomes the registered owner thereof on
behalf of the Indenture Trustee, or, having previously become
the registered owner, acknowledges that it holds for the
Indenture Trustee;
(g) for purposes of this definition, except as otherwise indicated, the
following terms shall have the meaning assigned to each such term in the UCC:
(i) "certificated security"
(ii) "effective endorsement"
(iii) "entitlement holder"
(iv) "instrument"
(v) "securities account"
(vi) "securities entitlement"
(vii) "securities intermediary"
(viii) "uncertificated security"
(h) in each case of Delivery contemplated herein, the Indenture Trustee
shall make appropriate notations on its records, and shall cause same to be made
of the records of its nominees, indicating that securities are held in trust
pursuant to and as provided in this Agreement.
"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.
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"Depository" has the meaning specified in Section 2.04 of the
Indenture.
"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 March, June, September and December or,
if such day is not a Business Day, the immediately following Business Day,
commencing on June 28, 1999.
"DTC" means the Depository Trust Company, a New York
Corporation.
"ECMC" means Educational Credit Management Corporation.
"EFS" means EFS Services, Inc., an Indiana corporation.
"EFS Fee Schedule" means the fee schedule setting forth the
Servicing Fee and Excess Servicing Fee of EFS.
"Eligible Deposit Account" means either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account with the
corporate trust department 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 at least two nationally
recognized Rating Agencies in one of their respective generic rating categories
which signifies investment grade.
"Eligible Institution" means a depository institution (which
may be the Seller (or any Affiliate of the Seller), the Eligible Lender Trustee
(or any Affiliate of the Eligible Lender Trustee) or the Indenture Trustee)
organized under the laws of the United States of America or any one of the
States (or any domestic branch of a foreign bank), (a) which has (i) 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) if rated by Fitch (A)
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a long term senior unsecured debt rating of AAA by Fitch and (B) short-term
senior of F-1+ by Fitch and (b) whose deposits are insured by the FDIC. If so
qualified, the Seller, any Affiliate of the Seller, the Eligible Lender Trustee,
or any Affiliate of the Eligible Lender Trustee or 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 Distribution Date, as the case may be), the commercial
paper or other short-term senior 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 Moody's in the highest investment category
granted thereby and, if rated by Fitch, in the highest investment
category granted by Fitch;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from Moody's in the
highest investment category granted thereby and, if rated by Fitch, in
the highest investment category granted by Fitch;
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(d) investments in money market funds (including funds for
which the Indenture Trustee or the Eligible Lender Trustee or any of
their respective Affiliates or any of Seller's Affiliates is an
investment manager or advisor) having a rating from Moody's of Aaa and
if rated by Fitch from Fitch of AAA;
(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.
"Event of Default" has the meaning specified in Section 5.01
of the Indenture.
"Excess Servicing Fee" has the meaning specified in the EFS
Fee Schedule and the PHEAA Fee Schedule, respectively.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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"Executive Officer" means, with respect to any corporation,
the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, any Executive 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.
"Expected Interest Collections" means, with respect to any
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
Collection Period (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 Collection Period (whether or not
actually received) with respect to the Financed Student Loans and (iii)
Investment Earnings for such Collection Period.
"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.
"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 Financed Federal
Loans of such borrower in accordance with the applicable terms and conditions of
the Program and the Higher Education Act.
"Federal Consolidation Loan Rebate" means the monthly fee
payable to the Department by the holder of Federal Consolidation Loans made (x)
on or after October 1, 1993 equal to 1.05% per annum and (y) on or after October
1, 1998 but before
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February 1, 1999 equal to .62% per annum, in each case on the outstanding
balance of such Federal Consolidation Loan.
"Federal Guarantor" means PHEAA, ASA, ECMC and NSLP.
"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.
"52 Week T-Bill Rate" means, on any date of determination, the
bond equivalent rate of 52-week Treasury bills auctioned at the final auction
held prior to the preceding June 1.
"Final Maturity Date" means (i) for the Class A-1 Notes, the
December 2006 Distribution Date, (ii) for the Class A-2 Notes the December 2029
Distribution Date and (iii) for the Certificates, the December 2035 Distribution
Date.
"Final Subsequent Transfer Date" means the last Transfer Date
on which Subsequent Pool Student Loans are transferred to the Trust but no later
than the Special Determination Date.
"Financed Federal Loans" means those Financed Student Loans
that are guaranteed as to the payment of principal and interest by PHEAA, ASA,
ECMC or NSLP and are reinsured by the Department and are listed on Schedule A to
the Sale and Servicing Agreement, as such Schedule may be supplemented from time
to time.
"Financed Private Loans" means those Financed Student Loans
that are guaranteed as to the payment of principal and interest by TERI or HICA
and are not reinsured by the Department or any other governmental entity and are
listed on Schedule A to the Sale and Servicing Agreement, as such Schedule may
be supplemented from time to time.
"Financed Student Loan" means any law school, medical school,
dental school, graduate business school or other graduate school student loan
listed on Schedule A of the Sale and
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Servicing Agreement as such Schedule may be supplemented from time to time.
"Financed Student Loan Files" means the documents specified in
Section 3.03 of the Sale and Servicing Agreement.
"Fitch" means Fitch IBCA, Inc.
"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 Insolvency Event occurs with respect to the Seller, (c) the first date
on which the amounts on deposit in each Pre-Funding Account is zero, and (d) the
close of business on the last day of the Collection Period preceding the March
2001 Distribution Date.
"Graduate Loan Programs" means the loan programs, under which
the Seller made Student Loans to students enrolled in or recently graduated from
approved or accredited law schools, medical schools, dental schools, graduate
business schools or other graduate level certificate or degree programs.
"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 June 13, 1998, between PHEAA and
the Eligible Lender Trustee on behalf
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of the Issuer, (ii) in the case of ASA, the Holder Guarantee Agreement dated as
of July 13, 1998, between ASA and the Eligible Lender Trustee on behalf of the
Issuer, (iii) in the case of ECMC, the Holder Agreement for Payment on Guarantee
dated as of January 1, 1999, between ECMC and the Eligible Lender Trustee on
behalf of the Issuer, (iv) in the case of NSLP, the Lender Agreement for
Guaranteed Educational Loans With Federal Reinsurance and the Lender Agreement
for Guarantee of Federal Consolidation Loans with Federal Reinsurance, each
dated as of July 13, 1998 between NSLP and the Eligible Lender Trustee on behalf
of the Issuer, (v) in the case of TERI, the Guarantee Agreement dated as of July
13, 1998, among TERI, the Seller and the Eligible Lender Trustee on behalf of
the Issuer and (vi) in the case of HICA, the Endorsement to Alternative Dental
Educational Assistance Loan Surety Bond Numbers 1994-A, 1994-B, 1995-A and
1996-A dated as of July 13, 1998 and executed by HICA, relative to such Surety
Bonds which were assigned by the Seller to 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 Payment" means any payment made by a Guarantor
pursuant to a Guarantee Agreement in respect of a Financed Student Loan.
"Guarantors" means PHEAA, ASA, ECMC, NSLP, TERI and HICA.
"HICA" means HEMAR Insurance Company of America, a South
Dakota corporation.
"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 January 1, 1999,
between the Issuer and the Indenture Trustee.
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"Indenture Trustee" means Bankers Trust Company, a New York
banking corporation, not in its individual capacity but solely as Indenture
Trustee under the Indenture.
"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.
"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 "Independent" in the Indenture and that the signer is Independent
within the meaning thereof.
"Index Maturity" shall have the meaning set forth in the
definition of "Three-Month LIBOR".
"Initial Certificate Balance" means $34,600,000.
"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 $767,111,823.09, plus as
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of each Subsequent Cutoff Date the principal balance of each Subsequent Pool
Student Loan sold to the Eligible Lender Trustee on behalf of the Issuer on each
Transfer Date during the Funding Period (but no later than the Special
Determination Date).
"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 the Notes or the Certificates, as the case may be, has
been distributed to but excluding the current Distribution Date. In the case of
any LIBOR Indexed Securities and the initial Interest Period, interest will
accrue for the period from the Closing Date to but excluding March 29, 1999
(computed on the basis of the actual number of days elapsed in a year of 360
days) based on Three Month LIBOR as determined on the initial LIBOR
Determination Date and interest will accrue for the period from March 29, 1999
to but excluding June 28, 1999 (computed on the basis of the actual
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number of days elapsed in a year of 360 days) based on Three Month LIBOR as
determined on the LIBOR Determination Date in March 1999.
"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 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 Distribution Date pursuant to Section 5.01(b) of the Sale and
Servicing Agreement.
"Issuer" means KeyCorp Student Loan Trust 1999-A (formerly
named KeyCorp Student Loan Trust 1998-A) until a successor replaces it and,
thereafter, means the successor.
"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.
"Law Loan" means a Law School Loan made by the Seller to an
eligible borrower pursuant to the Programs.
"LIBOR Determination Date" means (x) with respect to each
Interest Period other than the initial Interest Period, the second Business Day
prior to the commencement of each Interest Period and (y) with respect to the
initial Interest Period, as determined pursuant to clause (x) for the period
from the Closing Date to but excluding March 29, 1999 and as determined on the
second Business Day prior to March 29, 1999 for the period from March 29, 1999
to but excluding June 28, 1999. For purposes of this definition a "Business Day"
is any day on which banks in London and New York City are open for the
transaction of business.
"LIBOR Indexed Securities" means the Class A-1 Notes, the
Class A-2 Notes and the Certificates.
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"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 services such Financed Student Loan (which
shall not include any Financed Student Loan on which Guarantee Payments are
received) or which such Servicer has, after using all reasonable efforts to
realize upon such Financed Student Loan, determined to charge off.
"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
which serviced such Liquidated Student Loan 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 Rates or Certificate Rates, 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.
"Maximum TERI Payments Amount" means an amount equal to 19% of
the Initial Pool Balance.
"Minimum Purchase Amount" means the greatest of (i) the
Auction Purchase Amount, (ii) the fair market value of the Financed Student
Loans as of the end of the Collection Period immediately preceding such
Distribution Date, and (iii) the aggregate unpaid principal amount of the Notes
and unpaid principal balance of the Certificates plus, in each case, accrued and
unpaid interest thereon on the related Distribution Date and any amount to be
paid pursuant to Section 5.04(b) FIRST and SECOND of the Indenture.
"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 March 1, 1999.
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"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.
"Net Government Receivable" means, with respect to any
Distribution Date, the sum of the amount of Interest Subsidy Payments and
Special Allowance Payments due from the Department less the amount owed to the
Department for Federal Origination Fee and Federal Consolidation Loan Rebate as
of the end of the related Collection Period.
"Note Collateralization Amount" means, with respect to any
Distribution Date, the sum of (i) the Pool Balance as of the end of the related
Collection Period, (ii) the Pre-Funded Amount as of the end of the related
Collection Period, (iii) the amount on deposit in the Reserve Account after
giving effect to distributions on such Distribution Date, and (iv) the Net
Government Receivable.
"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 Interest Rate" means, with respect to any Interest
Period, (w) in the case of any Class of Notes, the interest rate per annum equal
to the lesser of (i) the sum of (x) in the case of any class of Notes that are
T-Bill Indexed Securities, the weighted average of the T-Bill Rates within such
Interest Period and in the case of any class of Notes that are LIBOR Indexed
Securities, Three-Month LIBOR plus (y) the Applicable Note Margin and (ii) the
Student Loan Rate for such Interest Period. The interest rate per annum for any
class of Notes that are T-Bill Indexed Securities will be computed on the basis
of the actual number of days elapsed in such Interest Period over a period of
365 days (or 366 in a leap year) and in the case of any class of Notes that are
LIBOR Indexed Securities, will be computed on the basis of the actual number of
days elapsed in the related Interest Period divided by 360. In the case of any
LIBOR Indexed Securities and the initial Interest Period, the Note Interest Rate
will equal the interest rate per
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annum equal to the lesser of (i) the weighted average of (x) Three-Month LIBOR
for the period from the Closing Date to but excluding March 29, 1999 (computed
on the basis of the actual number of days elapsed in such period divided by 360)
as determined on the initial LIBOR Determination Date and (y) Three-Month LIBOR
for the period from March 29, 1999 to but excluding June 28, 1999 (computed on
the basis of the actual number of days elapsed in such period divided by 360) as
determined on the LIBOR Determination Date in March 1999, in each case plus the
Applicable Note Margin and (ii) the Student Loan Rate for the initial Interest
Period.
"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 Register" and "Note Registrar" have the respective
meanings specified in Section 2.04 of the Indenture.
"Note Underwriting Agreement" means the Note Underwriting
Agreement dated as of February 3, 1999 between the Seller and the Underwriters.
"Noteholder" means the Person in whose name a Note is
registered in the Note Register.
"Noteholders' Available Interest Distribution Amount" means on
any Distribution Date, an amount equal to (x) the sum of (1) Available Funds for
such Distribution Date, (2) the amounts withdrawn from the Pre-Funding Account
pursuant to Section 5.08(d) of the Sale and Servicing Agreement on such
Distribution Date, and (3) the amounts withdrawn from the Reserve Account
pursuant to Section 5.06(b)(v) of the Sale and Servicing Agreement on such
Distribution Date minus (y) the amount required to be distributed pursuant to
clauses (i) and (ii) of Section 5.05(c) of the Sale and Servicing Agreement,
including any Noteholders' Priority Principal Distribution Amount actually
distributed.
"Noteholders' Available Principal Distribution Amount" means
on the Final Maturity Date for each class of Notes, an
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amount equal to (x) the sum of (1) the Available Funds for such Distribution
Date and (2) the amount, if any, withdrawn from the Reserve Account pursuant to
Sections 5.06(b)(vii) or (viii) of the Sale and Servicing Agreement minus (y)
the amounts required to be distributed pursuant to clauses (i) through (v) of
Section 5.05(c) of the Sale and Servicing Agreement, including the Noteholders'
Priority Principal Distribution Amount for such class of Notes actually
distributed.
"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 over (ii) the
amount of interest actually distributed to the holders of the Notes on such
preceding Distribution Date, plus interest on the amount of such excess interest
due to the holders of the Notes, to the extent permitted by law, at the weighted
average of the Note Interest Rates for 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 aggregate amount of
interest accrued at the applicable Note Interest Rate for the related Interest
Period on the outstanding principal balance of each class of Notes on the
immediately preceding Distribution Date after giving effect to all principal
distributions to Noteholders of such class on such date (or, in the case of the
first Distribution Date, on the Closing Date) and (ii) the Noteholders' Interest
Carryover Shortfall for such Distribution Date; provided, 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 the Notes 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 such Notes that would have
accrued in respect of the related Interest Period had interest been
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calculated based on the T-Bill Rate, if such Notes are T-Bill Indexed Securities
or Three-Month LIBOR if such Notes are LIBOR Indexed Securities, over (b) the
amount of interest on such 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 Distribution Dates (and interest accrued thereon, to the
extent permitted by law, at the applicable rate calculated based on the T-Bill
Rate, in the case of T-Bill Indexed Securities or Three-Month LIBOR, in the case
of LIBOR Indexed Securities); provided, however, that on the Final Maturity Date
for such Notes, the Noteholders' Interest Index Carryover for such Notes 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 the holders for such Notes on such
date pursuant to Sections 5.05(c)(x) 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 Distribution Amount" means, with
respect to any Distribution Date, the Principal Distribution Amount for such
Notes for such Distribution Date; provided, however, that the Noteholders'
Principal Distribution Amount for the Notes will not exceed the outstanding
principal balance of the Notes. In addition, (i) on the Final Maturity Date for
each related class of Notes, the principal required to be distributed to such
class of Notes will include the amount required to reduce the outstanding
principal balance of such class of Notes to zero, and (ii) on the related
Distribution Date following a sale of the Financed Student Loans pursuant to
Section 9.01(a) or (c) of the Sale and Servicing Agreement, the principal
required to be distributed to the holders of Class A-2 Notes will include the
amount required to reduce the outstanding principal balance of the Class A-2
Notes to zero. In the event that the outstanding balance of the Notes is in
excess of the Note Collateralization Amount, the Noteholders' Principal
Distribution Amount will be reduced by the amount of any Noteholders' Priority
Principal Distribution Amount.
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"Noteholders' Priority Principal Distribution Amount" means,
with respect to any Distribution Date, the excess of (i) the aggregate
outstanding principal balance of the Notes (after giving effect to any
distributions on such Distribution Date) over (ii) the Note Collateralization
Amount.
"Notes" means the Class A-1 Notes and Class A-2 Notes.
"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 Eligible Lender
Trustee, 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 a Servicer, one or more written
opinions of counsel who may be an employee of or counsel to the Seller, the
Administrator or such Servicer, which counsel shall be acceptable to the
Indenture Trustee, the Eligible Lender Trustee or the Rating Agencies, as
applicable.
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"Other Additional Pre-Funded Amount" means, with respect to
any Distribution Date, the amount on deposit in the Other Additional Pre-Funding
Subaccount.
"Other Additional Pre-Funding Subaccount" has the meaning set
forth in Section 5.08 of the Sale and Servicing Agreement.
"Other Subsequent Student Loans" means the Serial Loans
(including Consolidation Loans but not including Subsequent Pool Student Loans),
Guarantee Fees Advances and the funding of accrued interest to be capitalized
made by the Seller to an eligible borrower who has one or more existing loans
under the Programs that are Financed Student Loans and are transferred or to be
transferred to the Eligible Lender Trustee on behalf of the Issuer during the
Funding Period 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 which Schedule A may be in the form of microfiche or computer tape.
"Outstanding" means, as of the date of determination, all
Notes theretofore authenticated and delivered under the Indenture except:
(i) Notes theretofore canceled 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
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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.
"Outstanding Amount" means the aggregate principal amount of
all Notes Outstanding at the date of determination.
"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.
"PHEAA Fee Schedule" means the fee schedule setting forth the
Servicing Fee and Excess Servicing Fee of PHEAA.
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"Physical Property" has the meaning assigned to such term in
the definition of "Delivery" above.
"Pool Balance" means, at any time, the aggregate principal
balance of the Financed Student Loans at the end of the preceding Collection
Period (including accrued interest thereon for such Collection Period to the
extent such interest will be capitalized upon commencement of repayment), after
giving effect to the following without duplication: (i) all payments received by
the Trust related to the Financed Student Loans during such Collection Period
from or on behalf of borrowers, Guarantors and the Department, (ii) all Purchase
Amounts received by the Trust related to the Financed Student Loans for such
Collection Period from the Seller or the Servicers, (iii) all Additional
Fundings made from the Escrow Account and the Pre-Funding Account with respect
to such Collection Period and (iv) all losses realized on Financed Student Loans
liquidated during such Collection Period.
"Pool Factor" means as of the close of business on a
Distribution Date (i) for the Class A-1 Notes, a seven-digit decimal figure
equal to the outstanding principal balance of the Class A-1 Notes divided by the
original outstanding principal balance of the Class A-1 Notes, (ii) for the
Class A-2 Notes, a seven-digit decimal figure equal to the outstanding principal
balance of the Class A-2 Notes divided by the original outstanding principal
balance of the Class A-2 Notes and (iii) for the Certificates, a seven-digit
decimal figure equal to the Certificate Balance of the Certificates divided by
the Initial Certificate Balance of the Certificates. The Pool Factor for each
class of Securities will be 1.0000000 as of the Closing Date; thereafter, the
Pool Factor for each class of Securities will decrease to reflect reductions in
the outstanding principal balance of such classes of Securities.
"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
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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 Subsequent Pool
Pre-Funding Subaccount and the Other Additional Pre-Funding Subaccount).
"Principal Distribution Amount" means, with respect to any
Distribution Date, the amount by which the sum of the outstanding principal
balance of the Notes and the Certificates exceeds the Specified Collateral
Balance for such Distribution Date.
"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 Private Financed
Loans of such borrower in accordance with the terms of the Programs.
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Programs" means the Graduate Loan Programs, as in effect from
time to time.
"Purchase Amount" means, as of the close of business on the
last day of a Collection Period, 102.85% of the amount required to prepay in
full the respective Financed Student Loan, if it is an Initial Financed Student
Loan, 102.85% of the amount required to prepay in full the respective Financed
Student Loan, if it is a Subsequent Pool Student Loan and 100% of the amount
required to prepay in
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full the respective Financed Student Loan if it is an Other Subsequent Student
Loan, in each case under the terms thereof including all accrued interest
thereon and any lost Interest Subsidy Payments and Special Allowance Payments
with respect thereto.
"Purchased Student Loan" means a Financed Student Loan
purchased as of the close of business on the last day of a Collection Period by
a 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 each of Moody's and Fitch. If any such
organization or successor is no 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 (or
such shorter period as shall be acceptable to the Rating Agencies) and that
neither of the Rating Agencies shall have notified the Seller, the Servicers,
the Eligible Lender Trustee and the Indenture Trustee in writing that such
action will in and of itself result 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 Distribution Date or
Redemption Date, the close of business on the twenty-sixth day of the calendar
month in which such 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
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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 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.]
"Reference Bank" means a leading bank (i) engaged in
transactions in Eurodollar deposits in the international Eurocurrency market,
(ii) not controlling, controlled by or under common control with the
Administrator and (iii) having an established place of business in London.
"Reserve Account" means the account designated as such,
established and maintained pursuant to Section 5.01 of the Sale and Servicing
Agreement.
"Reserve Account Initial Deposit" means $2,595,000.
"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
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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 January 1, 1999 among the Issuer, the Seller, the
Administrator, the Eligible Lender Trustee and the Servicers.
"Schedules of Financed Student Loans" means the listing of the
Financed Student Loans set forth in Schedules A and B to the Sale and Servicing
Agreement and to the Indenture (which Schedules may be in the form of
microfiche), as amended or supplemented on each Transfer Date to reflect the
sale to the Eligible Lender Trustee on behalf of the Trust of the Additional
Student Loans.
"Securities" means the Class A-1 Notes, Class A-2 Notes and
the Certificates.
"Seller" means Key Bank USA, National Association, a national
banking association.
"Seller Optional Deposit" has the meaning specified in Section
5.09 of the Sale and Servicing Agreement.
"Serial Loans" means additional student loans, including
Consolidation Loans, which are made under the Programs to a borrower who is also
a borrower under at least one Initial Financed Student Loan or Subsequent Pool
Student Loan.
"Servicer" means PHEAA, in its capacity as servicer of the
Financed Student Loans it services or EFS, as servicer of the Financed Student
Loans it services, as applicable.
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"Servicer Default" means an event specified in Section 8.01(a)
of the Sale and Servicing Agreement.
"Servicer's Report" means any report of a 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 the EFS Fee
Schedule and the PHEAA Fee Schedule, respectively.
"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.
"Special Determination Date" means March 1, 1999.
"Specified Collateral Balance" means, with respect to any
Distribution Date, the sum of (a) the Pool Balance as of the last day of the
related Collection Period plus (b) the Pre-Funded Amount, as of the last day of
the related Collection Period for such Distribution Date. In the event that the
Financed Student Loans are not sold pursuant to Section 9.01(c) of the Sale and
Servicing Agreement with respect to any Distribution Date occurring on or after
the March 2009 Distribution Date, the Specified Collateral Balance will be zero.
Following a TERI Trigger Event, the Specified Collateral Balance will equal
zero.
"Specified Reserve Account Balance" means with respect to any
Distribution Date an amount equal to the greater of (i) 0.30% of the aggregate
outstanding principal amount of the Notes and the Certificate Balance on such
Distribution Date before giving effect to any distributions on such Distribution
Date and (ii) $1,297,500; provided, however, that in no event will such balance
exceed the sum of the outstanding principal amount of the Notes and the
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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.
"State" means any one of the 50 States of the United States of
America or the District of Columbia.
"Statistical Cutoff Date" means January 1, 1999.
"Student Loan Rate" means for any class of Securities for any
Interest Period a rate equal to 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
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
outstanding principal balance of the Securities as of the first day of such
Interest Period.
"Subsequent Cutoff Date" means the day specified in the
related Transfer Agreement as of which principal and interest accruing with
respect to an Additional Student Loan is to be transferred to the Eligible
Lender Trustee on behalf of the Issuer pursuant to Section 2.02 of the Sale and
Servicing Agreement.
"Subsequent Pool Pre-Funded Amount" means, with respect to any
Distribution Date, the amount on deposit in the Subsequent Pool Pre-Funding
Subaccount.
"Subsequent Pool Pre-Funding Subaccount" has the meaning set
forth in Section 5.08 of the Sale and Servicing Agreement.
"Subsequent Pool Student Loans" means any law school, medical
school, dental school, graduate business school and other graduate school
student loans listed on the
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Schedule of Subsequent Pool Student Loans on the Closing Date as set forth in
Schedule B to the Sale and Servicing Agreement (which Schedules 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 January 1, 1999, among the
Seller, the Administrator, the Trust, the Eligible Lender Trustee, the Indenture
Trustee and the Servicers.
"T-Bill Indexed Securities" means none.
"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.
"Telerate Page 3750" means the display page so designated on
the Dow Jones Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices).
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"TERI" means The Education Resources Institute, Inc., a
Massachusetts non-profit corporation.
A "TERI Trigger Event" shall occur when (i) the Cumulative
TERI Claims Ratio exceeds 20% and (ii) a claim has been made under the TERI
Guarantee Agreement and TERI has failed to fully satisfy such claim.
Notwithstanding the foregoing, no TERI Trigger Event will be deemed to occur if
each Rating Agency rating the Securities waives the TERI Trigger Event.
"Three-Month LIBOR" means the London interbank offered rate
for deposits in U.S. dollars having a maturity of three months commencing on the
related LIBOR Determination Date (the "Index Maturity") which appears on
Telerate Page 3750 as of 11:00 a.m., London time, on such LIBOR Determination
Date. If such rate does not appear on Telerate Page 3750, the rate for that day
will be determined on the basis of the rates at which deposits in U.S. dollars,
having the Index Maturity and in a principal amount of not less than U.S.
$1,000,000, are offered at approximately 11:00 a.m., London time, on such LIBOR
Determination Date to prime banks in the London interbank market by the
Reference Banks. The Administrator will request the principal London office of
each of such Reference Banks to provide a quotation of its rate. If at least two
such quotations are provided, the rate for that day will be the arithmetic mean
of the quotations. If fewer than two quotations are provided, the rate for that
day will be the arithmetic mean of the rates quoted by major banks in New York
City, selected by the Administrator, at approximately 11:00 a.m., New York City
time, on such LIBOR Determination Date for loans in U.S. dollars to leading
European banks having the Index Maturity and in a principal amount equal to an
amount of not less than U.S. $1,000,000; provided that if the banks selected as
aforesaid are not quoting as mentioned in this sentence, Three-Month LIBOR in
effect for the applicable Interest Period will be Three-Month LIBOR in effect
for the previous Interest Period.
"TIA" means the Trust Indenture Act of 1939, as amended.
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"Transfer Agreement" has the meaning specified in Section
2.02(b) of the Sale and Servicing Agreement.
"Transfer Date" means the Closing Date, the fifteenth day (or,
if such day is not a Business Day, the next succeeding Business Day) of any
month or any other date 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.
"Transferred Balance" has the meaning assigned to such term in
Sections 5.05(d) and 5.08 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 the
Pre-Funded Amount 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 January 1, 1999, 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
-43-
<PAGE> 105
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 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.
"Underwriters" shall mean Credit Suisse First Boston
Corporation and McDonald Investments Inc., A Keycorp Company.
"Underwriting Agreement" shall mean the Note Underwriting
Agreement or the Certificate Underwriting Agreement, as applicable.
-44-
<PAGE> 106
SCHEDULE A
TO THE
SALE AND SERVICING AGREEMENT
Schedule of Initial Financed Student Loans
- - ------------------------------------------
[Set forth name of Servicer servicing each Initial Financed Student Loan]
Delivered to Indenture Trustee.
<PAGE> 107
SCHEDULE B
TO THE
SALE AND SERVICING AGREEMENT
Schedule of Subsequent Pool Student Loans
- - -----------------------------------------
[Set forth name of Servicer servicing each Subsequent Pool Student Loan]
Delivered to Indenture Trustee
<PAGE> 108
SCHEDULE C
TO THE
SALE AND SERVICING AGREEMENT
Location of Financed Student Loan Files - PHEAA
- - -----------------------------------------------
Documents relating to the Financed Student Loans being serviced by PHEAA
(including original notes) are stored at PHEAA's facility at 1200 North 7th
Street, Harrisburg, Pennsylvania 17102.
Location of Financed Student Loan Files - EFS
- - ---------------------------------------------
Documents relating to the Financed Student Loans being serviced by EFS
(including original notes) are stored at EFS's facility at 8425 Woodfield
Crossing Boulevard, Suite 401, Indianapolis, Indiana 46240-2495.
<PAGE> 109
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)(xx), 1(b)(iii), 2 and 3 of the Administration Agreement.
<PAGE> 110
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
Class A-1 Notes:___________ ($_______ per $1,000 original principal amount of
Class A-1 Notes)
(ii) Amount of principal being paid or distributed in respect of the
Class A-2 Notes:___________ ($_______ per $1,000 original principal amount of
Class A-2 Notes)
(iii) Amount of interest being paid or distributed in respect of the
Class A-1 Notes:___________ ($_______ per $1,000 original principal amount of
Class A-1 Notes)
(iv) Amount of interest being paid or distributed in respect of the
Class A-2 Notes:___________ ($_______ per $1,000 original principal amount of
Class A-2 Notes)
(v) Amount of Noteholders' Interest Index Carryover being paid or
distributed (if any) and amount remaining (if any):
(1) Distributed to Class A-1 Noteholders: _______($_______ per
$1,000 original principal amount of Class A-1 Notes)
(2) Distributed to Class A-2 Noteholders: _______($_______ per
$1,000 original principal amount of Class A-2 Notes)
(3) Balance on Class A-1 Notes:__________ ($_______ per $1,000
original principal amount of Class A-1 Notes)
(4) Balance on Class A-2 Notes:__________ ($_______ per $1,000
original principal amount of Class A-2 Notes)
<PAGE> 111
(vi) Pool Balance at the end of the related Collection Period:________
(vii) After giving effect to distributions on this Distribution Date:
(a) (1) outstanding principal amount of Class A-1
Notes:____________
(2) Pool Factor for the Class A-1 Notes:____________
(b) (1) outstanding principal amount of Class A-2
Notes:____________
(2) Pool Factor for the Class A-2 Notes:____________
(c) (1) Certificate Balance:________________
(2) Pool Factor for the Certificates:____________
(viii) Note Interest Rate for the Class A-1 Notes:
(a) In general:
[(1) T-Bill Rate for the period from the previous
Distribution Date to this Distribution Date was _____%;][(1)]
or
[(1) Three-Month LIBOR for the period from the
previous Distribution Date to this Distribution Date was ___%
and in the case of the initial Interest Period Three-Month
LIBOR was _____% for the period from the Closing Date till
March 29, 1999 and _____% for the period from March 29, 1999
to but excluding June 28, 1999 and] [(2)]
[(2)] the Student Loan Rate was _____%. [(1)][(2)]
(b) Note Interest Rate for the Class A-2 Notes: ______% (based
on [T-Bill Rate][Three-Month LIBOR][Student Loan Rate])
- - --------
[(1) This Calculation not required unless the T-Bill Rate for such Interest
Period is 100 basis points greater than the T-Bill Rate of the preceding
Determination Date or the 52 Week Treasury Bill Rate is 100 basis points less
than the T-Bill Rate as of such Determination Date.]
[(2) This Calculation not required unless Three-Month LIBOR for such Interest
Period is 100 basis points greater than Three-Month LIBOR of the preceding
Determination Date.]
<PAGE> 112
(c) Note Interest Rate for the Class A-2 Notes __% (based on
[T-bill Rate] [Three-Month LIBOR][Student Loan Rate]
(ix) (a) Amount of Servicing Fee for related Collection Period:
____________ ($_______ per $1,000 original principal amount of Class A-1 Notes,
$_________ per $1,000 original principal balance of Class A-2 Notes;
(b) Amount of Excess Servicing Fee being distributed and
remaining balance (if any):
(1) Distributed: $____________ ($_______ per $1,000
original principal amount of Class A-1 Notes, and $_________
per $1,000 original principal balance of Class A-2 Notes;
(2) Balance owed to the holders of Notes: $__________
($_____ per $1,000 original principal amount of Class A-1
Notes, and $_____________ per $1,000 original principal
balance of Class A-2 Notes)
(x) Amount of Administration Fee for related Collection Period:
____________ ($_______ per $1,000 original principal amount of Class A-1 Notes,
and $_________ per $1,000 original principal balance of Class A-2 Notes;
(xi) (a) Aggregate amount of Realized Losses (if any) for the related
Collection Period:
(b) Balance of Financed Student Loans that are delinquent in
each delinquency period as of the end of the related Collection Period:
[(xii) Amount in the Pre-Funding Account:_________](3)
[(xiii) (a) Amount remaining in the Subsequent Pool Pre-Funding
Subaccount not used to acquire Subsequent Pool Student Loans: ______;
(b) Amount of (a) to be paid to the holders of the Class A-1
Notes: __________](4)
(c) Amount of (a) to be paid to the holders of the Class A-2
Notes: ________; and
- - --------
(3) To be included for each Distribution Date during the Funding Period.
(4) To be included for First Distribution Date only.
<PAGE> 113
[(xiv) Amount in the Pre-Funding Account at the end of the
Funding Period to be distributed as a payment of principal in respect of the
Notes:__________](5)
- - --------
(5) To be included for the Distribution Date on or immediately following the end
of the Funding Period.
<PAGE> 114
EXHIBIT B
TO THE
SALE AND SERVICING AGREEMENT
Form of Certificateholders' Statement
pursuant to Section 5.07(b) of Sale
and Servicing Agreement (capitalized
terms used herein are defined in
Appendix A thereto)
Distribution Date:___________________
(i) Amount of principal being paid or distributed in respect of the
Certificates:___________ ($_______ per $1,000 original principal amount of the
Certificates)(6)
(ii) Amount of interest being paid or distributed in respect of the
Certificates:______________ ($_______ 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 $1,000 original
principal amount of Certificates)
(iv) Pool Balance at the end of related Collection Period: ____________
(v) After giving effect to distributions on this Distribution Date:
(a) (1) outstanding principal amount of Class A-1
Notes:____________
(2) Pool Factor for Class A-1 Notes:____________
(b) (1) outstanding principal amount of Class A-2
Notes:____________
(2) Pool Factor for Class A-2 Notes:____________
- - --------
(6) Only after the Notes have been paid in full.
<PAGE> 115
(c) (1) Certificate Balance:______________
(2) Certificate Pool Factor:____________
(vi) Certificate Rate:
(a) In general:
[(1) T-Bill Rate for the period from the previous
Distribution Date to this Distribution Date was _____%;][(1)]
[(2) Three-Month LIBOR for the period from the
previous Distribution Date to this Distribution Date was __%
and in the case of the initial Interest Period Three-Month
LIBOR was _____% for the period from the Closing Date till
March 29, 1999 and _____% for the period from March 29, 1999
to but excluding June 28, 1999 and] [(2)].
(3) the Student Loan Rate was _____%.[(1)][(2)]
(b) Certificate Rate: ______% (based on [T-Bill Rate]
[Three-Month LIBOR][Student Loan Rate])
(vii) (a) Amount of Servicing Fee for the related Collection Period:
____________ ($_______ 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 $1,000
original principal amount of Certificates).
(viii) Amount of Administration Fee for the related Collection Period:
____________ ($_______ 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:__________
<PAGE> 116
(x) Amount in the Reserve Account:____________
(xi) Amount in the Pre-Funding Account:_________(7)
(xii) (a) Amount remaining in the Subsequent Pool Pre-Funding
Subaccount not used to acquire Subsequent Pool Student Loans: ______;
(b) Amount of (a) to be paid to Certificateholders:
________(8)
- - --------
(7) To be included for each Distribution Date during the Funding Period.
(8) To be included for First Distribution Date only.
<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
ASSIGNMENT
For value received, in accordance with the Sale and Servicing
Agreement (the "Sale and Servicing Agreement") dated as of January 1, 1999,
among the undersigned, as seller (the "Seller") and as administrator (the
"Administrator"), KeyCorp Student Loan Trust 1999-A (the "Trust"), The First
National Bank of Chicago, not in its individual capacity but solely as Eligible
Lender Trustee (the "Eligible Lender Trustee"), Pennsylvania Higher Education
Assistance Agency, as servicer ("Servicer") and EFS Services, Inc., as servicer
("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 Obligors with respect to 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.
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.
<PAGE> 119
IN WITNESS WHEREOF, the undersigned has caused this Assignment
to be duly executed as of _____________ __, 1999.
KEY BANK USA, NATIONAL
ASSOCIATION, as Seller
By:___________________
Name:
Title:
<PAGE> 120
EXHIBIT E
TO THE
SALE AND SERVICING AGREEMENT
TRANSFER AGREEMENT
TRANSFER No. ____ OF ADDITIONAL STUDENT LOANS dated as of
_________, ______, among KEYCORP STUDENT LOAN TRUST 1999-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, 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 Servicers (as defined in the Appendix A to the Sale
and Servicing Agreement) are parties to the Sale and Servicing Agreement dated
as of January 1, 1999 (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
January 1, 1999 (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 of
this Agreement (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.
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.
<PAGE> 121
"Transfer Date" means, with respect to the Additional Student
Loans, ______________, ____.
2. Schedules of Financed Student Loans. Attached hereto as
Schedule A is a supplement to Schedule B 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 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.
<PAGE> 122
(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 which breach or default
would reasonably be expected to have a material adverse effect on the
condition of Key Bank USA, National Association, financial or
otherwise, or adversely affect the transactions contemplated by this
Agreement or any other Basic Document; 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 to its best
knowledge investigations pending against the Seller or, to its best
knowledge, threatened against the Seller, before 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:
<PAGE> 123
(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 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.
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.
<PAGE> 124
KEYCORP STUDENT LOAN TRUST 1999-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:
KEY BANK USA, NATIONAL ASSOCIATION,
Administrator,
By: _______________________________
Name:
Title:
Acknowledged and accepted
as of the date first above written:
BANKERS TRUST COMPANY,
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 and the name of the Servicer servicing such Additional Student Loans]
<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 January 1, 1999,
among the undersigned, as seller (the "Seller") and as administrator (the
"Administrator"), KeyCorp Student Loan Trust 1999-A (the "Trust"), The First
National Bank of Chicago, not in its individual capacity but solely as Eligible
Lender Trustee (the "Eligible Lender Trustee"), Pennsylvania Higher Education
Assistance Agency, as servicer ("Servicer"), and EFS Services, Inc., as servicer
("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 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_.
<PAGE> 127
KEY BANK USA, NATIONAL ASSOCIATION,
as Seller
By: _______________________________
Name:
Title:
<PAGE> 1
EXHIBIT 99.1
Execution Copy
ADMINISTRATION AGREEMENT dated as of January 1, 1999, among
KEYCORP STUDENT LOAN TRUST 1999-A, a New York trust (the "Issuer"), KEY BANK
USA, NATIONAL ASSOCIATION, a national banking association, as administrator (the
"Administrator"), and BANKERS TRUST COMPANY, 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 two classes of Floating Rate
Asset Backed Notes (the "Notes") pursuant to the Indenture dated as of January
1, 1999 (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;
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:
<PAGE> 2
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):
(i) 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);
(ii) the fixing or causing to be fixed of any specified record
date and the notification of the Indenture Trustee and the holders of
the Notes with respect to special payment dates, if any (Section
2.07(c));
(iii) the preparation of or obtaining of the documents and
instruments required for authentication of the Notes and delivery of
the same to the Indenture Trustee (Section 2.02);
(iv) the preparation, obtaining or filing of the instruments,
opinions and certificates and other documents required for the release
of collateral (Section 2.09);
(v) 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);
(vi) 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);
(vii) the direction to the Paying Agents to deposit moneys
with the Indenture Trustee (Section 3.03);
(viii) 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);
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<PAGE> 3
(ix) 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);
(x) 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);
(xi) 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));
(xii) 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 such 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));
(xiii) the preparation and obtaining of documents and
instruments required for the release of the Issuer from its obligations
under the Indenture (Section 3.10);
(xiv) 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 a Servicer, the Administrator or the Seller under
the Sale and Servicing Agreement known to the Administrator (Section
3.18);
(xv) 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);
(xvi) 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);
(xvii) 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);
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<PAGE> 4
(xviii) the furnishing of the Indenture Trustee with the names
and addresses of the holders of the Notes during any period when the
Indenture Trustee is not the Note Registrar (Section 7.01);
(xix) the preparation and, after execution by the Issuer, the
filing with the Commission, any applicable State agencies and the
Indenture Trustee of documents 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 holders of the
Notes (Section 7.03);
(xx) 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);
(xxi) 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);
(xxii) 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 holders of the Notes of notices with
respect to such supplemental indentures (Sections 9.01, 9.02 and 9.03);
(xxiii) 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);
(xxiv) the notification of the holders of the Notes of
redemption of the Notes or the duty to cause the Indenture Trustee to
provide such notification (Section 10.02);
(xxv) 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));
(xxvi) 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));
(xxvii) the preparation and delivery to the holders of the
Notes and the Indenture Trustee of any agreements with respect to
alternate payment and notice provisions (Section 11.06);
(xxviii) the recording of the Indenture, if applicable
(Section 11.15); and
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<PAGE> 5
(xxix) 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, 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
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<PAGE> 6
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:
(i) the amendment of or any supplement to the Indenture;
(ii) 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);
(iii) the amendment, change or modification of the Related
Agreements;
(iv) 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 Agent or Indenture Trustee of its obligations under the
Indenture; and
(v) 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, (i) make
any payments to the holders of the Notes under the Related Agreements, (ii) sell
the Indenture Trust Estate pursuant to Section 5.04 of the Indenture, (iii) take
any other action that the Issuer directs the Administrator not to take on its
behalf, (iv) in connection with its duties hereunder assume any indemnification
obligation of any other Person or (v) 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
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<PAGE> 7
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, 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:
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<PAGE> 8
(a) if to the Issuer or the Eligible Lender Trustee, to
KeyCorp Student Loan Trust 1999-A
c/o The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, Illinois 60670
Attention: Corporate Trust Administration
(b) if to the Administrator, to
Key Bank USA, National Association
800 Superior Avenue, 4th Floor
Cleveland, Ohio 44114
Attention: Key Education Resources
KeyCorp Student Loan Trust 1999-A
(c) if to the Indenture Trustee, to
Bankers Trust Company
Four Albany Street
New York, New York 10006
Attention: Corporate Trust and Agency Group,
Structured Finance Team
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 holders of the Notes and the
holders of the Certificates, 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 holders of the Notes or the holders
of the Certificates; 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 holder of the Notes or holder of the Certificates. 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 holders of
the Notes of at least a majority in the Outstanding Amount of the Notes and the
holders of the Certificates of at least a majority of the sum of the Certificate
Balances 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 holders of the Notes or the holders of the
Certificates; provided, however, that no such amendment may (i) increase or
reduce in any
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<PAGE> 9
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 holders of the Notes or the holders
of the Certificates or (ii) reduce the aforesaid percentage of the holders of
the Notes and the holders of the Certificates which are required to consent to
any such amendment, without the consent of all Outstanding holders of the Notes
and holders of the Certificates. 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.
13. 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.
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, except as provided in subsection (c) of this section, this instrument
has been countersigned by The First National Bank
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<PAGE> 10
of Chicago not in its individual capacity but solely in its capacity as Eligible
Lender Trustee of the Issuer and subject to the succeeding paragraph, in no
event shall The First National Bank of Chicago in its individual capacity,
Bankers Trust Company 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 hereunder, 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.
(c) Notwithstanding any other provision in this Agreement or
the other Basic Documents, nothing in this Agreement or the other Basic
Documents shall be construed to limit the Eligible Lender Trustee's or the
Indenture Trustee's legal responsibility to the U.S. Secretary of Education or a
Guarantor for any violations of statutory or regulatory requirements that may
occur with respect to loans held by the Eligible Lender Trustee or the Indenture
Trustee pursuant to or to otherwise comply with their obligations under the
Higher Education Act or implementing regulations.
20. Third-Party Beneficiaries. The Eligible Lender Trustee is
a third-party beneficiary to this Agreement and is entitled to the rights and
benefits hereunder and may enforce the provisions hereof as if it were a party
hereto.
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<PAGE> 11
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
1999-A,
by THE FIRST NATIONAL BANK OF
CHICAGO, not in its individual capacity but
solely as Eligible Lender Trustee,
By: _______________________________________
Name:
Title:
BANKERS TRUST COMPANY, not in its individual
capacity but solely as Indenture Trustee,
By: _______________________________________
Name:
Title:
KEY BANK USA, NATIONAL ASSOCIATION, as
Administrator,
By: _______________________________________
Name: Darlene Dimitrijevs
Title: Vice President
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<PAGE> 1
EXHIBIT 99.2
January 25, 1999
Key Bank USA, National Association
127 Public Square
Cleveland, Ohio 44114
Re: FLOATING RATE ASSET BACKED NOTES AND FLOATING
RATE ASSET BACKED CERTIFICATES OF KEYCORP
STUDENT LOAN TRUST 1999-A
Gentlemen:
I am the General Counsel of Key Bank USA, National Association and have
acted as counsel to the Bank ("Bank") in connection with the KeyCorp Student
Loan Trust 1999-A (the "Trust") and the issuance and sale by the Trust of (i)
certain Floating Rate Asset Backed Notes (the "Notes") pursuant to an Indenture,
to be dated as of January 1, 1999 (the "Indenture"), by and between the Trust,
as Issuer, and Bankers Trust Company, as Indenture Trustee (the "Indenture
Trustee") and (ii) certain Floating Rate Asset Backed Certificates (the
"Certificates") pursuant to an Amended and Restated Trust Agreement, to be dated
as of January 1, 1999 (the "Trust Agreement"), by and between the Bank, as
Depositor, and The First National Bank of Chicago, as Eligible Lender Trustee
(the "Eligible Lender Trustee").
This Opinion Letter is governed by, and shall be interpreted in
accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section of
Business Law (1991). As a consequence, it is subject to a number of
qualifications, exceptions, definitions, limitations on coverage, and other
limitations, all as more particularly described in the Accord, and this Opinion
Letter should be read in conjunction therewith. The Law covered by the opinions
expressed herein is limited to the Laws of the State of Ohio and Federal Law.
Based upon and subject to the foregoing, I am of the opinion that:
(1) The Notes have been duly authorized and, when duly executed,
authenticated, delivered, and paid for as contemplated by the Registration
<PAGE> 2
Page 2
Statement referred to below, will be validly issued, will be binding obligations
of the Trust, and will be entitled to the benefits of the Indenture.
(2) The Certificates have been duly authorized and, when duly executed,
delivered, and paid for as contemplated by the Registration Statement referred
to below, will be binding obligations of the Trust, and will be entitled to the
benefits of the Trust Agreement.
I hereby consent to the filing of this Opinion Letter as an Exhibit to
Registration Statement No. 333-58073 on Form S-3 filed by the Bank as originator
of the Trust to effect registration of the Notes and Certificates under the
Securities Act of 1933 and to the references to me under the caption "Legal
Matters" in the Prospectus constituting a part of such Registration Statement.
Very truly yours,
/s/ Forrest F. Stanley
Forrest F. Stanley
General Counsel
