SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
December 17, 1997.
Crestar Bank, as Depositor to Crestar Student Loan Trust 1997-1
(Exact name of registrant as specified in charter)
Virginia 333-35828 53-0116200
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
919 East Main Street, Richmond, Virginia 23219
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (804) 782-5000
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(Former name or former address, if changed since last report.)
<PAGE>
Item 5. Other Events.
Crestar Student Loan Trust 1997-1 (the "Issuer") was formed on December
17, 1997 pursuant to a Trust Agreement, dated as of December 1, 1997 (the "Trust
Agreement"), by and among the Crestar Bank, Star Bank, National Association, as
Eligible Lender Trustee and Delaware Trust Capital Management, Inc., as Delaware
Trustee.
On December 17, 1997, the Issuer sold $222,900,000 aggregate initial
principal amount of Student Loan Asset Backed Notes, Series 1997-1 (the "Notes")
pursuant to an Indenture and the First Terms Supplement to the Indenture, each
dated as of December 1, 1997 (collectively, the "Indenture"), between the Issuer
and Bankers Trust Company, as Indenture Trustee. As security for the Notes, the
Issuer pledged to the Indenture Trustee pursuant to the Indenture a pool of
guaranteed or insured education loans to students and parents of students (the
"Assets"). The Assets were acquired by the Issuer in a privately-negotiated
transaction pursuant to a Transfer and Servicing Agreement, dated as of December
1, 1997, among Crestar Student Loan Trust 1997-1, Crestar Bank and Star Bank,
National Association as Eligible Lender Trustee.
The Notes have been sold by the Issuer to the Underwriters pursuant to
an Underwriting Agreement, dated as of December 11, 1997, among the
Underwriters, Crestar Bank and the Issuer.
<PAGE>
Exhibits
1.1 Underwriting Agreement, dated December 11, 1997, among Crestar Bank,
Crestar Student Loan Trust 1997-1 and Salomon Brothers Inc, as
Representatives of the Underwriters, relating to the Notes.
4.1 Indenture and First Terms Supplement to the Indenture, dated as of
December 1, 1997, by and between the Issuer and Bankers Trust Company,
as Indenture Trustee (related exhibits available upon request of the
Indenture Trustee).
4.2 Trust Agreement, dated as of December 1, 1997, by and among Crestar
Bank, Star Bank, National Association, as Eligible Lender Trustee and
Delaware Trust Capital Management, Inc., as Delaware Trustee.
99.1 Copy of the Transfer and Servicing Agreement, dated as of December 1,
1997, among Crestar Student Loan Trust 1997-1, Crestar Bank and Star
Bank, National Association, as Eligible Lender Trustee.
99.2 Copy of Administration Agreement, dated as of December 1, 1997 among
Star Bank, National Association, as Eligible Lender Trustee on behalf
of Crestar Student Loan Trust 1997-1, Bankers Trust Company, as
Indenture Trustee and Crestar Bank, as Administrator.
<PAGE>
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.
December 29, 1997
Crestar Bank
By: /s/ W Clark McGhee
---------------------------------
Name: W. Clark McGhee
Title: Senior Vice President
Exhibit 1.1
CRESTAR STUDENT LOAN TRUST 1997-1
$222,900,000 Student Loan Asset Backed Notes
UNDERWRITING AGREEMENT
December 11, 1997
SALOMON BROTHERS INC
As Representative of the
several Underwriters named herein
390 Greenwich Street, 4th Floor
New York, New York 10013
Ladies and Gentlemen:
Crestar Bank, a Virginia banking corporation (as transferor of the
Financed Student Loans to the Trust (each as defined below), the "Bank"), has
formed a trust known as Crestar Student Loan Trust 1997-1 (the "Trust") under
the laws of the State of Delaware and the Bank proposes to cause the Trust to
sell to the underwriters named in Schedule I hereto (collectively, the
"Underwriters" and each individually an "Underwriter"), for whom you (the
"Representative") are acting as representative, pursuant to the terms of this
Underwriting Agreement, Student Loan Asset Backed Notes in the following Classes
and initial principal amounts: $130,000,000 Senior LIBOR Rate Class A-1 Student
Loan Asset Backed Notes (the "Class A-1 Notes") and $84,000,000 Senior LIBOR
Rate Class A-2 Student Loan Asset Backed Notes (the "Class A-2 Notes" and
together with the Class A-1 Notes, the "Class A Notes") and $8,900,000
Subordinate LIBOR Rate Class B Student Loan Asset Backed Notes (the "Class B
Notes" and together with the Class A Notes, the "Notes"). Star Bank, National
Association, a national banking association, acts as eligible lender trustee
(the "Eligible Lender Trustee") of the Trust. The Trust has been formed pursuant
to a Trust Agreement, dated as December 1, 1997 (the "Trust Agreement") by and
among the Bank, Delaware Trust Capital Management, Inc., as Delaware trustee,
and the Eligible Lender Trustee. On the Closing Date, Financed Student Loans (as
defined in the Transfer and Servicing Agreement defined below) will have been
transferred to the Eligible Lender Trustee on behalf of the Trust by the Bank.
The Notes will be issued under an Indenture dated as of December 1, 1997 (the
"Master Indenture") between the Trust and Bankers Trust Company, as indenture
trustee ("Indenture Trustee"), as supplemented by a related First Terms
Supplement (the "First Terms Supplement" and collectively with the Master
Indenture, the "Indenture"). Upon issuance, the Notes will be secured by, among
other things, Financed Student Loans pledged to the Indenture Trustee and
described in the Prospectus (as defined in Section 3 below). This Agreement, the
Transfer and Servicing Agreement dated as of December 1, 1997 (the "Transfer and
Servicing Agreement") among the Trust, the Bank and the Eligible Lender Trustee,
the Indenture, the Administration Agreement dated as of December 1, 1997 among
the Trust, the Bank and the Indenture Trustee (the "Administration Agreement")
and the Trust Agreement shall collectively hereinafter be referred to as the
"Basic Documents." Capitalized terms used herein without definition shall have
the meanings ascribed to them in the Transfer and Servicing Agreement.
1. Purchase, Sale and Delivery of the Notes.
(a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Bank agrees to cause the Trust to sell to the Underwriters, and the Underwriters
agree, severally and not jointly, to purchase from the Trust: the Class A-1
Notes, at a purchase price of 99.75% of the principal amount of the Class A-1
Notes; the Class A-2 Notes, at a purchase price of 99.64% of the principal
amount of the Class A-2 Notes; and the Class B Notes at a purchase price of
99.54% of the principal amount of the Class B Notes, the respective principal
amounts of each Class of Notes set forth opposite the names of the Underwriters
in Schedule I hereto. The Notes will bear interest at the rates as set forth in
Schedule I.
(b) Delivery to the Representative of and payment for the Notes shall
be made at the offices of Hunton & Williams in Richmond, Virginia, at 10:00
A.M., New York City time, on December 17, 1997 (the "Closing Date"). The place
of such closing and the Closing Date may be varied by agreement between the
Representative and the Bank.
The Notes will be delivered by the Bank to the Representative for the
respective accounts of the Underwriters against payment of the purchase price
therefor to or upon the order of the Bank in Federal Funds, by wire, or such
other form of payment as to which the parties may agree. Each Class of Notes
will be evidenced by a single global security in definitive form and/or by
additional definitive securities, and will be registered, in the case of the
global Classes of Notes, in the name of Cede & Co. as nominee of The Depository
Trust Company ("DTC"), and in the other cases, in such names and in such
denominations as the Representative shall request prior to 1:00 p.m., New York
City time, no later than the business day preceding the Closing Date. The Notes
to be delivered to the Representative shall be made available to the
Representative in New York City for inspection not later than 9:30 a.m., New
York City time, on the business day next preceding the Closing Date.
2. Offering by the Underwriters.
(a) It is understood that, after the Registration Statement becomes
effective, the Underwriters propose to offer the Notes for sale to the public
(which may include selected dealers) as set forth in the Prospectus. The
Underwriters agree not to offer or sell the Notes in any state or jurisdiction
where registration, qualification or any filing to effect any exemption is
required under such state's or jurisdiction's securities or Blue Sky laws,
except where, with the consent of the Bank (which may be withheld in the Bank's
sole discretion), such registration, qualification or filing has been completed.
The Underwriters agree that all offers and sales of the Notes will be made in
accordance with applicable federal and state securities laws and regulations. To
the extent the Underwriters engage in overallotment, stabilizing transactions,
syndicate covering transactions and penalty bids, the Underwriters agree that
such activities shall be in accordance with Regulation M under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(b) Each Underwriter severally represents and agrees that (i) it has
not offered or sold and will not offer or sell any Notes to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purpose of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995; (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Act of 1986 with respect to anything done by it in relation to the
Notes in, from or otherwise involving the United Kingdom; and (iii) it has only
issued or passed on, and will only issue or pass on, in the United Kingdom any
document received by it in connection with the issue of the Notes to a person
who is of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996 or to a person to whom such
document may otherwise lawfully be issued, distributed or passed on.
3. Representations and Warranties of the Bank. The Bank represents and
warrants to and agrees with the Underwriters that:
(a) A registration statement on Form S-3 (No. 333-35825), including a
prospectus and such amendments thereto as may have been required to the date
hereof, relating to the Notes and the offering thereof has been filed with the
Securities and Exchange Commission (the "SEC") and such registration statement,
as amended, has become effective under the Securities Act of 1933, as amended
(the "Act"); such registration statement, as amended, including all information
(if any) deemed to be a part of such registration statement as of the Effective
Time (as defined below) pursuant to Rule 430A under the Act, and including the
exhibits thereto and any material incorporated by reference therein, and the
prospectus relating to the sale of the Notes offered thereby constituting a part
thereof, as amended or supplemented, are respectively referred to herein as the
"Registration Statement" and the "Prospectus"; and the conditions to the use of
a registration statement on Form S-3 under the Act, as set forth in the General
Instructions to Form S-3, have been satisfied with respect to the Registration
Statement. For purposes of this Agreement, "Effective Time" means (x) if the
Bank has advised the Representative that it does not propose to amend the
Registration Statement, the date and time as of which the 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 SEC, or (y) if the Bank has advised the Representative that it proposes to
file an amendment or post-effective amendment to the Registration Statement, the
date and time as of which the Registration Statement, as amended by such
amendment or post-effective amendment, as the case may be, is declared effective
by the SEC. "Effective Date" means the date of the Effective Time.
(b) On the Effective Date, the Registration Statement, and at the time
of the filing of the Prospectus pursuant to Rule 424(b), the Registration
Statement and the Prospectus, conformed, in all material respects to the
requirements of the Act, the rules and regulations of the SEC (the "Rules and
Regulations") and the Trust Indenture Act of 1939, as amended, and the rules and
regulations thereunder (the "Trust Indenture Act"), and in the case of the
Registration Statement, did not include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading and, in the case of the Prospectus,
did not include any 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, and on the date of
this Agreement, the Registration Statement and the Prospectus conforms in all
material respects to the requirements of the Act, the Rules and Regulations and
the Trust Indenture Act, and the Registration Statement does not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading;
the Prospectus does not include any untrue statement of material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided, however,
that the foregoing does not apply to statements in or omissions from the
Registration Statement or the Prospectus based upon written information
furnished to the Bank by any Underwriter specifically for use therein.
(c) The SEC has not issued and, to the best knowledge of the Bank, is
not threatening to issue any order preventing or suspending the use of the
Registration Statement.
(d) This Agreement has been duly authorized, executed and delivered by
the Bank. 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, the organizational documents or
by-laws of the Bank or any agreement or instrument to which the Bank is a party
or by which the Bank is bound or to which any of the properties of the Bank is
subject which could reasonably be expected to have a material adverse effect on
the transactions contemplated herein.
(e) The Bank is duly organized and validly existing as a Virginia
banking corporation 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, except for such power and authority the absence of which
would not have a material adverse effect on the Bank or its ability to
consummate the transactions contemplated hereby.
(f) There are no legal or governmental proceedings pending or, to the
knowledge of the Bank, threatened, against the Bank, or to which the Bank or any
of its properties is subject, of a character required to be disclosed in the
Prospectus that are not disclosed in the Prospectus.
(g) 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 Bank in connection with the execution and delivery by the Bank of
this Agreement and the performance by the Bank of the transactions expressly
contemplated by this Agreement, have been duly obtained, effected or given and
are in full force and effect, except such as may be required by the blue sky
laws of any jurisdiction in connection with the sale and distribution of the
Notes for which no representation is being given.
(h) The Bank has all requisite corporate power and authority to execute
and deliver this Agreement and carry out its terms.
(i) The Bank is not required to register as an "investment company"
under the Investment Company Act of 1940, as amended (the "1940 Act") by reason
of the issuance of the Notes.
(j) The representations and warranties made by the Bank as Transferor
in Section 3.1 and Section 6.1 of the Transfer and Servicing Agreement will be
true and correct in all material respects at the time made and on and as of the
Closing Date.
(k) 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 Bank 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.
4. Agreements of the Bank. The Bank agrees with the Underwriters as
follows:
(a) If the Effective Time is prior to the execution and delivery of
this Agreement, the Bank will file the Prospectus, properly completed, with the
SEC 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 Bank will advise the Representative promptly of any such
filing pursuant to Rule 424(b). The Bank will advise the Representative promptly
of any proposal to amend or supplement 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; provided, however, except for the Current Report on Form 8-K
described in Section 4(m), no consent of the Representative shall be required in
connection with any filing made pursuant to the Exchange Act and the rules and
regulations promulgated thereunder; the Bank 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 Bank 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 known threat of any proceeding for that purpose and the Bank
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.
(b) If, at any time when the Prospectus relating to the Notes is
required to be delivered under the Act, any event occurs as a result of which
such Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend or supplement
the Prospectus to comply with the Act or the Rules and Regulations, the Bank
promptly will prepare and file with the SEC, an amendment or supplement to such
Prospectus that will correct such statement or omission or an amendment that
will effect such compliance.
(c) The Bank will immediately inform the Representative (i) of the
receipt by the Bank or the Trust of any communication from the SEC or any state
securities authority concerning the offering or sale of the Notes and (ii) of
the commencement of any lawsuit or proceeding to which either the Bank or the
Trust is a party relating to the offering or sale of the Notes; provided,
however, with respect to the Trust, the Trust has so informed the Bank to the
extent the Bank did not receive such communication provided in clause (i) or is
not a party to the lawsuit or proceeding as provided in clause (ii) and did not
receive notice of such lawsuit.
(d) The Bank will furnish to the Underwriters, without charge, copies
of the Registration Statement (including all documents and exhibits thereto or
incorporated by reference therein), the Prospectus, and all amendments and
supplements to such documents relating to the Notes, in each case in such
quantities as the Underwriters may reasonably request.
(e) No amendment or supplement will be made to the Registration
Statement or Prospectus unless the Representative shall have previously been
advised thereof and the Representative shall not have reasonably objected
thereto after being so advised; provided, however, after the Closing Date,
excluded from this provision shall be filings made pursuant to the Exchange Act.
(f) The Bank will cooperate with the Representative and with its
counsel in connection with the qualification of, or procurement of exemptions
with respect to, the Notes for offering and sale by the Underwriters and by
dealers under the securities or Blue Sky laws of such jurisdictions as any
Underwriter may designate and to which the Bank shall consent (which consent may
be withheld in the Bank's sole discretion) and, in such jurisdictions, will file
or cause the Trust to file such consents to service of process or other
documents necessary or appropriate in order to effect such qualification or
exemptions; provided that in no event shall either of the Bank or the Trust be
obligated to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to service of process in
suits, other than those arising out of the offering or sale of the Notes, in any
jurisdiction where it is not now so subject.
(g) Subject to Section 2, the Bank and the Trust consent to the use, in
accordance with the securities or Blue Sky laws of such jurisdictions in which
the Notes are offered by the Underwriters and by dealers, of the Prospectus
furnished by the Bank.
(h) To the extent, if any, that the rating or ratings provided with
respect to the Notes by the rating agency or agencies that initially rate a
series of Notes is conditional upon the furnishing of documents or the taking of
any other actions by the Bank or the Trust, the Bank shall cause to be furnished
such documents and such other reasonable actions to be taken.
(i) For two years from the Closing Date, the Bank will furnish to the
Representative (i) as soon as available, a copy of each document relating to the
Trust or the Notes required to be filed with the SEC pursuant to the Exchange
Act or any order of the SEC thereunder, and (ii) such other information
concerning the Bank or the Trust as the Representative may reasonably request
from time to time insofar as such information reasonably relates to the
Registration Statement or the transactions contemplated by the Basic Documents.
(j) If this Agreement shall terminate or shall be terminated after
execution and delivery pursuant to any provisions hereof (otherwise than by
notice given by an Underwriter terminating this Agreement pursuant to Section 8
or Section 9 hereof) or if this Agreement shall be terminated by the
Representative because of any failure or refusal on the part of the Bank to
comply with the terms or fulfill any of the conditions of this Agreement, the
Bank agrees to reimburse the Underwriters for all out-of-pocket expenses
(including reasonable fees and expenses of their counsel) reasonably incurred in
connection herewith. In no event shall the Bank or the Trust be liable to the
Underwriters for loss of anticipated profits from the transactions contemplated
by this Agreement.
(k) The net proceeds from the sale of the Notes hereunder will be
applied substantially in accordance with the description set forth in the
Prospectus.
(l) Except as stated in this Agreement and in the Prospectus, the Bank
has not taken, nor will it take, directly or indirectly, any action designed to
or that might reasonably be expected to cause or result in stabilization or
manipulation of the price of the Notes to facilitate the sale or resale of the
Notes; it being understood and agreed that no such action by any Underwriter
shall be deemed an action of the Bank.
(m) Provided that the Bank has received the Computational Materials (as
defined in Section 8 below) within the time frame set forth in Section 8, the
Bank will cause such Computational Materials to be filed with the SEC on a
Current Report on Form 8-K (the "Current Report") not later than the second
Business Day following the receipt of each Computational Materials.
(n) For the period beginning on the date of this Agreement and ending
90 days after the Closing Date, neither the Bank nor any trust originated,
directly or indirectly, by the Bank will, without the prior written consent of
the Representative, offer to sell or sell notes (other than the Notes)
collateralized by, or 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 Bank.
5. Indemnification and Contribution. (a) The Bank agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation) arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the Prospectus, or in any amendment or
supplement thereto, or the preliminary prospectus dated December 5, 1997 (the
"Preliminary Prospectus"), or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or expenses arise out of or are based
upon any untrue statement or omission or alleged untrue statement or omission
which has been made therein or omitted therefrom in reliance upon and in
conformity with the information relating to the Underwriter furnished in writing
to the Bank by or on behalf of any Underwriter through the Representative
expressly for use in connection therewith; provided, however, that the foregoing
indemnity with respect to the Prospectus or the Preliminary Prospectus shall not
inure to the benefit of any Underwriter (or any person controlling such
Underwriter) from whom the person asserting any such loss, claim, damage or
liability purchased Notes, if such person did not receive a copy of the
Prospectus (as then amended or supplemented) at or prior to the written
confirmation of the sale of such Notes to such person and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage or liability. The foregoing indemnity agreement shall be in
addition to any liability which the Bank may otherwise have.
(b) If any action, suit or proceeding shall be brought against an
Underwriter or any person controlling an Underwriter in respect of which
indemnity may be sought against the Bank, such Underwriter or such controlling
person shall promptly notify the parties against whom indemnification is being
sought (the "indemnifying parties"), and such indemnifying parties shall assume
the defense thereof, including the employment of counsel and payment of all
reasonable fees and expenses. Such Underwriter or any such controlling person
shall have the right to employ separate counsel in any such action, suit or
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of the Underwriter or such controlling
person unless (i) the indemnifying parties have agreed in writing to pay such
fees and expenses, (ii) the indemnifying parties have failed to assume the
defense and employ counsel within a reasonable period of time, or (iii) the
named parties to any such action, suit or proceeding (including any impleaded
parties) include both the Underwriter or such controlling person and the
indemnifying parties and the Underwriter or such controlling person shall have
been advised by its counsel that representation of such indemnified party and
any indemnifying party by the same counsel would be inappropriate under
applicable standards of professional conduct (whether or not such representation
by the same counsel has been proposed) due to actual or potential differing
interests between them (in which case the indemnifying party shall not have the
right to assume the defense of such action, suit or proceeding on behalf of the
Underwriter or such controlling person). It is understood, however, that the
indemnifying parties shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related actions, suits or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
the Underwriter and controlling persons not having actual or potential differing
interests with the Underwriter or among themselves, which firm shall be
designated in writing by the Underwriter, and that all such fees and expenses
shall be reimbursed on a monthly basis as provided in paragraph (a) hereof. The
indemnifying parties shall not be liable for any settlement of any such action,
suit or proceeding effected without their written consent, but if settled with
such written consent, or if there be a final judgment for the plaintiff in any
such action, suit or proceeding, the indemnifying parties agree to indemnify and
hold harmless the Underwriter and any such controlling person from and against
any loss, claim, damage, liability or expense by reason of such settlement or
judgment to the extent provided in paragraph (a).
(c) Each Underwriter agrees severally but not jointly to indemnify and
hold harmless the Bank and its respective directors and officers, and any person
who controls the Bank within the meaning of Section 15 of the Act or Section 20
of the Exchange Act to the same extent as the indemnity from the Bank to such
Underwriter set forth in paragraph (a) hereof, but only with respect to
information relating to such Underwriter furnished in writing by or on behalf of
such Underwriter through the Representative expressly for use in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
or any related preliminary prospectus. If any action, suit or proceeding shall
be brought against the Bank, any of its directors or officers, or any such
controlling person based on the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus and in
respect of which indemnity may be sought against an Underwriter pursuant to this
paragraph (c), such Underwriter shall have the rights and duties given to the
Bank by paragraph (b) above (except that if the Bank shall have assumed the
defense thereof no Underwriter shall be required to do so, but may employ
separate counsel therein and participate in the defense thereof, but the fees
and expenses of such counsel shall be at such Underwriter's expense, except as
otherwise provided in paragraph (b) above), and the Bank, its respective
directors and officers, and any such controlling person shall have the rights
and duties given to such Underwriter by paragraph (b) above. The foregoing
indemnity agreement shall be in addition to any liability which the Underwriters
may otherwise have.
(d) If the indemnification provided for in this Section 5 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Bank on the one hand and the applicable Underwriter on the other hand 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 Bank on the one hand and such Underwriter on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Bank on the one
hand and such Underwriter on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Notes (before
deducting expenses) received by the Bank bear to the total underwriting
discounts and commissions received by such Underwriter. The relative fault of
the Bank on the one hand and such Underwriter on the other hand 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 Bank on the one hand or
by such Underwriter on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) The Bank and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 5 were determined by a pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in paragraph (d) above. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities and expenses referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating any claim or defending any such action, suit or proceeding.
Notwithstanding the provisions of this Section 5, no Underwriter shall be
required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Notes hereunder. 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.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 5 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 5 and the
representations and warranties of the Bank set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of an Underwriter, the Bank or any person
controlling any of them or their respective directors or officers, (ii)
acceptance of any Notes and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to any Underwriter, the Bank or any
person controlling any of them or their respective directors or officers, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 5.
6. Conditions of the Underwriters' Obligations. The obligations
of the Underwriters to purchase the Notes hereunder are subject to the
following conditions:
(a) All actions required to be taken and all filings required to be
made by the Bank under the Act prior to the sale of the Notes shall have been
duly taken or made. At and 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 Bank or the Underwriters, shall be threatened by the SEC.
(b) Since the respective dates as of which information is given in the
Registration Statement (or any amendment or supplement thereto), except as may
otherwise be stated therein or contemplated thereby, there shall not have
occurred (i) any change, or any development involving a prospective change, in
or affecting the condition (financial or other), business, properties, net
worth, or results of operations of the Bank not contemplated by the Registration
Statement, which in the opinion of the Representative, would materially
adversely affect the market for the Notes, or (ii) any event or development
which makes any statement made in the Registration Statement or Prospectus
untrue in any material respect or which, in the opinion of the Bank and its
counsel or the Underwriters and their counsel, requires the filing of any
amendment to or change in the Registration Statement or Prospectus in order to
state a material fact required by any law to be stated therein or necessary in
order to make the statements therein not misleading, if amending or
supplementing the Registration Statement or Prospectus to reflect such event or
development would, in the opinion of the Representative, materially adversely
affect the market for the Notes.
(c) The Representative shall have received on the Closing Date an
opinion of Prickett, Jones, Elliott, Kristol & Schnee, special Delaware counsel
for the Trust, dated the Closing Date and addressed to the Underwriters, in form
and scope reasonably satisfactory to the Representative and its counsel and
substantially in the form of Exhibit A hereto.
(d) The Representative shall have received on the Closing Date an
opinion of Foley & Lardner, special counsel for the Bank, dated the Closing Date
and addressed to the Underwriters, in form and scope reasonably satisfactory to
the Representative and its counsel and substantially in the form of Exhibit B
hereto. The Representative shall also have received on the Closing Date an
opinion relating to the "eligible lender" status of the Indenture Trustee of
either Dean Blakey & Moskowitz or Foley & Lardner, special counsel for the Bank,
dated the Closing Date and addressed to the Underwriters, in form and scope
reasonably satisfactory to the Representative and its counsel.
(e) The Representative shall have received on the Closing Date an
opinion of Hunton & Williams, counsel for the Bank, dated the Closing Date and
addressed to the Underwriters, in form and scope reasonably satisfactory to the
Representative and its counsel and substantially in the form of Exhibit C
hereto.
(f) The Representative shall have received on the Closing Date an
opinion of the Law Department of the Eligible Lender Trustee, dated the Closing
Date and addressed to the Underwriters, in form and scope reasonably
satisfactory to the Representative and its counsel and substantially in the form
of Exhibit D hereto.
(g) The Representative shall have received on the Closing Date an
opinion of White & Case, counsel for the Indenture Trustee, dated the Closing
Date and addressed to the Underwriters, in form and scope satisfactory to the
Representative and its counsel and substantially in the form of Exhibit E
hereto.
(h) The Representative shall have received on the Closing Date the
opinion of Squire, Sanders & Dempsey L.L.P., special counsel for the
Underwriters, dated the Closing Date, and addressed to the Underwriters, in form
and scope satisfactory to the Representative and substantially in the form of
Exhibit F hereto.
(i) The Representative shall have received on the Closing Date the
opinion of Hunton & Williams, counsel for the Bank, dated the Closing Date and
addressed to the Underwriters, in form and scope reasonably satisfactory to the
Representative and its counsel and substantially in the form of Exhibit G.
(j) The Representative shall have received on the Closing Date the
opinion of Foley & Lardner, counsel for the Bank, dated the Closing Date and
addressed to the Underwriters, in form and scope reasonably satisfactory to the
Representative and its counsel and substantially in the form of Exhibit H
hereto.
(k) The Representative shall have received on the Closing Date the
opinion of Hunton & Williams, counsel for the Bank, dated the Closing Date and
addressed to the Underwriters, in form and scope reasonably satisfactory to the
Representative and its counsel and substantially in the form of Exhibit I
hereto.
(l) The Representative shall have received on the Closing Date the
opinion of Hunton & Williams, counsel for the Bank, dated the Closing Date and
addressed to the Underwriters, in form and scope reasonably satisfactory to the
Representative and its counsel and substantially in the form of Exhibit J
hereto.
(m) The Representative shall have received on the Closing Date the
opinions of Squire, Sanders & Dempsey L.L.P. and Sheila Dow-Ford, Chief Counsel
of the Pennsylvania Higher Education Assistance Agency, respectively, dated the
Closing Date and addressed to the Underwriters, in form and scope reasonably
satisfactory to the Representative and its counsel and substantially in the
forms of Exhibits K-1 and K-2 respectively, hereto.
(n) The Representative shall have received a letter dated the date of
delivery thereof (which shall be on or prior to the date of this Agreement) from
KPMG Peat Marwick, and in form and substance reasonably satisfactory to the
Representative, to the effect that they have carried out certain specified
procedures, not constituting an audit, with respect to certain information
regarding the Financed Student Loans and setting forth the results of such
specified procedures.
(o) All the representations and warranties of the Bank contained in
this Agreement and the Basic Documents shall be true and correct in all material
respects on and as of the date hereof and on and as of the Closing Date as if
made on and as of the Closing Date and the Representative shall have received a
certificate, dated the Closing Date and signed by an executive officer of the
Bank, to the effect set forth in this Section 6(o) and in Section 6(p) hereof.
(p) The Bank shall not have failed at or prior to the Closing Date to
have performed or complied in any material respect with any of its agreements
herein contained and required to be performed or complied with by it hereunder
at or prior to the Closing Date.
(q) The Representative shall have received by instrument dated the
Closing Date (at the option of the Representative), in lieu of or in addition to
the opinions referred to in clauses (c) through (m) of this Section (6), the
right to rely on opinions provided by such counsel and all other counsel under
the terms of the Basic Documents to Moody's Investors Service, Inc. ("Moody's"),
Fitch IBCA, Inc. ("Fitch") and Standard & Poor's Ratings Services ("Standard &
Poor's").
(r) Moody's, Fitch and Standard & Poor's shall have rated the Class A
Notes "Aaa", "AAA", and "AAA", respectively, and the Class B Notes at least
"A2", "A" and "A", respectively, and there shall not have been any announcement
by Moody's, Fitch or Standard & Poor's that (i) it is downgrading any of its
ratings assigned to any Class of Notes or (ii) it is reviewing its ratings
assigned to any Class of Notes with a view to possible downgrading, or with
negative implications, or direction not determined.
(s) The Bank shall have furnished or caused to be furnished to the
Representative an executed copy or certified copy of an executed copy of each of
the Basic Documents, each Guarantee Agreement, each Subservicing Agreement and
such further certificates and documents as the Representative shall have
reasonably requested.
(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 State Corporation Commission of Virginia
reflecting the transfer of the interest of the Bank in the Financed Student
Loans to the Eligible Lender Trustee on behalf of the Trust and the proceeds
thereof to the Trust and in the offices of the Secretaries of State of the
States of Ohio and Delaware reflecting the grant of the security interest by the
Trust in the Financed Student Loans and the proceeds thereof to the Indenture
Trustee.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Representative and counsel for the Representative.
7. Expenses. The Bank agrees to pay or to otherwise cause the payment
of the following costs and expenses and all other costs and expenses incident to
the performance by it and the Trust of their respective obligations hereunder:
(i) the preparation, printing or reproduction of the Registration Statement,
each Prospectus and each amendment or supplement to any of them, this Agreement
and each other Basic Document; (ii) the printing (or reproduction) and delivery
(including postage, air freight charges and charges for counting and packaging)
of such copies of the Registration Statement, each Prospectus and all amendments
or supplements to any of them as may be reasonably requested for use in
connection with the offering and sale of the Notes; (iii) the preparation,
printing, authentication, issuance and delivery of definitive certificates for
the Notes; (iv) the printing (or reproduction) and delivery of this Agreement,
the Blue Sky Memorandum and all other agreements or documents printed (or
reproduced) and delivered in connection with the offering of the Notes; (v)
qualification of the Indenture under the Trust Indenture Act; (vi) the
qualification of the Notes for offer and sale under the securities or Blue Sky
laws of such states as the Bank and the Representative may agree (including the
reasonable fees, expenses and disbursements of counsel for the Underwriters
relating to the preparation, printing or reproduction, and delivery of any Blue
Sky Memorandum prepared in connection with such qualification); (vii) the fees
and disbursements of (A) the Bank's counsel, (B) the Representative's counsel
(which fee shall not exceed $60,000), (C) the Indenture Trustee and its counsel,
(D) the Eligible Lender Trustee and its counsel, (E) The Depository Trust
Company in connection with the book-entry registration of the Notes, (F) KPMG
Peat Marwick, accountants for the Bank and issuer of the letters described in
Section 6(n), and (G) Prickett, Jones, Elliott, Kristol & Schnee, Special
Delaware Counsel to the Trust in connection with the preparation of the opinion
referred to in Section 6(c), and (viii) the fees charged by Moody's and Standard
& Poor's for rating the Notes.
8. Computational Materials. (a) Not later than 4:00 p.m. New York City
time, on the date on which Computational Materials (as defined below) are first
used by an Underwriter, said Underwriter shall deliver to the Bank
electronically a complete copy of all materials, if any, provided by such
Underwriter to prospective investors in such Notes which constitute
"Computational Materials" within the meaning of the no-action letter dated May
20, 1994 issued by the Division of Corporation Finance of the SEC to Kidder,
Peabody Acceptance Corporation I, Kidder, Peabody & Co. Incorporated, and Kidder
Structured Asset Corporation, the no-action letter dated May 27, 1994 issued by
the Division of Corporation Finance of the SEC to the Public Securities
Association and the no-action letter of February 17, 1995 issued by the SEC to
the Public Securities Association (collectively, the "Kidder/PSA Letters") and
the filing of which is a condition of the relief granted in such letters (such
materials being the "Computational Materials").
Each Underwriter severally and not jointly represents and warrants to
and agrees with the Bank, as of the date hereof and as of the Closing Date, that
the Computational Materials furnished to the Bank by such Underwriter pursuant
to Section 8(a) constitute (either in original, aggregated or consolidated form)
all of the materials furnished to prospective investors in the Notes by such
Underwriter prior to the time of delivery thereof to the Bank that are required
to be filed with the SEC with respect to the Notes in accordance with the
Kidder/PSA Letters and such Computational Materials comply with the requirements
of the Kidder/PSA Letters.
Notwithstanding the foregoing, such Underwriter makes no representation
or warranty with respect to statements in any Computational Materials relating
to the Financed Student Loans which were furnished by or on behalf of the Bank
to such Underwriter.
9. Default by One of the Underwriters. If any of the Underwriters shall
fail at the Closing Date to purchase the Notes which it is obligated to purchase
hereunder (the "Defaulted Notes") and the principal amount of the Defaulted
Notes does not exceed 10% of the total principal amount of the Notes set forth
on the first page hereof, the Representative may make arrangements satisfactory
to the Bank for the purchase of such Defaulted Notes by other persons, including
the remaining Underwriter or Underwriters (the "Non-Defaulting Underwriters"),
but if no such arrangements are made within one (1) Business Day thereafter, the
Non-Defaulting Underwriters shall be obligated severally, in proportion to their
respective total commitments hereunder, to purchase the Notes which 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 which such default or defaults occur is more than 10% of the total
principal amount of the Notes set forth on the first page hereof and
arrangements satisfactory to the Representative and Bank for the purchase of
such Notes by other persons are not made within two (2) Business Days after such
default, then this Agreement shall terminate without liability on the part of
the Non-Defaulting Underwriters.
No action taken pursuant to this Section 9 shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either the Non-Defaulting Underwriters or the Bank shall have
the right to postpone the Closing Date for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or Prospectus
or in any other documents or arrangements.
10. Effective Date of Agreement. This Agreement shall become effective
upon the execution and delivery hereof by all the parties hereto. Until such
time as this Agreement shall have become effective, it may be terminated by the
Bank, by notifying the Representative, or by the Representative, by notifying
the Bank.
Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
11. Termination of Agreement. This Agreement shall be subject to
termination in the absolute discretion of the Representative, without liability
on the part of any Underwriter, by notice to the Bank, if prior to the Closing
Date, (i) trading in securities generally on the New York Stock Exchange shall
have been suspended or materially limited, (ii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or New York state authorities, (iii) there shall have occurred any
outbreak or escalation of hostilities or other international or domestic
calamity, crisis or change in political, financial or economic conditions, the
effect of which on the financial markets of the United States is such as to make
it, in the reasonable judgment of the Representative, impracticable or
inadvisable to commence or continue the offering of the Notes on the terms set
forth in the Prospectus, or to enforce contracts for the resale of the Notes by
the Underwriters, (iv) legislation shall be enacted by the Congress of the
United States or a decision by a court of the United States or the Tax Court of
the United States shall be rendered, or an officially published ruling,
regulation, proposed regulation or official statement by or on behalf of the
Treasury Department of the United States, the Internal Revenue Service or any
other governmental agency shall be made, with respect to federal taxation upon
revenues or other income of the general character expected to be pledged under
the Indenture or upon interest received on securities of the general character
of the Notes, or which would have the effect of changing, directly or
indirectly, the federal income tax consequences of interest on securities of the
general character of the Notes in the hands of the holders thereof, which in the
opinion of counsel to the Representative materially affects the market price of
the Notes, or (v) legislation shall be enacted by the States of Delaware or Ohio
or the Commonwealths of Virginia or Pennsylvania, or a decision by a court of
competent jurisdiction of the States of Delaware or Ohio or the Commonwealths of
Virginia or Pennsylvania or any administrative tribunal of the States of
Delaware or Ohio or the Commonwealths of Virginia or Pennsylvania or other
governmental agency or department thereof shall be rendered with respect to
taxation by the States of Delaware or Ohio or the Commonwealths of Virginia or
Pennsylvania or any of their political subdivisions upon revenues or other
income of the general character expected to be pledged under the Indenture, or
upon interest received on securities of the general character of the Notes, or
which would have the effect of changing, directly or indirectly, the tax
consequences under the States of Delaware or Ohio or the Commonwealths of
Virginia or Pennsylvania tax law of interest on securities of the general
character of the Notes in the hands of the holders thereof, which in the opinion
of counsel to the Representative materially affects the market price of the
Notes. Notice of such termination may be given to the Bank, by telegram,
telecopy or telephone and shall be subsequently confirmed by letter.
12. Information Furnished by the Underwriter. The statements set forth
in the second sentence of the fourth paragraph on the second page of the cover
page, the second sentence under the subsection "Risk Resulting from Limited
Liquidity of the Notes" under the heading "Risk Factors", under the subsection
"Weighted Average Life of the Notes" under the heading "Maturity and Prepayment
Considerations" and under the heading "Underwriting" in the Preliminary
Prospectus and the Prospectus and the computational material contained in the
Form 8-K filed with the SEC on December 11, 1997 relating to the Notes
constitute the only information furnished by or on behalf of the Underwriters as
such information is referred to in Sections 3(b) and 5 hereof, and each
Underwriter confirms that such statements relating to such Underwriter are
correct and the Representative confirms that the information under the
subsection "Weighted Average Life of the Notes" under the heading "Maturity and
Prepayment Considerations" and the computational material contained in the Form
8-K filed with the SEC on December 11, 1997 relating to the Notes is correct;
provided that with respect to the information contained under the subsection
"Weighted Average Life of the Notes" under the heading "Maturity and Prepayment
Considerations" and the computational material contained in the Form 8-K filed
with the SEC on December 11, 1997 relating to the Notes each Underwriter has
assumed that the underlying financial information regarding the Financed Student
Loans as furnished by or on behalf of the Bank to such Underwriter is accurate
and each Underwriter makes no representation, warranty or confirmation with
respect to such underlying financial information regarding the Financed Student
Loans. Anything to the contrary notwithstanding in this Agreement, the Bank
agrees that the information contained under the subsection "Weighted Average
Life of the Notes" under the heading "Maturity and Prepayment Considerations"
and the computational material contained in the Form 8-K filed with the SEC on
December 11, 1997 relating to the Notes is not included in the indemnification
of each Underwriter contained in Section 5(c) hereof.
13. 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.
14. Miscellaneous. Except as otherwise provided in Sections 4, 10 and
11 hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Bank, to Crestar Bank, 6802 Paragon
Place, Richmond, Virginia 23230-7172, Attention: W. Clark McGhee, Senior Vice
President; facsimile (804) 287-9428 with a copy to the Bank's Legal Department,
at 919 E. Main Street, Richmond, Virginia 23219, Attention: Linda Rigsby, (ii)
if to the Trust, to the Eligible Lender Trustee, at the Corporate Trust Office
of the Eligible Lender Trustee and (iii) if to the Representative, to Salomon
Brothers Inc, 390 Greenwich Street, 4th Floor, New York, NY 10013, Attention:
Debt Organization Group; facsimile (212) 723-8853.
This Agreement has been and is made solely for the benefit of the
Underwriters, the Trust and the Bank, their respective directors, officers,
trustees and controlling persons referred to in Section 5 hereof and their
respective successors and assigns, to the extent provided herein, and no other
person shall acquire or have any right under or by virtue of this Agreement.
Neither the term "successor" nor the term "successors and assigns" as used in
this Agreement shall include a purchaser from any Underwriter of any of the
Notes in its status as such purchaser.
15. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed within the State of New York without giving effect to
the choice of laws or conflict of laws principles thereof.
16. Counterparts. This Agreement may be signed in various counterparts
which together constitute one and the same instrument. If signed in
counterparts, this Agreement shall not become effective unless at least one
counterpart hereof or thereof shall have been executed and delivered on behalf
of each party hereto.
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Bank, the Trust and the Underwriters.
Very truly yours,
CRESTAR BANK
By:_____________________________________
Name:
Title:
CRESTAR STUDENT LOAN TRUST 1997-1
By: STAR BANK, NATIONAL
ASSOCIATION, not in
its individual capacity but
solely as Eligible Lender
Trustee on behalf of the
Trust,
By:_____________________________________
Name:
Title:
Confirmed as of the date first above mentioned.
SALOMON BROTHERS INC
By:___________________________
Name:
Title:
Acting on behalf of itself
and as Representative of
the several Underwriters named herein.
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Underwriters
Principal Balance
------------------------------------------------------------------------
Crestar
Class of Notes Morgan Stanley & Co. Securities
Salomon Brothers Inc Incorporated Corporation Total
-------------------- ------------------ ---------------- ---------------
<S> <C>
Class A-1 Notes...... $91,000,000 $19,500,000 $19,500,000 $130,000,000
Class A-2 Notes...... $59,000,000 $12,500,000 $12,500,000 $84,000,000
Class B Notes........ $8,900,000 -0- -0- $8,900,000
Total................ $158,900,000 $32,000,000 $32,000,000 $222,900,000
============ =========== =========== ============
</TABLE>
Interest Rate
During the initial Interest Period (as defined in the Prospectus), the Class A-1
Notes, the Class A-2 Notes and the Class B Notes will bear interest at 6.14047%,
6.20047% and 6.43047%, respectively. Following the initial Interest Period, the
Class Interest Rates (as defined in the Prospectus) for the Class A-1 Notes, the
Class A-2 Notes and the Class B Notes will equal, subject to certain limitations
described in the Prospectus, One-Month LIBOR (as defined in the Prospectus) plus
0.16%, 0.22% and 0.45%, respectively.
<PAGE>
EXHIBIT A
___________, 1997
To Each of the Parties Listed
on Schedule A Hereto
Re: Crestar Student Loan Trust 1997-1
Ladies and Gentlemen:
We have acted as special Delaware counsel to Crestar Student Loan Trust
1997-1, a business trust existing under the laws of the State of Delaware (the
"Trust"), in connection with the transactions contemplated by the Trust
Agreement, dated as of December 1, 1997, (the "Trust Agreement"), among Crestar
Bank ("Crestar"), as depositor (the "Depositor"), Star Bank, National
Association, as trustee (the "Eligible Lender Trustee") and Delaware Trust
Capital Management, Inc., as co-trustee (the "Delaware Trustee"; the Eligible
Lender Trustee and the Delaware Trustee being collectively referred to as the
"Trustees"). This opinion is being delivered to you at your request. Capitalized
terms used herein and not otherwise defined are used as defined in the Trust
Agreement, except that references herein to any instrument shall mean such
instrument as in effect on the date hereof.
We have examined originals or copies of the following documents:
(a) The Trust Agreement;
(b) The Transfer and Servicing Agreement, dated as of December
1, 1997, among the Trust, Crestar, as Transferor, Master
Servicer and Administrator, and the Eligible Lender Trustee;
(c) The Indenture, dated as of December 1, 1997, between the Trust
and Bankers Trust Company, as trustee (the "Indenture
Trustee");
(d) The First Terms Supplement to the Indenture, dated as of
December 1, 1997, between the Trust and the Indenture Trustee
(the documents identified in paragraphs (c) and (d) being
collectively referred to as the "Indenture");
(e) The Underwriting Agreement, dated as of December ___, 1997,
between the Trust and Salomon Brothers Inc as Representative
of the several Underwriters named therein;
(f) The Administration Agreement, dated as of December 1, 1997,
among the Trust, the Administrator and the Indenture Trustee
(the documents identified in items (b) through (e) being
collectively referred to as the "Trust Documents");
(g) The certificate of trust of the Trust (the "Certificate of
Trust") which was filed with the Office of the Secretary of
State of the State of Delaware (the "Secretary of State") on
December ___, 1997;
(h) Forms of the Certificates; and
(i) Forms of the Notes being issued on the date hereof pursuant to
the Indenture.
We have not reviewed any documents other than the foregoing documents for
purposes of rendering our opinions as expressed herein, and we have assumed that
there exists no provision of any such other document that bears upon or is
inconsistent with our opinions as expressed herein. We have conducted no
independent factual investigation of our own but have relied solely upon the
foregoing documents, the statements and information set forth therein and the
additional matters recited or assumed herein, all of which we have assumed to be
true, complete and accurate in all material respects.
Based upon the foregoing and upon an examination of such questions of
law as we have considered necessary or appropriate, and subject to the
assumptions, exceptions and qualifications set forth below, we advise you that,
in our opinion:
1. The Trust has been duly formed and is validly existing as a business
trust under the Delaware Business Trust Act, 12 Del. C. ss. 3801, et seq. (the
"Act"), and has the power and authority under the Trust Agreement and the Act to
execute, deliver and perform its obligations under the Trust Documents, the
Certificates and the Notes.
2. Each of the Trust Documents to which the Trust is a party has been
duly authorized by the Trust.
3. The issuance and sale of the Notes has been duly authorized by the
Trust.
4. No consent, approval or other authorization of, registration,
declaration or filing with, any court or governmental agency or commission of
the State of Delaware is required by or with respect to the Trust for the valid
execution and delivery of the Trust Documents, or for the validity or
enforceability thereof, or for the payment of any amounts by the Trust
thereunder, other than the filing of the Certificate of Trust with the Secretary
of State (which Certificate of Trust has been duly filed).
5. Neither the execution, delivery and performance by the Trust of the
Trust Documents to which the Trust is a party, nor the consummation by the Trust
of any of the transactions contemplated thereby, is in violation of the Trust
Agreement or of any law, rule or regulation of the State of Delaware applicable
to the Trust.
6. To our knowledge, without independent investigation, there are no
pending or threatened actions, suits or proceedings affecting the Trust before
any court or other governmental authority which, if adversely decided, would
materially and adversely affect the ability of the Trust to carry out the
transactions contemplated by the Trust Agreement and the Trust Documents.
7. The Trust Agreement is a legal, valid and binding agreement of the
parties thereto, enforceable against such parties, in accordance with its terms.
8. Under Section 3805(b) of the Act, no creditor of any Certificate
holder shall have any right to obtain possession of, or otherwise exercise legal
or equitable remedies.
9. Under Section 3801(a) of the Act, the Trust has standing at law as a
separate legal entity distinct from the Depositor.
The foregoing opinions are subject to the following assumptions,
exceptions and qualifications:
A. We are admitted to practice law in the State of Delaware and do not
hold ourselves out as being experts on the law of any other jurisdiction. The
foregoing opinions are limited to the laws of the State of Delaware currently in
effect. We express no opinion with respect to (i) federal securities laws,
including, without limitation, the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, the Trust Indenture Act of 1939, as
amended and the Investment Company Act of 1940, as amended, or (ii) state
securities or blue sky laws, and we have not considered and express no opinion
on the laws, rules and regulations of any other jurisdiction.
B. The foregoing opinions regarding enforceability and the opinions in
paragraphs 8 and 9 above are subject to (i) applicable bankruptcy, insolvency,
moratorium, receivership, fraudulent conveyance and similar laws relating to or
affecting the rights and remedies of creditors generally, (ii) principles of
equity (regardless of whether considered and applied in a proceeding in equity
or at law), and (iii) applicable public policy with respect to rights of
indemnification or contribution.
C. We have assumed (i) except to the extent provided in paragraph 1
above, the valid existence of each party to the documents examined by us under
the laws of the jurisdiction governing its organization, (ii) except to the
extent provided in paragraph 1 above, that each party has the power and
authority to execute and deliver, and to perform its obligations under, the
documents examined by us, (iii) except to the extent provided in paragraphs 2
and 3 above, that each party has duly authorized, executed and delivered the
documents examined by us, (iv) that the Trust Agreement constitutes the entire
agreement among the parties thereto with respect to the subject matter thereof,
including, without limitation, the creation, operation and termination of the
Trust, and (v) that the execution, delivery and performance of the Trust
Agreement by each of the parties thereto (other than the Trust) does not and
will not conflict with, result in a breach of, or constitute a default or
require any consent (other than such consents as have been duly obtained) under,
any agreement, indenture or instrument to which it is a party or by which it is
bound, or violate or conflict with any provision of any judgment, order, writ,
injunction or decree of any court or governmental authority applicable to it or
any of its property.
D. We have assumed that all signatures on documents examined by us are
genuine, that all documents submitted to us as originals are authentic and that
all documents submitted to us as copies or specimens conform with the originals,
which facts we have not independently verified.
E. We express no opinion as to the creation, attachment, perfection or
priority of any mortgage or security interest or as to the nature or validity of
title to any property.
F. We have not participated in the preparation of any offering
materials with respect to the Certificates or the Notes and assume no
responsibility for their contents.
This opinion may be relied upon by you in connection with the matters
set forth herein and, without our prior written consent, may not be furnished or
quoted to, or relied upon by, any other person or entity for any purpose.
Very truly yours,
HUNTON & WILLIAMS
<PAGE>
SCHEDULE A
Depositor
Crestar Bank
Eligible Lender Trustee
Star Bank, National Association
Delaware Trustee
Delaware Trust Capital Management, Inc.
Administrator
Crestar Bank
Indenture Trustee
Bankers Trust Company
Underwriters
Salomon Brothers Inc,
As Representative of the several Underwriters
<PAGE>
EXHIBIT B
__________, 1997
Bankers Trust Company,
individually and as Indenture Trustee
for Crestar Student Loan Trust 1997-1
New York, New York
Attention: Corporate Trust Department
Crestar Bank
Richmond, Virginia
Salomon Brothers Inc
New York, New York
Hunton & Williams
Richmond, Virginia
Squire, Sanders & Dempsey L.L.P.
Columbus, Ohio
Star Bank, National Association
Cincinnati, Ohio
Re: CRESTAR STUDENT LOAN TRUST 1997-1
Student Loan Asset Backed Notes
Ladies and Gentlemen:
You have requested our opinion concerning the status of Star Bank,
National Association (the "Eligible Lender Trustee") as an "eligible lender"
under Parts B, E and F of Title IV of the Higher Education Act of 1965, as
amended, and the applicable rules and regulations promulgated thereunder by the
United States Secretary of Education (the "Higher Education Act"), and under
Title VII, Sections 701-720 of the Public Health Services Act, as amended, and
the applicable rules and regulations promulgated thereunder by the United States
Secretary of Health and Human Services (the "HEAL Act"). Crestar Student Loan
Trust 1997-1 (the "Trust") has been formed pursuant to a trust agreement, dated
as of _________, 1997 (the "Trust Agreement"), by and among Crestar Bank, as
depositor, the Eligible Lender Trustee, and Delaware Trust Capital Management,
Inc., as Delaware trustee. Crestar Bank, as transferor, will assign certain
FFELP Loans and HEAL Loans (as such terms are defined in the Trust Agreement) to
the Eligible Lender Trustee on the date hereof pursuant to the Transfer and
Servicing Agreement, dated as of __________, 1997, among Crestar Bank, the Trust
and the Eligible Lender Trustee (the "Transfer and Servicing Agreement"), and
pursuant to an Assignment for Financed Student Loans, dated as of __________,
1997, from Crestar Bank (the "Assignment"). Bankers Trust Company (the
"Indenture Trustee") will serve as the trustee under the Indenture, dated as of
__________, 1997 (the "Indenture"), pursuant to which the above-referenced Notes
are being issued and secured.
We have reviewed the provisions of the Higher Education Act and the
HEAL Act and the Certificate of the Eligible Lender Trustee attached hereto and
dated the date hereof (the "Certificate"). For purposes of this opinion, we have
assumed that: (a) the Trust Agreement, the Transfer and Servicing Agreement and
the Assignment have been duly and validly authorized, executed and delivered by
the parties thereto, (b) the HEAL Insurance Contract (as defined in the Trust
Agreement) has been duly and validly authorized, executed and delivered by the
parties thereto, and (c) all of the statements set forth in the Certificate
(upon which we have relied without investigation and without verification) are
accurate and correct.
Based on the foregoing, and subject to the following paragraphs, it is
our opinion that, as of the date hereof:
A. The Eligible Lender Trustee is an "eligible lender" as defined in
the Higher Education Act, and the transfer of the FFELP Loans to the Eligible
Lender Trustee pursuant to the Assignment will not cause such loans to be held
by an entity that is not an "eligible lender" under the Higher Education Act.
B. The Eligible Lender Trustee is an "eligible lender" as defined in
the HEAL Act, and the transfer of the HEAL Loans to the Eligible Lender Trustee
pursuant to the Assignment will not cause such loans to be held by an "eligible
lender" under the HEAL Act.
Our opinion has not been requested, and we express no opinion, as to
the effect of any failure of the Eligible Lender Trustee to have a participation
or guarantee agreement in effect with the Secretary of Education or any of the
guarantee agencies that have guaranteed the Financed FFELP Loans (as defined in
the Trust Agreement) under Section 428(b) of the Higher Education Act. We call
to your attention that qualifying as an "eligible lender" under the Higher
Education Act alone does not authorize a party to be a holder (which is defined
under the Higher Education Act as the eligible lender that owns the loan and in
the regulations to include an eligible lender in possession of the note
evidencing such a loan that its payable to or has been assigned to such lender)
of loans under the FFEL Program (as defined in the Indenture) or to be eligible
for the receipt of guarantee or other benefits related to such Financed FFEL
Loans. Under a guarantee agency's policies and procedures, an eligible lender
typically is required to have a participation or guarantee agreement to be a
holder or assignee of loans.
The scope of our engagement has not extended beyond the examinations
and the rendering of the opinions expressed herein. This opinion is based solely
upon the Higher Education Act and the HEAL Act as now in effect. We express no
opinion as of any subsequent date or with respect to any pending legislation. We
express no opinion as to whether the proposed transaction complies in any
respect with the Higher Education Act, the HEAL Act and/or implementing
regulations and policies, or with other federal or state law. This opinion is
rendered solely for your use in connection with the formation of the Trust and
may not be relied upon by any other person or for any other purposes without our
prior written consent.
<PAGE>
EXHIBIT C
_________, 1997
Salomon Brothers Inc
New York, New York
Bankers Trust Company
New York, New York
Star Bank, National Association
Cincinnati, Ohio
Ladies and Gentlemen:
We have acted as special counsel to Crestar Bank, a Virginia banking
corporation (the "Bank"), in connection with the transactions contemplated by
the Transfer and Servicing Agreement dated as of December 1, 1997 (the "Transfer
and Servicing Agreement"), among the Bank, as transferor, as master servicer and
as administrator, Crestar Student Loan Trust 1997-1, a Delaware business trust
(the "Trust"), as issuer, and Star Bank, National Association, a national
banking association as eligible lender trustee (the "Eligible Lender Trustee"),
pursuant to which the Bank will transfer to the Eligible Lender Trustee on
behalf of the Trust, without recourse (subject to the obligations set forth
therein), all right, title and interest of the Bank in and to the Financed
Student Loans listed on Schedule A-1 thereto and the proceeds thereof (the
"Specified Assets"). This opinion is being delivered to the Eligible Lender
Trustee and the Indenture Trustee (as defined below) pursuant to Section 2.1(b)
of the Transfer and Servicing Agreement and to the Underwriters pursuant to
Section 6(e) of the Underwriting Agreement (each as defined below). Unless
otherwise defined herein, capitalized words and terms used herein shall have the
respective meanings assigned to such words and terms in the Transfer and
Servicing Agreement.
In connection with this opinion, we have examined a copy of each of (i)
the Transfer and Servicing Agreement; (ii) the Trust Agreement dated as of
December 1, 1997 (the "Trust Agreement"), among the Bank, as depositor, the
Eligible Lender Trustee, and Delaware Trust Capital Management, Inc., as
Delaware trustee; (iii) the Indenture dated as of December 1, 1997, (the
"Indenture"), between the Trust and Bankers Trust Company, a New York banking
corporation as indenture trustee (the "Indenture Trustee"); (iv) the First Terms
Supplement to the Indenture dated as of December 1, 1997 (the "Terms
Supplement"), between the Trust and the Indenture Trustee; (v) the
Administration Agreement dated as of December 1, 1997 (the "Administration
Agreement"), among the Trust, the Bank and the Indenture Trustee; and (vi) the
Underwriting Agreement dated as of December ___, 1997 (the "Underwriting
Agreement"), among the Transferor, the Trust and Salomon Brothers Inc, as
representative of the several Underwriters named therein (each an "Underwriter")
(hereinafter the Transfer and Servicing Agreement, the Trust Agreement, the
Indenture, the Terms Supplement, the Administration Agreement and the
Underwriting Agreement may sometimes be referred to collectively as the "Basic
Documents"). In addition, we have reviewed the Articles of Incorporation and the
By-laws of the Bank, each as amended to date (the "Articles" and the "By-laws",
respectively), and the resolutions of the [Executive Committee] of the Board of
Directors of the Bank adopted on ________, 1997. We have also reviewed the
Registration Statement on Form S-3, as amended (No. 333-35825) (the
"Registration Statement"), which was declared effective by the Securities and
Exchange Commission (the "SEC") on December 4, 1997 (the "Effective Date"), and
the definitive Prospectus dated _________, 1997, arising from said Registration
Statement (the "Prospectus").
For the purposes of the opinions set forth in Paragraphs (6) through
(8) below, we have reviewed the financing statements on Form UCC-1, naming the
Bank as debtor, the Eligible Lender Trustee as secured party and the Indenture
Trustee as assignee, in the form attached hereto as Attachment 1 and filed on
December ___, 1997 with the State Corporation Commission of Virginia (the "SCC")
and assigned No.________ [and on _________, 1997 with the Clerk of the Circuit
Court of the City of Richmond, Virginia and assigned No. ____________] (referred
to collectively as the "Financing Statements"), and reviewed and, with your
consent, relied exclusively on and assumed the accuracy of a report (the "Search
Report") of CT Corporation, attached hereto as Attachment 2 and reflecting the
results of Uniform Commercial Code searches in the Offices of the SCC and the
Clerk of the Circuit Court of the City of Richmond, Virginia against the name
"Crestar Bank" (collectively, the "Lien Searches"). We have made no independent
search or review of any liens or other matters of record with respect to the
Bank in any other government office. The "as of" or "effective" date of each
Lien Search (which we have assumed is the date through which such Lien Search is
current) is indicated for each office identified therein. Information in the
Lien Searches does not include any filings filed or terminated on or after the
"as of" or "effective" dates indicated for each of the Lien Searches. We assume
no liability for the accuracy of the Search Report.
In addition to the Basic Documents, the Financing Statements and the
Search Report, we have reviewed such corporate records and other documents
relating to the Bank and certificates of public officials and officers of the
Bank and have satisfied ourselves as to such other matters as we have deemed
necessary under the circumstances as a basis for the opinions hereinafter
expressed. As to various questions of fact material to this opinion, we have
relied upon the representations made in the Basic Documents. We have not
independently verified any factual matters in connection with or apart from our
review of the documents referred to above and, accordingly, we do not express
any opinion as to matters that might have been brought to our attention by
independent verification.
In making such examination and rendering the opinions set forth below,
we have assumed: (i) the genuineness and authenticity of all signatures on
original documents; (ii) the authenticity of all documents submitted to us as
originals; (iii) the conformity to the originals of all documents submitted to
us as certified, telecopied, photostated or reproduced copies and the
authenticity of all originals of such documents; (iv) the accuracy, completeness
and authenticity of certificates of public officials; and (v) the due
authorization, execution and delivery of all documents (except for the due
authorization, execution and delivery by the Bank of the Basic Documents to
which the Bank is a party), where authorization, execution and delivery are
prerequisites to the effectiveness of such documents. We have also assumed that
each of the parties (other than the Bank) to the Basic Documents has the
requisite power and authority to execute and perform its obligations thereunder
and all such actions have been duly and validly authorized by all necessary
proceedings on its part.
We have also assumed without independent investigation that: (a) the
Eligible Lender Trustee has given "value" (as defined in the Uniform Commercial
Code as enacted in the State of New York (the "NY UCC")) to the Bank, and the
Indenture Trustee has given "value" (as defined in the NY UCC) to the Eligible
Lender Trustee; (b) that the Specified Assets exist and that the Bank and the
Trust have rights therein; and (c) since the "as of" or "effective time" of the
Lien Searches included in the Search Report, no financing statement or other
document, other than the Financing Statements, has been filed in the Office of
the SCC that names the Bank as the debtor and that describes any of the Financed
Student Loans or the Specified Assets.
On the basis of the foregoing and in reliance thereon, having regard
for legal considerations which we deem relevant, and subject to the
qualifications and reservations stated herein, we are of the opinion that:
1. The Bank is organized and validly existing as a Virginia banking
corporation under the laws of the Commonwealth of Virginia, with
requisite corporate power and authority to own its properties and
conduct its business as such properties are currently owned and such
business is presently conducted, except for such power and authority
the absence of which would not have a material adverse effect on the
Bank or its ability to consummate the transactions contemplated by the
Basic Documents.
2. The Bank has requisite corporate power and authority to execute and
deliver the Basic Documents to which it is a party and consummate the
transactions contemplated by such Basic Documents, and has taken all
corporate action necessary to authorize the execution and delivery of
the Basic Documents to which the Bank is a party and consummation of
the transactions contemplated by such Basic Documents.
3. The Basic Documents to which the Bank is a party have been duly
executed and delivered by the Bank.
4. Neither the consummation of the transactions contemplated by, nor
the fulfillment of the terms of, the Basic Documents to which the Bank
is a party (a) violates any provision of the Articles or the By-laws,
(b) constitutes a violation or breach of or default under any provision
of any material indenture, agreement or instrument known to us to which
the Bank is a party or by which the Bank is bound, (c) results in the
creation or imposition of any Lien upon any of the Bank's properties
pursuant to the terms of any material indenture, agreement or
instrument referred to in clause (b), other than pursuant to the Basic
Documents, or (d) violates any law or any order, rule or regulation
applicable to the Bank known to us of any court or Federal or Virginia
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Bank or its properties,
except for such violations which would not have a material adverse
effect on the Bank or its ability to consummate the transactions
contemplated by the Basic Documents.
5. All authorizations, consents, orders or approvals or registrations
or declarations with any court, regulatory body, administrative agency
or other government instrumentality required to be obtained, effected
or given by the Bank in connection with the execution and delivery by
the Bank of the Basic Agreements to which the Bank is a party and the
performance of the transactions expressly contemplated by such Basic
Documents have been obtained, effected or given and are in full force
and effect, except such as may be required by the blue sky laws of any
jurisdiction as to which no opinion is given.
6. In the event that the transfer of the Specified Assets by the Bank
to the Trust is found not to be a "true sale," the Bank has granted to
the Trust a valid security interest in the Specified Assets under
Article 9 of the NY UCC, and the Eligible Lender Trustee has assigned
that security interest to the Indenture Trustee. In the event that the
transfer of the Specified Assets by the Bank to the Trust is found to
be a "true sale," the Trust has granted to the Indenture Trustee a
valid security interest in the Specified Assets under Article 9 of the
NY UCC.
7. Under the NY UCC, the perfection and the effect of perfection or
nonperfection of a security interest in "accounts" would be governed by
the law (including the conflict of laws rules) of the jurisdiction
where the debtor is located. Because the Bank's chief executive office
is located within the Commonwealth of Virginia, the Uniform Commercial
Code as in effect in the Commonwealth of Virginia (the "VA UCC") would
govern the perfection of a security interest in "accounts." Under
Section 8.9-302(1)(e) and Section 8.9-401(1)(c) of the VA UCC, a
security interest in "accounts" is perfected by filing a financing
statement in the Office of the SCC and in addition, if the debtor has a
place of business in only one county or city of the Commonwealth, also
in the office of the clerk of the court in which deeds are admitted to
record in such county or city. Because the Bank has a place of business
in more than one county or city of the Commonwealth, the Financing
Statement needs to be filed only in the Office of the SCC. The
Financing Statement to be filed in the Office of the Clerk of the
Circuit Court of the City of Richmond, where the Bank maintains its
principal executive office, is a cautionary filing.
8. Upon the filing and proper indexing of the Financing Statement in
the Office of the SCC, pursuant to 20 USC ss. 1087-2(d)(3), such filing
will perfect a security interest in the Financed Student Loans that
comply with the requirements of the Higher Education Act of 1965, as
amended (the "Higher Education Act"), in favor of the Eligible Lender
Trustee on behalf of the Trust at such time as such Financed Student
Loans are pledged to the Eligible Lender Trustee on behalf of the Trust
and included on the schedule of Financed Student Loans maintained by
the Eligible Lender Trustee. When so perfected, such security interest
will have priority over any other security interest in such Financed
Student Loans if such other security interest, in order to achieve
priority over the Eligible Lender Trustee's security interest was
required by law to have been perfected by the filing of a UCC financing
statement in the Office of the SCC.
In reaching the opinions set forth in Paragraphs 7 and 8, we bring to
your attention the provisions of the Higher Education Act codified at 20 USC ss.
1087-2(d)(3), which provide:
Notwithstanding the provisions of any State law to the contrary,
including the Uniform Commercial Code as in effect in any State, a
security interest in insured student loans created on behalf of . . .
any eligible lender as defined in section 1085(a) of this title may
be perfected . . . by filing notice of such security interest in such
loans in the manner provided by such State law for perfection of
security interest in accounts.
Based solely on the opinion of Foley & Lardner dated the date hereof
that the Eligible Lender Trustee is an "eligible lender" within the meaning of
the Higher Education Act, we believe that Section 1087-2(d)(3) of the Higher
Education Act governs the perfection of the Eligible Lender Trustee's security
interest in the Financed Student Loans. We note that the definition of "eligible
lender" is contained in Section 1085(d) of the Higher Education Act and not
Section 1085(a). We believe that the reference to Section 1085(a) contained in
Section 1087-2(d)(3) is an error and the correct reference should be to Section
1085(d), although we have made no independent investigation with respect
thereto.
We note that the opinions set forth in Paragraphs 7 and 8 apply only to
FFELP Loans comprising a portion of the specified Assets, and do not extend to
the perfection or priority of the Eligible Lender Trustee or the Indenture
Trustee in the HEAL Loans, as to which we express no opinions, except as set
forth in Paragraph 6.
With respect to the opinions set forth in Paragraph 8, the scope,
priority and enforceability of the Eligible Lender Trustee's security interests
in the FFELP Loans are subject to the following limitations and qualifications:
(a) bankruptcy, insolvency, moratorium, fraudulent transfer,
preference, equitable subordination and other laws and
equitable principles affecting the scope and enforcement of
creditors' rights generally;
(b) a security interest in proceeds is limited to the extent set
forth in Section 9-306 of the NY and VA UCCs;
(c) as to after-acquired property, the limitations set forth in
Sections 8.9-204 and 8,9312 of the VA UCC;
(d) as to future advances, the limitations set forth in Sections
8.9-204, 8.9-301 and 8.9-312 of the VA UCC;
(e) priorities accorded other interests and liens that, under
the Virginia UCC or other applicable law, may be perfected
by means other than the filing of financing statements
including without limitation (1) security interests
temporarily perfected under Section 8.9-304 of the VA UCC
without the filing of financing statements, (2) liens,
claims or other interests that arise by operation of law and
do not require any filing or similar action, and (3) liens,
claims or other interests in favor of the United States or
any State or agency or instrumentality thereof;
(f) as to proceeds, the limitations set forth in Section 8.9-308
of the VA UCC;
(g) the rights of purchasers of and instruments and documents as
set forth in Section 8.9-309 of the VA UCC;
(h) the priorities accorded purchase money security interests
under Section 8.9-312(4) of the VA UCC;
(i) as to subordination by agreement of any person entitled to
priority, Section 8.9-316 of the VA UCC;
(j) the priority of any security interest in collateral
constituting proceeds of collateral subject to a third party's
security interest;
(k) the right, defense, claim of an account debtor to which the
rights of an assignee would be subject under Section 8.9-318
of the VA UCC; and
(l) any rights of offset.
Additionally, with respect to Paragraphs 7 and 8, please be advised
that we express no opinion as to the rights of any Person (other than the
Eligible Lender Trustee on behalf of the Trust and the Indenture Trustee) to
whom the FFELP Loans were assigned (either absolutely or as collateral for an
obligation) by the Bank or the Trust on or prior to the date hereof, which
assignment was (i) excluded by Section 8.9-104 of the VA UCC from the scope of
Article 9 of the VA UCC, or (ii) alone or in conjunction with any other
assignments (of either or both kinds), if any, to the same assignee did not
transfer a significant part of the outstanding "accounts" (as defined in the VA
UCC) of the assignor.
Further, with respect to the opinions expressed in Paragraphs 7 and 8,
we note that the effectiveness of the Financing Statements will terminate (i)
unless appropriate continuation statements are filed within six months prior to
each five-year anniversary of the filing of the related Financing Statement,
(ii) if the Bank changes its name, identity or corporate structure, unless a new
appropriate financing statement or amendment indicating the new name, identity
or corporate structure of the Bank is properly filed before the expiration of
four months after such change in name, identity or corporate structure, (iii)
four months after the Bank changes its chief executive office to a jurisdiction
outside of the Commonwealth of Virginia, unless such security interest is
perfected in such new jurisdiction within such time, (iv) if the mailing address
of the Bank as shown on the Financing Statements ceases to be a mailing address
of the Bank, unless a new appropriate financing statement or amendment
indicating a new mailing address of the Bank, is properly filed upon the
effectiveness of such change in mailing address, and (v) if the Eligible Lender
Trustee changes its name or its address from which information concerning the
Eligible Lender Trustee's security interest, as applicable, can be obtained,
unless new appropriate financing statements or amendments indicating the new
name or address of the Eligible Lender Trustee from which information concerning
the Eligible Lender Trustee's security interest can be obtained, as the case may
be, are properly filed upon the effectiveness of such change in name or address.
We express no opinion with respect to the laws of any jurisdiction
other than the laws of the Commonwealth of Virginia, the State of New York and
the federal laws of the United States of America. The opinions set forth in this
letter are rendered and effective only as of the date hereof. They are based on
existing laws, ordinances, rules, regulations, court and administrative
decisions as they presently have been interpreted to apply to the transactions
and matters addressed herein, and we can give no assurances that these opinions
would not be different after any change in any of the foregoing occurring after
the date hereof. No expansion of our opinion may be made by implication or
otherwise, and we express no opinion other than as herein expressly set forth.
We do not undertake to advise you of any matter within the scope of this letter
that comes to my attention after the date of this letter, and we disclaim any
responsibility to advise you of future changes in law or fact that may affect
the above opinions.
We consent to reliance on this opinion letter by you and by (i)
Standard & Poor's Rating Services, a division of The McGraw-Hill Companies, by
Fitch IBCA, Inc., and by Moody's Investors Service, Inc. for the purpose of
rating the Notes, and (ii) Squire, Sanders & Dempsey L.L.P. for the purpose of
their opinion letter given in connection with the transactions contemplated by
the Basic Documents.
Very truly yours,
HUNTON & WILLIAMS
<PAGE>
EXHIBIT D
__________, 1997
TO THE PARTIES LISTED ON
SCHEDULE A ATTACHED HERETO
Re: Crestar Student Loan Trust 1997-1
Ladies and Gentlemen:
As counsel to Star Bank, National Association, we have examined or have
had examined each of (i) the Trust Agreement dated as of December 1, 1997 (the
"Trust Agreement") between Crestar Bank, as Depositor, Star Bank, National
Association, as Eligible Lender Trustee (the "Eligible Lender Trustee") and
Delaware Capital Management, Inc., as Delaware trustee, creating Crestar Bank
Student Loan Trust 1997-1 (referred to herein as the "Trust" or the "Issuer"),
(ii) the Transfer and Servicing Agreement dated as of December 1, 1997 (the
"Transfer and Servicing Agreement") among the Issuer, the Eligible Lender
Trustee and Crestar Bank, as Transferor, Master Servicer and Administrator,
(iii) the Administration Agreement dated as of December 1, 1997 (the
"Administration Agreement") among the Issuer, Crestar Bank, as Administrator,
and Bankers Trust Company, as Indenture Trustee, (iv) the Indenture dated as of
December 1, 1997 (the "Original Indenture"), as supplemented by the First Terms
Supplement dated as of December 1, 1997 (the First Terms Supplement and,
together with the Original Indenture, the Indenture ) between the Issuer and the
Indenture Trustee, pursuant to which the Trust's Student Loan Asset Backed Notes
(as defined in the First Terms Supplement) are being issued, (v) [Guarantee
Agreement references to be inserted] (the agreements referred to in clauses (v)
through (___) above shall be referred to herein as the "Guarantee Agreements")
(the agreements referred to in clauses (i) through (____) above shall be
referred to herein as the "Program Documents"). We have also examined or have
had examined such other agreements, documents, certificates and papers as we
have deemed necessary as a basis for the opinions expressed below.
We have assumed the due authorization, execution and delivery of each
agreement referenced above by each party thereto (other than the Eligible Lender
Trustee) and that each agreement referenced above is a legal, valid, binding and
enforceable obligation of each party thereto (other than the Eligible Lender
Trustee).
We have examined and are familiar with the Articles of Association and
the By-Laws of Star Bank, National Association, the certificates of authority to
exercise corporate trust powers issued to Star Bank, National Association by the
Federal Reserve Board of the United States (as predecessor in jurisdiction to
the Comptroller of the Currency of the United States), and certain resolutions
of the Board of Directors of Star Bank, National Association pertaining to the
operation of the Corporate Trust Department of Star Bank, National Association.
Basing our conclusions on such examination and familiarity, we are of the
opinion that:
(i) The Eligible Lender Trustee is a national banking association
duly 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 and the Transfer and Servicing Agreement and, on behalf of
the Issuer, under the Indenture, the Transfer and Servicing Agreement,
the Administration Agreement and the Guarantee Agreements.
(iii) The execution and delivery of the Trust Agreement and the
Transfer and Servicing Agreement by the Eligible Lender Trustee and of
the Indenture, the Transfer and Servicing Agreement, the Administration
Agreement and the Guarantee Agreements by the Eligible Lender Trustee
on behalf of the Issuer, and the performance by the Eligible Lender
Trustee of its obligations under the Trust Agreement and the Transfer
and Servicing Agreement, as well as the performance by the Eligible
Lender Trustee of its obligations on behalf of the Issuer under the
Indenture, the Transfer 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 and the Transfer and Servicing Agreement
constitute valid and binding obligations of the Eligible Lender Trustee
enforceable against the Eligible Lender Trustee in accordance with
their terms, and the Indenture, the Transfer and Servicing Agreement,
the Administration Agreement and the Guarantee Agreements constitute
the valid and binding obligations of the Issuer enforceable against the
Issuer in accordance with their terms, except as the enforceability
thereof may be (a) limited by bankruptcy, insolvency, reorganization,
moratorium, liquidation other similar laws affecting the rights of
creditors generally, and (b) subject to general principals of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(v) The execution and delivery by the Eligible Lender Trustee of
the Trust Agreement and the Transfer and Servicing Agreement and by the
Eligible Lender Trustee on behalf of the Trust of the Indenture, the
Transfer 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 which has not been obtained or done.
(vi) Each of the Issuer's 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 Trust Agreement or the Transfer and
Servicing Agreement, the consummation by the Issuer of the transactions
contemplated in the Indenture, the Transfer and Servicing Agreement,
the Administration Agreement or the Guarantee Agreements nor the
fulfillment of the terms thereof by the Eligible Lender Trustee or the
Issuer, as the case may be, will conflict with, result in a breach or
violation of, or constitute a default under any law or the Articles of
Association, By-Laws or other organizational documents of the Eligible
Lender Trustee or the terms of any indenture or other agreement or
instrument known to us 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 us 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 our 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 Transfer and Servicing
Agreement, the Indenture, the Administration Agreement or the Guarantee
Agreement.
(ix) The execution, delivery and performance by the Eligible Lender
Trustee of the Trust Agreement and the Transfer and Servicing
Agreement, and the execution, delivery and performance by the Eligible
Lender Trustee on behalf of the Trust of the Indenture, the Transfer
and Servicing 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 liens created by or arising under the
Eligible Lender Trustee that are unrelated to the transactions
contemplated in such agreements.
We are members of the bar of the State of Ohio and do not
express any opinion as to any matters governed by any laws other than
the laws of the State of Ohio and Federal laws of the United States of
America. This opinion is being furnished to you solely for your benefit
in connection with the transactions contemplated by the Trust
Agreement, the Transfer and Servicing Agreement, the Administration
Agreement, the Indenture and the Guarantee Agreements, and may not be
used, circulated, quoted or otherwise referred to without our prior
written permission.
Respectfully submitted,
The Law Department
Star Bank, National Association
<PAGE>
SCHEDULE A
Salomon Brothers Inc
New York, New York
Standard & Poor's Ratings Services Group
New York, New York
Moody's Investors Service, Inc.
New York, New York
Fitch IBCA, Inc.
New York, New York
Bankers Trust Company
New York, New York
Hunton & Williams
Richmond, Virginia
Foley & Lardner
Milwaukee, Wisconsin
Squire, Sanders & Dempsey L.L.P.
Columbus, Ohio
<PAGE>
EXHIBIT E
____________, 1997
TO THE PERSONS LISTED ON
ATTACHED SCHEDULE I
Re: Crestar Student Loan Trust 1997-1
Dear Ladies and Gentlemen:
We have acted as counsel for Bankers Trust Company (the "Indenture
Trustee") in connection with the Indenture dated as of December 1, 1997 by and
between Crestar Student Loan Trust 1997-1, as Issuer (the "Issuer") and the
Indenture Trustee, together with the First Terms Supplement dated December 1,
1997 (herein collectively, the "Indenture"), and the Administration Agreement by
and among the Issuer, Crestar Bank, as Administrator (the "Administrator") and
the Indenture Trustee, with respect to the $222,900,000 aggregate principal
amount of Student Loan Asset Backed Notes (the "Notes").
In this connection, we have examined such certificates of public
officials, such certificates of officers of the Indenture Trustee, and copies
certified to our satisfaction of such corporate documents and records of the
Indenture Trustee, and of such other papers, as we have deemed relevant and
necessary for our opinion hereinafter set forth. We have relied upon such
certificates of public officials and of officers of the Indenture Trustee with
respect to the accuracy of material factual matters contained therein which were
not independently established. In rendering the opinion expressed below, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity of authentic original documents
of all documents submitted to us as certified, conformed or photostatic copies.
Based upon the foregoing, it is our opinion that:
1. The Indenture Trustee has been duly incorporated and is validly
existing as a New York banking corporation under the laws of the State of New
York and has the power and authority to enter into, and to take all action
required of it under the Indenture.
2. The Indenture and the Administration Agreement have been duly
authorized, executed and delivered by the Indenture Trustee and constitute a
legal, valid and binding obligation of the Indenture Trustee, enforceable
against the Indenture Trustee in accordance with their terms, except as the
enforceability thereof may be limited by (i) bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of creditors'
rights generally, as such laws would apply in the event of a bankruptcy,
insolvency or reorganization or similar occurrence affecting the Indenture
Trustee, and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
3. The execution and delivery of the Indenture and the Administration
Agreement by the Indenture Trustee and the performance by the Indenture Trustee
of their terms does not conflict with or result in a violation of (A) any law or
regulation of the United States of America or the State of New York governing
the banking or trust powers of the Indenture Trustee, or (B) the By-laws of the
Indenture Trustee.
4. The Notes have been duly authenticated and delivered by the
Indenture Trustee.
5. No approval, authorization or other action by, or filing with, any
governmental authority of the United States of America or the State of New York
having jurisdiction over the banking or trust powers of the Indenture Trustee is
required in connection with the execution and delivery by the Indenture Trustee
of the Indenture or the Administration Agreement or the performance by the
Indenture Trustee of the terms of the Indenture and the Administration
Agreement.
We express no opinion as to matters governed by any law other than the
law of the State of New York and the Federal law of the United States.
Very truly yours,
WHITE & CASE
<PAGE>
Schedule I
Bankers Trust Company
New York, New York
Crestar Bank
Richmond, Virginia
Salomon Brothers Inc
New York, New York
Hunton & Williams
Richmond, Virginia
Foley & Lardner
Milwaukee, Wisconsin
Squire, Sanders & Dempsey L.L.P.
Columbus, Ohio
<PAGE>
EXHIBIT F
_________, 1997
Salomon Brothers Inc,
as Representative of the Underwriters
named in the Underwriting Agreement
dated December ___, 1997
390 Greenwich Street, 4th Floor
New York, New York 10013
Ladies and Gentlemen:
This opinion is rendered pursuant to the Underwriting Agreement dated
December ___, 1997 (the "Underwriting Agreement") among Salomon Brothers Inc, as
Representative of the Underwriters named therein (the "Underwriters"), Crestar
Student Loan Trust 1997-1, a Delaware business trust (the "Issuer") and Crestar
Bank (the "Bank"), relating to the purchase by the Underwriters of the Issuer's
Student Loan Asset-Backed Notes (the "Notes"). We have acted as counsel to the
Underwriters in connection with the purchase of the Notes pursuant to the
Underwriting Agreement.
As such counsel, we have examined copies of (i) the Underwriting
Agreement, (ii) the Issuer's Registration Statement on Form S-3 (Registration
No. 333-35825), in the form declared effective by the Securities and Exchange
Commission (the "Registration Statement"), (iii) the Prospectus dated _________,
1997 (the "Prospectus"), filed with the Securities and Exchange Commission
pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the
"Securities Act"), (iv) the Indenture dated as of December 1, 1997, and the
First Terms Supplement to the Indenture dated as of December 1, 1997
(collectively, the "Indenture") each between the Issuer and Bankers Trust
Company, as indenture trustee (the " Indenture Trustee"), (v) the Trust
Agreement dated as of December 1, 1997, among the Issue, Star Bank, National
Association, as Eligible Lender Trustee (the "Eligible Lender Trustee"), and
Delaware Trust Capital Management, Inc., as Delaware Trustee, (vi) the Transfer
and Servicing Agreement dated as of December 1, 1997 among the Issuer, the Bank,
as Transferor, Master Servicer and Administrator, and the Eligible Lender
Trustee and (vii) the Administration Agreement dated as of December 1, 1997
among the Issuer, the Bank and the Indenture Trustee.
We have also examined such other documents, papers, statutes and
authorities as we have deemed necessary to form the basis of the opinions
hereinafter expressed. In such examination, we have assumed the genuineness of
all signatures, the authenticity of all documents submitted to us as originals
and the conformity to original documents of copies of documents supplied to us.
As to certain matters of fact relevant to the opinions hereinafter expressed, we
have relied solely upon (i) the representations and warranties contained in the
above-referenced documents, and (ii) statements and certificates of officers of
the Bank, the Issuer, the Underwriters and others. We are rendering this opinion
pursuant to Section 6(h) of the Underwriting Agreement.
Attorneys involved in the preparation of this opinion are admitted to
the Bar of the State of Ohio and we express no opinion as to any laws other than
the laws of the United States and the State of Ohio.
Based on the foregoing, we are of the opinion that:
1. The Issuer is not, nor as a result of the offering and initial sale
of the Notes as contemplated in the Prospectus will the Issuer become, an
"investment company" as defined in the Investment Company Act of 1940, as
amended.
2. The Indenture has been duly qualified under the Trust Indenture Act
of 1939, as amended.
3. The Registration Statement has become effective under the Securities
Act and, to the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or contemplated under the
Securities Act, and the Registration Statement and the Prospectus, and each
amendment or supplement thereto, as of their respective effective or issue dates
(except for any financial statements or other financial data or notes thereto or
any statistical or tabular data contained or incorporated therein as to which we
express no opinion), complied as to form in all material respects with the
requirements of the Securities Act and the Rules and Regulations thereunder.
We have participated in conferences with officers and other
representatives of the Issuer and the Bank, the Indenture Trustee and the
Eligible Lender Trustee, and the legal counsel for each of these parties and
with your representatives. At these conferences, the contents of the
Registration Statement, the Prospectus and related matters were discussed.
Although we are not passing upon and do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, on the basis of the foregoing (relying
as to materiality to a large extent upon the opinions and representations of
officers and other representatives of the Issuer and others), no facts have come
to our attention which would lead us to believe that the Registration Statement
(excluding the Exhibits thereto) at the time it became effective, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or that the Prospectus on the date thereof or on the date hereof, included an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided that in the case of both
the Registration Statement and the Prospectus, we express no opinion or view as
to the financial, numerical, statistical and quantitative information included
or incorporated therein, the information in the Prospectus under the headings
"The Transferor", "The Servicers", "The Financed Student Loan Pool",
"Description of the FFEL Program", "Description of the Guarantee Agencies",
"Description of the HEAL Program", "Maturity and Prepayment Considerations" and
the other information contained in the Prospectus relating to or describing
provisions of the Higher Education Act of 1965, as amended, the Federal Family
Education Loan Program, the Health Education Assistance Loan Act, as amended, or
the Health Education Assistance Loan Program.
This opinion and advice is being rendered to the Underwriters solely
for their benefit and may not be relied upon by any other person or entity
without our written consent, except that each of the Bank and the Indenture
Trustee may rely on the opinion set forth in paragraph (2) above.
Respectfully submitted,
SQUIRE, SANDERS & DEMPSEY L.L.P.
<PAGE>
EXHIBIT G
_________, 1997
To the Persons Listed
on Schedule A
Ladies and Gentlemen:
We have acted as special counsel to Crestar Bank, a Virginia banking
corporation (the "Bank"), in connection with the transactions contemplated by
the Transfer and Servicing Agreement dated as of December __, 1997 (the
"Transfer and Servicing Agreement"), by and among the Bank, as transferor, as
master servicer and as administrator, Crestar Student Loan Trust 1997-1, a
statutory Delaware business trust (the "Trust"), as Trust, and Star Bank,
National Association, a national banking association as eligible lender trustee
(the "Eligible Lender Trustee"), pursuant to which the Bank will transfer to the
Eligible Lender Trustee on behalf of the Trust, without recourse, all right,
title and interest of the Bank in, to and under the Financed Student Loans
listed on Schedule A-1 thereto and all payments thereon and all proceeds thereof
(the "Specified Assets"). Terms herein with an initial capital not required by
standard capitalization rules are defined terms, and each such term not
parenthetically defined herein shall have the meaning assigned to it in the
Transfer and Servicing Agreement.
I. OPINION REQUESTED
You have requested our opinion as to whether, in the event that the
Federal Deposit Insurance Corporation (the "FDIC") were to be appointed as
conservator or receiver for the Bank pursuant to Section 11(c) of the Federal
Deposit Insurance Act (the "FDIA") and a court were to recharacterize the
transfer of the Bank's right, title, and interest in, to and under the Specified
Assets to the Eligible Lender Trustee pursuant to the Transfer and Servicing
Agreement as the grant of a security interest in the Specified Assets securing a
loan from the Eligible Lender Trustee to the Bank (such security interest, the
"Security Interest"), the Security Interest would be enforceable notwithstanding
the appointment of the FDIC as conservator or receiver of the Bank.
II. ASSUMPTIONS
We have examined a copy of each of (i) the Transfer and Servicing
Agreement; (ii) the Trust Agreement dated as of December __, 1997 (the "Trust
Agreement"), among the Bank, as depositor, the Eligible Lender Trustee, and
Delaware Trust Capital Management Inc., as Delaware trustee; (iii) the Indenture
dated as of December __, 1997, (the "Indenture"), between the Trust and Bankers
Trust Company, a New York banking corporation as indenture trustee (the
"Indenture Trustee"); (iv) the First Terms Supplement to the Indenture dated as
of December __, 1997 (the "Terms Supplement"), between the Trust and the
Indenture Trustee; (v) the Administration Agreement dated as of December __,
1997 (the "Administration Agreement, among the Trust, the Bank and the Indenture
Trustee; and (vi) the Underwriting Agreement dated as of December __, 1997 (the
"Underwriting Agreement"), among the Transferor, the Trust and Smith Barney
Inc., as representative of the several Underwriters named therein (each an
"Underwriter") (hereinafter the Transfer and Servicing Agreement, the Trust
Agreement, the Indenture, the Terms Supplement, the Administration Agreement and
the Underwriting Agreement may sometimes be referred to collectively as the
"Basic Documents"). In addition, we have reviewed the Articles of Incorporation
and the By-laws of the Bank, each as amended to date (the "Articles" and the
"By-laws", respectively), and the resolutions of the [Executive Committee] of
the Board of Directors of the Bank adopted on December __, 1997. We have also
reviewed the Registration Statement on Form S-3, as amended (No. 333-35825) (the
"Registration Statement"), which was declared effective by the Securities and
Exchange Commission (the "SEC") on December __, 1997 (the "Effective Date"), and
the definitive Prospectus dated December __, 1997, arising from said
Registration Statement (the "Prospectus").
In rendering the opinion herein, we have relied upon and incorporate by
reference herein the assumptions and opinions of our letter opinion regarding,
inter alia, whether the Bank would be construed to have granted to the Trust a
valid security interest in the Specified Assets under Article 9 of the New York
Uniform Commercial Code in the event that the transfer of the Specified Assets
by the Bank to the Trust is found not be to a "true sale" or "absolute
conveyance" for purposes of a receivership or conservatorship of the Bank under
Section 11(c) of the FDIA (the "Lien Opinion").
As to factual matters, we have reviewed and relied, without any
independent investigation, confirmation or inquiry whatsoever, upon the
representations, warranties, certifications and covenants contained in the
Officer's Certificate executed by the Bank annexed hereto as Exhibit A (the
"Bank Certificate") and the Officer's Certificate executed by the Eligible
Lender Trustee annexed hereto as Exhibit B (the "Trustee Certificate"; together
with the Bank Certificate, the "Certificates"). We further have assumed, again
with your permission and without any independent investigation, confirmation or
inquiry whatsoever, that such representations, warranties and certifications are
true, accurate and not materially misleading as of the date hereof and such
covenants will be kept, observed and otherwise fully performed until all amounts
due on the Notes and the Certificates are indefeasibly paid in full. We have no
actual knowledge of any facts indicating that any of such assumptions are false
or materially misleading or that our reliance thereon would be unreasonable.
III. ANALYSIS
The Bank is ineligible to be a "debtor" under ss. 109(b)(2) and 109(d)
of the United States Bankruptcy Code, 11 U.S.C. ss.ss. 101-1330 (the "Bankruptcy
Code"). As a result, neither the provisions of the Bankruptcy Code that impact
the right of a secured creditor to liquidate collateral nor the provisions of
Section 547 of the Bankruptcy Code concerning "preferential" transfers would
apply in the event of the insolvency of the Bank. Rather, the FDIC is authorized
under Sections 11(c)(1) and (2) of the FDIA to accept appointment as
conservator, and is required to be appointed as receiver, for a national bank
such as the Bank.
The FDIC as conservator or receiver is granted the powers set forth in
Section 11 of the FDIA. Section 11(e) of the FDIA, authorizes the FDIC as
conservator or receiver to "repudiate" certain "contracts." However, the FDIA
does not grant the FDIC as conservator or receiver the general power to avoid
valid perfected security interests, provided that certain requirements are
satisfied. In this respect, Section 11(e)(11) of the FDIA states that no
provision of this subsection shall be construed as permitting the avoidance of
any legally enforceable(1) or perfected security interest in any of the assets
of any depository institution except where such an interest is taken in
contemplation of the institution's insolvency or with the intent to hinder,
delay, or defraud the institution or the creditors of such institution.
If the FDIC as receiver or conservator were to disaffirm or repudiate
the Transfer and Servicing Agreement, the liability of the FDIC would be limited
to actual direct compensatory damages determined as of the date of the
appointment of the conservator or receiver(2) 12 U.S.C. ss. 1821(e)(3)(A).
The FDIA authorizes the FDIC as receiver to determine claims against an
insured depository institution in receivership. This authorization appears to
include the authority, at least in certain cases, to determine a "claim of
security." See 12 U.S.C. ss. 1821(d)(5)(D). Section 11(d)(5) of the FDIA
provides that before the end of the 180-day period beginning on the date that a
claim is filed with the FDIC as receiver, the FDIC shall determine whether to
allow or disallow the claim. The FDIC is required by Section 11(d)(8) of the
FDIA to establish a procedure for expedited relief for claimants alleging that
(i) there exists a perfected security interest in the assets of a depository
institution for which the FDIC has been appointed receiver, and (ii) irreparable
injury will occur if the routine claims procedure is followed. Section
11(d)(8)(B) of the FDIA provides that before the end of the 90-day period
beginning on the date any claim is filed in accordance with such expedited
relief determination procedures, the FDIC shall determine whether to allow or
disallow a claim, or whether the claim shall be determined pursuant to the
claims procedure.
Section 11(d)(5)(D) of the FDIA states that the FDIC as receiver may
disallow any portion of a claim to security which is not proved to the
satisfaction of the receiver. The FDIC may treat the portion of a secured claim
exceeding the fair market value of the security as an unsecured claim and
payment on such unsecured portion of the claim will only be made in connection
with the disposition of all claims of unsecured creditors of the institution.
Section 11(d)(50(D) of the FDIA states that no court may review the FDIC's
determination to disallow a claim of security not proved to the FDIC's
satisfaction.
Certain Basic Documents to which the Bank is party may be invalid
against the FDIC. Section 13(e)(1) of the FDIA provides in pertinent part:
No agreement which tends to diminish or defeat the interest of the
[FDIC] in any asset acquired by it under this section or section 11 [of the
FDIA] . . .shall be valid against the [FDIC] unless such agreement-
(A) is in, writing,
(B) was executed by the depository institution and any person
claiming an adverse interest thereunder, including the
obligor, contemporaneously with the acquisition of the asset
by the depository institution,
(C) was approved by the board of directors of the depository
institution or its loan committee, which approval shall be
reflected in the minutes of said board or committee, and
(D) has been, continuously, from the time of its execution, an
official record of the depository institution(3)
[Emphasis added.]
In North Arkansas Medical Center v. Barrett, 962 F.2d 780 (8th Cir.
1992), the Eighth Circuit affirmed the district court's decision to dismiss a
claim by a depositor of an insolvent savings and loan association (the "S&L")
that the depositor had a perfected security interest in certain assets held by
the S&L to secure the S&L's obligations under certain certificates of deposit.
The dismissal was made on the ground that the claim of the depositor did not
comply with Section 13(e) of the FDIA.
In response to the concerns raised by the North Arkansas Medical Center
decision, the FDIC, in 1993, adopted a "Statement of Policy Regarding Treatment
of Security Interests After Appointment of the FDIC as Conservator or Receiver"
(the "Security Interest Policy Statement")(4). In the Security Interest Policy
Statement, the FDIC indicates that, if certain conditions are met, the FDIC as
conservator or receiver, will not seek to avoid an otherwise legally enforceable
and perfected security interest solely because the secured obligation or
collateral subject to the security interest (a) was not acquired by the
depository institution contemporaneously with the approval and execution of the
security agreement granting the security interest and/or (b) may change,
increase, or be subject to substitution from time to time during the period that
the security interest is enforceable and perfected. Such conditions are as
follows: (a) the agreement was undertaken in the ordinary course of business,
not in contemplation of insolvency, and with no intent to hinder, delay or
defraud the depository institution or its creditors; (b) the secured obligation
represents a bona fide and arm's length transaction; (c) the secured party or
parties are not insiders or affiliates of the depository institution; (d) the
grant or creation of the security interest was for adequate consideration; and
(e) the security agreement evidencing the security interest is in writing, was
approved by the depository institution's board of directors or loan committee
(which approval is reflected in the minutes of a meeting of the board of
directors or committee), an has been continuously from the time of its
execution, an official record of the depository institution.
IV. OPINION
Based on the foregoing and subject to the qualifications and
assumptions set forth herein and below, we are of the opinion that if the FDIC
were to be appointed as conservator or receiver for the Bank pursuant to Section
11 (c) of the FDIA and a court were to recharacterize the transfer of the
Specified Assets to the Eligible Lender Trustee pursuant to the Transfer and
Servicing Agreement and the other Basic Documents as the grant of a security
interest in the Specified Assets securing a loan from the Eligible Lender
Trustee to the Bank, a court properly presented with the issue and correctly
applying applicable law to the facts set forth herein and relied upon for
purposes of this opinion would rule that the Security Interest is enforceable,
notwithstanding the appointment of the FDIC as conservator or receiver for the
Bank.
V. QUALIFICATIONS
We note that we have found no case law directly on point.(5) We further
note that the FDIC as a matter of policy will not issue binding advisory
opinions as to positions it would adopt in hypothetical situations that could
arise in future receiverships or conservatorships of insured depository
institutions and that the FDIC's actions as receiver or conservator are
determined on a case by case basis in accordance with applicable laws and in
light of the specific factual situation. Furthermore, we note that a court's
decision regarding the matter upon which we opine herein will be based on the
court's own analysis and interpretation of the factual evidence before the court
and applicable legal principles. Consequently, a court could reach conclusions
different from those set forth herein, and our opinion herein cannot and does
not in any way constitute an empirical prediction as to the actual outcome of
any future litigation. Rather, the opinion herein is merely our informed legal
judgment as the proper application of applicable law to the facts set forth
herein and relied upon for purposes of this opinion.
We do not purport to express any opinion herein other than the opinion expressly
set forth in Section IV above. Nor do we purport to express an opinion herein on
any laws other than those of the United States of America in effect as of the
date this opinion is given and policy statements and letters by the FDIC or its
counsel or staff in effect as of the date this opinion is given. This opinion is
given and effective only on the date hereof, and we assume no obligation to
inform you of any subsequent changes in the facts, law, policy statements or
letters bearing on this opinion, even if such changes are brought to our
attention.
We incorporate herein by reference the qualifications of the Lien
Opinion.
We consent to reliance on this opinion letter only by the addressees
hereof for purposes of the transactions contemplated by the Basic Documents.
Except as provided in the immediately preceding sentence, this opinion letter
may not to be relied upon, quoted, referred to, or otherwise used by any other
person or entity or for any other purpose without our prior written consent in
each instance.
- --------
1 The FDIC has taken the position that "legally enforceable" for
this purpose requires compliance with Section 13(e) of the FDIA. See Security
Interest Policy Statement (defined below).
2 See Security Interest Policy Statement. But see FDIC "Statement
of Policy Regarding Treatment of Collateralized Letters of Credit After
Appointment of the Federal Deposit Insurance Corporation as Conservator or
Receiver," 60 Fed. Reg. 27976 (May 26, 1995) (the "L/C Policy Statement")(under
the circumstances indicated therein, payment for a collateralized letter of
credit repudiated by the FDIC as conservator or receiver will be made to the
extent of available collateral up to an amount equal to the outstanding
principal amount or accreted value of the secured obligations, together with
interest at the contract rate up to and including the date of payment and
expenses of liquidation, if provided in the contract). Cf., Employees'
Retirement System of Alabama v. The Resolution Trust Company, 830 F. Supp. 972
(S.D.N.Y. 1993) (the district court held that the Resolution Trust Corporation,
a former sister agency of the FDIC, was obligated to pay holders of repudiated
bonds the fair market value thereof as of the date of repudiation).
3 We are not aware of any case law that interprets the
contemporaneous requirement, involving facts analogous to the transactions
contemplated. We note that the FDIC has issued a Statement of Policy Regarding
Federal Common Law and Statutory Provisions Protecting FDIC, as Receiver or
Corporate Liquidator, Against Unrecorded Basic Documents or Arrangements of a
Depository Institution Prior to Receivership (Feb. 4, 1997) (the "February 1997
Policy Statement"). In the February 1997 Policy Statement, the FDIC indicates
"the FDIC, as a matter of policy, will not seek to bar claims which by their
very nature do not lend themselves to the enumerated requirements of [12 U.S.C.]
1823(e)". In addition, the February 1997 Policy Statement sets forth guidelines
for the application of 12 U.S.C. ss. 1823(e). Such guidelines do not provide any
guidance in the securitization context, however they do indicate that (i) 12
U.S.C. 1823(e) may not be asserted by the FDIC without the approval of the
Washington Deputy Directory of the FDIC where the claimant has been diligent,
i.e., it took all reasonable steps to document and record the agreement or
understanding with the failed depository institution and there is no evidence of
deceptive activity, and (ii) the contemporaneous requirements in 12 U.S.C. ss.
1823(e) insofar as it applies to loan workouts and loan modifications where the
sole issue is the contemporaneous requirement, should be considered principally
where "the facts demonstrate that the workout or restructure was entered into in
bad faith and in anticipation of institution failure." Although the foregoing is
not directly on point, it does indicate an aversion by the FDIC (absent approval
of the applicable Washington Deputy Director) to utilize 12 U.S.C. ss. 1823(e)
to defeat claims where there is a bona fide arm's length transaction, no
evidence of bad faith, fraud, collusion or anticipation of institution failure,
or deception and the claimant has been diligent.
4 5 Fed. Reg 16833 (Mar. 31, 1993). In the Security Interest
Policy Statement, the FDIC cites previous FDIC general counsel opinions
supporting its position, e.g., FDIC Advisory Opinion 4537 (Apr. 2, 1991) and
FDIC Advisory Opinion 4423 (Dec. 15, 1989).
5 [Discussion of Westport Bank & Trust Company v. Geraghty, 90
-------------------------------------------
F.3d 661 (2d Cir. 1996). Copy to come.]
Very truly yours,
HUNTON & WILLIAMS
<PAGE>
Schedule A
Crestar Bank
Richmond, Virginia
Salomon Brothers Inc
New York, New York
Bankers Trust Company
New York, New York
Star Bank, National Association
Cincinnati, Ohio
Standard & Poor's Ratings Services
New York, New York
Moody's Investors Service, Inc.
New York, New York
Fitch IBCA, Inc.
New York, New York
Squire, Sanders & Dempsey L.L.P.
Columbus, Ohio
KPMG Peat Marwick
Richmond, Virginia
<PAGE>
EXHIBIT H
_________, 1997
Salomon Brothers Inc
As Representative of the Underwriters
390 Greenwich Street, 4th Floor
New York, New York 10013
Re: Crestar Student Loan Trust 1997-1
Ladies and Gentlemen:
We have acted as special counsel for Crestar Bank (the "Bank"), in connection
with the Underwriting Agreement dated December ___, 1997 (the "Underwriting
Agreement") among Crestar Student Loan Trust 1997-1, a Delaware business trust
(the "Issuer"), the Bank and Salomon Brothers Inc, as representative of the
Underwriters named in the Underwriting Agreement. Capitalized terms not
otherwise defined here shall have the meaning set forth in the Underwriting
Agreement. Pursuant to the Underwriting Agreement, the Underwriters are
purchasing on the date hereof, the Issuer's Student Loan Asset Backed Notes.
As such counsel, we have examined copies of (i) the Registration Statement on
Form S-3 (Registration Nos. 333-35825), in the form declared effective by the
Securities and Exchange Commission (the "Registration Statement") and (ii) the
Prospectus dated December ___, 1997 (the "Prospectus"), filed with the
Securities and Exchange Commission pursuant to Rule 424(b) under the Securities
Act of 1933, as amended.
In such examination, we have assumed the authenticity of all documents submitted
to us as originals and the conformity to original documents of copies of
documents supplied to us. As to certain factual matters, we have relied solely
upon (i) the representations and warranties contained in the Underwriting
Agreement and the other Basic Documents, and (ii) statements and certificates of
officers of the Bank, the Issuer, Salomon Brothers Inc and others.
We have participated in conferences with officers and other representatives of
the Issuer and the Bank and with your representatives. At these conferences, the
contents of the Registration Statement, the Prospectus and related matters were
discussed. Although we are not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, on the basis of the foregoing (relying
as to materiality to a large extent upon the opinions and representations of
officers and other representatives of the Issuer and others), no facts have come
to our attention which would lead us to believe that the Registration Statement
(excluding the Exhibits thereto) at the time it became effective, contained an
untrue statement of material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or that the Prospectus on the date thereof and on the date hereof, included an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading (in the case of both the Registration
Statement and the Prospectus, other than the financial, numerical, statistical
and quantitative information included or incorporated therein, and the
information in the Prospectus under the headings "The Servicers", "The Financed
Student Loan Pool", "Maturity and Prepayment Considerations", "Description of
the Guarantee Agencies", "Federal Income Tax Consequences", "State Tax
Considerations" and "ERISA Considerations").
This letter is solely for the benefit of the addressee hereof and may not be
relied upon by any other party without our written consent.
Very truly yours,
FOLEY & LARDNER
<PAGE>
EXHIBIT I
_________, 1997
Salomon Brothers Inc
As Representative of the Underwriters
390 Greenwich Street, 4th Floor
New York, New York 10013
Re: Crestar Student Loan Trust 1997-1
Ladies and Gentlemen:
We have acted as special counsel for Crestar Bank (the "Bank"), in connection
with the Underwriting Agreement dated December ___, 1997 (the "Underwriting
Agreement") among Crestar Student Loan Trust 1997-1, a Delaware business trust
(the "Issuer"), the Bank and Salomon Brothers Inc, as representative of the
Underwriters named in the Underwriting Agreement. Capitalized terms not
otherwise defined here shall have the meaning set forth in the Underwriting
Agreement. Pursuant to the Underwriting Agreement, the Underwriters are
purchasing on the date hereof, the Issuer's Student Loan Asset Backed Notes.
As such counsel, we have examined copies of (i) the Registration Statement on
Form S-3 (Registration Nos. 333-35825), in the form declared effective by the
Securities and Exchange Commission (the "Registration Statement") and (ii) the
Prospectus dated __________, 1997 (the "Prospectus"), filed with the Securities
and Exchange Commission pursuant to Rule 424(b) under the Securities Act of
1933, as amended.
In such examination, we have assumed the authenticity of all documents submitted
to us as originals and the conformity to original documents of copies of
documents supplied to us. As to certain factual matters, we have relied solely
upon (i) the representations and warranties contained in the Underwriting
Agreement and the other Basic Documents, and (ii) statements and certificates of
officers of the Bank, the Issuer, Salomon Brothers Inc and others.
We have participated in conferences with officers and other representatives of
the Issuer and the Bank and with your representatives. At these conferences, the
contents of the Registration Statement, the Prospectus and related matters were
discussed. Although we are not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, on the basis of the foregoing (relying
as to materiality to a large extent upon the opinions and representations of
officers and other representatives of the Issuer and others), no facts have come
to our attention which would lead us to believe that the Registration Statement
(excluding the Exhibits thereto) at the time it became effective, contained an
untrue statement of material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or that the Prospectus on the date thereof and on the date hereof, included an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading (in the case of both the Registration
Statement and the Prospectus, other than the financial, numerical, statistical
and quantitative information included or incorporated therein, the information
in the Prospectus under the headings "The Servicers", "The Financed Student Loan
Pool", "Maturity and Prepayment Considerations", "Description of the FFEL
Program", "Description of the Guarantee Agencies" and "Description of the HEAL
Program").
This letter is solely for the benefit of the addressee hereof and may not be
relied upon by any other party without our written consent.
Very truly yours,
HUNTON & WILLIAMS
<PAGE>
EXHIBIT J
______________, 1997
Salomon Brothers Inc
As Representative of the Underwriters
390 Greenwich Street, 4th Floor
New York, New York 10013
Re: Crestar Student Loan Trust 1997-1
Ladies and Gentlemen:
We have acted as special tax counsel to Crestar Bank, a Virginia
banking corporation (the "Depositor") in connection with the formation of the
Crestar Student Loan Trust 1997-1, a Delaware business trust (the "Trust"), and
the issuance of approximately $222,900,000 in principal amount of Student Loan
Asset Backed Notes (the "Notes"). The Notes are being issued pursuant to an
indenture dated as of December 1, 1997, between the Trust and Bankers Trust
Company, as trustee (the "Indenture Trustee"), as supplemented by the First
Terms Supplement dated as of December 1, 1997 between the Trust and the
Indenture Trustee (together, the "Indenture"). Any capitalized term used and not
defined herein shall have the meaning assigned to it in the Indenture.
We have reviewed the originals or copies of (i) the Prospectus for the
Notes dated December ___, 1997 (the "Prospectus"); (ii) the Trust Agreement
dated as of December 1, 1997 by and among the Depositor, Star Bank, National
Association, a national banking association, as eligible lender trustee (the
"Eligible Lender Trustee"), and Delaware Trust Capital Management, Inc., as
Delaware trustee (the "Delaware Trustee"); (iii) the Indenture; and (iv) such
other documents as we have deemed necessary or appropriate as a basis for the
opinions set forth below.
Based on the foregoing and subject to the qualifications stated herein,
we are of the opinion that if (i) the Trust, the Indenture Trustee, and the
other parties to the issuance transaction comply (without waiver) with all of
the provisions of the Indenture and certain other documents to be prepared and
executed in connection with the issuance of the Notes and (ii) the Trust issues
and sells the Notes as described in the Prospectus, the Notes will be treated
for federal income tax purposes as evidences of indebtedness and not as
ownership interests in the collateral securing them or as equity interests in
the trust or in a separate association taxable as a corporation. In addition, we
are of the opinion that the descriptions of the law and legal conclusions
contained under the caption "Federal Income Tax Consequences" in the Prospectus
are correct in all material respects and the discussions thereunder fairly
summarize the federal income tax considerations that are likely to be material
to the holders of the Notes.
There are no existing regulations under section 385 of the Code
defining instruments as equity or indebtedness for income tax purposes.
Furthermore, there are no controlling regulations, published rulings, or
judicial decisions involving securities with terms substantially the same as the
Notes that discuss, for federal income tax purposes, (i) whether the securities
constitute equity or indebtedness or (ii) whether the collateral relating to the
securities has been pledged or sold to the holders of the securities. Therefore,
our opinion regarding the characterization of the Notes as evidences of
indebtedness is based upon rulings and judicial decisions under the Code
involving situations that we consider to be analogous and an analysis of all of
the facts and circumstances surrounding the issuance and sale of the Notes.
You should be aware that this opinion represents conclusions as to the
application to the Notes of existing law, regulations, administrative rules and
practices, and legislative history. There can be no assurance, however, that
existing law will not change or that contrary positions will not be taken by the
Internal Revenue Service.
No opinion has been sought and none has been given concerning the tax
treatment of the issuance and sale of the Notes under the laws of any state.
The opinions expressed herein are solely for the information and use of
the addressees and may not be relied upon or otherwise used for any purpose by
any other person without our express written consent.
Very truly yours,
HUNTON & WILLIAMS
<PAGE>
EXHIBIT K-1
_________, 1997
Salomon Brothers Inc
As Representative of the Underwriters
390 Greenwich Street, 4th Floor
New York, New York 10013
Re: Crestar Student Loan Trust 1997-1
We have acted as special Ohio counsel to Crestar Student Loan Trust
1997-1 (the "Trust") in connection with the Indenture dated as of December 1,
1997 (the "Indenture") between the Trust and Bankers Trust Company, a New York
banking corporation as the indenture trustee (the "Indenture Trustee").
For the purpose of rendering our opinion, our review has been limited
solely to originals of the following:
1. the Indenture;
2. the Transfer and Servicing Agreement dated as of December 1,
1997 (the "Transfer and Servicing Agreement") by and among
Crestar Bank, a Virginia banking corporation, as transferor,
as master servicer and as administrator (the "Bank"), the
Trust, as issuer, and Star Bank, National Association, as
eligible lender trustee (the "Eligible Lender Trustee");
3. the Trust Agreement dated as of December 1, 1997 (the "Trust
Agreement"), among the Bank, as depositor, the Eligible Lender
Trustee, and Delaware Trust Capital Management, Inc., as
Delaware trustee;
4. reports of Lexis Document Services with respect to searches
of the Uniform Commercial Code records at the office of the
Secretary of State of the State of Ohio, listing all
currently effective financing statements filed through
December , 1997 naming the Trust as debtor and at the office
of the Recorder of Hamilton County, Ohio, listing all
currently effective financing statements filed through
December , 1997 (the "Search Results"); and
5. file-stamped acknowledgement copies of UCC-1 financing
statements naming the Trust as Debtor and the Indenture
Trustee as secured party filed with the Secretary of State of
the State of Ohio and the Recorder of the County of Hamilton,
Ohio which are attached here to as Exhibits A-1 and A-2 (the
"Financing Statements").
It is our understanding that pursuant to the Transfer and Servicing
Agreement, the Bank is transferring to the Eligible Lender Trustee on behalf of
the Trust, without recourse (subject to the obligations set forth therein), all
right, title and interest of the Bank in and to the Financed Student Loans
listed on Schedule [A-1] thereto and the proceeds thereof (the "Specified
Assets"); pursuant to the Indenture, the Trust is pledging all of its right,
title and interest in and to the Specified Assets to the Indenture Trustee for
the benefit of the holders from time to time of the Senior LIBOR Rate Class A-1
Student Loan Asset Backed Notes, the Senior LIBOR Rate Class A-2 Student Loan
Asset Backed Notes and the Subordinate LIBOR Rate Class B Student Loan Asset
Backed Notes (collectively, the "Notes"); and the Notes are being sold in a
public offering registered under the Securities Act of 1933, as amended (the
"Act").
This opinion is being delivered to you at your request. Unless
otherwise defined herein, each of the capitalized terms used herein shall have
the meaning ascribed to such term in the Indenture, or if not so defined
therein, as defined in the Transfer and Servicing Agreement.
In rendering this opinion, we have with your permission assumed,
without independent investigation, the following:
1. the genuineness of all signatures of all persons executing
the documents examined by us;
2. all documents submitted to us as copies in connection with
this opinion conform to the originals thereof;
3. each of the Trust, the Eligible Lender Trustee and the
Indenture Trustee has been duly incorporated and organized or
duly established and each of them is validly existing under
the laws of the jurisdiction in which it is incorporated or
established;
4. the Specified Assets exist, value has been given and the Trust
and the Eligible Lender Trustee on behalf of the Trust have
sufficient rights in the Specified Assets for the security
interest of the Indenture Trustee to attach to the Specified
Assets and we express no opinion as to the nature or extent of
the Trust's or the Eligible Lender Trustee's rights, title or
interest in or to any Specified Assets;
5. each of the Transfer and Servicing Agreement, the Trust
Agreement and the Indenture, (a) has been duly executed and
delivered by each of the parties thereto and (b) is the valid
and binding obligation of the parties thereto enforceable
against such parties in accordance with its respective terms;
6. each of the Trust and the Eligible Lender Trustee is
identified by its full and correct legal name in each of the
Indenture and the Financing Statements and each of the Trust
and the Eligible Lender Trustee does not do business and has
not done business under any other name; and
7. each of the Financing Statements gives an address of the
secured party from which information concerning the security
interest may be obtained and gives a correct mailing address
of the debtor and secured party listed therein.
Based upon and subject to the foregoing and subject to the assumptions,
exceptions and qualifications and limitations set forth herein, it is our
opinion that except for the timely filing in the future of continuation
statements with respect to the Financing Statements, no other filing is required
in the State of Ohio in order to make effective the Lien of the Indenture in the
Specified Assets and the proceeds thereof. Insofar as Chapter 1309 of the Ohio
Revised Code [Article 9 of the Uniform Commercial Code as enacted in Ohio (the
"UCC")] applies (without regard to conflict of laws principles), the Indenture
Trustee has a perfected security interest in such Specified Assets and the
proceeds thereof and, assuming that the Search Results accurately list all of
the financing statements filed naming the Trust as debtor and describing any
portion of the Specified Assets consisting of such accounts and proceeds
thereof, such security interest of the Indenture Trustee will be prior to the
security interest of all other creditors of the Trust whose security interests
are perfected solely by filing UCC financing statements in the State of Ohio.
The foregoing opinion is subject to the following further assumptions
and qualifications:
1. The opinion expressed herein insofar as it relates to the
filing of the Financing Statements is based solely upon our
review of the above-referenced file-stamped acknowledgement
copies of the Financing Statements and is subject to the
effect that any misfiling or misindexing of the Financing
Statements might have on the perfection or priority of the
security interests perfected by the filing thereof.
2. The opinion expressed herein with respect to priority, to
the extent dependent upon the existence or non-existence of
UCC financing statements filed prior to the Financing
Statements, (a) is based solely on the Search Results and
(b) assumes that there have been no UCC financing statements
filed subsequent to the respective dates of the Search
Results which were filed prior to the filing of the
Financing Statements.
3. The security interest of the Indenture Trustee in Collateral
consisting of proceeds is limited to the extent set forth in
Section 1309.25 of the Ohio Revised Code [Section 9-306 of the
UCC].
4. The perfection of the security interest in the Specified
Assets will be terminated four months after the Trust changes
the location of its chief executive office to a new
jurisdiction outside the State of Ohio (or, if earlier, when
perfection under the laws of the State of Ohio would have
ceased) unless such security interests are perfected in such
new jurisdiction before that termination.
5. We have assumed that the Trust has not, within the past four
months, changed its name, corporate structure or the locations
of its chief executive office, chief place of business, or
where it keeps its records with respect thereto.
6. With regard to the sufficiency of the description of the
Specified Assets set forth in the Financing Statements, we
have assumed that the Indenture Trustee will maintain a
detailed list describing the Specified Assets which will be
available for inspection by interested parties during normal
business hours.
We are admitted to the Bar of the State of Ohio and we express no
opinion herein as to the laws of any jurisdiction other than the laws of the
State of Ohio. This opinion is limited to the matters expressly stated herein.
No implied opinion may be inferred to extend this opinion beyond the matters
expressly stated herein. A copy of this opinion may be delivered to Moody's
Investors Service, Inc., Fitch ICBA, Inc., Standard & Poor's Corporation and
Hunton & Williams, each of which may rely upon this opinion as if it were
addressed to it. The opinion expressed herein is expressed solely to you and,
without the express written consent of the undersigned, may not be relied upon
by any other persons (except the Noteholders, who are hereby expressly permitted
to rely upon our opinion) for any reason.
Very truly yours,
SQUIRE, SANDERS & DEMPSEY L.L.P.
<PAGE>
EXHIBIT K-2
_________, 1997
To the Parties Identified
On Schedule 1 Hereto
Re: Crestar Student Loan Trust 1997-1
Ladies and Gentlemen:
I have acted as chief counsel to the Pennsylvania Higher Education Assistance
Agency (the "PHEAA") in connection with the execution and delivery of an
Indenture dated as of December 1, 1997 between Crestar Student Loan Trust 1997-1
(the "Issuer") and Banker's Trust Company, as Indenture Trustee (the "Indenture
Trustee"), as supplemented by a First Terms Supplement, also dated as of
December 1, 1997 (collectively, the "Indenture"). Capitalized terms used herein
and not otherwise defined shall have the meanings set forth in the Indenture.
You have requested my opinion as to the perfection and priority of the
security interest in the HEAL Notes for the Student Loans (the "HEAL Notes")
granted by the Issuer to the Indenture Trustee pursuant to the Indenture.
This opinion is based solely upon my review of my examination of the
Indenture and such matters of law as I have deemed necessary for purposes of
rendering the opinions set forth herein.
Based on and subject to the foregoing, as well as the assumptions and
limitations set forth below, I am of the opinion that upon delivery to PHEAA, in
the Commonwealth of Pennsylvania, of the HEAL Notes and the proceeds thereof,
the security interest created by the Indenture in favor of the Indenture Trustee
in such HEAL Notes and the proceeds thereof is perfected. At the time of such
perfection, such security interest has first priority. At the present time the
PHEAA is in possession of the HEAL Notes.
The opinions set forth herein are limited to Title 13 of the
Pennsylvania Commercial Code (the "Commercial Code"), and therefore those
opinions do not address (i) law of jurisdictions other than Pennsylvania, and of
Pennsylvania except for Title 13 of the Commercial Code, and (ii) collateral of
a type not subject to Title 13 of the Commercial Code. Without limiting the
generality of the foregoing, I express no opinion as to the consequences of the
failure to record any assignment, transfer or sale of the HEAL Notes. My
opinions as to the perfection and priority of any security interest in proceeds
are subject to the provisions of Title 13 of the Commercial Code.
My Opinions as to matters of Pennsylvania law are based solely on my
review of the text of Title 13, Division 9, of the Commercial Code.
This opinion letter addresses the legal consequences of only the facts
existing or assumed as of the date hereof. The opinions expressed herein are
based on an analysis of existing laws. Such opinions may be affected by actions
taken or omitted, events occurring, or changes in the relevant facts, after the
date hereof. I have not undertaken to determine, or to inform any person of, the
occurrence or non-occurrence of any such actions, events or changes. This
opinion is solely for your benefit in connection with the transaction covered by
the first two paragraphs of this letter and may not be relied upon or used by,
circulated, quoted or referred to, nor may copies hereof be delivered to, any
other person without my prior written approval. I disclaim any obligation to
update this opinion letter for events occurring or coming to my attention after
the date hereof.
Very truly yours,
Sheila Dow-Ford
Chief Counsel
<PAGE>
SCHEDULE A
Depositor
Crestar Bank
Eligible Lender Trustee
Star Bank, National Association
Delaware Trustee
Delaware Trust Capital Management, Inc.
Administrator
Crestar Bank
Indenture Trustee
Bankers Trust Company
Underwriters
Salomon Brothers Inc,
As Representative of the several Underwriters
Counsel
Squire, Sanders & Dempsey L.L.P.
Hunton & Williams
INDENTURE
between
CRESTAR STUDENT LOAN TRUST 1997-1,
as Issuer
and
BANKERS TRUST COMPANY
not in its individual capacity, but
solely as Indenture Trustee
Dated as of December 1, 1997
<PAGE>
<TABLE>
<CAPTION>
CROSS-REFERENCE TABLE(1)
<S> <C>
TIA Indenture
Section Section
310 (a)(1) ............................................................. 6.11
(a)(2) ............................................................. 6.12
(a)(3) ............................................................. 6.10
(a)(4) ............................................................. N.A.(2)
(a)(5) ............................................................. 6.11
(b) ............................................................. 6.8;
6.10; 6.11
(c) ............................................................. N.A.
311 (a) ............................................................. 6.13
(b) ............................................................. 6.13
(c) ............................................................. N.A.
312 (a) ............................................................. 7.1; 7.2(a)
(b) ............................................................. 7.2(b)
(c) ............................................................. 7.2(c)
313 (a) ............................................................. 6.6
(b) ............................................................. 6.6
(c) ............................................................. 11.5
(d) ............................................................. 6.6
314 (a) ............................................................. 3.9; 7.3
(b) ............................................................. 3.6
(c) ............................................................. 2.9; 4.1;
11.1
(d) ............................................................. 2.9; 11.1
(e) ............................................................. 11.1
(f) ............................................................. 3.9
315 (a) ............................................................. 6.1
(b) ............................................................. 6.5
(c) ............................................................. 6.1
(d) ............................................................. 6.1
(e) ............................................................. 5.13
316 (a)(1)(A) ............................................................. 5.11
(a)(1)(B) ............................................................. 5.12
(a)(2) ............................................................. N.A.
(b) ............................................................. 5.7
(c) ............................................................. 1.1
317 (a) ............................................................. 5.3
(b) ............................................................. 3.3
318 (a) ............................................................. 11.7
</TABLE>
- --------
1 Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
2 N.A. means Not Applicable.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE I DEFINITIONS AND USAGE...................................................................................1
Section 1.1. Definitions and Usage......................................................................1
Section 1.2. Incorporation by Reference of Trust Indenture Act..........................................1
ARTICLE II THE NOTES..............................................................................................2
Section 2.1. Form.......................................................................................2
Section 2.2. Execution, Authentication and Delivery.....................................................2
Section 2.3. Notes Issuable in Classes; General Provisions with Respect to Principal and
Interest Payments..........................................................................3
Section 2.4. Denominations..............................................................................4
Section 2.5. Temporary Notes............................................................................4
Section 2.6. Registration; Registration of Transfer and Exchange........................................4
Section 2.7. Mutilated, Destroyed, Lost or Stolen Notes.................................................5
Section 2.8. Persons Deemed Owner.......................................................................6
Section 2.9. Payments of Principal and Interest.........................................................6
Section 2.10. Cancellation...............................................................................8
Section 2.11. Authentication and Delivery of Notes.......................................................8
Section 2.12. Release of Collateral.....................................................................11
Section 2.13. Restrictions on Transfer..................................................................11
Section 2.14. Book-Entry Notes..........................................................................11
Section 2.15. Notices to Clearing Agency................................................................12
Section 2.16. Definitive Notes..........................................................................12
ARTICLE III COVENANTS............................................................................................13
Section 3.1. Payment to Noteholders....................................................................13
Section 3.2. Maintenance of Office or Agency...........................................................13
Section 3.3. Money for Payments to be Held in Trust....................................................13
Section 3.4. Existence.................................................................................15
Section 3.5. Protection of Indenture Trust Estate......................................................15
Section 3.6. Opinions as to Indenture Trust Estate.....................................................15
Section 3.7. Performance of Obligations; Servicing of Financed Student Loans...........................16
Section 3.8. Negative Covenants........................................................................17
Section 3.9. Annual Statement as to Compliance.........................................................17
Section 3.10. Issuer May Consolidate, etc., Only on Certain Terms.......................................18
Section 3.11. Successor or Transferee...................................................................19
Section 3.12. No Other Business.........................................................................20
Section 3.13. No Borrowing..............................................................................20
Section 3.14. Obligations of Master Servicer and Administrator..........................................20
Section 3.15. Guarantees, Loans, Advances and Other Liabilities.........................................20
Section 3.16. Capital Expenditures......................................................................20
Section 3.17. Restricted Payments.......................................................................20
Section 3.18. Notice of Events of Default...............................................................21
Section 3.19. Further Instruments and Acts..............................................................21
ARTICLE IV SATISFACTION AND DISCHARGE............................................................................21
Section 4.1. Satisfaction and Discharge of Indenture...................................................21
Section 4.2. Application of Trust Money................................................................22
Section 4.3. Repayment of Moneys Held by Paying Agent..................................................22
ARTICLE V REMEDIES...............................................................................................23
Section 5.1. Events of Default.........................................................................23
Section 5.2. Acceleration of Maturity; Rescission and Annulment........................................24
Section 5.3. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.................24
Section 5.4. Remedies; Priorities......................................................................26
Section 5.5. Optional Preservation of the Financed Student Loans.......................................28
Section 5.6. Limitation of Suits.......................................................................29
Section 5.7. Unconditional Rights of Noteholders to Receive Principal and Interest.....................29
Section 5.8. Restoration of Rights and Remedies........................................................30
Section 5.9. Rights and Remedies Cumulative............................................................30
Section 5.10. Delay or Omission Not a Waiver............................................................30
Section 5.11. Control by Noteholders....................................................................30
Section 5.12. Waiver of Past Defaults...................................................................31
Section 5.13. Undertaking for Costs.....................................................................31
Section 5.14. Waiver of Stay or Extension Laws..........................................................31
Section 5.15. Action on Notes...........................................................................32
Section 5.16. Performance and Enforcement of Certain Obligations........................................32
ARTICLE VI THE INDENTURE TRUSTEE.................................................................................33
Section 6.1. Duties of Indenture Trustee...............................................................33
Section 6.2. Rights of Indenture Trustee...............................................................34
Section 6.3. Individual Rights of Indenture Trustee....................................................35
Section 6.4. Indenture Trustee's Disclaimer............................................................35
Section 6.5. Notice of Defaults........................................................................35
Section 6.6. Reports by Indenture Trustee to Noteholders...............................................35
Section 6.7. Compensation and Indemnity................................................................36
Section 6.8. Replacement of Indenture Trustee..........................................................36
Section 6.9. Successor Indenture Trustee by Merger.....................................................37
Section 6.10. Appointment of Co-Trustee or Separate Trustee.............................................38
Section 6.11. Appointment of Custodian..................................................................39
Section 6.12. Eligibility; Disqualification.............................................................39
Section 6.13. Preferential Collection of Claims Against Issuer..........................................39
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS.......................................................................40
Section 7.1. Issuer to Furnish Indenture Trustee Names and Addresses of Noteholders....................40
Section 7.2. Preservation of Information; Communications to Noteholders................................40
Section 7.3. Fiscal Year of Issuer.....................................................................40
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES................................................................41
Section 8.1. Collection of Money.......................................................................41
Section 8.2. Trust Accounts............................................................................41
Section 8.3. General Provisions Regarding Accounts.....................................................41
ARTICLE IX SUPPLEMENTAL INDENTURES...............................................................................42
Section 9.1. Supplemental Indentures Without Consent of Noteholders....................................42
Section 9.2. Supplemental Indentures with Consent of Noteholders.......................................44
Section 9.3. Execution of Supplemental Indentures......................................................45
Section 9.4. Effect of Supplemental Indenture..........................................................45
Section 9.5. Conformity with Trust Indenture Act.......................................................46
Section 9.6. Reference in Notes to Supplemental Indentures.............................................46
ARTICLE X RESERVED...............................................................................................46
ARTICLE XI MISCELLANEOUS.........................................................................................46
Section 11.1. Compliance Certificates and Opinions, etc................................................46
Section 11.2. Form of Documents Delivered to Indenture Trustee.........................................48
Section 11.3. Acts of Noteholders......................................................................48
Section 11.4. Notices, etc., to Indenture Trustee, Issuer and Rating Agencies..........................49
Section 11.5. Notices to Noteholders; Waiver...........................................................50
Section 11.6. Alternate Payment and Notice Provisions..................................................50
Section 11.7. Conflict with Trust Indenture Act........................................................51
Section 11.8. Effect of Headings and Table of Contents.................................................51
Section 11.9. Successors and Assigns...................................................................51
Section 11.10. Separability.............................................................................51
Section 11.11. Benefits of Indenture....................................................................51
Section 11.12. Legal Holidays...........................................................................51
Section 11.13. Governing Law............................................................................52
Section 11.14. Counterparts.............................................................................52
Section 11.15. Recording of Indenture...................................................................52
Section 11.16. Trust Obligations........................................................................52
Section 11.17. No Petition..............................................................................53
Section 11.18. Inspection...............................................................................53
Section 11.19. Usury....................................................................................54
Appendix A Definitions
</TABLE>
<PAGE>
INDENTURE dated as of December 1, 1997, between CRESTAR STUDENT LOAN
TRUST 1997-1, a Delaware business trust (the "Issuer"), BANKERS TRUST COMPANY,
as trustee and not in its individual capacity (the "Indenture Trustee").
PRELIMINARY STATEMENT
The Issuer has duly authorized the execution and delivery of this
Indenture to provide for the issuance of a series of its notes (the "Notes") as
provided herein. The Notes will be issued only under a separate supplement to
this Indenture duly executed and delivered by the Issuer and the Indenture
Trustee and limited to the amount therein described. All covenants and
agreements made by the Issuer herein are for the benefit and security of the
holders of the Notes. The Issuer is entering into this Indenture and the
Indenture Trustee is accepting the trusts created hereby, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged.
All things necessary to make this Indenture a valid agreement of the
Issuer in accordance with its terms have been done.
ARTICLE I
DEFINITIONS AND USAGE
Section 1.1. 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
to the Transfer and Servicing Agreement, a copy of which is attached hereto (as
supplemented to the extent indicated therein, by the provisions of the Terms
Supplement). Appendix A also contains rules as to usage that shall be applicable
herein.
Section 1.2. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the Trust Indenture
Act ("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 Noteholder.
"indenture trustee" or "institutional trustee" means the
Indenture Trustee.
"obligor" on the indenture securities means the Issuer and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by
Commission rule have the meaning assigned to them by such definitions.
ARTICLE II
THE NOTES
Section 2.1. Form.
The Notes and the Indenture Trustee's certificate of authentication
shall be in substantially the form set forth in an Exhibit to the Terms
Supplement, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture or any Terms
Supplement 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 such Notes, as evidenced by their
execution of the Notes. Any portion of the text of any Note may be set forth on
the reverse thereof, with an appropriate reference thereto on the face of the
Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of
the Notes are part of the terms of this Indenture.
Section 2.2. 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.
At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may deliver Notes executed by the Issuer to the
Indenture Trustee for authentication; and the Indenture Trustee shall
authenticate and deliver such Notes as provided in this Indenture and not
otherwise.
Each Note shall be dated as of the date specified in the related Terms
Supplement.
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 2.3. Notes Issuable in Classes; General Provisions with
Respect to Principal and Interest Payments.
The Notes may, as provided herein, be issued in one or more Classes of
Notes, and shall be designated generally as the "Crestar Student Loan Trust
1997-1 Student Loan Asset Backed Notes" of the Issuer, with such further
particular designations added or incorporated in such title for the Notes of any
particular Class as the Issuer may determine.
The principal of each Note shall be payable on the related Final
Maturity Date unless the unpaid principal of such Note becomes due and payable
at an earlier date by declaration of acceleration or otherwise.
Payments of principal of a Class of Notes shall be made pro rata among
all Outstanding Notes of such Class, without preference or priority of any kind.
Unless otherwise provided in the Terms Supplement, all payments made
with respect to any Note shall be applied first to the interest then due and
payable on such Note and then to the principal thereof. Computations of interest
accrued on any Note shall be made as provided in the Terms Supplement.
Interest on the unpaid principal amount of each Outstanding Note of a
Class shall be payable on each Distribution Date for such Class at the Class
Interest Rates applicable to such Note for the related Interest Periods.
Notwithstanding any of the foregoing provisions with respect to
payments of principal of and interest on the Notes, if the Notes have become or
been declared due and payable following an Event of Default and such
acceleration of maturity and its consequences have not been rescinded and
annulled and the provisions of Section 5.5 are not applicable to such Notes,
then payments of principal of and interest on such Notes shall be made in
accordance with Section 5.4.
Each Note shall bear upon the face thereof the designation so selected
for the Class to which it belongs. All Notes of the same Class shall be
identical in all respects except for the denominations and dates thereof. All
Notes of all Classes at any time Outstanding shall be identical except for
differences among the Notes of the different Classes as specified in the
applicable Terms Supplement.
The Notes shall be created by a Terms Supplement authorized by the
Trust Agreement and establishing the terms and provisions thereof, specifying
the Financed Student Loans and any other property to be included in the
Indenture Trust Estate therefor and Granting such Indenture Trust Estate as
security for the Notes created thereby.
Section 2.4. Denominations.
The Notes shall be issuable only as registered Notes in the
denominations prescribed by the terms of the Terms Supplement creating them.
Section 2.5. 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,
photocopied, 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 3.2, without charge to the Noteholder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and the Indenture Trustee shall authenticate and deliver in exchange
therefor a like principal amount of Definitive Notes of the same Class and 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 of the same Class.
Section 2.6. 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 the "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 Registrar, 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 officer
thereof as to the names and addresses of the Noteholders and the principal
amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.2, the Issuer
shall execute, and the Indenture Trustee shall authenticate and the Noteholder
shall obtain from the Indenture Trustee, in the name of the designated
transferee or transferees, one or more new Notes in any authorized
denominations, of the same class and a like aggregate principal amount.
At the option of the Noteholder, Notes may be exchanged for other Notes
of any authorized denominations, of the same 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, the Issuer shall
execute, and the Indenture Trustee shall authenticate and the Noteholder shall
obtain from the Indenture Trustee, the Notes which the Noteholder making the
exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Restrictions on transfer, if any, of a Class of Notes shall be set
forth herein and in the related Terms Supplement.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by the
Noteholder thereof or such Noteholder's attorney duly authorized in writing,
with such signature guaranteed by an "eligible guarantor institution" meeting
the requirements of the Note Registrar, which requirements includes membership
or participation in the Securities Transfer Agent's Medallion Program ("STAMP")
or such other signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Exchange Act.
No service charge shall be made to a Noteholder for any registration of
transfer or exchange of Notes, but the Indenture Trustee may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of Notes,
other than exchanges pursuant to Section 2.3 or 9.6 not involving any transfer.
Section 2.7. 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, 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 of the same tenor,
aggregate initial principal amount and Class bearing a number not
contemporaneously outstanding; 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, instead of issuing a replacement Note, the Issuer
may pay such destroyed, lost or stolen Note when so due or payable. If, after
the delivery of such replacement Note or payment of a destroyed, lost or stolen
Note pursuant to the proviso to the preceding sentence, a bona fide purchaser of
the original Note in lieu of which such replacement Note was issued presents for
payment such original Note, the Issuer and the Indenture Trustee shall be
entitled to recover such replacement Note (or such payment) from the Person to
whom it was delivered or any Person taking such replacement Note from such
Person to whom such replacement Note was delivered or any assignee of such
Person, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer or the Indenture Trustee in connection
therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer may require the payment by the Noteholder thereof of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone in
accordance with the provisions of this Indenture and the applicable Terms
Supplement.
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 2.8. 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, if any, on such Note and for all other
purposes whatsoever, whether or not such Note be overdue, and neither the
Issuer, the Indenture Trustee nor any agent of the Issuer or the Indenture
Trustee shall be affected by notice to the contrary.
Section 2.9. Payments of Principal and Interest.
(a) Any installment of interest or principal payable on any Notes
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 at the close of business on the Record
Date for such Distribution Date by either (i) check mailed to such Person's
address as it appears in the Note Register on such Record Date, or (ii) wire
transfer in immediately available funds to the account of such Noteholders at a
bank or other entity having appropriate facilities therefore, if such Noteholder
shall have provided the Note Registrar appropriate written instructions (which
may be standing instructions) at least five business days prior to such
Distribution Date; provided, however, the final installment of principal payable
with respect to such Note shall be payable as provided in subsection (b) of this
Section 2.9.
(b) All reductions in the principal amount of a Note (or one or more
Predecessor Notes) effected by payments of installments of principal made on any
Distribution Date shall be binding upon all Holders of such Note and of any Note
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, whether or not such payment is noted in such Note. The final
installment of principal of each Note shall be payable only upon presentation
and surrender thereof on or after the Distribution Date therefor to the
Indenture Trustee.
(c) The principal of each Class of Notes shall be payable in
installments on each Distribution Date as provided in the applicable Terms
Supplement. Notwithstanding the foregoing, the entire unpaid principal amount of
each Class of 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
either the Indenture Trustee or the Noteholders of the Directing Notes
representing not less than a majority of the Outstanding Amount of Directing
Notes have declared the Notes to be immediately due and payable in the manner
provided in Section 5.2. All principal payments on each Class of Notes shall be
made to the Noteholders of such Class entitled thereto as provided in the
applicable Terms Supplement. 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 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.
(d) If the Issuer defaults in a payment of interest on any Class of
Notes, the Issuer shall pay defaulted interest (plus interest on such defaulted
interest to the extent lawful) at the applicable Class Interest Rate in any
lawful manner. The Issuer may pay such defaulted interest to the persons who are
Noteholders of such Class on a subsequent special record date, which date shall
be at least five Business Days prior to the payment date. The Issuer shall fix
or cause to be fixed any such special record date and payment date, and, at
least 15 days before any such special record date, the Issuer shall mail to each
Noteholder of such Class a notice that states the special record date and the
amount of defaulted interest to be paid.
(e) Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture, upon registration of transfer of or in exchange
for or in lieu of any other Note, shall carry the rights to unpaid principal and
interest that were carried by such other Note. Any checks mailed pursuant to
this Section 2.9 and returned undelivered shall be held in accordance with
Section 3.3.
(f) Unless otherwise provided in the relevant Terms Supplement, not
later than each Distribution Determination Date relating to each Distribution
Date, the Administrator shall prepare and deliver to the Issuer, the Eligible
Lender Trustee and the Indenture Trustee a statement (a "Distribution Date
Statement") with respect to such Distribution Date setting forth:
(i) the amount of the distribution allocable to interest on
each Class of Notes, together with the interest rates applicable with respect
thereto;
(ii) the amount of the distribution allocable to principal of
each Class of Notes;
(iii) the Pool Balance as of the close of business on
the last day of the preceding Collection Period;
(iv) the aggregate outstanding principal balance of
each Class of Notes of such Distribution Date, after giving effect to
payments allocated to principal reported under clause (ii) above;
(v) the amount of the Servicing Fee allocated to the
Master Servicer, the amount of the Administration Fee allocated to the
Administrator, the amount of the Indenture Trustee Fee allocated to the
Indenture Trustee, the amount of the Eligible Lender Trustee Fee
allocated to the Eligible Lender Trustee, and the amount of the Delaware
Trustee Fee allocated to the Delaware Trustee respectively, if any; and
(vi) the amount of the aggregate Realized Losses, if
any, for such Collection Period.
Section 2.10 Cancellation.
All Notes surrendered for payment, registration of transfer or exchange
shall, if surrendered to any Person other than the Indenture Trustee, be
delivered to the Indenture Trustee and shall be promptly canceled 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 canceled by the Indenture Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section, except as expressly permitted by this Indenture. All canceled
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 2.11 Authentication and Delivery of Notes.
Notes may from time to time be executed by the Issuer and delivered to
the Indenture Trustee for authentication, and thereupon the same shall be
authenticated and delivered by the Indenture Trustee, upon Issuer Request and
upon receipt by the Indenture Trustee of the following:
(a) an Issuer Order authorizing the execution, authentication and
delivery of such Notes by the Issuer and specifying the Classes, the Final
Maturity Date of each Class, the principal amount and the Class Interest Rate
and the method of determining such Class Interest Rate, of each Class of such
Notes to be authenticated and delivered;
(b) [Reserved].
(c) Opinions of Counsel addressed to the Indenture Trustee
substantially to the effect that:
(i) the Eligible Lender Trustee is an "eligible
lender" under the terms of the Higher Education Act and HEAL Act, has corporate
power to execute and deliver the Trust Agreement, the Trust Agreement authorizes
the Issuer to execute and deliver the Indenture and Terms Supplement relating to
such Notes and to issue such Notes, and the Issuer has duly taken all necessary
action under the Trust Agreement for those purposes;
(ii) the Issuer is a Delaware business trust;
(iii) assuming due execution and delivery thereof by
the Indenture Trustee, this Indenture and the related Terms Supplement, as
executed and delivered by the Issuer, are the valid, legal and binding
obligations of the Issuer, enforceable in accordance with their terms, subject
to the effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws relating to or affecting creditors' rights
generally and court decisions with respect thereto, and such counsel need
express no opinion with respect to the availability of equitable remedies, and
the execution of such Terms Supplement is authorized or permitted by Section 9.1
of this Indenture;
(iv) the Notes then applied for, when issued,
delivered, authenticated and paid for, will be the valid, legal and binding
obligations of the Issuer, entitled to the benefits of this Indenture and the
related Terms Supplement, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws
relating to or affecting creditors' rights generally and court decisions with
respect thereto, and such counsel need express no opinion with respect to the
availability of equitable remedies;
(v) the Issuer has Granted to the Indenture Trustee
a lien and first perfected security interest in all of its right, title and
interest in each such Financed Student Loan (with priority being based solely on
UCC searches conducted, as specified in the opinion and only as to priority over
other security interests perfected by UCC filings);
(vi) Reserved;
(vii) the Terms Supplement delivered to the Indenture
Trustee with such Opinion of Counsel subjects the Financed Student Loans
securing such Notes and all proceeds therefrom and the Pledged Accounts or Funds
for such Notes to the lien and security interest of this Indenture;
(viii) such action has been taken with respect
to delivery of possession of the Indenture Trust Estate and with respect
to the recording and filing of this Indenture, the Terms Supplement for
such Notes, any other indentures supplemental hereto and any other
requisite documents and with respect to the execution and filing of any
financing statements as is necessary to perfect a first priority
security interest in the Indenture Trust Estate for such Notes, with
either the details of such action being recited therein, or the absence
of any such action being necessary to make such lien and security
interest effective being stated therein; and, with any recording,
filing, re-recording and re-filing of this Indenture, the Terms
Supplement for such Notes, any other indentures supplemental hereto and
any other requisite documents and any 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 created by this Indenture and the related Terms Supplements in
the Indenture Trust Estate for such Notes until April 30 of the year in
which the first Opinion of Counsel with respect to such Notes is
required to be delivered under Section 3.6 being described therein;
(ix) this Indenture and the Terms Supplement
for such Notes have been duly qualified under the TIA, or that no
qualification of this Indenture or the related Terms Supplement under
the TIA is necessary; the execution of the Terms Supplement for such
Notes requires the requalification of this Indenture under the TIA, or
that no requalification of the Indenture under the TIA is necessary by
virtue of the execution of such Terms Supplement; and
(x) no authorization, approval or consent of any
governmental body having jurisdiction over the Issuer which has not been
obtained by the Issuer is required for the valid issuance and delivery
of the Notes, except such as may be required by the blue sky laws of any
jurisdiction in connection with the sale and distribution of the Notes
for which no opinion need be given.
(d) an Officer's Certificate of the Administrator on
behalf of the Issuer stating substantially to the effect that:
(i) all instruments furnished to the Indenture
Trustee in connection with such Notes conform to the requirements of
this Indenture and constitute all the documents required to be delivered
hereunder for the Indenture Trustee to authenticate and deliver the
Notes then applied for;
(ii) all conditions precedent provided for in this
Indenture relating to the authentication and delivery of the Notes
applied for have been complied with;
(iii) the Issuer is not in Default under this
Indenture and the issuance of the Notes applied for will not result in
any breach of any of the terms, conditions or provisions of, or
constitute a default under, the Trust Agreement, any indenture,
mortgage, deed of trust or other agreement or instrument to which the
Issuer is a party or by which it is bound, or any order of any court or
administrative agency entered in any proceeding to which the Issuer is a
party or by which it may be bound or to which it may be subject; and
(iv) the Issuer is the beneficial owner of each
Financed Student Loan securing such Notes, has not assigned any interest
or participation in any such Financed Student Loan (or, if any such
interest or participation has been assigned, it has been released) and
has the right to Grant each such Financed Student Loan to the Indenture
Trustee.
(e) Unless any of the requirements set forth herein shall be
deleted by the related Terms Supplement, an Officer's Certificate of the
Administrator on behalf of the Issuer stating that all of the Financed
Student Loans and any other assets securing such Notes:
(i) satisfy each of the requirements established
for such Financed Student Loans in the related Terms Supplement; and
(ii) have been endorsed as provided in the Transfer
and Servicing Agreement;
(f) Cash in the amount, if any, required by the terms of the
related Terms Supplement to be deposited in the Collection Account and
held by the Indenture Trustee and applied in accordance with the terms
hereof or as otherwise provided in the related Terms Supplement;
(g) Cash, Eligible Investments or (if permitted by the
related Terms Supplement) a Qualified Letter of Credit or any other
assets specified in or permitted by the related Terms Supplement in the
respective amounts, if any, required by the terms of the related Terms
Supplement to be maintained in the Reserve Account and held by the
Indenture Trustee;
(h) An executed counterpart of the Terms Supplement; and
(i) Such other documents, certificates, instruments or
opinions as may be reasonably required by the terms of the Terms
Supplement creating such Notes.
Section 2.12 Release of Collateral.
Except as otherwise permitted by Section 11.1 and the terms of
the Basic Documents, the Indenture Trustee shall release property from
the lien of this Indenture and the related Terms Supplement only upon
(i) prior confirmation by the Rating Agencies that such release will not
cause a reduction or withdrawal of the then current ratings of each
Class of Notes and (ii) receipt of an Issuer Request accompanied by an
Officer's Certificate of the Issuer, an Opinion of Counsel and
Independent Certificates in accordance with TIA ss.ss. 314(c) and
314(d)(1) or an Opinion of Counsel in lieu of such Independent
Certificates to the effect that the TIA does not require any such
Independent Certificates.
Section 2.13 Restrictions on Transfer.
[Reserved.]
Section 2.14 Book-Entry Notes.
Unless otherwise provided in the related Terms Supplement, 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 2.16. Unless and until definitive,
fully registered Notes (the "Definitive Notes") have been issued to Note Owners
pursuant to Section 2.16:
(i) the provisions of this Section shall be in full force
and effect;
(ii) 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 2.16, the initial Clearing
Agency will make book-entry transfers among the Clearing Agency participants and
receive and transmit payments of principal of and interest and other amounts on
the Notes to such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to
be taken based upon instructions or directions of Noteholders of Notes
evidencing a specified percentage of the Outstanding Amount of the Notes, the
Clearing Agency shall be deemed to represent such percentage only to the extent
that it has received instructions to such effect from Note Owners and/or
Clearing Agency Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Notes and has delivered such
instructions to the Indenture Trustee.
Section 2.15 Notices to Clearing Agency.
Whenever a notice or other communication to the Noteholders is required
under this Indenture, unless and until Definitive Notes shall have been issued
to Note Owners pursuant to Section 2.16, the Indenture Trustee shall give all
such notices and communications specified herein to be given to Noteholders to
the Clearing Agency.
Section 2.16 Definitive Notes.
Unless the Terms Supplement provides otherwise, and if (i) the
Administrator advises the Indenture Trustee in writing that the Clearing Agency
is no longer willing or able to properly discharge its responsibilities with
respect to the Notes, and the Administrator is unable to locate a qualified
successor, or (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
Directing Notes advise the Clearing Agency (which shall then notify the
Indenture Trustee) in writing that the continuation of a book-entry system
through the Clearing Agency is no longer in the best interests of the Note
Owners, then the Indenture Trustee will cause the Clearing Agency to notify all
Note Owners, through the Clearing Agency, of the occurrence of any such event
and of the availability of Definitive Notes to Note Owners requesting the same.
Upon surrender to the Indenture Trustee of the typewritten Notes representing
the Book-Entry Notes by the Clearing Agency, accompanied by registration
instructions, the Issuer shall execute and the Indenture Trustee shall
authenticate the Definitive Notes in accordance with the instructions of the
Clearing Agency. None of the Issuer, the Note Registrar or the Indenture Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the
holders of the Definitive Notes as Noteholders.
ARTICLE III
COVENANTS
Section 3.1. Payment to Noteholders.
The Issuer will pay or cause to be duly and punctually paid, from the
property of the Issuer, the principal of and interest on the Notes in accordance
with the terms of such Notes, this Indenture and the related Terms Supplement
and Transfer and Servicing Agreement. Amounts properly withheld under the Code
by any Person from a payment to any Noteholder of interest and/or principal
shall be considered as having been paid by the Issuer to such Noteholder for all
purposes of this Indenture.
Section 3.2. Maintenance of Office or Agency.
The Issuer will maintain in the Borough of Manhattan, the City of New
York, the State of New York, an office or agency where Notes may be surrendered
for registration of transfer or exchange, and where notices and demands to or
upon the Issuer in respect of the Notes and this Indenture may be served. The
Issuer hereby initially appoints the Indenture Trustee to serve as its agent for
the foregoing purposes. The Issuer will give prompt written notice to the
Indenture Trustee of the location, and of any change in the location, of any
such office or agency. If at any time the issuer shall fail to maintain any such
office or agency or shall fail to furnish the Indenture Trustee with the address
thereof, such surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Issuer hereby appoints the Indenture Trustee as
its agent to receive all such surrenders, notices and demands.
The Issuer may also from time to time designate one or more other
offices or agencies (in or outside the City of New York) where the Notes may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that (i) no such designation or
rescission shall in any manner relieve the Issuer of its obligation to maintain
an office or agency in the Borough of Manhattan, the City of New York, the State
of New York for the purposes set forth in the preceding paragraph, (ii)
presentations or surrenders of Notes for payment may be made only in the City of
New York, the State of New York and (iii) any designation of an office or agency
for payment of Notes shall be subject to Section 3.3. The Issuer will give
prompt written notice to the Indenture Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.
Section 3.3. Money for Payments to be Held in Trust.
As provided in Section 8.2(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
8.2(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.
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 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 Noteholder thereof shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that the Indenture
Trustee or such Paying Agent, before being required to make any such repayment,
shall at the expense and direction of the Issuer cause to be published once, in
a newspaper published in the English language, customarily published on each
Business Day and of general circulation in The City of New York, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Issuer. The Indenture
Trustee shall also adopt and employ, at the expense of the Issuer, any other
reasonable means of notification of such repayment (including mailing notice of
such repayment to Noteholders whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent, at the last address of record for each such
Noteholder).
Section 3.4. Existence.
The Issuer will keep in full effect its existence and rights as a trust
under the laws of the State of Delaware (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 and rights 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 Financed Student Loans and each
other instrument or agreement included in the Indenture Trust Estate.
Section 3.5. Protection of Indenture Trust Estate.
The Issuer will from time to time execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other instruments,
and will take such other action necessary or advisable to:
(i) maintain or preserve the lien and security interests
(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 or any Terms Supplement;
(iii) enforce any of the Collateral; or
(iv) preserve and defend title to the Indenture Trust Estate
and the rights of the Indenture Trustee and the Noteholders in such Indenture
Trust Estate against the claims of all persons and parties.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this Section.
Section 3.6. Opinions as to Indenture Trust Estate.
On or before April 30 in each calendar year, beginning with the first
calendar year commencing more than three months after the Closing Date, the
Administrator, on behalf of 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
re-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 on 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 re-filing 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 3.7. Performance of Obligations; Servicing of Financed
Student Loans.
(a) The Issuer will not take any action and will use its best
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under any
instrument or agreement included in the Indenture Trust Estate or that would
result in the amendment, hypothecation, subordination, termination or discharge
of, or impair the validity or effectiveness of, any such instrument or
agreement, except as expressly provided in this Indenture, the related Terms
Supplement or Transfer 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 Officer's Certificate of
the Issuer shall be deemed to be action taken by the Issuer. Initially, the
Issuer has contracted with the Master Servicer and the Administrator to assist
the Issuer in performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe in all material
respects 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 related Terms Supplement and Transfer 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.
(d) Without derogating from the absolute nature of the assignment
Granted to the Indenture Trustee under any Terms Supplement or the rights of the
Indenture Trustee hereunder, the Issuer agrees that it will not, without the
prior written consent of the Noteholders of at least a majority in Outstanding
Amount of the Directing Notes, amend, modify, waive, supplement, terminate or
surrender, or agree to any amendment, modification, supplement, termination,
waiver or surrender of, the terms of (i) any portion of the Trust Estate, or, as
applicable, (ii) the Basic Documents, except to the extent otherwise provided in
the related Transfer and Servicing Agreement, or waive timely performance or
observance by the Master Servicer, the Administrator, the Issuer or the Eligible
Lender Trustee under the related Transfer and Servicing Agreement; provided,
however, that no such amendment shall (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, distributions that are required
to be made for the benefit of the Noteholders, or (ii) reduce the aforesaid
percentage of the Notes which are required to consent to any such amendment,
without the consent of the Noteholders of all the Outstanding Notes affected
thereby. If any such amendment, modification, supplement or waiver should be so
consented to by the Indenture Trustee or such Noteholders, the Issuer agrees,
promptly following a request by the Indenture Trustee to do so, to execute and
deliver, in its own name and at its own expense, such agreements, instruments,
consents and other documents as the Indenture Trustee may deem necessary or
appropriate in the circumstances.
Section 3.8. 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 Documents, 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 of or interest on any of the Notes (other than amounts properly
withheld from such payments under the Code or applicable State law) or assert
any claim against any present or former Noteholder by reason of the payment of
the taxes levied or assessed upon any part of the Indenture Trust Estate;
(iii) except as contemplated by the Basic Documents, dissolve
or liquidate in whole or in part; or
(iv) (A) permit the validity or effectiveness of this
Indenture or any Terms Supplement to be impaired, or permit the lien of this
Indenture and any Terms Supplement to be amended, hypothecated, subordinated,
terminated or discharged, or permit any Person to be released from any covenants
or obligations with respect to the Notes under this Indenture except as may be
expressly permitted hereby, (B) permit any lien, charge, excise, claim, security
interest, mortgage or other encumbrance (other than the lien of this Indenture
and any Terms Supplement) 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 and any Terms
Supplement 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 3.9. Annual Statement as to Compliance.
The Administrator, on behalf of the Issuer, will deliver to the
Indenture Trustee, on or before April 30 following the first fiscal year of the
Issuer that ends more than three months after the Closing Date, and on or before
April 30 of each fiscal year thereafter, an Officer's 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, in all material respects, with
all conditions and covenants under this Indenture throughout such year, or, if
there has been a default in the compliance in any material respect 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 reasonably satisfactory to the Indenture Trustee, the
due and punctual payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this Indenture and
any Terms Supplement on the part of the Issuer to be performed or observed, all
as provided herein or therein;
(ii) immediately after giving effect to such transaction,
no Default shall have occurred and be continuing;
(iii) 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 Ohio or
Delaware State income tax consequence to the Issuer, any Noteholder or any
Certificateholder;
(iv) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(v) the Issuer shall have delivered to the Indenture Trustee
an Officer's 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) in all material respects.
(b) Except as otherwise permitted by the Basic Documents, the Issuer
shall not consolidate with or merge into any entity or 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 the entity formed by or serving such
consolidation or merger or 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 and interest on all Notes and the
performance or observance of every agreement and covenant of this Indenture on
the part of the Issuer to be performed or observed, all as provided herein, (C)
expressly agrees by means of such supplemental indenture that all right, title
and interest so conveyed or transferred shall be subject and subordinate to the
rights of Noteholders, (D) unless otherwise provided in such supplemental
indenture, expressly agrees to indemnify, defend and hold harmless the Issuer
against and from any loss, liability or expense arising under or related to this
Indenture and the Notes and (E) expressly agrees by means of such supplemental
indenture that such Person (or if a group of Persons, then one specified Person)
shall make all filings with the Commission (and any other appropriate Person)
required by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such transaction,
no Default shall have occurred and be continuing;
(iii) the 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, Ohio or
Delaware State income tax consequence to the Issuer, any Noteholder or any
Certificateholder;
(iv) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(v) the Issuer shall have delivered to the Indenture Trustee
an Officer's 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 and any
Terms Supplement 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), Crestar Student Loan Trust 1997-1
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 Crestar Student Loan Trust 1997-1 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, servicing and managing Financed Student Loans 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
and such other obligations as are authorized under the Basic Documents.
Section 3.14 Obligations of Master Servicer and Administrator.
The Issuer shall cause the Master Servicer and the Administrator to
comply with the applicable provisions of the Transfer and Servicing Agreement.
Section 3.15 Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by the Transfer and Servicing Agreement, this
Indenture or any Terms Supplement, the Issuer shall not make any loan or advance
or credit to, or guarantee (directly or indirectly or by an instrument having
the effect of assuring another's payment or performance on any obligation or
capability of so doing or otherwise), endorse or otherwise become contingently
liable, directly or indirectly, in connection with the obligations, stocks or
dividends of, or own, purchase, repurchase or acquire (or agree contingently to
do so) any stock, obligations, assets or securities of, or any other interest
in, or make any capital contribution to, any other Person.
Section 3.16 Capital Expenditures.
The Issuer shall not make any expenditure (by long-term or operating
lease or otherwise) for capital assets (either realty or personalty).
Section 3.17 Restricted Payments.
The Issuer shall not, directly or indirectly, (i) pay any dividend or
make any distribution (by reduction of capital or otherwise), whether in cash,
property, securities or a combination thereof, to the Eligible Lender Trustee or
any owner of a beneficial interest in the Issuer or otherwise with respect to
any ownership or equity interest or security in or of the Issuer or to the
Servicer or the Administrator, (ii) redeem, purchase, retire or otherwise
acquire for value any such ownership or equity interest or security or (iii) set
aside or otherwise segregate any amounts for any such purpose; provided,
however, that the Issuer may make, or cause to be made, distributions to the
Master Servicer, the Depositor, the Eligible Lender Trustee, the Indenture
Trustee, the Certificateholders, the Noteholders, and the Administrator as
contemplated by, and to the extent funds are available for such purpose under
the Transfer and Servicing Agreement and the other Basic Documents.
Section 3.18 Notice of Events of Default.
The Issuer shall give the Indenture Trustee written notice of each
Event of Default hereunder and each Default on the part of the Transferor of its
obligations under the Transfer and Servicing Agreement, the Master Servicer of
its obligations under the Transfer and Servicing Agreement or the Administrator
of its obligations under the Transfer and Servicing Agreement or the
Administration Agreement. In addition, the Issuer shall deliver to the Indenture
Trustee, within five days after the foregoing notice of Default, written notice
in the form of an Officer's 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 5.1(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
Section 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect with respect to the
Indenture Trust Estate except as to (i) rights of registration of transfer and
exchange, (ii) substitution of mutilated, destroyed, lost or stolen Notes, (iii)
rights of Noteholders to receive payments of principal thereof and interest
thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8, 3.10, 3.12, 3.13 and 3.15 of this
Agreement, (v) the rights, obligations and immunities of the Indenture Trustee
hereunder (including the rights of the Indenture Trustee under Section 6.7 and
the obligations of the Indenture Trustee under Section 4.2), and (vi) the rights
of Noteholders as beneficiaries hereof with respect to the property so deposited
with the Indenture Trustee payable to all or any of them, and the Indenture
Trustee, on demand of and at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to the Notes, when:
(a) either
(i) all Notes theretofore authenticated and delivered (other
than (A) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 2.7 and (B) 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 3.3) have been delivered to the Indenture Trustee for
cancellation; or
(ii) all Notes not theretofore delivered to the Indenture
Trustee for cancellation
(A) have become due and payable, or
(B) will become due and payable within one year,
and the Issuer, in the case of (A) or (B) 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 on the applicable Final Maturity Date;
(b) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer with respect to such Notes; and
(c) in the case of (a)(ii) above, the Issuer has delivered to the
Indenture Trustee an Officer's 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
requirement of Section 11.l(a) and, subject to Section 11.2, each stating that
all conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture with respect to such Notes have been complied with.
Section 4.2. Application of Trust Money.
All moneys deposited with the Indenture Trustee pursuant to Section 4.1
hereof shall be held in trust and applied by it, in accordance with the
provisions of the Notes and this Indenture, to the payment, either directly or
through any Paying Agent, as the Indenture Trustee may determine, to the
Noteholders of the particular Notes for the payment of which such moneys have
been deposited with the Indenture Trustee, of all sums due and to become due
thereon for principal and interest; but such moneys need not be segregated from
other funds except to the extent required herein or in the Transfer and
Servicing Agreement or required by law.
Section 4.3. Repayment of Moneys Held by Paying Agent.
In connection with the satisfaction and discharge of this Indenture
with respect to any 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 3.3 and thereupon such Paying Agent
shall be released from all further liability with respect to such moneys.
ARTICLE V
REMEDIES
Section 5.1. Events of Default.
"Event of Default," wherever used herein, means, with respect to all
Outstanding Notes issued hereunder, 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 Noteholders' Interest
Distribution Amount when the same becomes due and payable, and such Default
shall continue for a period of five Business Days; or
(ii) Default in the payment of the principal of any Note when
the same becomes due and payable, and such Default shall continue for a period
of five Business Days; or
(iii) Default in the observance or performance of any covenant
or agreement in any material respect of the Issuer made in this Indenture, or
the Transfer and Servicing Agreement (other than a covenant or agreement, a
Default in the observance or performance of which is specifically dealt with
elsewhere in this Section), or any representation or warranty of the Issuer made
in this Indenture or in any certificate or other writing delivered pursuant
hereto or in connection herewith proving to have been incorrect in any material
respect as of the time when the same shall have been made, and such Default
shall continue or not be cured, or the circumstance or condition in respect of
which such misrepresentation or warranty was incorrect shall not have been
eliminated or otherwise cured, for a period of 30 days after there shall have
been given, by registered or certified mail, to the Issuer by the Indenture
Trustee or to the Issuer and the Indenture Trustee by the Noteholders of at
least 25% of the Outstanding Amount of the Outstanding Directing Notes, a
written notice specifying such Default or incorrect representation or warranty
and requiring it to be remedied and stating that such notice is a notice of
Default hereunder; or
(iv) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or any substantial
part of the Indenture Trust Estate in an involuntary case under any applicable
federal or State bankruptcy, insolvency or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial part of
the Indenture Trust Estate, or ordering the winding-up or liquidation of the
Issuer's affairs, and such decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or
(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 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default should occur and be continuing with respect to
any Notes, then and in every such case the Indenture Trustee or Noteholders of
Directing Notes representing no less than a majority of the Outstanding Amount
of the Outstanding Directing Notes may declare all the Outstanding Notes to be
immediately due and payable, by a notice in writing to the Issuer (and to the
Indenture Trustee if given by Noteholders), and upon any such declaration the
unpaid principal amount of all the Outstanding Notes, together with accrued and
unpaid interest thereon through the date of acceleration, shall become
immediately due and payable.
At any time after such a declaration of acceleration of maturity of the
Outstanding Notes has been made and before a judgment or decree for payment of
the money due has been obtained by the Indenture Trustee as hereinafter provided
in this Article V, the Noteholders of Directing Notes representing a majority of
the Outstanding Amount of the Outstanding Directing 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 Outstanding 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
(ii) all Events of Default, other than the nonpayment of the
principal of the Outstanding 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 5.3. 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 Noteholders' Interest Distribution Amount on any Notes 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 Notes when the same becomes due and payable, and such
Default continues for a period of five days, the Issuer will, upon demand of the
Indenture Trustee, pay to the Indenture Trustee, for the benefit of the
Noteholders, the whole amount then due and payable on the Outstanding Notes for
principal and interest, 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 at the respective Class Interest Rate 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 any Notes and collect
in the manner provided by law out of the property of the Issuer or other obligor
upon any 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 5.4, in its discretion,
proceed to protect and enforce its rights and the rights of the Noteholders, by
such appropriate Proceedings as the Indenture Trustee shall deem most effective
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy or legal or
equitable right vested in the Indenture Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Indenture Trust Estate, Proceedings under Title 11 of the United
States Code or any other applicable federal or State bankruptcy, insolvency or
other similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial Proceedings
relative to the Issuer or other obligor upon the Notes, or to the creditors or
property of the Issuer or such other obligor, the Indenture Trustee,
irrespective of whether the principal of any Notes shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of whether
the Indenture Trustee shall have made any demand pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount
of principal and interest owing and unpaid in respect of such 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, willful misconduct or bad faith) and of the Noteholders allowed in
such Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Noteholders in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all amounts received
with respect to the claims of the Noteholders and of the Indenture Trustee on
their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Indenture Trustee or the Noteholders allowed in any judicial proceedings
relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence, willful
misconduct or bad faith.
(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Outstanding Notes or the rights of any Noteholder
thereof or to authorize the Indenture Trustee to vote in respect of the claim of
any Noteholder in any such proceeding except, as aforesaid, to vote for the
election of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Outstanding Notes, may be enforced by the
Indenture Trustee without the possession of any of the Outstanding Notes or the
production thereof in any trial or other Proceedings relative thereto, and any
such action or Proceedings instituted by the Indenture Trustee shall be brought
in its own name as trustee of an express trust, and any recovery of judgment,
subject to the payment of the expenses, disbursements and compensation of the
Indenture Trustee, each predecessor Indenture Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the Noteholders.
(g) In any Proceedings brought by the Indenture Trustee (and also
any Proceedings involving the interpretation of any provision of this Indenture
to which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Noteholders, and it shall not be necessary to make any
Noteholder a party to any such Proceedings.
Section 5.4. Remedies; Priorities.
(a) If an Event of Default shall have occurred and be continuing in
respect of the Outstanding Notes and the Outstanding Notes have been declared
due and payable and such declaration and its consequences have not been
rescinded and annulled, the Indenture Trustee may do one or more of the
following:
(i) institute Proceedings in its own name and as trustee of
an express trust for the collection of all amounts then payable on the
Outstanding Notes or under this Indenture with respect of Notes, whether by
declaration or otherwise, enforce any judgment obtained, and collect from the
Issuer and any other obligor upon such Outstanding 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 securing the Outstanding Notes;
(iii) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the rights and
remedies of the Indenture Trustee and the Noteholders; and
(iv) sell the Indenture Trust Estate or any portion thereof
or rights or interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Indenture Trust Estate following an Event of Default, other than
an Event of Default described in Section 5.1(i) or (ii), unless (A) the
Noteholders of 100% of the Outstanding Amount of the Notes consent thereto, (B)
the proceeds of such sale or liquidation distributable to the Noteholders are
sufficient to discharge in full all amounts then due and unpaid upon the
Outstanding Notes or (C) the Indenture Trustee determines that the Indenture
Trust Estate will not continue to provide sufficient funds for the payment of
principal of and interest on the Notes as they would have become due if the
Outstanding Notes had not been declared due and payable, and the Indenture
Trustee obtains the consent of Noteholders of at least 66-2/3% of the
Outstanding Amount of Notes; provided, further, 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 5.1(i) or (ii),
unless (D) the proceeds of such sale or liquidation distributable to the
Subordinated Noteholders are sufficient to enable the Indenture Trustee to pay
amounts due on the Subordinated Notes (as provided in clauses FOURTH and FIFTH
of Section 5.4(b) below), or (E) following notice that the proceeds of such sale
or liquidation distributable to the Subordinated Noteholders would be
insufficient to pay amounts due on the Subordinated Notes (as provided in
clauses FOURTH and FIFTH of Section 5.4(b) below), Subordinated Noteholders of
at least a majority of the Outstanding Amount of Subordinated Notes consent
thereto. In determining such sufficiency or insufficiency with respect to
clauses (B) through (E), 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.
(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 pay (i) an amount equal to Consolidation Loan Fees
with respect to the calendar month most recently ended and all overdue
Consolidation Loan Fees, and (ii) any amounts due the Indenture Trustee, the
Eligible Lender Trustee, and the Delaware Trustee for their respective fees and
expenses, and (iii) any amounts due the Servicer and the Administrator for their
respective fees and expenses;
SECOND: to Senior Noteholders for amounts due and
unpaid on the Senior Notes for the Noteholders' Interest Distribution
Amount;
THIRD: to Senior Noteholders for amounts due and unpaid on the
Senior Notes for principal;
FOURTH: to Subordinated Noteholders for amounts due and
unpaid on the Subordinated Notes for the Noteholders Interest Distribution
Amount;
FIFTH: to Subordinated Noteholders for amounts due and
unpaid on the Subordinated Notes for principal;
SIXTH: to Senior Noteholders for amounts due and unpaid on
the Senior Notes (and thereafter to the Subordinated Noteholders for amounts
due and unpaid on the Subordinated Notes), for Noteholders' Interest
Carryover; and
SEVENTH: to the Issuer, for distribution in accordance
with the terms of the Transfer and Servicing Agreement.
The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section. At least 15 days before such
record date, the Issuer shall mail to each Noteholder and the Indenture Trustee
a notice that states the record date, the payment date and the amount to be
paid.
Section 5.5. Optional Preservation of the Financed Student Loans.
If the Outstanding Notes have been declared to be due and payable under
Section 5.2 following an Event of Default and such declaration and its
consequences have not been rescinded and annulled, the Indenture Trustee may,
but need not, elect to maintain possession of the Indenture Trust Estate. It is
the desire of the parties hereto and the Noteholders that there be at all times
sufficient funds for the payment of principal of and interest 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 5.6. Limitation of Suits.
No Noteholder shall have any right to institute any Proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless:
(i) such Noteholder has previously given written notice
to the Indenture Trustee of a continuing Event of Default;
(ii) Noteholders of not less than 25% of the Outstanding
Directing Notes have made written request to the Indenture Trustee to institute
such Proceeding in respect of such Event of Default in its own name as Indenture
Trustee hereunder;
(iii) such Noteholder or Noteholders have offered to the
Indenture Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute such
Proceeding; and
(v) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 60-day period by the Noteholders
of a majority of the Outstanding Amount of Directing Notes;
it being understood and intended that no one or more Noteholders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other
Noteholders or to obtain or to seek to obtain priority or preference over any
other Noteholders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Noteholders, each
representing less than a majority of the Outstanding Amount of the Outstanding
Directing Notes, the Indenture Trustee in its sole discretion may determine what
action, if any, shall be taken, notwithstanding any other provisions of this
Indenture based upon the larger percentage of Noteholders as of a date certain.
Section 5.7. Unconditional Rights of Noteholders to Receive
Principal and Interest.
Notwithstanding any other provisions in this Indenture, any Noteholder
shall have the right, which is absolute and unconditional, to receive payment of
the principal of and interest, if any, on such Note on or after the respective
due dates thereof expressed in such Note or in this Indenture and to institute
suit for the enforcement of any such payment, and such right shall not be
impaired without the consent of such Noteholder.
Section 5.8. Restoration of Rights and Remedies.
If the Indenture Trustee or any Noteholder has instituted any
Proceeding to enforce any right or remedy under this Indenture and such
Proceeding has been discontinued or abandoned for any reason or has been
determined adversely to the Indenture Trustee or to such Noteholder, then and in
every such case the Issuer, the Indenture Trustee and the Noteholders shall,
subject to any determination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Indenture Trustee and the Noteholders shall continue as though
no such Proceeding had been instituted.
Section 5.9. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the Indenture
Trustee or to the Noteholders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 5.10 Delay or Omission Not a Waiver.
No delay or omission of the Indenture Trustee or any Noteholder to
exercise any right or remedy accruing upon any Default shall impair any such
right or remedy or constitute a waiver of any such Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the
Indenture Trustee or to the Noteholders may be exercised from time to time, and
as often as may be deemed expedient, by the Indenture Trustee or by the
Noteholders, as the case may be.
Section 5.11 Control by Noteholders.
The Noteholders of a majority of the Outstanding Amount of the
Directing 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 5.4, any
direction to the Indenture Trustee to sell or liquidate the Trust Estate shall
be by the Noteholders of not less than 66-2/3% of the Outstanding Amount of
Directing Notes;
(iii) if the conditions set forth in Section 5.5 have been
satisfied and the Indenture Trustee elects to retain the Indenture Trust Estate
pursuant to such Section, then any direction to the Indenture Trustee by
Noteholders of less than 66-2/3% of the Outstanding Amount of Directing Notes to
sell or liquidate the Trust Estate shall be of no force and effect;
(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 6.1, the Indenture Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to such
action.
Section 5.12 Waiver of Past Defaults.
Prior to the time a judgment or decree for payment of money due has
been obtained as described in Section 5.2, the Noteholders of not less than a
majority of the Outstanding Amount of Directing Notes may waive any past Default
hereunder and its consequences except a Default (a) in payment when due of
principal of or interest on any of the Outstanding Notes or (b) in respect of a
covenant or provision hereof which cannot be modified or amended without the
consent of each Noteholder. In the case of any such waiver, the Issuer, the
Indenture Trustee and the Noteholders shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend to
any subsequent or other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease but 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, not in their individual capacity
but solely in their capacity as Indenture Trustee or Eligible Lender Trustee, as
applicable, and each Noteholder by such Noteholder's acceptance of any Note
shall be deemed to have agreed, that any court may in its discretion require, in
any suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Indenture Trustee for any action taken, suffered or omitted
by it as Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Outstanding Notes or (c) any suit instituted by any
Noteholder for the enforcement of the payment of principal of or interest on any
Note on or after the respective due dates expressed in such Note.
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 and each Terms Supplement nor any rights or remedies
of the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Indenture Trust Estate or
upon any of the assets of the Issuer. Any money or property collected by the
Indenture Trustee shall be applied in accordance with Section 5.4(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 Depositor, the Administrator and the Master Servicer, as
applicable, of each of their obligations to the Issuer under or in connection
with the Transfer 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 Transfer 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 Depositor, the Administrator or the Servicer thereunder and the
institution of legal or administrative actions or proceedings to compel or
secure performance by the Depositor, the Administrator or the Servicer of each
of their obligations under the Transfer 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) of the Noteholders of 66-2/3% of the Outstanding Amount of the
Outstanding Directing Notes shall exercise all rights, remedies, powers,
privileges and claims of the Issuer against the Depositor, the Administrator or
the Master Servicer under or in connection with the Transfer 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 Depositor,
the Administrator or the Servicer of each of their obligations to the Issuer
thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Transfer 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 6.1. 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 any
Terms Supplement and no implied covenants or obligations shall be read into this
Indenture or any Terms Supplement against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Indenture Trustee and conforming to the requirements of this
Indenture; provided, however, that the Indenture Trustee shall examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own bad faith, 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; and
(iii) the Indenture Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.11.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this
Section.
(e) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing with
the Issuer.
(f) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent required by law or the terms of
this Indenture or the Transfer 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; provided, however, that the Indenture
Trustee shall not refuse or fail to perform any of its duties hereunder
solely as a result of nonpayment of its normal fees and expenses and
further provided that nothing in this Section 6.1(g) shall be construed
to limit the exercise by the Indenture Trustee of any right or remedy
permitted under this Indenture or otherwise in the event of the Issuer's
failure to pay the Indenture Trustee's fees and expenses pursuant to
Section 6.7.
(h) Except as expressly provided in the Basic Documents,
the Indenture Trustee shall have no obligation to administer, service or
collect the Financed Student Loans or to maintain, monitor or otherwise
supervise the administration, servicing or collection of the Financed
Student Loans.
(i) In the event that the Indenture Trustee is the Paying
Agent or the Note Registrar, the rights and protections afforded to the
Indenture Trustee pursuant to this Indenture shall also be afforded to
the Indenture Trustee in its capacity as Paying Agent or Note Registrar.
(j) Every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the
Indenture Trustee shall be subject to the provision of this Section and
to the provisions of the TIA.
Section 6.2. Rights of Indenture Trustee.
(a) The Indenture Trustee may conclusively 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 Officer's 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 Officer's 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 willful 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.
Section 6.3. 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 6.12 and 6.13.
Section 6.4. Indenture Trustee's Disclaimer.
Neither the Indenture Trustee nor the Eligible Lender Trustee shall be
responsible for and neither makes any representation as to the validity or
adequacy of this Indenture or the Notes, neither shall be accountable for the
Issuer's use of the proceeds from the sale of the Notes, and neither shall 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 6.5. Notice of Defaults.
If a Default occurs and is continuing and written notice of the
existence thereof has been delivered to a Responsible Officer of the Indenture
Trustee, the Indenture Trustee shall mail notice of the Default to each
Noteholder within 90 days after it occurs. Except in the case of a Default in
payment of principal of or interest on any Note, the Indenture Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of
Noteholders.
Section 6.6. Reports by Indenture Trustee to Noteholders.
The Indenture Trustee shall deliver to each Noteholder (and to each
Person who was a Noteholder at any time during the applicable calendar year)
such information as may be requested of it 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 issuance of any Notes, the Indenture Trustee shall mail to each
Noteholder a brief report as of such December 31 that complies with TIA ss.
313(a) if required by said section. The Indenture Trustee shall also comply with
TIA ss. 313(b). If the issuance of any Notes has been registered under the
Securities Act of 1933, as amended, a copy of each such report required pursuant
to TIA ss.ss. 313(a) or (b) shall, at the time of such transmission to
Noteholders, be filed by the Indenture Trustee with the Commission and with each
securities exchange, if any, upon which such Notes are listed, provided that the
Issuer has previously notified the Indenture Trustee of such listing.
Section 6.7. Compensation and Indemnity.
The Issuer shall pay, or cause to be paid, to the Indenture Trustee for
its services, a fee equal to the amount agreed to in writing between the
Indenture Trustee and the Administrator (the "Indenture Trustee Fee") at the
times set forth in Section 5.5 of the Transfer and Servicing Agreement and shall
or shall cause the Administrator from its own funds to reimburse the Indenture
Trustee for all reasonable out-of-pocket expenses (including the reasonable fees
and expenses of Trustee's counsel) incurred or made by it in accordance with any
provision of this Indenture or in the performance of its duties hereunder, or in
connection with review of the Terms Supplement, amendment or other
documentation. The Indenture Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Issuer shall or shall
cause the Administrator from its own funds to indemnify the Indenture Trustee,
its directors, officers, agents and employees against any and all loss,
liability or expense (including reasonable attorneys' fees and expenses)
incurred by it in connection with the administration of this Trust and the
performance of its duties hereunder and the other Basic Documents. 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 or shall cause the Administrator to defend the claim and the Administrator
shall not be liable for any separate 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 reasonable fees and expenses of which
shall be paid by the Administrator from its own funds 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 or its
directors, officers, agents and employees to the extent any such loss, liability
or expenditure arises out of or results from the Indenture Trustee's own willful
misconduct, negligence or bad faith or a breach of the representations,
warranties and covenants of the Indenture Trustee.
The Issuer's payment obligations to the Indenture Trustee pursuant to
this Section (including the obligation of the Issuer or Administrator to
indemnify the Indenture Trustee) shall survive the discharge of this Indenture
or the resignation or removal of the Indenture Trustee. When the Indenture
Trustee incurs expenses after the occurrence of a Default specified in Section
5.1(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 6.8. 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 6.8. The
Indenture Trustee may resign at any time by so notifying the Issuer. The Issuer
shall remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.12;
(ii) an Insolvency Event occurs with respect to the Indenture
Trustee;
(iii) a receiver or other public officer takes charge of the
Indenture Trustee or its property; or
(iv) The Indenture Trustee otherwise becomes incapable of
acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists
in the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee, and to the Issuer. Thereupon the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of the Indenture Trustee under this Indenture. The successor Indenture Trustee
shall mail a notice of its succession to Noteholders. The retiring Indenture
Trustee shall promptly transfer all property held by it as Indenture Trustee to
the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Noteholders of a majority in Outstanding
Amount of Directing 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 6.12, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Issuer's and the Administrator's obligations under Section 6.7
shall continue for the benefit of the retiring Indenture Trustee.
Section 6.9. 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 6.12.
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 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 co-trustee or co-trustees,
or separate trustee or separate trustees, of all or any part of the Indenture
Trust Estate, and to vest in such Person or Persons, in such capacity and for
the benefit of the Noteholders, such title to the Indenture Trust Estate, or any
part hereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Indenture Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
6.12 and no notice to Noteholders of the appointment of any co-trustee or
separate trustee shall be required under Section 6.8 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 a co-trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute
the Indenture Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Indenture on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 6.11 Appointment of Custodian.
The Issuer acknowledges and agrees that the Indenture Trustee has
appointed a custodian for the sole purpose of perfecting the Indenture Trustee's
security interest in the Financed HEAL Loans hereunder. The Indenture Trustee
hereby appoints Pennsylvania Higher Education Assistance Agency solely for the
purpose of maintaining possession in Pennsylvania of the instruments evidencing
the Financed HEAL Loans. The Indenture Trustee shall not be liable for any
negligence by such custodian. Any costs of such custodianship incurred by the
Indenture Trustee shall be reimbursed to it by the Issuer or Administrator
pursuant to Section 6.7 hereof.
Section 6.12 Eligibility; Disqualification.
The Indenture Trustee shall at all times satisfy the requirements of
TIA ss. 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 or BBB or better by Standard & Poor's Corporation. The Indenture Trustee
shall at all times meet the eligibility criteria for an "eligible lender" under
the terms of the Higher Education Act and HEAL Act. The Indenture Trustee shall
comply with TIA ss. 310(b), including the optional provision permitted by the
second sentence of TIA ss. 310(b)(9); provided, however, that there shall be
excluded from the operation of TIA ss. 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 ss. 310(b)(1) are met.
Section 6.13 Preferential Collection of Claims Against Issuer.
The Indenture Trustee shall comply with TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). An Indenture Trustee who has
resigned or been removed shall be subject to TIA ss. 311(a) to the extent
indicated.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.1. 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
for any Notes and (ii) three months after the last Record Date for such Notes, a
list, in such form as the Indenture Trustee may reasonably require, of the names
and addresses of such Noteholders as of such Record Date, (b) at such other
times as the Indenture Trustee may request in writing, within 30 days after
receipt by the Issuer of any such request, a list of similar form and content as
of a date not more than 10 days prior to the time such list is furnished;
provided, however, that so long as the Indenture Trustee is the Note Registrar,
no such list shall be required to be furnished.
Section 7.2. Preservation of Information; Communications to
Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Noteholders contained in
the most recent list furnished to the Indenture Trustee as provided in Section
7.1 and the name and addresses of Noteholders received by the Indenture Trustee
in its capacity as Note Registrar. The Indenture Trustee may destroy any list
furnished to it as provided in such Section 7.1 upon receipt of a new list so
furnished.
(b) Noteholders may communicate pursuant to TIA ss. 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes. Upon receipt by the Indenture Trustee of any request by a Noteholder to
receive a copy of the current list of Noteholders (whether or not made pursuant
to TIA ss. 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 Noteholders produced in response thereto.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall
have the protection of TIA ss. 312(c).
(d) The Indenture Trustee shall furnish to the Noteholders promptly
upon receipt of a written request therefor, duplicates or copies of all reports,
notices, requests, demands, certificates, financial statements and any other
instruments furnished to the Indenture Trustee under the Basic Documents.
Section 7.3. Fiscal Year of Issuer.
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 8.1. 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 Noteholders pursuant to the Transfer 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 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 8.2. Trust Accounts.
(a) On or prior to the Closing Date of the Notes, the Indenture
Trustee shall establish and maintain, in the name of and with the Indenture
Trustee, for the benefit of the Noteholders and the Certificateholders, the
Trust Accounts as provided in Section 5.1 of the Transfer and Servicing
Agreement, with the exception of the Certificate Distribution Account and the
Certificate Quarterly Advance Account.
(b) On or before the Business Day preceding each Distribution Date,
all Available Funds for the related Class of Notes with respect to the preceding
Collection Period will be deposited in the Collection Account as provided in
Section 5.2 of the Transfer and Servicing Agreement. On or before each
Distribution Date for each Class of Notes, the appropriate Noteholders'
Distribution Amount with respect to the preceding Collection Period will be
distributed from the Collection Account and any other Trust Account to the
Indenture Trustee (or any other Paying Agent) on behalf of the Noteholders as
provided in Sections 5.5 and 5.6 of the Transfer and Servicing Agreement.
(c) On each Distribution Date, the Indenture Trustee (or any other
Paying Agent) shall distribute all amounts received by it on behalf of
Noteholders of a particular Class pursuant to paragraph (b) above to such
Noteholders in respect of the Notes to the extent of amounts due and unpaid on
the Notes of such Class as provided in the related Terms Supplement.
Section 8.3. 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 5.1(b) of the Transfer and Servicing Agreement. All
income or other gain from investments of moneys deposited in the Trust Accounts
with the exception of the Certificate Distribution Account and the Certificate
Quarterly Advance Account relating to the Notes 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.
(b) Subject to Section 6.1(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. New York City 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 5.2, or, (iii) if
such Notes shall have been declared due and payable following an Event of
Default, and amounts collected or receivable from the Indenture Trust Estate are
being applied in accordance with Section 5.5 as if there had not been such a
declaration; the Indenture Trustee shall, to the fullest extent practicable,
invest and reinvest funds in the Trust Accounts (with the exception of the
Certificate Distribution Account and the Certificate Quarterly Advance Account)
in one or more Eligible Investments listed in paragraph (7) of the definition of
Eligible Investments, provided that for so long as Bankers Trust Company is the
Indenture Trustee, the Indenture Trustee shall invest and reinvest funds as
provided above, in the Bankers Trust Institutional Cash Management Fund.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.1. Supplemental Indentures Without Consent of
Noteholders.
(a) Without the consent of any Noteholders, the Issuer and the
Indenture Trustee, when authorized by an Issuer Order, from time to time, may
enter into one or more indentures supplemental hereto (which shall conform to
the provisions of the Trust Indenture Act, to the extent this Indenture is
qualified under 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 each Terms Supplement, or better to
assure, convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien of the Indenture, or to subject to the lien
of the Indenture additional property;
(ii) to evidence the succession, in compliance with
the applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein and in
the Notes contained;
(iii) to add to the covenants of the Issuer, for the
benefit of the Noteholders 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 Noteholders;
(vi) to evidence and provide for the acceptance of
the appointment hereunder by a successor trustee with respect to the Notes and
to add to or change any of the provisions of this Indenture as shall be
necessary to facilitate the administration of the trusts hereunder by more than
one trustee, pursuant to the requirements of Article VI;
(vii) to add to the conditions, limitations and
restrictions on the authorized amount, terms and purposes of the issuance,
authentication and delivery of any Notes, as herein set forth, additional
conditions, limitations and restrictions thereafter to be observed;
(viii) to modify or eliminate any of the terms of this
Indenture; provided, however, that
(A) such supplemental indenture shall expressly
provide that any such modifications or eliminations shall not be effective
with respect to any Outstanding Note created prior to the execution of such
supplemental indenture; and
(B) the Indenture Trustee may, in its
discretion, decline to enter into any such supplemental indenture which,
in its opinion, would adversely affect its own rights, duties or immunities.
(ix) 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.
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 enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of modifying in any
manner the rights of the Noteholders under this Indenture; provided, however,
that such action shall not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of any Noteholder.
(c) An amendment or supplemental indenture shall be deemed not to
materially and adversely affect any Noteholder if there is delivered to the
Indenture Trustee written notification from each Rating Agency that initially
rated the Notes and is then rating the Notes to the effect that such amendment
or supplement will not cause that Rating Agency to reduce the then-current
rating assigned to the Notes.
Section 9.2. Supplemental Indentures with Consent of Noteholders.
The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, also may with the consent of the Noteholders of not less than a majority
of the Outstanding Amount of all the Notes in case Outstanding Notes of all
Classes are to be affected, or with the consent of the Noteholders of not less
than a majority of the Outstanding Amount of the Notes to be affected in case
one or more, but less than all, of the Classes of Outstanding Notes are to be
affected, by Act of such Noteholders delivered to the Issuer and the Indenture
Trustee, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture relating to such Notes or of modifying
in any manner the rights of such Noteholders under this Indenture; provided,
however, that no such supplemental indenture shall, without the consent of the
Noteholders of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of
principal of or interest on any Note, or reduce the principal amount thereof or
the interest rate thereon, 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 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;
(ii) reduce the percentage of the Outstanding Amount of the
Notes, the consent of the Noteholders of which is required for any such
supplemental indenture, or the consent of the Noteholders of which is required
for any waiver of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences provided for in this
Indenture;
(iii) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the
Notes required to direct the Indenture Trustee to direct the Issuer to sell or
liquidate the Indenture Trust Estate pursuant to Section 5.4;
(v) modify any provision of this Section except to increase
any percentage specified herein or to provide that certain additional provisions
of this Indenture or the other Basic Documents cannot be modified or waived
without the consent of the Noteholder of each Outstanding Note affected thereby;
(vi) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of interest;
(vii) permit the creation of any lien ranking prior to
or on a parity with the lien of this Indenture with respect to any part of the
Indenture Trust Estate or, except as otherwise permitted or contemplated herein,
terminate the lien of this Indenture on any property at any time subject hereto
or deprive any Noteholder of any Note of the security provided by the lien of
this Indenture; or
(viii) impair the rights provided such Noteholder under
the TIA, except as permitted therein.
It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section, the Indenture Trustee shall
mail to the Noteholders of the Notes to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
Section 9.3. 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 6.1 and 6.2, shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Indenture Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Indenture Trustee's own rights, duties,
liabilities or immunities under this Indenture or otherwise.
Section 9.4. Effect of Supplemental Indenture.
Upon the execution of any supplemental indenture pursuant to the
provisions hereof, this Indenture shall be and be deemed to be modified and
amended in accordance therewith with respect to the Notes affected thereby, and
the respective rights, limitations of rights, obligations, duties, liabilities
and immunities under this Indenture of the Indenture Trustee, the Issuer and the
Noteholders shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
Section 9.5. 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 to the extent this Indenture is qualified
under the Trust Indenture Act.
Section 9.6. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article IX which relates to the affected
Notes 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 which relates to such
Notes may be prepared and executed by the Issuer and authenticated and delivered
by the Indenture Trustee in exchange for Outstanding Notes.
Notwithstanding anything to the contrary contained in this Article IX,
no supplemental indenture may be entered into unless the Rating Agency Condition
has been satisfied with respect to such supplemental indenture.
ARTICLE X
RESERVED
ARTICLE XI
MISCELLANEOUS
Section 11.1 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, or
the Administrator on behalf of the Issuer, shall furnish to the Indenture
Trustee (i) an Officer's 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 such 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) Other than any property released as contemplated by
clause (iii) below, whenever any property or securities are to be released from
the lien of this Indenture and the related Terms Supplements, the Issuer shall
also furnish to the Indenture Trustee an Officer's 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.
(ii) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's 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 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 (iii) below, or securities released from the lien of this Indenture and
the related Terms Supplements since the commencement of the then-current
calendar year, as set forth in the certificates required by clause (i) above and
this clause (ii), 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 Officer's
Certificate is less than $25,000 or less than one percent of the then
Outstanding Amount of the Notes Outstanding.
(iii) Notwithstanding Section 2.12 or any other provisions of
this Section, the Issuer may, without compliance with the requirements of
Section 2.12 or the other provisions of this Section, (A) collect, liquidate,
sell, service, convey, administer, manage 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 Depositor those
specified Financed Student Loans as and to the extent permitted or required by
and in accordance with Section 2.3 of the Transfer and Servicing Agreement, so
long as the Issuer shall deliver to the Indenture Trustee every six months,
commencing six months after the first issuance of Notes, an Officer's
Certificate of the Issuer stating that all the dispositions of any portion of
the Indenture Trust Estate described in clauses (A), (B) or (C) above that
occurred during the immediately preceding six calendar months were applied in
accordance with the Basic Documents.
Section 11.2 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
the Servicer, the Depositor, the Issuer or the Administrator, stating that the
information with respect to such factual matters is in the possession of the
Servicer, the Depositor, the Issuer or the Administrator, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
Section 11.3 Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.1) 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 Noteholder of any Notes shall bind the Noteholder
of every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
Section 11.4 Notices, etc., to Indenture Trustee, Issuer and
Rating Agencies.
Any request, demand, authorization, direction, notice, consent, filing,
waiver or Act of Noteholders or other documents provided or permitted by this
Indenture or any of the Basic Documents, shall be in writing and if such
request, demand, authorization, direction, notice, consent, filing waiver or Act
of Noteholders is to be made upon, given or furnished to or filed with:
(a) the Indenture Trustee by any Noteholder or by the Issuer shall
be sufficient for every purpose hereunder if made, given, furnished or filed in
writing and mailed, first class, postage prepaid or sent by overnight courier or
by facsimile transmission to or with the Indenture Trustee at its Corporate
Trust Office, or
(b) the Issuer by the Indenture Trustee or by any Noteholder shall
be sufficient for every purpose hereunder if in writing and mailed, first-class,
postage prepaid, or via overnight courier to the Issuer addressed to: Crestar
Student Loan Trust 1997-1, Attention: Corporate Trust Department, Star Bank,
National Association, 425 Walnut Street, Cincinnati, Ohio 45201, 513-632-4622
(Tel); 513-632-5511 (Fax); with a copy to the Administrator addressed to:
Crestar Bank, 919 East Main Street, Richmond, Virginia 23219, Attention: Vice
President Securitizations Manager, 804-343-9400 (Tel); 804-782-7155 (Fax); with
a copy to Crestar Bank, 919 East Main Street, Richmond, Virginia 23219;
Attention: Linda Rigsby; Senior Vice President and General Counsel, or at any
other address previously furnished in writing to the Indenture Trustee by the
Issuer or the Administrator. The Issuer shall promptly transmit any notice
received by it from the Noteholders to the Indenture Trustee.
(c) the Rating Agencies shall be sufficient for every purpose
hereunder if in writing and mailed, first-class, postage prepaid, or via
overnight courier to the Rating Agency addressed to: Fitch IBCA, Inc., One State
Street Plaza, New York, New York 10004, 212-908-0500 (Tel); 212-480-4438 (Fax),
Attention: Asset-Backed Securities Group; Moody's Investors Service, Inc., 99
Church Street, New York, New York 10007, 212-553-3884 (Tel); 212-553-0573 (Fax);
Attention: Assistant Vice President - Analyst Structured Finance; Standard &
Poor's Rating Services, 25 Broadway, New York, New York 10004, 212-208-8000
(Tel); 212-208-0030 (Fax); Attention: Asset-Backed Surveillance Group; or at any
other address previously furnished to the Issuer, Administrator or Indenture
Trustee by such Rating Agency.
Section 11.5 Notices to Noteholders; Waiver.
Where this Indenture provides for notice to Noteholders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class, postage prepaid to each
Noteholder affected by such event, at his address as it appears on the Note
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Noteholders is given by mail, neither the failure to mail such notice nor any
defect in any notice so mailed to any particular Noteholder shall affect the
sufficiency of such notice with respect to other Noteholders, and any notice
that is mailed in the manner herein provided shall conclusively be presumed to
have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default.
Section 11.6 Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to
the contrary, the Issuer and the Indenture Trustee may enter into any agreement
with any Noteholder providing for a method of payment, or notice by the
Indenture Trustee or any Paying Agent to such Noteholder, that is different from
the methods provided for in this Indenture for such payments or notices. The
Issuer will furnish to the Indenture Trustee a copy of each such agreement and
the Indenture Trustee will cause payments to be made and notices to be given in
accordance with such agreements.
Section 11.7 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 ss.ss. 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 11.8 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 11.9 Successors and Assigns.
All covenants and agreements in this Indenture and the Notes by the
Issuer shall bind its successors and assigns, whether so expressed or not. All
agreements of the Indenture Trustee in this Indenture shall bind the successors,
co-trustees and agents (excluding any legal representatives or accountants) of
the Indenture Trustee.
Section 11.10 Separability.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality, and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.11 Benefits of Indenture.
Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, and the Noteholders, and any other 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, each Terms Supplement and the Notes 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.
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 Issuer
or any other counsel reasonably acceptable to the Indenture Trustee) to the
effect that such recording is necessary either for the protection of the
Noteholders or any other Person secured hereunder or for the enforcement of any
right or remedy granted to the Indenture Trustee under this Indenture.
Section 11.16 Trust Obligations.
No recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the 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 Indenture Trustee
or the Eligible Lender Trustee in its individual capacity or (ii) any partner,
owner, beneficiary, custodian, officer, director, employee or agent of 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 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 benefit of, the
terms and provisions of Article VI, VII and VIII of the Trust Agreement. No
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, 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 the Delaware Trustee, in its
individual capacity or as Delaware Trustee, or any officer, director, employee,
agent, owner, or interestholder of the Delaware Trustee or of any successor or
assign of the Delaware Trustee.
Section 11.17 No Petition.
The Indenture Trustee, by entering into this Indenture, and each
Noteholder, by accepting a Note, hereby covenant and agree that prior to the
date which is one year and a day after to the termination of this Indenture,
they will not at any time institute against the Issuer, or join in any
institution against the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency, receivership or liquidation proceedings, or other proceedings under
any United States federal or State bankruptcy or similar law in connection with
any obligations relating to the Notes, this Indenture or any of the other Basic
Documents.
Section 11.18 Inspection.
The Issuer agrees that, on reasonable prior notice, it will permit any
representative of the Indenture Trustee, during the Issuer's normal business
hours, to examine all the books of account, records, reports, and other papers
of the Issuer, to make copies and extracts therefrom, to cause such books to be
audited by Independent certified public accountants, and to discuss the Issuer's
affairs, finances and accounts with the Issuer's officers, employees and
Independent certified public accountants, all at such reasonable times and as
often as may be reasonably requested; provided, however, that the Indenture
Trustee may only cause the books of the Issuer to be audited on an annual basis,
unless there occurs an Event of Default hereunder. The Indenture Trustee shall
and shall cause its representatives to hold in confidence all such information
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 with advice of counsel and
after consultation with the Issuer and Administrator that such disclosure is
consistent with its obligations hereunder.
Notwithstanding anything herein to the contrary, the foregoing shall
not be construed to prohibit (i) disclosure of any and all information that is
or becomes publicly known through no fault of the Indenture Trustee, (ii)
disclosure of any and all information (which makes reference to the Issuer, the
Administrator or the Crestar Student Loan Trust 1997-1 transaction) obtained by
the Indenture Trustee from sources (other than the Issuer, Eligible Lender
Trustee, the Administrator or the Master Servicer) that have not notified the
Indenture Trustee that such information is subject to a confidentiality
obligation with the Issuer, the Eligible Lender Trustee, the Administrator or
the Master Servicer (iii) disclosure of any and all information (A) if required
to do so by any applicable statute, law, rule or regulation, (B) to any
government agency or regulatory body having or claiming authority to regulate or
oversee any aspects of the Indenture Trustee's business or that of its
affiliates, (C) pursuant to any subpoena, civil investigative demand or similar
demand or request of any court, regulatory authority, arbitrator or arbitration
to which the Indenture Trustee or an affiliate or an officer, director or
employee thereof is a party, (D) in any preliminary or final offering circular,
registration statement or contract or other document pertaining to the
transactions contemplated herein approved in advance by the Issuer or (E) to any
affiliate, independent or internal auditor, agent, employee or attorney of the
Indenture Trustee having a need to know the same, provided that the Indenture
Trustee advises such recipient of the confidential nature of the information
being disclosed or (iv) any other disclosure authorized by the Issuer.
Section 11.19 Usury.
The amount of interest payable or paid on any Note under the terms of
this Indenture shall be limited to an amount which shall not exceed the maximum
non usurious rate of interest allowed by the applicable laws of the United
States or the lesser of New York or Ohio, which could lawfully be contracted
for, charged or received (the "Highest Lawful Rate"). If any payment of interest
on any Note exceeds the Highest Lawful Rate, the Issuer stipulates that such
excess amount will be deemed to have been paid as a result of an error on the
part of the Issuer, and the Noteholder receiving such excess payment shall
promptly, upon discovery of such error or upon notice thereof from the Issuer or
the Indenture Trustee, refund the amount of such excess and, at the option of
the Indenture Trustee, apply the excess to the payment of principal of such
Note, if any, remaining unpaid.
<PAGE>
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.
CRESTAR STUDENT LOAN TRUST 1997-1
By: STAR BANK, NATIONAL
ASSOCIATION
not in its individual capacity
but solely as Eligible Lender
Trustee
By:_______________________________
Name: Stephen J. Blackstone
Title: Trust Officer
BANKERS TRUST COMPANY,
not in its individual capacity but solely
as Indenture Trustee,
By:_______________________________
Name:
Title:
<PAGE>
COMMONWEALTH OF VIRGINIA, )
) ss.:
CITY OF RICHMOND, )
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
_____________ of STAR BANK, NATIONAL ASSOCIATION, not in its individual capacity
but solely as Eligible Lender Trustee of CRESTAR STUDENT LOAN TRUST 1997-1, a
Delaware trust, and that he executed the same as the act of said trust for the
purpose and consideration therein expressed, and in the capacities therein
stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the _____ day of
___________, 1997.
-----------------------------
Notary Public in and for
the Commonwealth of Virginia
[SEAL]
My commission expires:
- ----------------------
<PAGE>
COMMONWEALTH OF VIRGINIA, )
) ss.:
CITY OF RICHMOND, )
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 she executed the same as
the act of said trust for the purpose and consideration therein expressed, and
in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the _____ day of
___________, 1997.
-----------------------------
Notary Public in and for
the Commonwealth of Virginia
[SEAL]
My commission expires:
- ----------------------
<PAGE>
FIRST TERMS SUPPLEMENT
TO THE
INDENTURE
DATED AS OF DECEMBER 1, 1997
between
CRESTAR STUDENT LOAN TRUST 1997-1
and
BANKERS TRUST COMPANY,
Indenture Trustee
-----------------------------
Dated as of December 1, 1997
-----------------------------
Securing
$222,900,000
CRESTAR STUDENT LOAN TRUST 1997-1 STUDENT LOAN ASSET BACKED NOTES
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I DEFINITIONS..............................................................................................2
ARTICLE II AUTHORIZATION, TERMS AND ISSUANCE.......................................................................4
Section 2.1. Authorization of Notes.......................................................................4
Section 2.2. Purposes.....................................................................................5
Section 2.3. Terms of the Notes...........................................................................5
Section 2.4. The Notes....................................................................................6
Section 2.5. Class Interest Rates.........................................................................7
Section 2.6. Additional Provisions Regarding the Class Interest Rates on the Notes........................7
ARTICLE III DISTRIBUTIONS..........................................................................................8
Section 3.1. Distributions of Interest and Principal......................................................8
Section 3.2. Early Payment................................................................................8
ARTICLE IV MISCELLANEOUS...........................................................................................9
Section 4.1. Adoption of This First Terms Supplement......................................................9
Section 4.2. Counterparts.................................................................................9
Section 4.3. Indenture Constitutes a Security Agreement...................................................9
Section 4.4. Governing Law................................................................................9
Section 4.5. Modification of Indenture....................................................................9
Section 4.6. Ratification of Indenture....................................................................9
</TABLE>
EXHIBIT A Form of Senior LIBOR Rate Note
EXHIBIT B Form of Subordinated LIBOR Rate Note
EXHIBIT C Schedule of Financed Student Loans
EXHIBIT D Form of Trust Receipt and Certification
<PAGE>
FIRST TERMS SUPPLEMENT, dated as of December 1, 1997, between
CRESTAR STUDENT LOAN TRUST 1997-1, a Delaware business trust (the "Issuer")
acting through STAR BANK, NATIONAL ASSOCIATION, a national banking association,
not in its individual capacity but solely as eligible lender trustee (the
"Eligible Lender Trustee"), and BANKERS TRUST COMPANY, a New York banking
corporation duly established, existing and authorized to accept and execute
trusts of the character herein set out under and by virtue of the laws of the
State of New York, with its principal corporate trust office in New York, New
York (the "Indenture Trustee"), as Indenture Trustee under an Indenture dated as
of December 1, 1997, as may be further amended and supplemented from time to
time (the "Indenture").
PRELIMINARY STATEMENT
Section 2.3 of the Indenture provides, among other things,
that the Issuer, as provided in the Trust Agreement, and the Indenture Trustee
may enter into an indenture supplemental to the Indenture for the purpose of
authorizing the Notes and to specify certain terms of such Notes. The Issuer has
duly authorized the creation of Notes in an aggregate principal amount not to
exceed $222,900,000 to be known as the Issuer's Student Loan Asset Backed Notes
(the "Notes"), and the Issuer and the Indenture Trustee are executing and
delivering this First Terms Supplement in order to provide for the Notes. Except
as otherwise specified herein, or as the context may require, capitalized terms
used but not defined herein shall have the meanings set forth in Appendix A to
the Transfer and Servicing Agreement dated as of December 1, 1997 (the "Transfer
and Servicing Agreement") among the Issuer, Crestar Bank as Transferor,
Administrator and Master Servicer (in such capacities, the "Transferor", the
"Administrator" and the "Master Servicer," respectively) and the Eligible Lender
Trustee, which Appendix A also contains rules as to usage that shall be
applicable herein.
GRANTING CLAUSES
The Issuer hereby Grants to the Indenture Trustee, for the
exclusive benefit of the Noteholders, all of the Issuer's right, title and
interest in and to (a) the Financed Student Loans listed in the Schedule of
Financed Student Loans (as such Schedule may be amended or supplemented from
time to time including, but not limited to, for purposes of adding any
Subsequent Financed Student Loans acquired by the Trust during the Subsequent
Finance Period) and all obligations of the Obligors thereunder including all
moneys paid thereunder (other than Interest Subsidy Payments and Special
Allowance Payments payable to the Cut-off Date (or with respect to the
Subsequent Financed Student Loans, through the applicable Subsequent Cut-off
Date)), and all written communications received by the Transferor with respect
thereto and still retained by the Transferor in accordance with its retention
policies (including borrower correspondence, notices of death, disability or
bankruptcy and requests for deferrals or forbearance), on or after the Cutoff
Date (or with respect to the Subsequent Financed Student Loans, after the
applicable Subsequent Cut-off Date), (b) all funds on deposit from time to time
in the Trust Accounts (other than the Certificate Distribution Account and the
Certificate Quarterly Advance Account) and in all investments and proceeds
thereof (including all income thereon), (c) all proceeds of the foregoing,
including without limitation any proceeds of the conversion, voluntary or
involuntary, of any of the foregoing into cash or other liquid property. Such
Grants are made, however, in trust, to secure the Notes, equally and ratably
without prejudice, priority or distinction, between any Note and any other Note
by reason of difference in time of issuance or otherwise, provided, however,
that the Class B Notes are subordinated to all amounts owing on the Class A
Notes (other than Noteholders' Interest Carryover) as described herein, in the
Indenture or any other Basic Document; and to secure (i) the payment of all
amounts due on the Notes, as such amounts become due in accordance with their
terms, (ii) the payment of all other sums payable under the Indenture, this
First Terms Supplement, or any other Basic Document with respect to the Notes
and (iii) compliance with the provisions of the Indenture, this First Terms
Supplement or any other Basic Document with respect to the Notes, all as
provided in the Indenture and this First Terms Supplement.
<PAGE>
The Indenture Trustee acknowledges such Grant, accepts the
trusts hereunder in accordance with the provisions hereof and of the Indenture
and agrees to perform the duties herein or therein required.
ARTICLE I
DEFINITIONS
Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in Appendix A to the Transfer and Servicing
Agreement. Additionally, the following terms shall be as defined below.
"Authorized Denominations" means, with respect to each Class
of Notes, $50,000 and integral multiples of $1,000 in excess thereof.
"Book-Entry Form" or "Book-Entry System" means a form or
system under which (i) the beneficial right to principal and interest may be
transferred only through a book-entry, (ii) physical securities in registered
form are issued only to a Securities Depository or its nominee as registered
owner, with the securities "immobilized" to the custody of the Securities
Depository, and (iii) the book-entry is the record that identifies the owners of
beneficial interests in that principal and interest.
"Class A Notes" means the Class A-1 Notes and the Class A-2 Notes.
"Class A-1 Notes" has the meaning set forth in Section 2.1 herein.
"Class A-2 Notes" has the meaning set forth in Section 2.1 herein.
"Class B Notes" has the meaning set forth in Section 2.1 herein.
"Class Initial Rate" means (i) 6.14047% per annum with respect to
the Class A-1 Notes, (ii) 6.20047% per annum with respect to the Class A-2
Notes, and (iii) 6.43047% per annum with respect to the Class B Notes.
<PAGE>
"Class Interest Rate" means with respect to (i) the Class A
Notes, each variable rate of interest per annum borne by the Class A-1 and Class
A-2 Notes during each Interest Period and determined in accordance with the
provisions of Section 2.4 and 2.5 hereof; and (ii) the Class B Notes, each
variable rate of interest per annum borne by the Class B Notes during each
Interest Period and determined in accordance with the provisions of Sections 2.4
and 2.5 hereof.
"Effective Interest Rate" means, with respect to any Financed
Student Loan, the interest rate per annum borne by such Financed Student Loan
after giving effect to all applicable Interest Subsidy Payments, Special
Allowance Payments, rebate fees on Consolidation Loans and reductions pursuant
to borrower incentives. For this purpose, the Special Allowance Payment rate
shall be computed based upon the average of the bond equivalent rates of 91-day
United States Treasury Bills auctioned during that portion of the then current
calendar quarter which ends on the date as of which the Effective Interest Rate
is determined.
"Final Maturity Date" means (i) January 25, 2007 with respect
to the Class A-1 Notes, (ii) January 25, 2017 with respect to the Class A-2
Notes, and (iii) January 25, 2027 with respect to the Class B Notes.
"First Terms Supplement" means this First Terms Supplement, as
from time to time amended or supplemented.
"Formula Interest Rate" means, as to each Class of Notes,
One-Month LIBOR plus the applicable Margin, as of the Rate Determination Date
for each Interest Period, but not more than 18% per annum.
"Interest Payment Period" means, with respect to each Class of
Notes, the period beginning on the most recent Distribution Date for such Class
of Notes (or the Closing Date with respect to the initial Interest Payment
Period) and ending on and including the day before the next Distribution Date
for such Class.
"Interest Period" means, with respect to each Class of Notes,
the period commencing on a Rate Adjustment Date for such Class (or the Closing
Date with respect to the initial Interest Period) and ending on and including
the day before the next Rate Adjustment Date for such Class.
"Margin" means, with respect to the Class A-1 Notes, 0.16% per
annum, with respect to the Class A-2 Notes, 0.22% per annum, and with respect to
the Class B Notes, 0.45% per annum.
"Net Loan Rate" means for any Interest Period, the rate of
interest per annum (rounded to the next highest .01%) equal to (i) the weighted
average Effective Interest Rate of the Financed Student Loans as of the last day
of the Collection Period immediately preceding the commencement of such Interest
Period, less (ii) the Program Operating Expense Percentage (or less 0.73% per
annum during the period from the Closing Date through March 31, 1998).
<PAGE>
"91-Day T-Bill Rate<180>means the average of the bond
equivalent rates of weekly auctions of 91-day United States Treasury bills
auctioned since the last day of the preceding calendar quarter, but preceding
the date of determination (unless otherwise specified).
"Noteholders' Interest Carryover" means, with respect to any
Class of Notes for any Interest Payment Period or portion thereof for which the
Class Interest Rate is based on the Net Loan Rate, the amount equal to the
excess, if any, of a)" (a) the amount of interest such Class of Notes would have
accrued in respect of the related Interest Payment Period or portion thereof had
interest been calculated based on the applicable Formula Interest Rate over b)"
(b) the amount of interest such Class of Notes actually accrued in respect of
such Interest Payment Period or portion thereof based on the Net Loan Rate,
together with the unpaid portion of any such excess from prior Interest Payment
Periods (and interest accrued thereon, to the extent permitted by law,
calculated based on Formula Interest Rate applicable to such Class of Notes;
provided, however, that, any amount of Noteholders' Interest Carryover with
respect to a Class of Notes remaining after the earlier of the Distribution Date
on which the outstanding principal amount of such Class has been reduced to zero
and the distribution of all Available Funds on the Final Maturity of such Class
of Notes, will never become due and payable and will be discharged as to the
applicable Class of Notes on such date.
"Program Operating Expense Percentage" means a fraction
(expressed as a percentage and calculated as of the end of each calendar quarter
by the Administrator) the numerator of which is the annualized operating
expenses of the Trust for the calendar month then ended, including, without
limitation, Transaction Fees, and the denominator of which is the Pool Balance
as of the last day of such calendar quarter.
"Notes" has the meaning set forth in the Preliminary
Statement.
"Rate Adjustment Date" means, (i) with respect to the Class A
Notes, the Distribution Date occurring in each month, and (ii) with respect to
the Class B Notes, the Distribution Date in each month while the Class A Notes
are Outstanding, and thereafter, the 25th day of each month, except that the
Rate Adjustment Date occurring in January, April, July or October will be the
Distribution Dates occurring in such months.
ARTICLE II
AUTHORIZATION, TERMS AND ISSUANCE
Section 2.1. Authorization of Notes.
There is hereby authorized the borrowing of funds, and to
evidence such borrowing there are hereby authorized three Classes of Notes
(collectively, the "Notes"), designated as (i) the "Crestar Student Loan Trust
1997-1, Senior LIBOR Rate Class A-1 Student Loan Asset Backed Notes" (the "Class
A-1 Notes") in the aggregate principal amount of $130,000,000, (ii) the "Crestar
Student Loan Trust 1997-1, Senior LIBOR Rate Class A-2 Student Loan Asset Backed
Notes" (the "Class A-2 Notes") in the aggregate principal amount of $84,000,000,
and (iii) the "Crestar Student Loan Trust 1997-1, Subordinate LIBOR Rate Class B
Student Loan Asset Backed Notes" (the "Class B Notes") in the aggregate
principal amount of $8,900,000.
<PAGE>
Section 2.2. Purposes.
The Notes are authorized to finance the acquisition by the
Issuer of Financed Student Loans, and to make deposits to the Trust Accounts
required hereby.
Section 2.3. Terms of the Notes.
The Notes shall be issued in fully registered form, in
substantially the forms set forth in Exhibit A hereof (with respect to the Class
A Notes) and Exhibit B (with respect to the Class B Notes), in each case with
such variations, omissions and insertions as may be required by the
circumstances, as may be required or permitted by the Indenture and this First
Terms Supplement, or be consistent with the Indenture and this First Terms
Supplement and necessary or appropriate to conform to the rules and requirements
of any governmental authority or any usage or requirement of law with respect
thereto.
The Notes may be issued only in Authorized Denominations. The
Notes shall be dated as of the Closing Date. Each Class of Notes shall mature on
its Final Maturity Date. The Notes shall be issued to a Securities Depository
for use in a Book-Entry System in accordance with the provisions of Section 2.14
of the Indenture.
Interest on each Note shall accrue on the Outstanding Amount
of such Note until such Note has been paid in full or payment has been duly
provided for, as the case may be, and shall accrue from the later of the Closing
Date or the most recent Distribution Date to which interest has been paid or
duly provided for. Each Note shall bear interest at an interest rate determined
in accordance with the provisions and subject to the limitations set forth
herein, and interest on Notes shall be paid for the related Interest Payment
Period on each Distribution Date (or on each Quarterly Distribution Date in the
case of the Class B Notes).
Principal will be paid on the Notes on each Distribution Date
(or on each Quarterly Distribution Date in the case of the Class B Notes) in an
amount up to the Noteholders' Principal Distribution Amount on such Distribution
Date or Quarterly Distribution Date, as the case may be, in the order and
priorities set forth in the Transfer and Servicing Agreement and the Indenture.
Except as otherwise set forth in the Indenture and the
Transfer and Servicing Agreement, the rights of the Class B Noteholders to
receive distributions with respect to interest shall be subordinated to the
prior rights of the Class A Noteholders to receive all payments of interest to
which they are entitled and, after each Class of Notes has received the full
amount of interest to which it is entitled, the rights of the Class B
Noteholders to receive distributions with respect to principal shall be
subordinated to the prior rights of the Class A Noteholders to receive all
payments of principal to which they are entitled.
<PAGE>
Section 2.4. The Notes.
(a) Until the initial Rate Adjustment Date, each Class of
Notes shall bear interest at the Class Initial Rate for such Class. Thereafter,
each Class of Notes shall bear interest during each Interest Period at the
lesser of (i) the Formula Interest Rate or (ii) the Net Loan Rate determined on
the Rate Determination Date for such Interest Period; provided, however, that no
determination of the Net Loan Rate is required to be made on a Rate
Determination Date unless One-Month LIBOR exceeds the 91-Day T-Bill Rate by more
than 100 basis points as of the preceding Rate Determination Date (or, with
respect to the initial Rate Determination Date, the Closing Date).
(b) Interest shall accrue daily on each Class of Notes at the
related Class Interest Rate and shall be computed for the actual number of days
elapsed in such Interest Period on the basis of a year consisting of 360 days.
(c) If the Class Interest Rate applicable to a Class of Notes
for any Interest Period is the Net Loan Rate, the Master Servicer shall
determine the Noteholders' Interest Carryover, if any, with respect to such
Class of Notes for such Interest Period. Such Noteholders' Interest Carryover
shall bear interest calculated at the Formula Interest Rate for such Class from
the Distribution Date for the Interest Period with respect to which such
Noteholders' Interest Carryover was calculated, until paid. For purposes of this
First Terms Supplement, any reference to "principal" or "interest" herein shall
not include within the meaning of such words Noteholders' Interest Carryover or
any interest accrued on any such Noteholders' Interest Carryover. Such
Noteholders' Interest Carryover shall be separately calculated for each Note of
such Class by the Master Servicer during such Interest Period in sufficient time
for the Indenture Trustee to give notice to each Noteholder of such Noteholders'
Interest Carryover as required in the next succeeding sentence. On the
Distribution Date for an Interest Period with respect to which such Noteholders'
Interest Carryover for a Class of Notes has been calculated by the Master
Servicer, the Indenture Trustee shall give written notice to each Noteholder of
the applicable Class of the Noteholders' Interest Carryover applicable to each
Noteholder's Note of such Class, which written notice may be included in any
other written statement sent by the Indenture Trustee to such Noteholders, and
shall be mailed on such Distribution Date by first-class mail, postage prepaid,
to each such Noteholder at such Noteholder's address as it appears on the
registration books maintained by the Note Registrar.
(d) The Noteholders' Interest Carryover for a Class of Notes
shall be paid by the Indenture Trustee on Outstanding Notes of such Class on the
first occurring Quarterly Distribution Date for such Class if and to the extent
funds are available therefor, in accordance with all priorities set forth in the
Transfer and Servicing Agreement. To the extent that any portion of the
Noteholders' Interest Carryover for a Class of Notes remains unpaid after
payment of a portion thereof, and subject to the next sentence below, such
unpaid portion of the Noteholders' Interest Carryover shall be paid in whole or
in part as required hereunder until fully paid by the Indenture Trustee on the
next occurring Quarterly Distribution Date or Dates, as necessary, to the extent
funds are available therefor in accordance with all priorities set forth in the
Transfer and Security Agreement. Any Noteholders' Interest Carryover (and any
interest accrued thereon) on any Note which is due and payable on the earlier of
the Distribution Date on which the outstanding principal amount of such Class is
reduced to zero and the related Final Maturity Date for such Class shall be paid
to the Noteholder thereof on such Final Maturity Date to the extent that moneys
are available therefor in accordance with the provisions of this First Terms
Supplement and the Transfer and Servicing Agreement; provided, however, that any
amount of Noteholders' Interest Carryover with respect to a Class of Notes
remaining after the earlier of the Distribution Date on which the outstanding
principal amount of such Class has been reduced to zero and the distribution of
all Available Funds on the Final Maturity of such Class of Notes, will never
become due and payable and will be discharged as to the applicable Class of
Notes on such date. On any Quarterly Distribution Date on which the Indenture
Trustee pays only a portion of the Noteholders' Interest Carryover on a Note of
such Class, the Indenture Trustee shall give written notice in the manner set
forth in the immediately preceding paragraph to the Noteholders of such Note
receiving such partial payment of the Noteholders' Interest Carryover remaining
unpaid on such Note.
(e) The failure to pay the aggregate amount of Noteholders'
Interest Carryover as a result of insufficient Available Funds will not result
in the occurrence of an Event of Default.
(f) In the event that the Master Servicer no longer
determines, or fails to determine, when required, the Class Interest Rate with
respect to a Class of Notes, or, if for any reason such manner of determination
shall be held to be invalid or unenforceable by a court of competent
jurisdiction, the Class Interest Rate for the next succeeding Interest Period
for such Class of Notes shall be determined by the Indenture Trustee provided it
is notified in writing by the Master Servicer on or prior to the Rate
Determination Date, or, if the Indenture Trustee fails to make such
determinations, such Class Interest Rate shall be the Net Loan Rate for such
next succeeding Interest Period.
Section 2.5. Class Interest Rates.
On each Rate Determination Date, the Master Servicer
shall determine the Formula Interest Rate for each Class of Notes that
will be applicable to the Interest Period immediately following such
Rate Determination Date. In connection therewith, the Master Servicer
shall calculate One-Month LIBOR, and shall notify the Indenture Trustee
and the Eligible Lender Trustee in writing of One-Month LIBOR. The
determination by the Master Servicer of One-Month LIBOR shall (in the
absence of manifest error) be final and binding upon all parties. On
each Rate Determination Date, the Master Servicer also shall determine
the Net Loan Rate for the related Interest Period when required pursuant
to Section 2.4(a). Based upon such calculations, the Master Servicer
shall determine the Class Interest Rate applicable to each Class of
Notes for the applicable Interest Period.
<PAGE>
Section 2.6. Additional Provisions Regarding the Class
Interest Rates on the Notes.
The determination of a Class Interest Rate by the Master
Servicer or the Indenture Trustee or any other Person pursuant to the provisions
of the applicable Section of this Article II shall be conclusive and binding on
the Noteholders of the Class of Notes to which such Class Interest Rate applies,
and the Issuer and the Indenture Trustee may rely thereon for all purposes.
In no event shall the cumulative amount of interest paid or
payable on a Class of Notes (including interest calculated as provided herein,
plus any other amounts that constitute interest on the Notes of such Class under
applicable law, which are contracted for, charged, reserved, taken or received
pursuant to the Notes of such Class or related documents) calculated from the
date of issuance of the Notes of such Class through any subsequent day during
the term of the Notes of such Class or otherwise prior to payment in full of the
Notes of such Class exceed the amount permitted by applicable law. If the
applicable law is ever judicially interpreted so as to render usurious any
amount called for under the Notes of such Class or related documents or
otherwise contracted for, charged, reserved, taken or received in connection
with the Notes of such Class, or if the acceleration of the maturity of the
Notes of such Class results in payment to or receipt by the Noteholder or any
former Noteholder of the Notes of such Class of any interest in excess of that
permitted by applicable law, then, notwithstanding any provision of the Notes of
such Class or related documents to the contrary, all excess amounts theretofore
paid or received with respect to the Notes of such Class shall be credited on
the principal balance of the Notes of such Class (or, if the Notes of such Class
have been paid or would thereby be paid in full, refunded by the recipient
thereof), and the provisions of the Notes of such Class and related documents
shall automatically and immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without the necessity
of the execution of any new document, so as to comply with the applicable law,
but so as to permit the recovery of the fullest amount otherwise called for
under the Notes of such Class and under the related documents.
ARTICLE III
DISTRIBUTIONS
Section 3.1. Distributions of Interest and Principal.
The Indenture Trustee shall make distributions from and to the
several Trust Accounts in the manner provided for in Section 5.5 of the Transfer
and Servicing Agreement, as such Section may be amended from time to time. All
principal payments of Notes of any Class shall be made pro rata to the
Noteholders of such Class. No later than each Distribution Determination Date,
the Master Servicer shall compute the Principal Factor of each Class of Notes
for the upcoming Distribution Date and shall notify the Indenture Trustee in
writing of such Principal Factors.
Section 3.2. Early Payment.
The Notes shall be subject to early repayment upon sale of the
Financed Student Loans as provided in Section 9.1 of the Transfer and Servicing
Agreement.
<PAGE>
ARTICLE IV
MISCELLANEOUS
Section 4.1. Adoption of This First Terms Supplement.
This First Terms Supplement is adopted pursuant to the
provisions of the Indenture.
Section 4.2. Counterparts.
This First Terms Supplement may be simultaneously executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 4.3. Indenture Constitutes a Security Agreement.
This First Terms Supplement constitutes a security agreement
for the purposes of the Uniform Commercial Code.
Section 4.4. Governing Law.
This First Terms Supplement shall be governed by and construed
in accordance with the laws of the State of New York.
Section 4.5. Modification of Indenture.
The provisions of Section 2.11(e) of the Indenture shall not
be applicable to the issuance of the Notes.
Section 4.6. Ratification of Indenture.
As supplemented by this First Terms Supplement, the Indenture
is in all respects ratified and confirmed, and the Indenture so supplemented by
this First Terms Supplement shall be read, taken and construed as one and the
same instrument. Each addition to and amendment of the Indenture contained
herein is solely for purposes of the Notes. If any term of this First Terms
Supplement conflicts with any term of the Indenture, this First Terms Supplement
shall control for purposes of the Notes.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Terms Supplement to be duly executed as of the day and year first above written.
CRESTAR STUDENT LOAN TRUST 1997-1
By: STAR BANK, NATIONAL
ASSOCIATION, not in its
individual capacity but solely
as Eligible Lender Trustee
By:_____________________________________
Name: Stephen J. Blackstone
Title: Trust Officer
BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Indenture Trustee,
By:_____________________________________
Name:
Title:
<PAGE>
COMMONWEALTH OF VIRGINIA, )
) ss:
CITY OF RICHMOND, )
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 [Assistant] Vice President of STAR BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Eligible Lender Trustee of CRESTAR STUDENT
LOAN TRUST 1997-1, a Delaware trust, and that he executed the same as the act of
said trust for the purpose and consideration therein expressed, and in the
capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the ____ day of December,
1997.
--------------------------------
Notary Public in and
for the Commonwealth of Virginia.
[SEAL]
My commission expires:
- ------------------------------
<PAGE>
COMMONWEALTH OF VIRGINIA, )
) ss:
CITY OF RICHMOND, )
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 she
executed the same as the act of said corporation for the purpose and
consideration therein expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the ____ day of December,
1997.
-------------------------------
Notary Public in and for
the Commonwealth of Virginia
[SEAL]
My commission expires:
- ------------------------------
<PAGE>
EXHIBIT A-1
[FORM OF SENIOR LIBOR RATE NOTE]
CRESTAR STUDENT LOAN TRUST 1997-1
SENIOR LIBOR RATE CLASS [A-l] [A-2] STUDENT LOAN ASSET BACKED NOTE
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.
THIS NOTE DOES NOT REPRESENT DEPOSITS OR OBLIGATIONS OF OR INTEREST IN
CRESTAR BANK, STAR BANK, NATIONAL ASSOCIATION, DELAWARE TRUST CAPITAL
MANAGEMENT, INC. OR BANKERS TRUST COMPANY.
THIS NOTE IS NOT GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY GOVERNMENTAL AGENCY.
<TABLE>
<S> <C>
No. A-[1] [2] - _____ $_________
FINAL CLASS
MATURITY DATED INTEREST
Class DATE DATE RATE CUSIP
[A-1] [A-2] One-Month
LIBOR
[-] [+]
___% as
herein
provided
REGISTERED NOTEHOLDER: CEDE & CO.
</TABLE>
<PAGE>
CRESTAR BANK STUDENT LOAN TRUST 1997-1, a Delaware business
trust (the "Issuer"), for value received, promises to pay, from the sources
herein described, to the Registered Noteholder identified above, or registered
assigns, upon presentation and surrender hereof at the Corporate Trust Office of
Bankers Trust Company, as Paying Agent, or at the principal office of any
successor or additional Paying Agent, the Principal Amount identified above on
the Final Maturity Date identified above, and to pay to the registered owner
hereof, interest and principal hereon in lawful money of the United States of
America at the Class Interest Rate on the dates as provided herein. Unless
otherwise defined herein, capitalized terms used herein shall have the
respective meanings given to such terms in the Indenture dated as of December 1,
1997 (the "Master Indenture") and as supplemented by the First Terms Supplement
dated as of December 1, 1997, (the "First Terms Supplement" and, together with
the Master Indenture, the "Indenture") between the Issuer and Bankers Trust
Company, as Indenture Trustee, as further amended and supplemented from time to
time.
This is one of a duly authorized issue of notes of the Issuer
designated as "Crestar Student Loan Trust 1997-1, Senior LIBOR Rate Class [A-l]
[A-2] Student Loan Asset Backed Notes", in the aggregate principal amount of
$[130,000,000] [80,000,000] (herein referred to as the "Class [A-l] [A-2]
Notes," and together with the Crestar Student Loan Trust 1997-1, Senior LIBOR
Rate Class [A-1] [A-2] Student Loan Asset Backed Notes in the aggregate
principal amount of $[130,000,000] [80,000,000] (the "Class [A-l] [A-2] Notes")
and the Crestar Student Loan Trust 1997-1, Subordinate LIBOR Rate Class B
Student Loan Asset Backed Notes in the aggregate principal amount of $8,900,000
(the "Class B Notes"), the "Notes") issued under the Indenture. The Notes are
issued to finance the acquisition of Financed Student Loans by the Trust, and to
make certain deposits into the Pledged Accounts.
The Notes are secured under the Indenture which, together with
certain other documents, assigns to the Indenture Trustee for the benefit of the
Noteholders all the rights and remedies of the Issuer under certain Financed
Student Loans and rights under various contracts providing for the issuance,
guarantee and servicing of such Financed Student Loans. Reference is hereby made
to the Indenture for the provisions, among others, with respect to the custody
and application of the proceeds of the Notes, the nature and the extent of the
liens and security of the Indenture, the collection and disposition of revenues,
the funds charged with and pledged to the payment of the principal of and the
interest on the Notes, the rights, duties and immunities of the Indenture
Trustee, the rights of the registered owners of the Notes, and the rights and
obligations of the Issuer. By the acceptance of this Note, the registered owner
hereof assents to all of the provisions of the Indenture.
Distributions of principal and interest will made on each
Distribution Date to the holders of this Note in the manner described in the
Transfer and Servicing Agreement.
The rate of interest on the [A-1] [A-2] Notes shall be
determined in accordance with the First Terms Supplement.
<PAGE>
If an Event of Default as defined in the Indenture occurs, the
principal of and interest on all Notes issued under the Indenture may be
declared due and payable upon the conditions and in the manner and with the
effect provided in the Indenture. The Indenture and the rights and obligations
of the Issuer, the Indenture Trustee and the Noteholder hereof may be modified
or amended in the manner and subject to the conditions set forth in the
Indenture.
The holder of this Note shall have no right to enforce the
provisions of the Indenture or to institute action to enforce the covenants
therein, or to take any action with respect to any Event of Default under the
Indenture, or to institute, appear in or defend any suit or other proceeding
with respect thereto, except as provided in the Indenture.
The transfer of this Note may be registered only upon
surrender hereof to the Indenture Trustee together with an assignment duly
executed by the registered owner or its attorney or legal representative in such
form as shall be satisfactory to the Indenture Trustee. Upon any such
registration of transfer of this Note and subject to the payment of any fees and
charges as provided by the Indenture, the Issuer shall execute and the Indenture
Trustee shall authenticate and deliver in exchange for this Note a new Note or
Notes registered in the name of the transferee, in any denomination or
denominations authorized by the Indenture, of the same maturity and in an
aggregate principal amount equal to the unredeemed principal amount of this Note
and bearing the same interest as this Note.
In any case where the date fixed for the payment of principal
of or interest on this Note shall not be a Business Day, then payment of such
principal or interest 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
fixed for the payment thereof.
This Note shall not be valid or become obligatory for any
purpose or be entitled to any security or benefit under the Indenture until the
certificate of authentication hereon shall have been manually signed by the
Indenture Trustee.
IN WITNESS WHEREOF, the Issuer has caused this Note to be
executed in its name by the manual or facsimile signature of an Authorized
Officer.
CRESTAR STUDENT LOAN TRUST 1997-1
By: STAR BANK, NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Eligible Lender Trustee
By: _______________________________________
Its Authorized Officer
<PAGE>
CERTIFICATE OF AUTHENTICATION
This Note is one of the Class [A-1] [A-2] Notes designated in
and issued under the provisions of the within mentioned-Indenture.
BANKERS TRUST COMPANY
New York, New York, as
Indenture Trustee
By:___________________________
Authorized Representative
Date of Authentication:
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto ______________________, the within Note and irrevocably appoints
________________________, attorney-in-fact, to transfer the within Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated: ____________ _____________________________
NOTICE: The signature to Signature Guaranteed:
this assignment must
correspond with the name as _____________________________
it appears upon the face of
the within Note in every
particular, without any
alteration whatsoever.
Name and Address: ___________________________
Tax Identification Number or
Social Security Number(s): __________________________
<PAGE>
EXHIBIT B
[FORM OF SUBORDINATE LIBOR RATE NOTE]
CRESTAR STUDENT LOAN TRUST 1997-1
SUBORDINATE LIBOR RATE CLASS B STUDENT LOAN ASSET BACKED NOTE
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.
THIS NOTE DOES NOT REPRESENT DEPOSITS OR OBLIGATIONS OF OR INTEREST IN
CRESTAR BANK, STAR BANK, NATIONAL ASSOCIATION, DELAWARE TRUST CAPITAL
MANAGEMENT, INC. OR BANKERS TRUST COMPANY.
THIS NOTE IS NOT GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY GOVERNMENTAL AGENCY.
<TABLE>
<S> <C>
No. B-_______ $_______
FINAL CLASS
MATURITY DATED INTEREST
Class DATE DATE RATE CUSIP
B One-Month
Libor +_____%
as herein
provided
REGISTERED NOTEHOLDER: CEDE & CO.
</TABLE>
<PAGE>
CRESTAR BANK STUDENT LOAN TRUST 1997-1, a Delaware business
trust (the "Issuer"), for value received, promises to pay, from the sources
herein described, to the Registered Noteholder identified above, or registered
assigns, upon presentation and surrender hereof at the Corporate Trust Office of
Bankers Trust Company, as Paying Agent, or at the principal office of any
successor or additional Paying Agent, the Principal Amount identified above on
the Final Maturity Date identified above, and to pay to the registered owner
hereof, interest and principal hereon in lawful money of the United States of
America at the Class Interest Rate on the dates as provided herein. Unless
otherwise defined herein, capitalized terms used herein shall have the
respective meanings given to such terms in the Indenture dated as of December 1,
1997 (the "Master Indenture"), as supplemented by the First Terms Supplement
dated as of December 1, 1997, (the "First Terms Supplement" and, together with
the Master Indenture, the "Indenture") between the Issuer and Bankers Trust
Company, as Indenture Trustee, as further amended and supplemented from time to
time.
This is one of a duly authorized issue of notes of the Issuer
designated as "Crestar Student Loan Trust 1997-1, Subordinate LIBOR Rate Class B
Student Loan Asset Backed Notes", in the aggregate principal amount of
$8,900,000 (herein referred to as the "Class B Notes," and together with the
Crestar Student Loan Trust 1997-1, Senior LIBOR Rate Class A-1 and Class A-2
Student Loan Asset Backed Notes in the aggregate principal amount of
$130,000,000 and $80,000,000, the "Notes") issued under the Indenture. The Notes
are issued to finance the acquisition of Financed Student Loans by the Trust,
and to make certain deposits into the Pledged Accounts.
The Notes are secured under the Indenture which, together with
certain other documents, assigns to the Indenture Trustee for the benefit of the
Noteholders all the rights and remedies of the Issuer under certain Financed
Student Loans and rights under various contracts providing for the issuance,
guarantee and servicing of such Financed Student Loans. Reference is hereby made
to the Indenture for the provisions, among others, with respect to the custody
and application of the proceeds of the Notes, the nature and the extent of the
liens and security of the Indenture, the collection and disposition of revenues,
the funds charged with and pledged to the payment of the principal of and the
interest on the Notes, the rights, duties and immunities of the Indenture
Trustee, the rights of the registered owners of the Notes, and the rights and
obligations of the Issuer. By the acceptance of this Note, the registered owner
hereof assents to all of the provisions of the Indenture.
DISTRIBUTIONS OF INTEREST AND PRINCIPAL ON THE CLASS B NOTES
ARE SUBORDINATED IN PRIORITY OF PAYMENT TO DISTRIBUTIONS OF INTEREST AND
PRINCIPAL ON THE CLASS A NOTES AS DESCRIBED IN THE FIRST TERMS SUPPLEMENT AND
THE TRANSFER AND SERVICING AGREEMENT.
Distributions of principal and interest on this Class B Note
will made on each Quarterly Distribution Date to the holders of this Class B
Note in the manner described in the Transfer and Servicing Agreement.
The rate of interest on the Class B Notes shall be determined
in accordance with the First Terms Supplement.
<PAGE>
If an Event of Default as defined in the Indenture occurs, the
principal of and interest on all Notes issued under the Indenture may be
declared due and payable upon the conditions and in the manner and with the
effect provided in the Indenture. The Indenture and the rights and obligations
of the Issuer, the Indenture Trustee and the Noteholder hereof may be modified
or amended in the manner and subject to the conditions set forth in the
Indenture.
The holder of this Note shall have no right to enforce the
provisions of the Indenture or to institute action to enforce the covenants
therein, or to take any action with respect to any Event of Default under the
Indenture, or to institute, appear in or defend any suit or other proceeding
with respect thereto, except as provided in the Indenture.
The transfer of this Note may be registered only upon
surrender hereof to the Indenture Trustee together with an assignment duly
executed by the registered owner or its attorney or legal representative in such
form as shall be satisfactory to the Indenture Trustee. Upon any such
registration of transfer of this Note and subject to the payment of any fees and
charges as provided by the Indenture, the Issuer shall execute and the Indenture
Trustee shall authenticate and deliver in exchange for this Note a new Note or
Notes registered in the name of the transferee, in any denomination or
denominations authorized by the Indenture, of the same maturity and in an
aggregate principal amount equal to the unredeemed principal amount of this Note
and bearing the same interest as Note.
In any case where the date fixed for the payment of principal
of or interest on this Note shall not be a Business Day, then payment of such
principal or interest 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
fixed for the payment thereof.
It is hereby certified, recited and declared that all acts,
conditions and things required to have happened, to exist and to have been
performed precedent to and in the execution and delivery of the Indenture and
issuance of this Note have happened, do exist and have been performed in due
time, form and manner as required by law.
This Note shall not be valid or become obligatory for any
purpose or be entitled to any security or benefit under the Indenture until the
certificate of authentication hereon shall have been manually signed by the
Indenture Trustee.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be
executed in its name by the manual or facsimile signature of an Authorized
Officer.
CRESTAR STUDENT LOAN TRUST 1997-1
By: STAR BANK, NATIONAL ASSOCIATION, not in
its individual capacity but solely as Eligible Lender
Trustee
By: _____________________________________
Its Authorized Officer
<PAGE>
CERTIFICATE OF AUTHENTICATION
This Note is one of the Class B Notes designated in and issued
under the provisions of the within mentioned Indenture.
BANKERS TRUST COMPANY
New York, New York, as
Indenture Trustee
By: ____________________________
Authorized Representative
Date of Authentication:
- --------------------------------
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto ___________________, the within Note and irrevocably appoints
____________________, attorney-in-fact, to transfer the within Note on the books
kept for registration thereof, with full power of substitution in the premises.
Dated: ____________ _____________________________
NOTICE: The signature to Signature Guaranteed:
this assignment must
correspond with the name as _____________________________
it appears upon the face of
the within Note in every
particular, without any
alteration whatsoever.
Name and Address: ___________________________
Tax Identification Number or
Social Security Number(s): __________________________
<PAGE>
EXHIBIT D
TRUST RECEIPT AND CERTIFICATION
December __, 1997
Bankers Trust Company
4 Albany Street
New York, New York 10006
Re: The Indenture between Crestar Student Loan Trust 1997-1 and
Bankers Trust Company, dated as of December 1, 1997
Ladies and Gentlemen:
In accordance with the provisions of Section 6.11 of the
above-referenced Indenture, the undersigned, as the Custodian, hereby certifies
as to each HEAL Loan in the Schedule of Financed Student Loans that it has
received the original HEAL Note relating thereto. The Custodian makes no
representations as to and shall not be responsible to verify (i) the validity,
legality, enforceability, sufficiency, due authorization or genuineness of any
of the documents contained in each custodial file or of any of the HEAL Loans,
or (ii) the collectibility, insurability, effectiveness or suitability of any
such HEAL Loan.
The Custodian hereby confirms that it is holding the HEAL Notes as
agent and bailee of, and custodian for the exclusive use and benefit, and
subject to the sole direction, of the Indenture Trustee pursuant to the terms
and conditions of the Indenture. The Custodian agrees to hold such HEAL Notes
continuously in the Commonwealth of Pennsylvania, without the prior approval of
Bankers Trust Company.
This Trust Receipt and Certification is not divisible or negotiable.
Capitalized terms used herein shall have the meaning ascribed to them
in the Indenture.
PENNSYLVANIA HIGHER EDUCATION
ASSISTANCE AGENCY,
Custodian
By:__________________________________________________
Name:________________________________________________
Title:_______________________________________________
Exhibit 4.2
TRUST AGREEMENT
among
CRESTAR BANK,
as Depositor
STAR BANK, NATIONAL ASSOCIATION,
as Eligible Lender Trustee
and
DELAWARE TRUST CAPITAL MANAGEMENT, INC.,
as Delaware Trustee
Dated as of December 1, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I Definitions and Usage..................................................................................1
ARTICLE II Organization..........................................................................................1
SECTION 2.1. Name....................................................................................1
SECTION 2.2. Office and Situs of the Trust...........................................................1
SECTION 2.3. Purposes and Powers.....................................................................1
SECTION 2.4. Appointment of Eligible Lender Trustee and Delaware Trustee.............................2
SECTION 2.5. Initial Capital Contribution of Trust Estate............................................4
SECTION 2.6. Declaration of Trust....................................................................4
SECTION 2.7. No Liability of the Certificateholders..................................................4
SECTION 2.8. Title to Trust Property.................................................................5
SECTION 2.9. Representations and Warranties of the Depositor.........................................5
SECTION 2.10. Federal Income Tax Provisions...........................................................6
ARTICLE III Trust Certificates and Transfer of Interests.........................................................8
SECTION 3.1. Initial Beneficial Ownership............................................................8
SECTION 3.2. The Trust Certificates..................................................................8
SECTION 3.3. Authentication of Trust Certificates....................................................8
SECTION 3.4. Registration of Transfer and Exchange of Trust Certificates.............................9
SECTION 3.5. Restrictions on Transfer...............................................................10
SECTION 3.6. Mutilated, Destroyed, Lost or Stolen Trust Certificates................................11
SECTION 3.7. Persons Deemed Owners..................................................................12
SECTION 3.8. Access to List of Certificateholders' Names and Addresses..............................12
SECTION 3.9. Maintenance of Office or Agency........................................................12
SECTION 3.10. Appointment of Certificate Paying Agent................................................12
ARTICLE IV Actions by Eligible Lender Trustee...................................................................13
SECTION 4.1. Prior Notice to Certificateholders with Respect to Certain Matters.....................13
SECTION 4.2. Action by Certificateholders with Respect to Certain Matters...........................14
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy................................14
SECTION 4.4. Restrictions on Certificateholders' Power..............................................14
SECTION 4.5. Majority Control.......................................................................14
ARTICLE V Application of Trust Funds; Certain Duties............................................................15
SECTION 5.1. Application of Trust Funds.............................................................15
SECTION 5.2. Method of Payment......................................................................16
SECTION 5.3. Segregation of Moneys; No Interest.....................................................16
SECTION 5.4. Accounting and Reports to the Certificateholders, the Internal Revenue Service
and Others.......................................................................16
SECTION 5.5. Signature on Returns; Tax Matters Partner..............................................16
ARTICLE VI Authority and Duties of Eligible Lender Trustee......................................................17
SECTION 6.1. General Authority......................................................................17
SECTION 6.2. General Duties.........................................................................17
SECTION 6.3. Action upon Instruction................................................................18
SECTION 6.4. No Duties Except as Specified in this Agreement, the Transfer and Servicing
Agreement, any Supplemental Transfer and Servicing Agreement or in
Instructions.....................................................................18
SECTION 6.5. No Action Except Under Specified Documents or Instructions.............................19
SECTION 6.6. Restrictions...........................................................................19
<PAGE>
ARTICLE VII Concerning the Eligible Lender Trustee..............................................................19
SECTION 7.1. Acceptance of Trusts and Duties........................................................19
SECTION 7.2. Furnishing of Documents................................................................21
SECTION 7.3. Representations and Warranties.........................................................21
SECTION 7.4. Reliance; Advice of Counsel............................................................22
SECTION 7.5. Not Acting in Individual Capacity......................................................22
SECTION 7.6. Eligible Lender Trustee Not Liable for Trust Certificates or Financed Student
Loans............................................................................22
SECTION 7.7. Eligible Lender Trustee May Own Trust Certificates and Notes...........................23
SECTION 7.8. Representations and Warrantees of Delaware Trustee.....................................23
ARTICLE VIII Compensation of Trustees...........................................................................24
SECTION 8.1. Eligible Lender Trustee's Fees and Expenses............................................24
SECTION 8.2. Payments to the Eligible Lender Trustee................................................24
SECTION 8.3. Delaware Trustee's Fees and Expenses...................................................24
ARTICLE IX Termination of Trust Agreement.......................................................................24
SECTION 9.1. Termination of Trust Agreement.........................................................24
SECTION 9.2. Dissolution upon Insolvency of Depositor...............................................26
<PAGE>
ARTICLE X Successor Eligible Lender Trustees and Additional Eligible Lender Trustees............................26
SECTION 10.1. Eligibility Requirements for Eligible Lender Trustee...................................26
SECTION 10.2. Resignation or Removal of Eligible Lender Trustee......................................27
SECTION 10.3. Successor Eligible Lender Trustee......................................................28
SECTION 10.4. Merger or Consolidation of Eligible Lender Trustee.....................................28
SECTION 10.5. Appointment of Co-Eligible Lender Trustee or Separate Eligible Lender Trustee..........29
ARTICLE XI Miscellaneous........................................................................................30
SECTION 11.1. Supplements and Amendments.............................................................30
SECTION 11.2. No Legal Title to Trust Estate in Certificateholders...................................31
SECTION 11.3. Limitations on Rights of Others........................................................31
SECTION 11.4. Notices................................................................................32
SECTION 11.5. Severability...........................................................................32
SECTION 11.6. Separate Counterparts..................................................................32
SECTION 11.7. Successors and Assigns.................................................................32
SECTION 11.8. No Petition............................................................................33
SECTION 11.9. No Recourse............................................................................33
SECTION 11.10. Headings...............................................................................33
SECTION 11.11. Governing Law..........................................................................33
</TABLE>
EXHIBIT A -- Form of Trust Certificate
EXHIBIT B -- Form of Purchaser's Representation and Warranty Letter
APPENDIX A -- Definitions
<PAGE>
TRUST AGREEMENT dated as of December 1, 1997, between CRESTAR BANK, as
Depositor (the "Depositor"), and STAR BANK, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Eligible Lender Trustee (the "Eligible Lender
Trustee") and DELAWARE TRUST CAPITAL MANAGEMENT, INC., not in its individual
capacity but solely as Delaware Trustee (the "Delaware Trustee").
The Depositor, the Eligible Lender Trustee and the Delaware Trustee
hereby agree as follows:
ARTICLE I
Definitions and Usage
Capitalized terms used but not defined herein are defined in Appendix A
to the Transfer and Servicing Agreement, which Appendix is attached hereto. The
Appendix also contains rules as to construction and usage that are applicable
herein.
ARTICLE II
Organization
SECTION 2.1. Name.
The Trust created hereby shall be known as "Crestar Student Loan Trust
1997-1," in which name the Eligible Lender Trustee may conduct the business of
the Trust, make and execute contracts and other instruments on behalf of the
Trust and sue and be sued.
SECTION 2.2. Office and Situs of the Trust.
The registered office of the Issuer in Delaware shall be the office of
the Delaware Trustee at 900 Market Street, 2nd Floor, Wilmington, Delaware 19801
and the situs of the Trust shall be at the corporate trust office of the
Eligible Lender Trustee located at 425 Walnut Street, Cincinnati, Ohio 45201.
SECTION 2.3. Purposes and Powers.
The purpose of the Trust is to engage in the following activities:
(a) to issue one or more Classes of the Trust Certificates pursuant
to this Agreement and to sell the Trust Certificates in one or more
transactions;
<PAGE>
(b) to issue one or more Classes of Notes pursuant to the Master
Indenture and the applicable Terms Supplement and to sell the Notes in one or
more transactions in accordance with instructions received from the
Administrator;
(c) with the proceeds of the sale of the Notes and the Trust
Certificates, to acquire, from time to time, the Financed Student Loans;
(d) to assign, grant, transfer, pledge, hypothecate, mortgage and
convey the Trust Estate pursuant to the Indenture and the applicable Terms
Supplement and to hold, manage and distribute to the Certificateholders pursuant
to the terms of the Transfer and Servicing Agreement any portion of the Trust
Estate released from the Lien of, and remitted to the Trust pursuant to, the
Indenture and the applicable Terms Supplement;
(e) from time to time to sell and dispose of the Financed Student
Loans in accordance with the terms of the Basic Documents;
(f) to enter into and perform its obligations under the Basic Documents
to which it is to be a party;
(g) 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
(h) to engage in such other activities as may be required in connection
with conservation of the Trust Estate and the making of distributions to the
Certificateholders, the Noteholders and the others specified in Article V of the
Transfer and Servicing Agreement and or contemplated by the Basic Documents.
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. Notwithstanding anything in this Agreement or the
Basic Documents to the contrary, for so long as the Depositor is a
Certificateholder, the Trust's activities shall be limited to activities that
are part of, or incidental to, the business of banking.
This Section 2.3 shall not be amended without the prior written
unanimous consent of the Certificateholders, including the Depositor.
SECTION 2.4. Appointment of Eligible Lender Trustee and Delaware
Trustee.
(a) The Depositor hereby (i) 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, and (ii) ratifies all actions of the
Eligible Lender Trustee taken on behalf of the Trust prior to the execution
hereof.
<PAGE>
(b) The Delaware Trustee is hereby appointed to serve as the trustee of
the Trust in the State of Delaware for the sole purpose of satisfying the
requirement of Section 3807 of the Delaware Business Trust Statute that the
Trust have at least one trustee with a principal place of business in Delaware.
It is understood and agreed by the parties hereto and the Certificateholders
that the Delaware Trustee shall have none of the duties or liabilities of the
Eligible Lender Trustee. The duties of the Delaware Trustee shall be limited to
(a) accepting legal process served on the Trust in the State of Delaware and (b)
the execution of any certificates required to be filed with the Delaware
Secretary of State, which the Delaware Trustee is required to execute under
Section 3811 of the Delaware Business Trust Statute. To the extent that, at law
or in equity, the Delaware Trustee has duties (including fiduciary duties) and
liabilities relating to the Trust, the Certificateholders or any other Person,
it is hereby understood and agreed by the other parties hereto and the
Certificateholders that such duties and liabilities are replaced by the duties
and liabilities of the Delaware Trustee expressly set forth in this Agreement in
Section 2.4. Except as otherwise expressly required by this Section 2.4, the
Delaware Trustee shall have no duty, obligation or liability with respect to the
Trust and shall incur no liability for any actions taken, or omitted to be
taken, in good faith pursuant to its rights, obligations or responsibilities
hereunder. By the execution hereof, the Delaware Trustee accepts the trust
created hereby. Except for the representations and warranties set forth in
Section 7.8, in accepting the trust hereby created, the Delaware Trustee acts
solely as Delaware trustee hereunder and not in its individual capacity, and all
Persons having any claim against the Delaware Trustee by reason of the creation
or existence of the Trust, the terms of this Agreement, or the transactions
contemplated by this Agreement or any other Basic Document shall look only to
the Trust Estate for payment or satisfaction thereof. Without limitation to the
foregoing, (A) in no event and under no circumstances shall the Delaware
Trustee, in its individual capacity or as Delaware Trustee, have any liability
for any of the representations, warranties, covenants, agreements or other
obligations of the Trust, (B) the Delaware Trustee shall incur no liability to
anyone in acting upon any signature, instrument, notice, resolution, request,
consent, order, instruction, certificate, report, opinion, bond or other
document or paper reasonably believed by it to be genuine and reasonably
believed by it to be signed or provided by the proper party or parties, and (C)
in the exercise of its rights or responsibilities under this Agreement, the
Delaware Trustee may consult with counsel, accountants and other skilled persons
to be selected with reasonable care and employed by it and it shall not be
liable for anything done, suffered or omitted in good faith by it in accordance
with the opinion or advice of any such counsel, accountants or other skilled
persons.
(c) The Depositor shall indemnify, defend and hold harmless the
Delaware Trustee and any of its affiliates, officers, directors, employees and
agents (the "Indemnified Parties") from and against any and all losses, claims,
taxes, damages, reasonable expenses, and liabilities (including liabilities
under state or federal securities laws) of any kind and nature whatsoever
(collectively, "Expenses"), as incurred, to the extent that such Expenses arise
out of or are imposed upon or asserted against such Indemnified Person with
respect to the creation, operation or termination of the Trust, the execution,
delivery or performance of this Agreement or the transactions contemplated
hereby; provided however that the Depositor shall not be required to indemnify
any Indemnified Party for any Expenses which are a result of the willful
misconduct, bad faith or gross negligence of such Indemnified Person. The
obligations of the Depositor to indemnify the Indemnified Persons as provided
herein shall survive the termination of this Agreement.
<PAGE>
(d) The Delaware Trustee may resign upon thirty days' prior notice to
the Eligible Lender Trustee; provided, however, that such resignation shall not
be effective until a successor Delaware Trustee shall have been appointed and
agreed to serve that meets the requirements of Section 3807 of the Delaware
Business Trust Statute and is satisfactory to the Eligible Lender Trustee and
the Administrator. If a successor Delaware Trustee shall not have been appointed
within such thirty day period, the Delaware Trustee may apply to the Court of
Chancery of the State of Delaware for the appointment of a successor Delaware
Trustee. The Eligible Lender Trustee may remove and replace the Delaware Trustee
from time to time in its sole discretion, provided that the removal shall not be
effective until a successor Delaware Trustee shall have been appointed and
agreed to serve.
SECTION 2.5. Initial Capital Contribution of Trust Estate.
The Depositor hereby sells, assigns, transfers, conveys and sets over
to the Eligible Lender Trustee, as of the date hereof, the sum of $10.00. The
Eligible Lender Trustee hereby acknowledges receipt in trust from the Depositor
of the foregoing contribution, which shall constitute the initial Trust Estate
and shall be deposited in the Collection Account.
SECTION 2.6. Declaration of Trust.
The Eligible Lender Trustee hereby declares that it will hold the Trust
Estate in trust upon and subject to the conditions set forth herein for the use
and benefit of the Certificateholders, subject to the obligations of the Trust
under the other Basic Documents. It is the intention of the parties hereto that
the Trust constitute a business trust under Delaware law and that this Agreement
constitute the governing instrument of such trust. If for any reason it is
determined that the Trust does not qualify as a business trust under Delaware
law, it shall be a trust, nonetheless, under the common law of Delaware. It is
the intention of the parties hereto that, solely for federal, state and local
income, franchise and similar 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
Depositor and the Certificateholders and the Notes being nonrecourse debt of the
partnership (or, alternatively, that the Trust shall be disregarded as an entity
separate from the Depositor, with the assets held by the Trust being treated as
assets of the Depositor and the Notes and the Certificates being treated as
nonrecourse debt of the Depositor). The parties agree that, unless otherwise
required by appropriate federal, state or local tax authorities or unless the
Trust is disregarded as an entity separate from the Depositor for income and
franchise tax purposes, they shall treat the Trust as a partnership for income
and franchise tax purposes, and the Administrator 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.
Furthermore, the Depositor will not make, or cause to be made, an election under
the provisions of Treasury Regulation Section 301.7701-3 to classify the Trust
as an association and shall take, or cause to be taken, necessary and
appropriate actions consistent with carrying out the intent of this Section 2.6.
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 2.7. No Liability of the Certificateholders.
No Certificateholder shall have any personal liability for any
liability or obligation of the Trust.
<PAGE>
SECTION 2.8. Title to Trust Property.
Legal title to all the Trust Estate shall be vested at all times in the
Trust as a separate legal entity except where applicable law in any jurisdiction
requires title to any part of the Trust Estate to be vested in a trustee or
trustees, in which case title shall be deemed to be vested in the Eligible
Lender Trustee, a co-trustee and/or a separate trustee, as the case may be;
provided that legal title to the Financed Student Loans shall be vested at all
times in the Eligible Lender Trustee on behalf of the Trust.
SECTION 2.9. 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 banking
corporation under the laws of the Commonwealth of Virginia, with corporate power
and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted except
for such power and authority the absence of which would not have a material
adverse effect on the Depositor.
(b) The Depositor has the requisite corporate power and authority to
execute and deliver this Agreement and to carry out its terms; the Depositor has
the requisite 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 on the
Depositor's part; and the execution, delivery and performance of this Agreement
has been duly authorized by the Depositor by all necessary corporate action.
(c) This Agreement has been duly executed and delivered by the
Depositor, and constitutes a legal, valid and binding obligation of the
Depositor enforceable against the Depositor in accordance with its terms,
subject to the effect of applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws relating to or affecting
creditors' rights generally and court decisions with respect thereto and subject
to the application of equitable principles in any proceeding, whether at law or
in equity.
(d) The consummation of the transactions contemplated by this Agreement
and the fulfillment of the terms hereof do not violate, 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 incorporation or by-laws
of the Depositor, or any material indenture, material agreement or other
material 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 material indenture, material agreement or
other material 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 except for such violations
which would not have a material adverse effect on the Depositor.
<PAGE>
(e) No consent of any federal or state governmental or administrative
authority is required to be obtained by the Depositor prior to its entering into
this Agreement or in connection with its consummation of the transactions
expressly contemplated by the Basic Documents, other than those that have been
obtained, except such as may be required by the blue sky laws of any
jurisdiction in connection with the sale of and distribution of the Notes and
Certificates for which no representation is being made.
SECTION 2.10. Federal Income Tax Provisions.
If the Trust is treated as a partnership (rather than disregarded as a
separate entity) for income and franchise tax purposes pursuant to Section 2.6,
all references in this Section to Certificateholder shall include the Depositor
in its capacity as a partner of the partnership, and the following provisions
shall apply:
(a) A separate capital account (a "Capital Account") shall be
established and maintained for each Certificateholder in accordance with
Treasury Regulations Section 1.704-1(b)(2)(iv). No Certificateholder shall be
entitled to interest on its Capital Account or any capital contribution made by
such Certificateholder to the Trust.
(b) Upon termination of the Trust pursuant to Article IX, any amounts
available for distribution to Certificateholders shall be distributed to the
Certificateholders with positive Capital Account balances in accordance with
such balances. For purposes of this Section 2.10(b), the Capital Account of each
Certificateholder shall be determined after all adjustments made in accordance
with this Section 2.10 resulting from the Trust's operations and from all sales
and dispositions of all or any part of the assets of the Trust. Any
distributions pursuant to this Section 2.10(b) shall be made by the end of the
taxable year in which the termination occurs (or, if later, within 90 days after
the date of the termination).
(c) No Certificateholder shall be required to restore any deficit
balance in its Capital Account. Furthermore, no Certificateholder shall be
liable for the return of the Capital Account of, or of any capital contribution
made to the Trust by, another Certificateholder.
(d) Interest payments on the Certificates at the Certificate rate
(including interest on amounts previously due on the Certificates but not yet
distributed) shall be treated as "guaranteed payments" under Section 707(c) of
the Code.
(e) Except as provided in Section 2.10(h), profit and loss of the Trust
for each taxable year shall be allocated to the Depositor.
<PAGE>
(f) Notwithstanding any provision to the contrary, (i) any expense of
the Trust that is a "nonrecourse deduction" within the meaning of Treasury
Regulations Section 1.704-2(b)(1) shall be allocated to the Depositor, (ii) any
expense of the Trust that is a "partner nonrecourse deduction" within the
meaning of Treasury Regulations Section 1.704-2(i)(2) shall be allocated in
accordance with Treasury Regulations Section 1.704-2(i)(1), (iii) if there is a
net decrease in Trust Minimum Gain within the meaning of Treasury Regulations
Section 1.704-2(f)(1) for any taxable year, items of gain and income shall be
allocated among the Certificateholders in accordance with Treasury Regulations
Section 1.704-2(f) and the ordering rules contained in Treasury Regulations
Section 1.704-2(j), and (iv) if there is a net decrease in Certificateholder
Nonrecourse Debt Minimum Gain within the meaning of Treasury Regulations Section
1.704-2(i)(4) for any taxable year, items of gain and income shall be allocated
among the Certificateholders in accordance with Treasury Regulations Section
1.704-2(i)(4) and the ordering rules contained in Treasury Regulations Section
1.704-2(j). The Depositor's "interest in partnership profits" for purposes of
determining its share of the nonrecourse liabilities of the Trust within the
meaning of Treasury Regulations Section 1.752-3(a)(3) shall be 100%.
(g) If a Certificateholder receives in any taxable year an adjustment,
allocation, or distribution described in subparagraphs (4), (5), or (6) of
Treasury Regulations Section 1.704-1(b)(2)(ii)(d) that causes or increases a
negative balance in such Certificateholder's Capital Account that exceeds the
sum of such Certificateholder's shares of Trust Minimum Gain and
Certificateholder Nonrecourse Debt Minimum Gain, as determined in accordance
with Treasury Regulations Sections 1.704-2(g) and 1.704-2(i), such
Certificateholder shall be allocated specially for such taxable year (and, if
necessary, later taxable years) items of income and gain in an amount and manner
sufficient to eliminate such negative Capital Account balance as quickly as
possible as provided in Treasury Regulations Section 1.704-1(b)(2)(ii)(d). After
the occurrence of an allocation of income or gain to a Certificateholder in
accordance with this Section 2.10(g), to the extent permitted by Regulations
Section 1.704-1(b), items of expense or loss shall be allocated to such
Certificateholder in an amount necessary to offset the income or gain previously
allocated to such Certificateholder under this Section 2.10(g).
(h) Loss shall be allocated first to the Depositor, but only to the
extent that such allocation would not cause a deficit in the Depositor's Capital
Account (after reduction to reflect the items described in Treasury Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) in excess of the sum of the
Depositor's share of Trust Minimum Gain and Certificateholder Nonrecourse Debt
Minimum Gain. Any loss in excess of that limitation shall be allocated to all
the Certificateholders in proportion to the outstanding principal amount of the
Notes and/or Certificates as of the end of the taxable year in which such loss
is allocated. After the occurrence of an allocation of loss to a
Certificateholder in accordance with this Section 2.10(h), to the extent
permitted by Treasury Regulations Section 1.704-1(b), profit shall be allocated
to such Certificateholder in an amount necessary to offset the loss previously
allocated to such Certificateholder under this Section 2.10(h).
(i) If a Certificateholder transfers any part or all of its Interest in
the Trust and the transferee is admitted as provided herein (a "Transferee
Certificateholder"), the distributive shares of the various items of profit and
loss allocable among the Certificateholders during such taxable year shall be
allocated between the transferor and the Transferee Certificateholder (at the
election of the Depositor) either (i) as if the taxable year had ended on the
date of the transfer or (ii) based on the number of days of such taxable year
that each was a Certificateholder without regard to the results of Trust
activities in the respective portions of such taxable year in which the
transferor and Transferee Certificateholder were Certificateholders.
<PAGE>
(j) "Profit" and "loss" and any items of income, gain, expense or loss
referred to in this Section 2.10 shall be determined in accordance with federal
income tax accounting principles as modified by Treasury Regulations Section
1.704-1(b)(2)(iv), except that profits and losses shall not include items of
income, gain, and expense that are specially allocated pursuant to Sections
2.10(f), 2.10(g) or 2.10(h) hereof. All allocations of income, profits, gains,
expenses, and losses (and all items contained therein) for federal income tax
purposes shall be identical to all allocations of such items set forth in this
Section 2.10, except as otherwise required by Section 704(c) of the Code and
Section 1.704-1(b)(4) of the Treasury Regulations.
(k) In the event that a Note is treated for federal income tax purposes
as an equity interest in the Trust rather than as a debt obligation (a
"Recharacterized Note"), the holder of such Recharacterized Note will be treated
as a Certificateholder for purposes of this Section, Section 5.1 and Section
5.4. In addition, the holder of any such Recharacterized Note shall be allocated
items of income, profits, gain, expenses, and losses so as to achieve, to the
extent possible, the same economic and tax effect as if such Recharacterized
Note had been treated for federal income tax purposes as a debt instrument.
ARTICLE III
Trust Certificates and Transfer of Interests
SECTION 3.1. Initial Beneficial Ownership.
Upon the formation of the Trust and the contribution by the Depositor
pursuant to Section 2.5 and until the initial issuance of the Trust
Certificates, the Depositor shall be the sole beneficial owner of the Trust.
SECTION 3.2. The Trust Certificates.
The Trust Certificates shall be substantially in the form of Exhibit A.
The Trust Certificates shall be issued in minimum denominations of $10.00 and
integral multiples of $1.00 in excess thereof. The Trust Certificates shall be
executed on behalf of the Trust by manual or facsimile signature of an
authorized officer of the Eligible Lender Trustee. Trust Certificates bearing
the manual or facsimile signatures of individuals who were, at the time when
such signatures shall have been affixed, authorized to sign on behalf of the
Trust, shall be valid and binding obligations of the Trust, notwithstanding that
such individuals or any of them shall have ceased to be so authorized prior to
the authentication and delivery of such Trust Certificates or did not hold such
offices at the date of authentication and delivery of such Trust Certificates.
SECTION 3.3. Authentication of Trust Certificates.
(a) On the Closing Date, the Eligible Lender Trustee shall cause the
Trust Certificates in an aggregate principal amount equal to $1,000 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 in exchange for the amount contributed to the Trust
pursuant to Section 2.5 and $990 in cash payable by the initial
Certificateholders on the Closing Date. Such Trust Certificates shall be
designated as the Crestar Student Loan Trust 1997-1 Student Loan Asset-Backed
Certificates. 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 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 3.4 or 3.5
hereunder.
<PAGE>
(b) In connection with the initial issuance of the Trust Certificates
the Depositor hereby makes the following representations and warranties:
(i) It is not (1) an employee benefit plan, retirement
arrangement, individual retirement account or Keogh plan subject to
either Title I of the Employee Retirement Income Security Act of 1974,
as amended, or Section 4975 of the Internal Revenue Code of 1986, as
amended, or (2) an entity (including an insurance company general
account) whose underlying assets include plan assets by reason of any
such plan's or account's investment in any such entity.
(ii) It is a U.S. Person as defined in Section 7701(a)(30) of the
Code.
(iii) It understands that the Trust Certificates will be offered in
a transaction not involving any public offering within the meaning of
the Securities Act, and that, if in the future it decides to resell,
pledge or otherwise transfer any Trust Certificates, such Trust
Certificates may be resold, pledged or transferred only (a) to a person
who the seller reasonably believes is an institutional "accredited
investor" as defined in Rule 501(a)(1) - (3) under the Securities Act
that purchases for its own account or for the account of another
institutional accredited investor or (b) pursuant to an effective
registration statement under the Securities Act.
SECTION 3.4. 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 3.9, 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 transfer
and exchanges of Trust Certificates as provided herein. The Eligible Lender
Trustee shall be the Certificate Registrar.
Upon surrender for registration of transfer of any Trust Certificate at
the office or agency maintained pursuant to Section 3.9, and compliance with the
provisions set forth in Section 3.5, the Eligible Lender Trustee shall execute,
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 Certificateholder, Trust
Certificates may be exchanged for other Trust Certificates of authorized
denominations of a like aggregate amount upon surrender of the Trust
Certificates to be exchanged at the office or agency maintained pursuant to
Section 3.9.
<PAGE>
Every Trust Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Eligible Lender Trustee and the Certificate Registrar
duly executed by the Certificateholder or his attorney duly authorized in
writing, with such signature guaranteed by an entity acceptable to the Eligible
Lender Trustee. Each Trust Certificate surrendered for registration of transfer
or exchange shall be canceled and subsequently disposed of by the Eligible
Lender Trustee in accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Eligible Lender Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer or
exchange of Trust Certificates.
The preceding provisions of this Section 3.4 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.
SECTION 3.5. Restrictions on Transfer.
(a) Except for the initial sale of the Trust Certificates, the Trust
Certificates may not be offered or sold except to institutional "accredited
investors" (as defined in Rule 501(a)(1) - (3) under the Securities Act) who are
U.S. Persons (as defined in Section 7701(a)(30) of the Code) in reliance on an
exemption from the registration requirements of the Securities Act.
The Trust Certificates have not been registered or qualified under the
Securities Act, or any state securities law. No transfer, sale, pledge or other
disposition of any Trust Certificate shall be made unless such disposition is
made pursuant to an effective registration statement under the Securities Act
and effective registration or qualification under applicable state securities
laws, or is made in a transaction which does not require such registration or
qualification. In the event that a transfer is to be made in reliance upon an
exemption from the Securities Act, the Eligible Lender Trustee may require, in
order to assure compliance with the Securities Act, that the Certificateholder's
prospective transferee certify to the Eligible Lender Trustee in writing the
facts surrounding such disposition. Unless the Eligible Lender Trustee requests
otherwise, such certification shall be substantially in the form of Exhibit B
hereto. In the event that such certification of facts does not on its face
establish the availability of an exemption under the Securities Act, the
Eligible Lender Trustee may require an opinion of counsel satisfactory to it
that such transfer may be made pursuant to an exemption from the Securities Act,
which opinion of counsel shall not be an expense of the Eligible Lender Trustee
or of the Trust.
(b) Each Trust Certificate will bear a legend substantially to the
following effect:
<PAGE>
"THIS TRUST CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY
PURCHASING THIS TRUST CERTIFICATE, AGREES THAT THIS TRUST CERTIFICATE MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH ANY APPLICABLE
STATE SECURITIES LAWS AND (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1) - (3)
UNDER THE ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF AN
INSTITUTIONAL ACCREDITED INVESTOR, OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT.
THIS TRUST CERTIFICATE MAY NOT BE TRANSFERRED DIRECTLY OR INDIRECTLY TO (1)
EMPLOYEE BENEFIT PLANS, RETIREMENT ARRANGEMENTS, INDIVIDUAL RETIREMENT ACCOUNTS
OR KEOGH PLANS SUBJECT TO EITHER TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED, OR (2) ENTITIES (INCLUDING INSURANCE COMPANY GENERAL
ACCOUNTS) WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF ANY SUCH
PLAN'S ARRANGEMENTS OR ACCOUNT'S INVESTMENT IN SUCH ENTITIES. FURTHER, THIS
TRUST CERTIFICATE MAY BE TRANSFERRED ONLY TO A UNITED STATES PERSON WITHIN THE
MEANING OF SECTION 7701(a)(30) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
THIS TRUST CERTIFICATE DOES NOT REPRESENT DEPOSITS OR OBLIGATIONS OF OR ANY
INTEREST IN CRESTAR BANK, STAR BANK, NATIONAL ASSOCIATION OR DELAWARE TRUST
CAPITAL MANAGEMENT, INC.
THIS TRUST CERTIFICATE IS NOT GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY GOVERNMENTAL AGENCY.
SECTION 3.6. Mutilated, Destroyed, Lost or Stolen Trust
Certificates.
If (a) any mutilated Trust Certificate shall be surrendered to the
Certificate Registrar, or if the Certificate Registrar shall receive evidence to
its satisfaction of the destruction, loss or theft of any Trust Certificate and
(b) there shall be delivered to the Certificate Registrar and the Eligible
Lender Trustee such security or indemnity as may be required by them to save
each of them harmless, then in the absence of notice that such Trust Certificate
shall have been acquired by a bona fide purchaser, the Eligible Lender Trustee
on behalf of the Trust shall execute and the Eligible Lender Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Trust Certificate, a new Trust Certificate of like
tenor and denomination. In connection with the issuance of any new Trust
Certificate under this Section, the Eligible Lender Trustee and the Certificate
Registrar may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Trust Certificate issued pursuant to this Section shall constitute conclusive
evidence of ownership in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Trust Certificate shall be found at any time.
<PAGE>
SECTION 3.7. 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 5.1 and for all
other purposes whatsoever, and neither the Eligible Lender Trustee or the
Certificate Registrar nor any agent of any thereof shall be bound by any notice
to the contrary.
SECTION 3.8. Access to List of Certificateholders' Names and
Addresses.
The Eligible Lender Trustee shall furnish or cause to be furnished to
the Depositor within 15 days after receipt by the Eligible Lender Trustee of a
request therefor from the Depositor in writing, a list, in such form as the
Depositor may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date. If three or more
Certificateholders or one or more Certificateholders evidencing not less than
25% of the Certificate Balance apply in writing to the Eligible Lender Trustee,
and such application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Trust Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Eligible Lender
Trustee shall, within five Business Days after the receipt of such application,
afford such applicants access during normal business hours to the current list
of Certificateholders. Upon receipt of any such application, the Eligible Lender
Trustee will promptly notify the Depositor by providing a copy of such
application and a copy of the list of Certificateholders produced in response
thereto. Each Certificateholder, by receiving and holding a Trust Certificate
shall be deemed to have agreed not to hold any of the Depositor, the Certificate
Registrar or the Eligible Lender Trustee accountable by reason of the disclosure
of its name and address, regardless of the source from which such information
was derived.
SECTION 3.9. Maintenance of Office or Agency.
The Eligible Lender Trustee shall maintain in the City of Cincinnati,
Ohio 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 its corporate trust office at Star Bank, National
Association, 425 Walnut Street, Cincinnati, Ohio 45201, as such office. The
Eligible Lender Trustee shall give prompt written notice to the Depositor and to
the Certificateholders of any change in the location of the Certificate Register
or any such office or agency.
SECTION 3.10. Appointment of Certificate Paying Agent.
<PAGE>
The Certificate Paying Agent shall make distributions to
Certificateholders from the amounts received from the Indenture Trustee out of
the Trust Accounts pursuant to Section 5.1 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
Majority Certificateholder 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 acceptable to the Majority Certificateholder, which consent shall
not be unreasonably withheld. The Eligible Lender Trustee shall furnish the
Indenture Trustee and the Majority Certificateholder with a notice identifying
each co-paying agent within two days of any such appointment. The Eligible
Lender Trustee shall be permitted to resign as Certificate Paying Agent upon 30
days written notice to the Eligible Lender Trustee and the Majority
Certificateholder. If the Eligible Lender Trustee shall no longer be the
Certificate Paying Agent, the Eligible Lender Trustee, subject to the prior
written consent of the Majority Certificateholder (which consent shall not be
unreasonably withheld), shall appoint a successor to act as Certificate Paying
Agent (which shall be a bank or trust company). The Eligible Lender Trustee
shall cause such successor Certificate Paying Agent or any additional
Certificate Paying Agent appointed by the Eligible Lender Trustee to execute and
deliver to the Eligible Lender Trustee an instrument in which such successor
Certificate Paying Agent or additional Certificate Paying Agent shall agree with
the Eligible Lender Trustee that, as Certificate Paying Agent, such successor
Certificate Paying Agent or additional Certificate Paying Agent will hold all
sums, if any, held by it for payment to the Certificateholders in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be paid
to such Certificateholders. The Certificate Paying Agent shall return all
unclaimed funds to the Eligible Lender Trustee and upon removal of a Certificate
Paying Agent such Certificate Paying Agent shall also return all funds in its
possession to the Eligible Lender Trustee. The provisions of Sections 7.1, 7.3,
7.4, 7.5 and 8.1 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.
ARTICLE IV
Actions by Eligible Lender Trustee
SECTION 4.1. 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 Certificateholders in
writing of the proposed action and the Majority Certificateholder shall not have
notified the Eligible Lender Trustee in writing prior to the 30th day after such
notice is given that the Majority Certificateholder has withheld consent:
(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);
<PAGE>
(b) the amendment of the Indenture or the Terms Supplement by a
supplemental indenture;
(c) the amendment, change or modification of the Administration
Agreement; or
(d) the appointment pursuant to the Indenture or the Terms Supplement
of a successor Note Registrar or Indenture Trustee or pursuant to this Agreement
of a successor Certificate Registrar or Certificate Paying Agent, 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 4.2. Action by Certificateholders with Respect to Certain
Matters.
The Eligible Lender Trustee shall not have the power, except upon the
direction of the Majority Certificateholders or, with the Majority
Certificateholder's consent, to (a) remove the Master Servicer or the
Administrator under the Transfer and Servicing Agreement pursuant to Section 8.1
thereof or (b) except as expressly provided in the Basic Documents, sell the
Financed Student Loans after the termination of the Indenture. The Eligible
Lender Trustee shall take the actions referred to in the preceding sentence only
upon written instructions signed by the Majority Certificateholder.
SECTION 4.3. Action by Certificateholders with Respect to
Bankruptcy.
The Eligible Lender Trustee shall not have the power to commence a
voluntary proceeding in bankruptcy relating to the Trust without the unanimous
prior approval of all Certificateholders and the delivery to the Eligible Lender
Trustee by each such Certificateholder of a certificate certifying that such
Certificateholder reasonably believes that the Trust is insolvent.
SECTION 4.4. Restrictions on Certificateholders' Power.
The Certificateholders shall not direct the Eligible Lender Trustee to
take or refrain from taking any action if such action or inaction would be
contrary to any obligation of the Trust or the Eligible Lender Trustee under
this Agreement or any of the other Basic Documents or would be contrary to
Section 2.3 nor shall the Eligible Lender Trustee be permitted to follow any
such direction, if given.
SECTION 4.5. Majority Control.
Except as expressly provided herein, any action that may be taken by
the Certificateholders under this Agreement may be taken by the Majority
Certificateholders evidencing not less than 50.1% of the Certificate Balance
without regard to Certificates held by the Depositor. Except as expressly
provided herein, any written notice of the Certificateholders delivered pursuant
to this Agreement shall be effective if signed by the Majority
Certificateholders evidencing not less than 50.1% of the Certificate Balance at
the time of the delivery of such notice.
<PAGE>
ARTICLE V
Application of Trust Funds; Certain Duties
SECTION 5.1. Application of Trust Funds.
(a) No later than the close of business on the day it receives funds
distributed by the Indenture Trustee pursuant to Sections 5.5, 5.6 and 5.10 of
the Transfer and Servicing Agreement, the Certificate Paying Agent will
distribute such amounts to Trust Certificateholders on a pro rata basis, based
upon the portion of the Certificate Balance held by such Certificateholder;
provided, however, that if the Eligible Lender Trustee receives funds for
distribution to Certificateholders after 11:00 a.m. on any day it shall use all
reasonable efforts to distribute such funds to the applicable Certificateholders
on such day but shall not be liable for any damages if such funds are
distributed on the following Business Day. Notwithstanding the foregoing, all
amounts received by the Eligible Lender Trustee from the Indenture Trustee
representing amounts in the Reserve Account in excess of the Specified Reserve
Account Balance shall be distributed to the Depositor (but such distributions
shall not reduce the principal amount of the Trust Certificates held by the
Depositor) and no other Certificateholder shall be entitled to have a claim for
such amounts.
(b) No later than the Business Day following its receipt thereof, the
Eligible Lender Trustee shall send to each Trust Certificateholder (but so long
as the Depositor is a Certificateholder, no such statement need be sent to the
Depositor) the statement provided to the Eligible Lender Trustee by the
Administrator pursuant to Section 5.7 of the Transfer and Servicing Agreement
relating to such Certificate Distribution Date.
(c) If any withholding tax is imposed on the Trust's payments (or
allocations of income) to a Certificateholder, such tax shall reduce the amount
otherwise distributable to the Certificateholder in accordance with this
Section. The Eligible Lender Trustee is hereby authorized to and shall, upon
receipt of written instructions of the Administrator identifying the appropriate
amount, to retain from amounts otherwise distributable to the Certificateholders
sufficient funds for the payment of any tax that is legally owed by the Trust
(but such authorization shall not prevent the Eligible Lender Trustee from
contesting any such tax in appropriate proceedings, and withholding payment of
such tax, if permitted by law, pending the outcome of such proceedings). The
amount of any withholding tax imposed with respect to a Certificateholder shall
be treated as cash distributed to such Certificateholder at the time it is
withheld by the Trust to be remitted to the appropriate taxing authority. If
there is a possibility that withholding tax is payable with respect to a
distribution (such as a distribution to a non-U.S. Certificateholder), the
Eligible Lender Trustee in its sole discretion may (but unless otherwise
required by law shall not be obligated to) withhold such amounts in accordance
with this paragraph (c). In the event that a Certificateholder wishes to apply
for a refund of any such withholding tax, the Eligible Lender Trustee and the
Administrator shall reasonably cooperate with such Certificateholder in making
such claim so long as such Certificateholder agrees to reimburse the Eligible
Lender Trustee and the Administrator for any reasonable out-of-pocket expenses
incurred.
<PAGE>
SECTION 5.2. Method of Payment.
Subject to Section 9.1(c), distributions required to be made to
Certificateholders on any Distribution Date shall be made to each
Certificateholder of record on the applicable Record Date either by wire
transfer, in immediately available funds, to the account of such
Certificateholder at a bank or other entity having appropriate facilities
therefore, if such Certificateholder shall have provided to the Certificate
Registrar appropriate written instructions (which may be standing instructions)
at least five Business Days prior to such Distribution Date or, if not, by check
mailed to such Certificateholder at the address of such Certificateholder
appearing in the Certificate Register.
SECTION 5.3. Segregation of Moneys; No Interest.
Subject to Section 5.1, moneys received by the Eligible Lender Trustee
hereunder shall be deposited in the Certificate Distribution Account and
invested in Eligible Investments in accordance with instructions received from
the Administrator. The Eligible Lender Trustee shall not be liable for any
interest thereon.
SECTION 5.4. Accounting and Reports to the Certificateholders,
the Internal Revenue Service and Others.
The Administrator, on behalf of the Eligible Lender Trustee, shall (a)
maintain (or cause to be maintained) the books of the Trust on a calendar year
basis on the accrual method of accounting, (b) deliver to each Certificateholder
(and to each Person who was a Certificateholder at any time during the
applicable calendar year), as may be required by the Code and applicable
Treasury Regulations, such information as may be required (including Schedule
K-1) to enable each such Certificateholder to prepare its federal and State
income tax returns, (c) file such tax returns relating to the Trust (including a
partnership information return, Internal Revenue Service Form 1065), and make
such elections as may from time to time be required or appropriate under any
applicable State or federal statute or rule or regulation thereunder so as to
maintain the Trust's characterization as a partnership for federal, State and
local 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 5.1(c) with respect to income or
distributions to Certificateholders. The Depositor shall instruct the
Administrator and the Eligible Lender Trustee as to whether to make any
available election under the Code or any applicable state or local tax law
(including the election under Section 1278 of the Code to include in income
currently any market discount that accrues with respect to the Financed Student
Loans). If the Depositor instructs the Administrator and the Trustee to make an
election under Section 754 of the Code, the Depositor shall bear the cost of
preparing such election and any additional accounting expenses of the Trust
incurred as a result of such election.
SECTION 5.5. Signature on Returns; Tax Matters Partner.
(a) The Depositor shall sign on behalf of the Trust the tax returns of
the Trust unless otherwise required by applicable law.
<PAGE>
(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 6.1. General Authority.
The Eligible Lender Trustee is authorized and directed by the Depositor
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 such Notes as may from
time to time be authorized by the Indenture and any related Terms Supplement.
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 and (ii)
to take all actions required pursuant to Section 4.2(c) of the Transfer 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 of HHS and Department of Education and any Guarantor with respect
to any Interest Subsidy Payments, Special Allowance Payments, and any other
payments relating to the Financed Student Loans.
In addition to the foregoing, the Eligible Lender Trustee is authorized
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 or with respect to the administration of the Trust and is directed to
take such action to the extent that the Administrator is expressly required
pursuant to the Basic Documents to cause the Eligible Lender Trustee to act.
SECTION 6.2. 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 best interests of the Certificateholders, subject to
and in accordance with the provisions of this Agreement and the other Basic
Documents. 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.
<PAGE>
SECTION 6.3. Action upon Instruction.
(a) 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 (except as such action is
specifically required hereunder) 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.
(b) Whenever the Eligible Lender Trustee is unable to determine the
appropriate course of action between alternative courses of action permitted or
required by the terms of this Agreement or under any other Basic Document, the
Eligible Lender Trustee shall promptly give notice (in such form as shall be
appropriate under the circumstances) to the Certificateholders and the
Administrator 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 received from the Administrator, 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 30 days of such notice (or within such shorter period of time as
reasonably may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, not inconsistent with this Agreement or the other Basic
Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
(c) If the Eligible Lender Trustee is unsure as to the application of
any provision of this Agreement or any other Basic Document or any agreement
entered into by the Eligible Lender Trustee on behalf of the Trust or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or if this Agreement permits any
determination by the Eligible Lender Trustee or is silent or is incomplete as to
the course of action that the Eligible Lender Trustee is required to take with
respect to a particular set of facts, the Eligible Lender Trustee may give
notice (in such form as shall be appropriate under the circumstances) to the
Certificateholders requesting instruction and, to the extent that the Eligible
Lender Trustee acts or refrains from acting in good faith in accordance with any
such instruction received from the Certificateholders, 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 30 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 or such other agreements, as it shall deem to be in the best interests
of the Certificateholders, and shall have no liability to any Person for such
action or inaction.
SECTION 6.4. No Duties Except as Specified in this Agreement, the
Transfer and Servicing Agreement, any Supplemental Transfer and Servicing
Agreement or in Instructions.
<PAGE>
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 Transfer and Servicing
Agreement, or in any document or written instruction received by the Eligible
Lender Trustee pursuant to Section 6.3; 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, Star Bank, National Association 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 6.5. 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 or the Trust is a party and (iii) in
accordance with any document or instruction delivered to the Eligible Lender
Trustee pursuant to Section 6.3.
SECTION 6.6. Restrictions.
The Eligible Lender Trustee shall not take any action (a) that is
inconsistent with the purposes of the Trust set forth in Section 2.3 or (b)
that, to the actual knowledge of the Eligible Lender Trustee, would result in
the Trust's becoming taxable as a corporation for federal income tax purposes.
The Certificateholders shall not direct the Eligible Lender Trustee to take any
action that would violate the provisions of this Section.
ARTICLE VII
Concerning the Eligible Lender Trustee
SECTION 7.1. 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 for the benefit of the Certificateholders. The
Eligible Lender Trustee also agrees to disburse all moneys actually received by
it constituting part of the Trust Estate under 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, bad faith or
negligence or (ii) in the case of the inaccuracy of any representation or
warranty contained in Section 7.3 expressly made by the Eligible Lender Trustee;
provided, however, that in no event shall the Eligible Lender Trustee be liable
under any theory of tort, contract, strict liability or other legal or equitable
theory for any lost profits or exemplary, punitive, special, incidental,
indirect or consequential damages, each of which is hereby excluded by agreement
of the parties regardless of whether or not the Eligible Lender Trustee has been
advised of the possibility of such damages. In particular, but not by way of
limitation (and subject to the exceptions set forth in the preceding sentence):
<PAGE>
(a) the Eligible Lender Trustee shall not be liable for any error of
judgment made in good faith by a responsible officer of the Eligible Lender
Trustee unless it is proved that the Eligible Lender Trustee was negligent in
ascertaining the pertinent facts;
(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, the Depositor or the Certificateholders of
Certificates evidencing the requisite percentage of the Certificate Balance;
(c) no provision of this Agreement or any other Basic Document shall
require the Eligible Lender Trustee to expend or risk funds or otherwise incur
any financial liability in the performance of any of its rights or powers
hereunder or under any other Basic Document, if the Eligible Lender Trustee
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured or
provided to it;
(d) under no circumstances shall the Eligible Lender Trustee be liable
for indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes or for any amounts owing
under the Trust Certificates;
(e) the Eligible Lender Trustee shall not be responsible for or in
respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Depositor or for the form, character genuineness,
sufficiency, value or validity of any of the Trust Estate or for or in respect
of the validity or sufficiency of the Basic Documents, other than the
certificate of authentication on the Trust Certificates and the Eligible Lender
Trustee shall in no event assume or incur any liability, duty or obligation to
any Noteholder or to any Certificateholder, other than as expressly provided for
herein and in the other Basic Documents;
(f) the Eligible Lender Trustee shall not be liable for the action or
inaction, default or misconduct of the Depositor, Administrator, the Indenture
Trustee or the Master Servicer under this Agreement or 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 Transfer and Servicing Agreement, the Indenture Trustee under the
Indenture or any Terms Supplement or the Master Servicer under the Transfer 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 Certificateholders, unless such Certificateholders
have offered to the Eligible Lender Trustee security or indemnity reasonably
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, bad faith or willful misconduct in the performance of any such act.
<PAGE>
SECTION 7.2. Furnishing of Documents.
The Eligible Lender Trustee shall furnish to the Certificateholders
promptly upon receipt of a written request therefor duplicates or copies of all
reports, notices, requests, demands, certificates, financial statements and any
other instruments furnished to the Eligible Lender Trustee under the Basic
Documents.
SECTION 7.3. Representations and Warranties.
The Eligible Lender Trustee hereby represents and warrants to the
Depositor, for the benefit of the Certificateholders that:
(a) It is a national banking association duly organized and validly
existing in good standing under the laws of the United States. It has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the other Basic Documents to which it is a
party.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement and the other Basic Documents to
which it is a party, and this Agreement and the other Basic Documents to which
it is a party, have been executed and delivered by one of its officers who is
duly authorized to execute and deliver this Agreement and the other Basic
Documents to which it is a party on its behalf, and when so executed shall be
legal, valid and binding obligations of the Eligible Lender Trustee, enforceable
against the Eligible Lender Trustee in accordance with their respective terms.
(c) Neither the execution nor the delivery by it of this Agreement or
the other Basic Documents to which it is a party, nor the consummation by it of
the transactions contemplated hereby or thereby nor compliance by it with any of
the terms or provisions hereof or thereof, will contravene any federal or 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 (and is otherwise eligible to be a lender
under the FFEL Program under the regulations for the FFEL Program) and Section
292o(2) of the HEAL Act (and is otherwise eligible to be a HEAL lender or holder
under the regulations for the HEAL Program), for purposes of holding legal title
to the Financed Student Loans as contemplated by this Agreement and the other
Basic Documents, and has obtained a lender identification number with respect to
the Trust from the (i) Department of Education and has in effect a Guarantee
Agreement with each of the Guarantors with respect to the Financed FFELP Loans
and (ii) the Department of HHS and has in effect the HEAL Insurance Contract
with respect to the Financed HEAL Loans.
<PAGE>
SECTION 7.4. 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. 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, including the Administrator, 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 or by the Administrator or Depositor, and (ii) may consult with
counsel, accountants and other skilled persons to be selected with reasonable
care and employed by it or selected and employed by the Administrator or
Depositor. The Eligible Lender Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the opinion or advice
of any such counsel, accountants or other such persons and not contrary to this
Agreement or any other Basic Document.
SECTION 7.5. Not Acting in Individual Capacity.
Except for the representations and warranties set forth in Section 7.3,
in accepting the trusts hereby created Star Bank, National Association 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 Agreement or any other Basic Document
shall look only to the Trust Estate for payment or satisfaction thereof.
SECTION 7.6. Eligible Lender Trustee Not Liable for Trust
Certificates or Financed Student Loans.
The recitals contained in any Trust Supplement 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. Except as to a Guarantor, the U.S.
Secretary of Education or the U.S. Secretary of the Department of HHS, 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 or the HEAL Insurance Contract) for or with
respect to the legality, validity, enforceability and eligibility for Guarantee
Payments or Insurance Payments of any Financed Student Loan, or for or with
respect to the sufficiency of the Trust Estate or its ability to generate the
payments to be distributed to Certificateholders under this Agreement or the
Noteholders under the Indenture, including without limitation: 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 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, Administrator, Seller or the Master
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 Depositor, Administrator, the Indenture Trustee or
the Master Servicer or any subservicer taken in the name of the Eligible Lender
Trustee; and the failure of the Financed Student Loans to be serviced in
conformity with applicable regulations.
<PAGE>
Notwithstanding any provision in this Agreement or the Basic Documents,
nothing in this Agreement or the Basic Documents shall be construed to limit the
Eligible Lender Trustee's responsibility to the (i) Secretary of Education or a
Guarantor in its capacity as Eligible Lender Trustee for any violations of
statutory or regulatory requirements that may occur with respect to loans held
in the Trust, pursuant to 34 CFR 682.203(b) or any successor provision thereto;
or (ii) the Department of HHS in its capacity as Eligible Lender Trustee for any
violations of statutory or regulatory requirements that may occur with respect
to loans held in the Trust, pursuant to the HEAL Act.
SECTION 7.7. 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 the Trust Certificates or Notes and may deal with
the Depositor, the Administrator, the Indenture Trustee, the Master Servicer and
the Guarantors in banking or trust transactions with the same rights as it would
have if it were not Eligible Lender Trustee, including serving as a trustee of
other trusts dealing in any student loans, including trusts which purchase
student loans from the Trust.
SECTION 7.8. Representations and Warrantees of Delaware Trustee.
The Delaware Trustee hereby represents and warrants to the Depositor,
for the benefit of the Certificateholders that:
(a) It is a Delaware banking corporation duly organized and validly
existing in good standing under the laws of Delaware. It has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement.
<PAGE>
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement has been
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf, and when so executed shall be a legal,
valid and binding obligation of the Delaware Trustee, enforceable against the
Delaware Trustee in accordance with its terms.
(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
State law, governmental rule or regulation governing the banking or trust powers
of the Delaware 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.
ARTICLE VIII
Compensation of Trustees
SECTION 8.1. 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. Such fee shall be
payable as provided in Section 5.5 of the Transfer and Servicing Agreement.
SECTION 8.2. Payments to the Eligible Lender Trustee.
Any amounts paid to the Eligible Lender Trustee pursuant to this
Agreement or the Transfer and Servicing Agreement shall be deemed not to be a
part of the Trust Estate immediately after such payment.
SECTION 8.3. Delaware Trustee's Fees and Expenses.
The Delaware Trustee shall receive as compensation for its services
hereunder such fees and expenses as have been separately agreed upon before the
date hereof between the Depositor and the Delaware Trustee. Such fees shall be
payable as provided in Section 5.5 of the Transfer and Servicing Agreement.
ARTICLE IX
Termination of Trust Agreement
SECTION 9.1. Termination of Trust Agreement.
<PAGE>
(a) This Trust shall terminate 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, any
related Terms Supplement, the Transfer and Servicing Agreement and Article V
hereof, (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 9.2. The bankruptcy, liquidation, dissolution, death or
incapacity of any Certificateholder other than the Depositor as described in
Section 9.2, shall not (x) operate to terminate this Agreement or the Trust, nor
(y) entitle such Certificateholder's or Depositor'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 9.1(a), neither the Depositor nor any
Certificateholder shall be entitled to revoke or terminate the Trust without the
prior written consent of the Indenture Trustee.
(c) Upon the termination of the Trust under Section 9.1(a), the Trust
shall be wound up by the Eligible Lender Trustee pursuant to Section 3808 of the
Delaware Business Trust Statute. Notice of any termination of the Trust,
specifying the Distribution Date upon which the Certificateholders 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 Certificateholders mailed within five
Business Days of receipt of notice of such termination from the Administrator
given pursuant to Section 9.1(c) of the Transfer and Servicing Agreement,
stating (i) the Distribution Date upon which final payment of the Trust
Certificates shall be made upon presentation and surrender of the Trust
Certificates at the office of the Certificate Paying Agent therein designated,
(ii) the amount of any such final payment and (iii) that the Record Date
otherwise applicable to such Distribution Date is not applicable, payments being
made only upon presentation and surrender of the Trust Certificates at the
office of the Certificate Paying Agent therein specified. The Eligible Lender
Trustee shall give such notice to the Certificate Registrar (if other than the
Eligible Lender Trustee) and the Certificate Paying Agent at the time such
notice is given to Certificateholders. Upon presentation and surrender of the
Trust Certificates the Certificate Paying Agent shall cause to be distributed to
Certificateholders amounts distributable on such Distribution Date pursuant to
Section 5.1. Certificates shall cease to earn interest as of the termination
date of the Trust. Any funds remaining in the Trust after required distributions
to Certificateholders shall be distributed by the Eligible Lender Trustee to the
Depositor.
(d) If all the Certificateholders shall not surrender their Trust
Certificates for cancellation within six months after the date specified in the
above-mentioned written notice, the Eligible Lender Trustee shall give a second
written notice to the remaining Certificateholders to surrender their Trust
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Trust Certificates
shall not have been surrendered for cancellation, the Eligible Lender Trustee
may take appropriate steps, or may appoint an agent to take appropriate steps,
to contact the remaining Certificateholders concerning surrender of their Trust
Certificates and the cost thereof shall be paid out of the funds and other
assets that shall remain subject to this Agreement. Any funds remaining in the
Trust after exhaustion of such remedies and no later than five years after the
first such notice shall be distributed by the Eligible Lender Trustee to the
Depositor.
<PAGE>
(e) Upon termination of the Trust in accordance with Article IX, the
Eligible Lender Trustee or Delaware Trustee (upon instruction from the Eligible
Lender Trustee) shall cause the Certificate of Trust to be canceled by filing a
Certificate of Cancellation with the Delaware Secretary of State under
applicable law.
SECTION 9.2. Dissolution upon Insolvency of Depositor.
If an Insolvency Event shall occur with respect to the Depositor, the
Trust shall be terminated in accordance with Section 9.1 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
Majority Certificateholders to the effect that they disapprove 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 Certificateholders and the Indenture Trustee, of the occurrence of
such event and (iii) the Indenture Trustee shall, upon receipt of written notice
of such Insolvency Event from the Eligible Lender Trustee or the Depositor, give
prompt written notice to the Noteholders of the occurrence of such event;
provided, however, that any failure to give a notice required by this sentence
shall not prevent or delay, in any manner, a termination of the Trust pursuant
to the first sentence of this Section 9.2. Upon a termination pursuant to this
Section 9.2, 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. The
proceeds of such a sale of the assets of the Trust shall be treated as
collections under the Transfer and Servicing Agreement.
ARTICLE X
Successor Eligible Lender Trustees and
Additional Eligible Lender Trustees
SECTION 10.1. 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 (and otherwise eligible to be a
lender under the FFEL Program under the regulations for the FFEL Program) for
purposes of holding legal title to the Federal Loans on behalf of the Trust,
with a valid lender identification number with respect to the Trust from the
Department of Education; (ii) qualifying as an "eligible lender" as such term is
defined in Section 292o(2) of the HEAL Act (and otherwise eligible to be a HEAL
lender or holder under the regulations for the HEAL Program), for purposes of
holding legal title to the HEAL Loans on behalf of the Trust, with a valid
lender identification number with respect to the Trust from the Department of
HHS, (iii) being authorized to exercise corporate trust powers and hold legal
title to the Financed Student Loans; (iv) having in effect Guarantee Agreements
with each of the Guaranty Agencies then guaranteeing FFELP Loans and an
insurance contract with the Department of HHS insuring the HEAL Loans; (v)
having a combined capital and surplus of at least $50,000,000 and being subject
to supervision or examination by federal or State authorities; and (vi), with
respect to any successor Eligible Lender Trustees, having (or having a parent
which has) a rating of at least Baa3 by Moody's and at least BBB by Standard &
Poor's and Fitch IBCA, Inc. 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 10.1, 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 10.1, the Eligible Lender Trustee shall resign immediately in the manner
and with the effect specified in Section 10.2.
<PAGE>
SECTION 10.2. Resignation or Removal of Eligible Lender Trustee.
The Eligible Lender Trustee may at any time resign and be discharged
from the trusts hereby created by giving written notice thereof to the
Administrator and the Administrator may dismiss the Eligible Lender Trustee or
any co-paying agent at any time for its failure to act in accordance with the
terms of this Agreement; provided, however, that prior to any such dismissal,
the Administrator shall have given the Eligible Lender Trustee or the co-paying
agent, as the case may be, notice identifying such failure, and shall have given
the Eligible Lender Trustee or the co-paying agent, as the case may be, two
Business Days to cure such failure, if such failure relates to the distribution
of funds to Certificateholders, and 30 days to cure all other failures. Upon
receiving such notice of resignation or dismissal, the Administrator, with the
approval of the Majority Certificateholders shall promptly appoint a successor
Eligible Lender Trustee meeting the eligibility requirements of Section 10.1 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 or dismissal, the resigning or dismissed Eligible
Lender Trustee, as the case may be, 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 or dismissed
Eligible Lender Trustee, as the case may be, 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 10.1 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,
with the prior approval of the Majority Certificateholder, a successor Eligible
Lender Trustee by written instrument, in duplicate, one copy of which instrument
shall be delivered to the outgoing Eligible Lender Trustee so removed and one
copy to the successor Eligible Lender Trustee and payment of all fees owed to
the outgoing Eligible Lender Trustee.
<PAGE>
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 10.3
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 the Certificateholders and, if any Notes or
Certificates are then rated by any of the Rating Agencies, the Rating Agencies.
SECTION 10.3. Successor Eligible Lender Trustee.
Any successor Eligible Lender Trustee appointed pursuant to Section
10.2 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 of
Education and the Department of HHS 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 10.3 unless at the time of such acceptance such
successor Eligible Lender Trustee shall be eligible pursuant to Section 10.1 and
shall have made the representations and warranties set forth in Section 7.3 to
the Depositor, for the benefit of the Certificateholders.
Upon acceptance of appointment by a successor Eligible Lender Trustee
pursuant to this Section, the Administrator shall mail notice of the successor
of such Eligible Lender Trustee to all Certificateholders, the Indenture Trustee
and the Noteholders. 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 10.4. Merger or Consolidation of Eligible Lender Trustee.
Any corporation into which the Eligible Lender Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Eligible Lender
Trustee shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of the Eligible Lender Trustee, shall, without
the execution or filing of any instrument or any further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding, be the
successor of the Eligible Lender Trustee hereunder; provided that such
corporation shall be eligible pursuant to Section 10.1; provided further that
the Eligible Lender Trustee shall mail notice of such merger or consolidation to
the Depositor.
<PAGE>
SECTION 10.5. 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, the Majority Certificateholder, and if the Notes or the
Certificates are then rated by any of the Rating Agencies, the Rating Agencies,
meeting the eligibility requirements of clauses (i) through (iii) of Section
10.1, 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) , (v) and (vi) of Section 10.1 and no notice of
the appointment of any co-trustee or separate trustee shall be required pursuant
to Section 10.3. The expenses incurred in connection with the retention of any
co-trustee shall be deemed an Expense of the Issuer to be borne by the
Depositor.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(a) 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;
(b) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement; and
(c) 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.
<PAGE>
Any notice, request or other writing given to the Eligible Lender
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Eligible
Lender Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Eligible Lender Trustee. Each such instrument shall be filed
with the Eligible Lender Trustee and a copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Eligible
Lender Trustee as its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustees 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 11.1. Supplements and Amendments.
(a) This Agreement, including the Attachments and Annexes hereto, may
be amended by the Depositor and the Eligible Lender Trustee, but without the
consent of any of the Noteholders or the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions in this Agreement or for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions in this Agreement or of modifying in any manner the rights of
the Noteholders, or the Certificateholders; provided, however, that such action
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Noteholder or Certificateholder.
(b) Subject to the last sentence of Section 2.3, this Agreement may
also be amended from time to time by the Depositor and the Eligible Lender
Trustee, with the consent of (i) the Noteholders of Directing Notes evidencing
not less than 50.1% of the Outstanding Amount of the Directing Notes, and (ii)
the Majority Certificateholders for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that no such amendment shall (a) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Financed Student Loans or distributions that shall be
required to be made for the benefit of the Noteholders or the
Certificateholders, (b) reduce the aforesaid percentage of the Outstanding
Amount of the Notes and the Certificate Balance of Trust Certificates required
to consent to any such amendment, without the consent of all the outstanding
Noteholders and Certificateholders or (c) modify Section 2.7 (or any other
Sections without an Opinion of Counsel that such amendment will not cause the
Trust to be taxed as a corporation).
<PAGE>
Promptly after the execution of any such amendment or consent, the
Eligible Lender Trustee shall furnish written notification of the substance of
such amendment or consent to each Certificateholder and, if the Notes or
Certificates are then rated by any Rating Agency, the Rating Agencies.
It shall not be necessary for the consent of Certificateholders, the
Noteholders or the Indenture Trustee pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Eligible Lender Trustee may prescribe.
(c) 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.
(d) Notwithstanding anything to the contrary contained in this Section
11.1, or elsewhere in this Agreement, the Depositor and the Eligible Lender
Trustee (upon written direction from the Depositor), at any time and from time
to time, may enter into one or more Trust Supplements to set forth the terms of
any Class of Trust Certificates that have not theretofore been authorized by a
Trust Supplement.
(e) Notwithstanding anything to the contrary contained in this Section
11.1 or elsewhere in this Agreement, no amendment, supplement or modification
shall be made or become effective with respect to Section 2.4(b), (c) or (d)
without sixty (60) days prior written notice to the Delaware Trustee (or the
prior written consent of the Delaware Trustee).
SECTION 11.2. No Legal Title to Trust Estate in Certificateholders.
The Certificateholders shall not have legal title to any part of the
Trust Estate. The Certificateholders shall be entitled to receive distributions
with respect to their undivided beneficial ownership interest therein only in
accordance with Articles V and IX. No transfer, by operation of law or
otherwise, of any right, title, or interest of the Certificateholders to and in
their beneficial ownership interest 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.
<PAGE>
SECTION 11.3. Limitations on Rights of Others.
The provisions of this Agreement are solely for the benefit of the
Eligible Lender Trustee, the Delaware Trustee, the Depositor, the
Certificateholders, the Administrator and, to the extent expressly provided
herein, the Indenture Trustee and the Noteholders, and nothing in this
Agreement, 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 11.4. 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, to Star Bank, National Association,
addressed to its Corporate Trust Office at 425 Walnut Street, Cincinnati, Ohio
45201; if to the Depositor, to Crestar Bank, addressed to 919 East Main Street,
Richmond, Virginia 23219, Attention: Vice President - Securitizations Manager,
804-343-9400 (Tel); 804-782-7155 (Fax); with a copy to Crestar Bank, 919 East
Main Street, Richmond, Virginia 23219; Attention: Linda Rigsby; Senior Vice
President and General Counsel, or, as to each party, at such other address or
facsimile number as shall be designated by such party in a written notice to
each other party.
(b) Any notice required or permitted to be given to a Certificateholder
shall be given (i) by first-class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate Register, or (ii) by facsimile if
the Certificate Register contains a facsimile number for such Certificateholder.
Any notice so mailed or sent by facsimile within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or not
the Certificateholder receives such notice.
SECTION 11.5. 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 11.6. 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 11.7. 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, the Delaware Trustee and its successors, each
Certificateholder and its successors and permitted assigns, all as herein
provided. Any request, notice, direction, consent, waiver or other instrument or
action by a Certificateholder shall bind the successors and assigns of such
Certificateholder.
<PAGE>
SECTION 11.8. No Petition.
(a) Prior to the date which is one year and a day after the termination
of the Trust pursuant to Section 9.1, the Depositor will not 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, and each
Certificateholder, by accepting a Trust Certificate 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 11.9. No Recourse.
Each Certificateholder by accepting a Trust Certificate acknowledges
that such Certificateholder's Trust Certificates represent beneficial interests
in the Trust only and do not represent interests in or obligations of the
Depositor, the Seller, the Master Servicer, the Administrator, the Eligible
Lender Trustee, the Delaware 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 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 Delaware, 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. The Trust created by this Agreement shall be a
business trust subject to Delaware law.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers hereunto duly authorized, as of
the day and year first above written.
STAR BANK, NATIONAL ASSOCIATION,
as Eligible Lender Trustee
By:________________________________
Name: Stephen J. Blackstone
Title: Trust Officer
DELAWARE TRUST CAPITAL
MANAGEMENT, INC., as Delaware Trustee
By:________________________________
Name:
Title:
CRESTAR BANK, Depositor
By:________________________________
Name:
Title:
<PAGE>
COMMONWEALTH OF VIRGINIA, )
) SS:
CITY OF RICHMOND, )
On this, the _____ day of December, 1997, before me, the undersigned
officer, personally appeared ______________, who acknowledged himself to be a
__________________________ of Star Bank, National Association, and that he as
such, being authorized to do so, executed the foregoing for the purpose of
creating Crestar Student Loan Trust 1997-1 with Star Bank, National Association,
as Eligible Lender Trustee, in accordance with the terms of the foregoing
instrument, by signing the name of the corporation by himself as
- -------------------------.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
----------------------------------
Notary Public in and for the
Commonwealth of Virginia
[SEAL]
My commission expires:
- ------------------------------
<PAGE>
COMMONWEALTH OF VIRGINIA, )
) ss.:
CITY OF RICHMOND, )
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
_____________ of DELEWARE TRUST CAPITAL MANAGEMENT, not in its individual
capacity but solely as Delaware Trustee of CRESTAR STUDENT LOAN TRUST 1997-1, a
Delaware trust, and that he executed the same as the act of said trust for the
purpose and consideration therein expressed, and in the capacities therein
stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the _____ day of
___________, 1997.
-----------------------------
Notary Public in and for
the Commonwealth of Virginia
[SEAL]
My commission expires:
- ----------------------
<PAGE>
COMMONWEALTH OF VIRGINIA, )
) ss.:
CITY OF RICHMOND, )
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 CRESTAR
BANK, a Virginia banking corporation, and that he executed the same as the act
of said trust for the purpose and consideration therein expressed, and in the
capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 16th day of December,
1997.
-----------------------------
Notary Public in and for
the Commonwealth of Virginia
[SEAL]
My commission expires:
- ----------------------
<PAGE>
EXHIBIT A
FORM OF TRUST CERTIFICATE
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THE HOLDER HEREOF,
BY PURCHASING THIS TRUST CERTIFICATE, AGREES THAT THIS TRUST CERTIFICATE MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH ANY APPLICABLE
STATE SECURITIES LAWS AND (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1)-(3)
UNDER THE ACT THAT PURCHASES FOR ITS OWN ACCOUNT, OR (2) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT.
THIS TRUST CERTIFICATE MAY NOT BE TRANSFERRED DIRECTLY OR INDIRECTLY TO
(1) EMPLOYEE BENEFIT PLANS, RETIREMENT ARRANGEMENTS, INDIVIDUAL RETIREMENT
ACCOUNTS OR KEOGH PLANS SUBJECT TO EITHER TITLE I OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, OR (2) ENTITIES (INCLUDING INSURANCE COMPANY GENERAL
ACCOUNTS) WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF ANY SUCH
PLAN'S ARRANGEMENTS OR ACCOUNT'S INVESTMENT IN SUCH ENTITIES. FURTHER, THIS
TRUST CERTIFICATE MAY BE TRANSFERRED ONLY TO A UNITED STATES PERSON WITHIN THE
MEANING OF SECTION 7701(a)(30) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
THIS TRUST CERTIFICATE DOES NOT REPRESENT DEPOSITS OR OBLIGATIONS OF OR
AN INTEREST IN CRESTAR BANK, STAR BANK, NATIONAL ASSOCIATION OR DELAWARE TRUST
CAPITAL MANAGEMENT, INC.
THIS TRUST CERTIFICATE IS NOT GUARANTEED OR INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENTAL AGENCY.
Original Denomination of this Certificate:
Aggregate Original Principal Balance of all Certificates:
CRESTAR STUDENT LOAN TRUST 1997-1
STUDENT LOAN ASSET BACKED CERTIFICATES
Exhibit A - Page 1
<PAGE>
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes a pool of student loans sold to
the Trust by Crestar Bank.
<PAGE>
THIS CERTIFIES THAT ________________ is the registered owner of a
_________________________ dollars non-assessable, fully-paid, fractional
undivided interest in the Crestar Student Loan Trust 1997-1 (the "Trust"), a
business trust formed under the laws of Delaware by Crestar Bank, (the
"Depositor"). The Trust was created pursuant to a Trust Agreement dated as of
December 1, 1997 (the "Trust Agreement") among the Depositor, Star Bank,
National Association, as eligible lender trustee (the "Eligible Lender
Trustee"), and Delaware Trust Capital Management, Inc., as Delaware 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 Annex A to the Trust Agreement; such Annex A
also contains rules as to usage that shall be applicable herein.
This Certificate is one of the duly authorized Certificates designated
as "Crestar Student Loan Trust 1997-1 Student Loan Asset Backed Certificates"
(herein called the "Trust Certificates") issued under 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 student loans (the "Financed Student Loans"), all
moneys paid thereunder on or after the Cut-off Date, certain bank accounts and
the proceeds thereof and certain other rights under the Trust Agreement and the
Transfer 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 (the "Notes") issued
under a Master Indenture dated as of December 1, 1997 between the Trust and
Bankers Trust Company, as Indenture Trustee, as supplemented by a Terms
Supplement dated as of December 1, 1997.
Under the Trust Agreement, distributions will be made on the Trust
Certificates on each Quarterly Distribution Date in the manner set forth in the
Trust Agreement and the Transfer and Servicing Agreement.
Each holder of this Trust Certificate acknowledges and agrees that its
rights to receive distributions in respect of this Trust Certificate from
Available Funds and amounts on deposit in the Reserve Account are subordinated
to the rights of the Noteholders as described in the Transfer and Servicing
Agreement and the Indenture.
Each Certificateholder, by its acceptance of a Trust Certificate,
covenants and agrees that such Certificateholder will not at any time institute
against the Depositor or the Trust, or join in any institution against the
Depositor or the Trust, 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.
Each Certificateholder, by its acceptance of a Trust Certificate, (i)
agrees, for federal, State and local income and franchise tax purposes, to treat
the Trust as a partnership, with the assets of the partnership being the
Financed Student Loans and other assets held by the Trust, the partners of the
partnership being the Certificateholders and the Depositor, and the Notes being
debt of the partnership (unless the Depositor elects to disregard the Trust as
an entity separate from itself for tax purposes), and (ii) acknowledges that 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 federal, State and local and franchise tax purposes (unless the
Depositor elects to disregard the Trust as an entity separate from itself for
tax purposes) and that the Depositor will not make, or cause to be made, an
election under the provisions of Treasury Regulation Section 301.7701.3 to
classify the Trust as an association.
<PAGE>
Distributions on this Trust Certificate will be made as provided in the
Trust Agreement by the Eligible Lender Trustee by wire transfer or by check
mailed to the Certificateholder of record in the Certificate Register without
the presentation or surrender of this Trust Certificate or the making of any
notation hereon.
Reference is hereby made to the further provisions of this Trust
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized representative 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
Transfer and Servicing Agreement or be valid for any purpose.
<PAGE>
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.
CRESTAR STUDENT LOAN TRUST 1997-1
By: Star Bank, National Association, not in its
individual capacity but solely as Eligible Lender
Trustee,
By: _______________________________________________________
Authorized Signatory
Date:
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the
within-mentioned Trust Agreement.
STAR BANK, NATIONAL ASSOCIATION,
not in its individual capacity but solely
as Eligible Lender Trustee,
By:__________________________________
Authorized Representative
Date:
<PAGE>
[Reverse of Trust Certificate]
The Trust Certificates do not represent an obligation of, or an
interest in, the Depositor, the Master 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
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
respecting the Financed Student Loans, all as more specifically set forth in the
Transfer and Servicing Agreement. A copy of each of the Transfer and Servicing
Agreement and the Trust Agreement may be examined during normal business hours
at the principal office of the Depositor, and at such other places, if any,
designated by the Depositor, by any Certificateholder upon request.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Transferor and the rights of the Certificateholders under the Trust Agreement at
any time by the Depositor and the Eligible Lender Trustee with the consent of
the Majority Certificateholders. Any such consent by the holder of this Trust
Certificate shall be conclusive and binding on such holder and on all future
holders of this Trust Certificate and of any Trust Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Trust Certificate. The Trust Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the holders of any of the Trust Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Trust Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies maintained by Star Bank, National
Association in its capacity as Certificate Registrar, or by any successor
Certificate Registrar, accompanied by a written instrument of transfer in form
satisfactory to the Eligible Lender Trustee and the Certificate Registrar duly
executed by the holder hereof or such holder's attorney duly authorized in
writing, and thereupon one or more new Trust Certificates of authorized
denominations evidencing the same aggregate interest in the Trust will be issued
to the designated transferee.
The Trust Certificates are issuable only as registered Trust
Certificates without coupons in minimum denominations of $10.00 and integral
multiples of $1.00 in excess thereof. As provided in the Trust Agreement and
subject to certain limitations therein set forth, Trust Certificates are
exchangeable for new Trust Certificates of authorized denominations evidencing
the same percentage interest, as requested by the holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Eligible Lender Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
payable in connection therewith.
The Eligible Lender Trustee, the Certificate Registrar and any agent of
the Eligible Lender Trustee and the Certificate Registrar may treat the person
in whose name this Trust Certificate is registered as the owner hereof for all
purposes, and none of the Eligible Lender Trustee or the Certificate Registrar
or any such agent shall be affected by any notice to the contrary.
<PAGE>
This Trust Certificate may not be transferred directly or indirectly to
(1) employee benefit plans, retirement arrangements, individual retirement
accounts or Keogh plans subject to either Title I of the Employee Retirement
Income Security Act of 1974, as amended, or Section 4975 of the Internal Revenue
Code of 1986, as amended, or (2) entities (including insurance company general
accounts) whose underlying assets include plan assets by reason of any such
plan's or account's investment in such entities. By accepting and holding this
Trust Certificate, the holder hereof shall be deemed to have represented and
warranted that it is not any of the foregoing entities.
This Trust Certificate may not be transferred to any person who is not
a U.S. Person, as such term is defined in Section 7701(a)(30) of the Internal
Revenue Code, as amended.
Each transferee of the Trust Certificates shall be required, prior to
purchasing a Trust Certificate, to execute the Purchaser's Representation and
Warranty Letter in the form attached to the Trust Agreement as Exhibit B.
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Trust Agreement and
the Transfer and Servicing Agreement and the disposition of all property held as
part of the Trust.
This Trust Certificate shall be construed in accordance with the laws
of the State of Delaware, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws.
<PAGE>
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 an approved eligible guarantor institution, an institution which
is a participant in a Securities Transfer Association recognized signature
guarantee program.
<PAGE>
EXHIBIT B
TO THE
TRUST AGREEMENT
[Form of Purchaser's Representation and Warranty Letter]
Crestar Bank
919 East Main Street
Richmond, VA 23219
Star Bank, National Association, as
Certificate Registrar
425 Walnut Street
Cincinnati, Ohio 45201
Re: Crestar Student Loan Trust 1997-1 Student Loan Asset Backed
Certificates
Ladies and Gentlemen:
In connection with our proposed purchase of Crestar Student Loan Trust
1997-1 Student Loan Asset Backed Certificates (the "Certificates") issued under
the Trust Agreement dated as of December 1, 1997 (the "Agreement"), between
Crestar Bank, as Depositor (the "Depositor"), Star Bank, National Association,
as Eligible Lender Trustee and Delaware Trust Capital Management Inc., as
Delaware trustee, the undersigned (the "Purchaser") represents, warrants and
agrees that:
1. It is an institutional "accredited investor" as defined in Rule
501(a)(1)-(3) under the Securities Act or a "qualified institutional buyer as
defined in Rule 144(a)(1) of the Securities Act" and is acquiring the
Certificates for its own institutional account or for the account of an
institutional accredited investor or qualified institutional buyer.
2. It is not (i) an employee benefit plan, retirement arrangement,
individual retirement account or Keogh plan subject to either Title I of the
Employee Retirement Income Security Act of 1974, as amended, or Section 4975 of
the Internal Revenue Code of 1986, as amended, or (ii) an entity (including an
insurance company general account) whose underlying assets include plan assets
by reason of any such plan's arrangements or account's investment in any such
entity.
3. It is a U.S. Person as defined in Section 7701(a)(30) of the Code.
4. It has such knowledge and experience in evaluating business and
financial matters so that it is capable of evaluating the merits and risks of an
investment in the Certificates. It understands the full nature and risks of an
investment in the Certificates and based upon its present and projected net
income and net worthy, it believes that it can bear the economic risk of an
immediate or future loss of its entire investment in the Certificates.
<PAGE>
5. It understands that the Certificates will be offered in a
transaction not involving any public offering within the meaning of the
Securities Act, and that, if in the future it decides to resell, pledge or
otherwise transfer any Certificates, such Certificates may be resold, pledged or
transferred only (a) to a person who the seller reasonably believes is an
institutional "accredited investor" as defined in Rule 501(a)(1)-(3) under the
Securities Act that purchases for its own account or for the account of another
institutional accredited investor or (b) pursuant to an effective registration
statement under the Securities Act.
6. It understands that each Trust Certificate will bear a legend
substantially to the following effect:
"THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") OR STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING
THIS TRUST CERTIFICATE, AGREES THAT THIS TRUST CERTIFICATE MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH ANY APPLICABLE STATE
SECURITIES LAWS AND (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS AN
INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1)-(3) UNDER
THE ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF AN
INSTITUTIONAL ACCREDITED INVESTOR, OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT.
THIS CERTIFICATE MAY NOT BE TRANSFERRED DIRECTLY OR INDIRECTLY TO (1) EMPLOYEE
BENEFIT PLANS, RETIREMENT ARRANGEMENTS, INDIVIDUAL RETIREMENT ACCOUNTS OR KEOGH
PLANS SUBJECT TO EITHER TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF 1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED, OR (2) ENTITIES (INCLUDING INSURANCE COMPANY GENERAL ACCOUNTS) WHOSE
UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF ANY SUCH PLAN'S ARRANGEMENTS
OR ACCOUNT'S INVESTMENT IN SUCH ENTITIES. FURTHER, THIS TRUST CERTIFICATE MAY BE
TRANSFERRED ONLY TO A UNITED STATES PERSON WITHIN THE MEANING OF SECTION
7701(a)(30) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
THE CERTIFICATES DO NOT REPRESENT DEPOSITS OR OBLIGATIONS OF OR ANY INTEREST IN
CRESTAR BANK, STAR BANK, NATIONAL ASSOCIATION OR DELAWARE TRUST CAPITAL
MANAGEMENT INC.
THIS CERTIFICATE IS NOT GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY GOVERNMENTAL AGENCY.
7. It is acquiring the Certificates for its own account and not with a
view to the public offering thereof in violation of the Securities Act (subject,
nevertheless, to the understanding that disposition of its property shall at all
times be and remain within its control).
8. It has been furnished with all information regarding the Trust and
Certificates which it has requested from the Trust and the Depositor.
<PAGE>
9. Neither it nor anyone acting on its behalf has offered, transferred,
pledged, sold or otherwise disposed of any Certificate, any interest in any
Certificate or any other similar security to, or solicited any offer to buy or
accept a transfer, pledge or other disposition of any Certificate, any interest
in any Certificate or any other similar security from, or otherwise approached
or negotiated with respect to any Certificate, any interest in any Certificate
or any other similar security with, any person in any manner or made any general
solicitation by means of general advertising or in any other manner, which would
constitute a distribution of the Certificates under the Securities Act or which
would require registration pursuant to the Securities Act nor will the it act,
nor has it authorized or will authorize any person to act, in such manner with
respect to any Certificate.
10. It is not an "affiliate" (within the meaning of Rule 144
under the Securities Act) of the Depositor.
Dated:_____________
Very truly yours,
----------------------------------
NAME OF PURCHASER
By:_______________________________
Name:_____________________________
Title:______________________________
NOTE: To be executed by an executive officer
EXHIBIT 99.1
TRANSFER AND SERVICING AGREEMENT
among
CRESTAR STUDENT LOAN TRUST 1997-1
as Issuer,
CRESTAR BANK
as Transferor, Master Servicer and Administrator
and
STAR BANK, NATIONAL ASSOCIATION
not in its individual capacity but solely
as Eligible Lender Trustee
Dated as of December 1, 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Definitions and Usage ................................................... 1
ARTICLE II
Conveyance of Financed Student Loans
SECTION 2.1 Conveyance of Initial Financed
Student Loans............................................ 1
SECTION 2.2 Conveyance of Subsequent Financed Student Loans............. 2
SECTION 2.3 Purchase of Subsequent Financed Student Loans upon Order
of the Transferor........................................ 3
SECTION 2.4 Security Agreement.......................................... 4
ARTICLE III
The Financed Student Loans
SECTION 3.1 Representations, Warranties and Agreements of
Transferor with Respect to the Financed Student Loans.... 5
SECTION 3.2 Repurchase upon Breach; Reimbursement....................... 7
SECTION 3.3 Custody of Financed Student Loan Files...................... 8
SECTION 3.4 Duties of Master Servicer as Custodian...................... 9
SECTION 3.5 Instructions; Authority to Act.............................. 9
SECTION 3.6 Custodian's Indemnification................................. 9
SECTION 3.7 Effective Period and Termination............................ 10
SECTION 3.8 Appointment of Subcustodian................................. 11
SECTION 3.9. Compliance by the Eligible Lender Trustee
with Insurance Agreements with the Secretary
of HHS................................................... 11
ARTICLE IV
Administration and Servicing of Financed Student Loans
SECTION 4.1 Duties of Master Servicer................................... 11
SECTION 4.2 Collection of Financed Student Loan Payments................ 12
SECTION 4.3 Realization upon Financed Student Loans..................... 14
SECTION 4.4 No Impairment............................................... 14
SECTION 4.5 Purchase of Financed Student Loans; Reimbursement........... 14
SECTION 4.6 Servicing Fee............................................... 15
<PAGE>
SECTION 4.7 Administrator's Certificate................................. 15
SECTION 4.8 Annual Statement as to Compliance; Notice of ...............
Default.................................................. 16
SECTION 4.9 Annual Independent Certified Public Accountants'
Report or Reports........................................ 16
SECTION 4.10 Access to Certain Documentation and Information
Regarding Financed Student Loans......................... 17
SECTION 4.11 Master Servicer and Administrator Expenses.................. 17
SECTION 4.12 Appointment of Servicer..................................... 17
SECTION 4.13 Subservicing Agreements..................................... 18
SECTION 4.14 Incentive Programs.......................................... 18
ARTICLE V
Distributions; Reserve Account;
Statements to Certificateholders and Noteholders
SECTION 5.1 Establishment of Trust Accounts............................. 18
SECTION 5.2 Collections................................................. 20
SECTION 5.3 Application of Collections.................................. 20
SECTION 5.4 Additional Deposits......................................... 20
SECTION 5.5 Distributions............................................... 21
SECTION 5.6 Reserve Account............................................. 24
SECTION 5.7 Statements to Certificateholders and Noteholders............ 25
SECTION 5.8 Expense Account............................................. 26
SECTION 5.9 Note Distribution Account and Certificate Distribution
Account.................................................. 26
SECTION 5.10 Monthly Advances............................................ 26
SECTION 5.11 Certificate Interest........................................ 27
ARTICLE VI
The Transferor and the Master Servicer
SECTION 6.1 Representations of Transferor and Master Servicer........... 27
SECTION 6.2 Existence................................................... 29
SECTION 6.3 Liability and Indemnities................................... 29
SECTION 6.4 [Reserved].................................................. 31
SECTION 6.5 Merger or Consolidation of, or Assumption of the
Obligations of, the Transferor, the Administrator
or the Master Servicer................................... 31
SECTION 6.6 Limitation on Liability of Transferor, Master Servicer
and Others............................................... 32
SECTION 6.7 Transferor May Own Certificates or Notes.................... 33
SECTION 6.8 Master Servicer Not to Resign............................... 33
<PAGE>
ARTICLE VII
The Administrator
SECTION 7.1 Representations of the Administrator........................ 33
SECTION 7.2 Liability and Indemnities................................... 34
SECTION 7.3 Administrator Not to Resign................................. 36
SECTION 7.4 Additional Services......................................... 36
ARTICLE VIII
Default
SECTION 8.1 Master Servicer Default; Administrator Default.............. 36
SECTION 8.2 Appointment of Successor.................................... 38
SECTION 8.3 Notification to Noteholders and Certificateholders.......... 39
SECTION 8.4 Waiver of Past Defaults..................................... 39
ARTICLE IX
Termination
SECTION 9.1 Termination................................................. 40
ARTICLE X
[Reserved]
ARTICLE XI
Miscellaneous
SECTION 11.1 Amendment................................................... 42
SECTION 11.2 Protection of Interests in Trust............................ 43
SECTION 11.3 Notices..................................................... 44
SECTION 11.4 Assignment.................................................. 45
SECTION 11.5 Limitations on Rights of Others............................. 45
SECTION 11.6 Severability................................................ 45
SECTION 11.7 Separate Counterparts....................................... 45
SECTION 11.8 Headings.................................................... 45
SECTION 11.9 Governing .................................................. 45
SECTION 11.10 Assignment to Indenture Trustee............................. 45
SECTION 11.11 Nonpetition Covenants....................................... 45
SECTION 11.12 Limitation of Liability of Eligible Lender Trustee,
Indenture Trustee and Delaware Trustee................... 46
<PAGE>
APPENDIX A Definitions and Usage
SCHEDULE A-1 Schedule of Financed Student Loans
SCHEDULE B Location of Financed Student Loan Files
EXHIBIT A Form of Noteholders' Statement
EXHIBIT B Form of to Certificateholders' Statement
EXHIBIT C Form of Administrator's Certificate
EXHIBIT D Assignment for Financed Student Loans
EXHIBIT E Transfer Agreement
EXHIBIT F Officer's Certificate Required by Section 2.2(b)(viii)
of the Transfer and Servicing Agreement
<PAGE>
TRANSFER AND SERVICING AGREEMENT (the "Agreement") dated as of December
1, 1997, among CRESTAR STUDENT LOAN TRUST 1997-1, a Delaware business trust (the
"Issuer"), CRESTAR BANK, a Virginia banking corporation (the "Transferor," the
"Master Servicer" or the "Administrator" in such respective capacities), and
STAR BANK, NATIONAL ASSOCIATION, a national banking association, solely as
eligible lender trustee and not in its individual capacity (the "Eligible Lender
Trustee").
WHEREAS the Issuer desires to acquire student loans originated or
acquired by the Transferor in the ordinary course of business;
WHEREAS the Eligible Lender Trustee is willing to hold legal title to,
and serve as eligible lender trustee with respect to, such student loans on
behalf of the Issuer; and
WHEREAS the Master Servicer and the Administrator are willing to
service such student loans and undertake certain administrative functions with
respect thereto; and
WHEREAS the Issuer has authorized the issuance of its Notes; and
WHEREAS the parties hereto are entering into this Transfer and
Servicing Agreement in connection with such Notes.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree, intending to be legally
bound hereby, 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.
ARTICLE II
Conveyance of Financed Student Loans
SECTION 2.1. Conveyance of Initial Financed Student Loans. (a) In
consideration of the Issuer's delivery to or upon the order of the Transferor on
the Closing Date of $222,231,660, the Transferor agrees to, and the Transferor
does hereby, as evidenced by a duly executed written assignment in the form of
<PAGE>
Exhibit D, contribute, transfer, sell, assign, set over and otherwise convey to
the Eligible Lender Trustee on behalf of the Issuer, without recourse (subject
to the obligations herein):
(i) All right, title and interest in and to the
Financed Student Loans listed on Schedule A-1 to this
Agreement (the "Initial Financed Student Loans") and all
obligations of the Obligors thereunder, including all moneys
paid thereunder (other than Interest Subsidy Payments and
Special Allowance Payments payable to the Cut-off Date), and
all written communications received by the Transferor with
respect thereto and still retained by Transferor in accordance
with its retention policies (including borrower
correspondence, notices of death, disability or bankruptcy and
requests for deferrals or forbearance), on or after the
Cut-off Date;
(ii) all right, title and interest in all funds on
deposit from time to time in the Trust Accounts and in all
investments and proceeds thereof (including all income
thereon); and
(iii) the proceeds of any and all of the foregoing.
(b) On the Closing Date, the Transferor shall have delivered
(A) to the Rating Agencies an Opinion of Counsel with respect to the
transfer of the Initial Financed Student Loans and (B) to the Eligible
Lender Trustee and the Indenture Trustee the Opinion of Counsel
required by Section 11.2(i)(1).
SECTION 2.2. Conveyance of Subsequent Financed Student Loans.
(a) Subject to the conditions set forth in paragraph (b)
below, the Transferor shall contribute, transfer, sell, 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 in and to each Subsequent Financed Student
Loan, and all obligations of the Obligors thereunder, including all
moneys paid thereunder (other than Interest Subsidy Payments and
Special Allowance Payments payable through the related Subsequent
Cut-off Date), and all written communications received by the
Transferor with respect thereto and still retained by the Transferor in
-2-
<PAGE>
accordance with its retention policies (including borrower
correspondence, notices of death, disability or bankruptcy and requests
for deferrals or forbearances), on and after the related Subsequent
Cut-off Date, and the proceeds of any and all of the foregoing, in
consideration of:
(i) the Indenture Trustee's transfer to the
Transferor on the related Subsequent Finance Date of the
Subsequent Financing Purchase Price in immediately available
funds to an account designated in writing by the Transferor to
the Indenture Trustee, if the Transferor exercises its option
pursuant to Section 2.3(a) hereof; and
(ii) the Eligible Lender Trustee's conveyance of
Financed Student Loans on the related Subsequent Finance Date
to the Transferor pursuant to Section 2.3(b) hereof, if the
Transferor exercises its option pursuant to Section 2.3(b).
(b) The Transferor shall transfer to the Issuer the Subsequent
Financed Student Loans for a given Subsequent Finance 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 Subsequent Finance Date:
(i) the Transferor 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 A-1,
listing such Subsequent Financed Student Loans;
(ii) the Transferor shall have delivered, at least
two days' prior to such Subsequent Finance Date, notice of
such transfer to the Eligible Lender Trustee and the Indenture
Trustee, with a copy to the Rating Agencies, including a
listing of the aggregate principal balance of such Subsequent
Financed Student Loans;
(iii) the Transferor shall, to the extent required by
Section 2.3, have deposited in the Collection Account all
collections received in respect of the Subsequent Financed
Student Loans after each applicable Subsequent Cut-off Date
and all required Adjustment Payments;
-3-
<PAGE>
(iv) as of such Subsequent Finance Date, the
Transferor was not insolvent nor will it have been made
insolvent by such transfer nor is it aware of any pending
insolvency;
(v) such transfer will not result in a material
adverse federal or State tax consequence to the Issuer
relating to its tax classification or the Noteholders,
considered as a whole, relating to a change in the
characterization of the Notes;
(vi) no Event of Default shall have occurred and be
continuing as of such Subsequent Finance Date and no Master
Servicer Default or Administrator Default shall have occurred
and be continuing as of such Subsequent Finance
Date;
(vii) the Subsequent Finance Period shall not have
terminated;
(viii) the Transferor shall have delivered to the
Indenture Trustee and the Eligible Lender Trustee an Officers'
Certificate in substantially the form of Exhibit F, confirming
the satisfaction of each condition precedent
specified in this paragraph (b);
(ix) the Transferor 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 Financed
Student Loans; and
(x) no selection procedures believed by the
Transferor to be adverse to the interests of the
Certificateholders or the Noteholders shall have been utilized
in selecting the Subsequent Financed Student Loans; provided,
however, that the Transferor shall not incur any liability as
a result of transferring Subsequent Financed Student Loans on
any Subsequent Finance Date at a time when the condition set
forth in clause (v) was not satisfied, if at the time of such
transfer the Transferor was not aware of any fact that would
reasonably suggest that such condition would not be satisfied
as of such date.
-4-
<PAGE>
In the case of a transfer of Financed Student Loans by the Eligible
Lender Trustee pursuant to Section 2.3(b) hereof, upon the satisfaction
of the conditions set forth in this Section 2.2 (b), the Eligible
Lender Trustee shall execute and deliver to the Transferor an
Assignment, substantially in the form of Annex B to the Transfer
Agreement.
SECTION 2.3. Purchase of Subsequent Financed Student Loans upon
Order of the Transferor.
(a) During the Subsequent Finance Period, subject to the
conditions set forth in Section 2.2(b) hereof, the Transferor may, at
its option, transfer to the Eligible Lender Trustee on behalf of the
Trust, Subsequent Financed Student Loans as described in this Section
2.3(a), and direct the Eligible Lender Trustee and the Indenture
Trustee to apply Consolidation Prepayments on deposit in the Collection
Account to pay the Subsequent Financing Purchase Price for such
Subsequent Financed Student Loans. Subsequent Financed Student Loans
that may be transferred by the Transferor pursuant to this Section
2.3(a) include:
(i) A Consolidation Loan or a HEAL Consolidation Loan being
made by the Transferor, provided that in no event shall the
aggregate amount of Subsequent Financed Student Loans that are
Consolidation Loans or HEAL Consolidation Loans transferred
into the Trust exceed $1,000,000; and
(ii) One or more Serial Loans owned by the Transferor that are
serial (i.e., made to the same borrower under the same loan
program and guaranteed by the same Guarantor or insured by the
Department of HHS) to an existing Financed Student Loan owned
by the Trust; provided that each such Subsequent Financed
Student Loan entitles the holder thereof to receive interest
based on the same interest rate index as the Financed Student
Loan to which it is serial, and provided further, that in no
event shall the aggregate amount of Subsequent Financed
Student Loans that are Serial Loans transferred into the Trust
exceed $750,000.
(b) During the Subsequent Finance Period, subject to the
conditions set forth in Section 2.2(b) hereof, the Transferor may, at
-5-
<PAGE>
its option, in lieu of depositing into the Collection Account the
Purchase Amount of a Financed Student Loan pursuant to clause (y) of
the second paragraph of Section 3.2 or clause (y) of the second
paragraph of Section 4.5 hereof, transfer to the Eligible Lender
Trustee on behalf of the Trust, a Subsequent Financed Student Loan
which satisfies the following criteria: (A) the Subsequent Financed
Student Loan was originated under the same loan program as the Financed
Student Loan for which it is being exchanged and entitles the holder
thereof to receive interest based on the same interest rate index as
the Financed Student Loan for which it is being exchanged, (B) the
Subsequent Financed Student Loan will not, at any level of such
interest rate index, have an interest rate that is less than the
Financed Student Loan for which it is being exchanged and (C) the
average principal balance per Obligor of the Subsequent Financed
Student Loans that are being transferred into the Trust on each
Subsequent Finance Date and the existing Financed Student Loans for
which they are being exchanged pursuant to this Section 2.3(b) is
within 10% (plus or minus) of the average principal balance per Obligor
of the Financed Student Loans being transferred to the Transferor on
such Subsequent Finance Date.
(c) Upon receipt of written notice (or telephonic or facsimile
notice promptly followed by written notice) from the Master Servicer by
the Eligible Lender Trustee and the Indenture Trustee, the Eligible
Lender Trustee will convey to the Master Servicer (or the Master
Servicer's designee) the Financed Student Loans identified in such
notice, which are to be transferred to a Guarantor or the Department of
HHS in consideration of a related Guarantee Payment or Insurance
Payment. Within one Business Day of its receipt of the related
Guarantee Payment or Insurance Payment, the Master Servicer shall
deposit, or cause to be deposited, into the Collection Account an
amount equal to such Guarantee Payment or Insurance Payment, as payment
of such conveyance.
(d) If on any Subsequent Finance Date the aggregate
outstanding principal balance as of the related Subsequent Cut-off Date
of all the Subsequent Financed Student Loans being exchanged on such
Subsequent Finance Date pursuant to Section 2.3(b) is less than that of
all the Financed Student Loans for which they are being exchanged, an
amount equal to such difference (the "Adjustment Payments") shall be
deposited by the Transferor into the Collection Account on the related
Subsequent Finance Date.
(e) If on any Subsequent Finance Date the aggregate
outstanding principal balance as of the related Subsequent Cut-off Date
of all the Subsequent Financed Student Loans being exchanged on such
Subsequent Finance Date pursuant to Section 2.3(b) is greater than that
of all the Financed Student Loans for which they are being exchanged,
upon written request of the Transferor an amount up to the amount of
such excess (the "Issuer 2.3(b) Payments") shall be remitted by the
Indenture Trustee to the Transferor from Consolidation Prepayments on
deposit in the Collection Account.
SECTION 2.4. Security Agreement. Although it is the intent of the
parties to this Agreement that the conveyance of the Transferor's right, title
and interest in and to the Financed Student Loans pursuant to this Agreement or
any Transfer Agreement shall constitute a contribution and transfer and not a
loan, if such conveyance is deemed to be a loan, it is the intent of the parties
to this Agreement that the Transferor shall be deemed to have Granted to the
Eligible Lender Trustee, on behalf of the Issuer, a first priority perfected
security interest in all of the Transferor's right, title and interest in, to
and under the Financed Student Loans and the proceeds thereof, and that this
Agreement shall constitute a security agreement under applicable law. It is the
further intent of the parties to this Agreement that if the Trust is disregarded
for whatever reason or purpose, the Transferor's foregoing Grant of a first
priority perfected security interest shall be deemed to be directly to, and for
the direct benefit of, the Indenture Trustee.
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ARTICLE III
The Financed Student Loans
SECTION 3.1. Representations, Warranties and Agreements of Transferor
with Respect to the Financed Student Loans. The Transferor hereby 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) such Financed Student Loans. Such representations and warranties
speak as of the Closing Date, in the case of the Initial Financed Student Loans,
and as of the applicable Subsequent Finance Dates in the case of the Subsequent
Financed Student Loans, but shall survive the contribution, transfer and
assignment of such 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 to an eligible borrower under
applicable law and agreements and was fully and properly
executed by the parties thereto, (B) was originated or
acquired by the Transferor in the ordinary course of its
business, and (C) 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 yields interest
at the rate applicable thereto (except as otherwise provided
in Section 4.14), as such maturity may be modified in
accordance with any applicable deferment or forbearance
periods granted in accordance with applicable laws and
restrictions, including those of the Higher Education Act, the
HEAL Act, the HEAL Insurance Contract or any Guarantee
Agreement. Each Financed Student Loan that is a Stafford Loan
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qualifies the holder thereof (assuming such holder is an
eligible lender under the Higher Education Act and has a
guarantee agreement with the applicable Guarantor of such
loan) to receive Interest Subsidy Payments and Special
Allowance Payments from the Department of Education. Each
Financed Student Loan that is a Consolidation Loan, a PLUS
Loan, a SLS Loan or an Unsubsidized Stafford Loan qualifies
the holder thereof (assuming such holder is an eligible lender
under the Higher Education Act and has a guarantee agreement
with the applicable Guarantor of such loan) to receive Special
Allowance Payments from the Department of Education to the
extent applicable. Each Financed FFELP Loan qualifies the
holder thereof (assuming such holder is an eligible lender
under the Higher Education Act and has a guarantee agreement
with the applicable Guarantor of such loan) to receive
Guarantee Payments from the applicable Guarantor in accordance
with the applicable Guarantee Agreement. Each Financed HEAL
Loan qualifies the holder thereof (assuming such holder is an
eligible lender under the HEAL Act and has an insurance
contract with the Secretary of HHS) to receive Insurance
Payments from the Department of HHS in accordance with the
HEAL Insurance Contract. At all times prior to the transfer of
the Financed Student Loans to the Eligible Lender Trustee on
behalf of the Issuer under this Agreement, the Transferor and
each predecessor originator or holder of the Financed Student
Loans (a) with respect to each Financed FFELP Loan was an
eligible lender under the Higher Education Act and had a
guarantee agreement with the applicable Guarantor of such
loan, and (b) with respect to each Financed HEAL Loan was an
eligible lender under the HEAL Act and had an insurance
contract with the Secretary of HHS.
(ii) Schedule of Financed Student Loans. The
information concerning the Financed Student Loans set forth in
Schedule A-1 to this Agreement and Schedule A of the related
Transfer Agreement is true and correct in all material
respects as of the close of business on the Cut-off Date (with
respect to Schedule A-1 to this Agreement) or each applicable
Subsequent Cut-off Date (with respect thereto), as applicable.
The computer tape or electronic data transmission regarding
the Initial Financed Student Loans is true and correct in all
material respects as of the Cut-off Date and each computer
tape or electronic data transmission regarding the Subsequent
Student Loans will be true and correct in all material
respects as of the related Subsequent Cut-off Date.
(iii) Compliance with Law. Except with respect to any
VELA Service Errors that have been waived by the Department of
Education and the applicable Guarantor, at the time each
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Financed Student Loan was originated or made and at the
execution of this Agreement or the applicable Transfer
Agreement, as the case may be, each Financed Student Loan
complied or complies, and the Transferor 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 with respect to
FFELP Loans, the HEAL Act with respect to HEAL Loans, the
Equal Credit Opportunity Act, the Federal Reserve Board's
Regulation B and other applicable consumer credit laws and
equal credit opportunity laws.
(iv) Binding Obligation. Each Financed Student Loan
represents the genuine, legal, valid and binding payment
obligation in writing of the related borrower, enforceable by
or on behalf of the holder thereof against such borrower in
accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance and similar
laws relating to creditors' rights generally and subject to
general principles of equity and no Financed Student Loan has
been satisfied, subordinated or rescinded.
(v) No Defenses. No right of rescission, setoff,
counterclaim or defense has been asserted or, to the
Transferor's knowledge, threatened with respect to any
Financed Student Loan.
(vi) No Default. No Initial Financed Student Loan has
a payment that is more than 90 days overdue as of the Cut-off
Date, and no Subsequent Financed Student Loan will have a
payment that is more than 90 days overdue as of its related
Subsequent Cut-off Date, 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 and other
circumstances creating a delinquency continuing for a period
of not more than 90 days, no continuing condition that with
notice or the lapse of time or both would constitute a
default, breach, violation or event permitting acceleration
under the terms of any Financed Student Loan has arisen; and
the Transferor has not waived and shall not waive any of the
foregoing other than as permitted by the Basic Documents.
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(vii) Title. It is the intention of the Transferor
that the transfer and assignment herein contemplated
constitutes a contribution of the Financed Student Loans from
the Transferor to the Eligible Lender Trustee on behalf of the
Issuer and the beneficial interest in and title to such
Financed Student Loans shall not be part of the debtor's
estate in the event of the appointment of a receiver with
respect to the Transferor. No Financed Student Loan has been
transferred, assigned or pledged by the Transferor to any
Person other than the Eligible Lender Trustee on behalf of the
Issuer or any such assignment or pledge has been released.
Immediately prior to the transfer and assignment herein
contemplated, the Transferor 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, and the
transfer to the Indenture Trustee, shall have been perfected
under the UCC. No Financed Student Loan was subject to a third
party's right of first refusal to the transfers from the
Transferor provided for herein, and the transfer of the
Financed Student Loans as contemplated hereby will not violate
in any material respect the terms of any Subservicing
Agreement or any other material agreement or arrangement to
which the Master Servicer is a party.
(viii) Lawful Assignment. No Financed Student Loan
has been originated in, or is subject to the laws of, any
jurisdiction under which the contribution, transfer and
assignment of such Financed Student Loan under this Agreement
or any Transfer Agreement is unlawful, void or voidable.
(ix) All Filings Made. All filings (including UCC
filings) necessary in any jurisdiction to give the Issuer a
first perfected security interest in the Financed Student
Loans (if, despite the express intention of the parties
hereto, the transfer of the Financed Student Loans is deemed a
loan), and to give the Indenture Trustee a first perfected
security interest therein, shall have been made or have been
delivered for filing.
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(x) One Original. To the best knowledge of the
Transferor, there is only one original executed copy of each
promissory note evidencing a Financed Student Loan.
(xi) Principal Balance. The aggregate principal
balance of the Initial Financed Student Loans set forth on
Schedule A-1 as of the Cut-off Date is $211,956,796.
Additionally, as of the Cut-off Date, the accrued interest on
the Initial Financed Student Loans set forth on Schedule A-1
other than with respect to Interest Subsidy Payments and
Special Allowance Payments is $7,416,340.
(xii) Interest Rate. Except with respect to TP Loans
(as permitted by Section 4.14 hereof), each Financed FFELP
Loan included in the Initial Financed Student Loans bears
interest at the "applicable interest rate" permitted for such
loan under the Higher Education Act. The Financed HEAL Loans
included in the Initial Financed Student Loans bear interest,
calculated on a variable rate basis, that varies every
calendar quarter throughout the life of the loan. Under the
HEAL Act, for each calendar quarter, the Department of HHS
determines the general maximum annual HEAL interest rate by
(i) determining the average of the bond equivalent rates
reported for the 91-day U.S. Treasury bills auctioned for the
preceding calendar quarter, (ii) adding 3 percentage points,
and (iii) rounding that figure to the next higher one-eighth
of one percent. Notwithstanding these general rates, however,
with respect to the Financed HEAL Loans included in the
Initial Financed Student Loans, the maximum amount under
clause (ii) of the preceding sentence is 2.70 percentage
points during the repayment periods, and 1.50 percentage
points (for loans disbursed from October 1, 1991 through
September 30, 1992) or 2.00 percentage points (for loans
disbursed on or after October 1, 1992) during in-school
periods, grace periods and deferment periods. As of the
Cut-off Date, of the Financed HEAL Loans included in the
Initial Financed Student Loans, $5,889,615 aggregate principal
amount bears interest at the rate of 6.75% per annum (applying
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1.50 percentage points), $10,829,651 aggregate principal
amount bears interest at the rate of 7.25% per annum (applying
2.00 percentage points), and $2,322,278 aggregate principal
amount bears interest at the rate of 8.00% per annum (applying
2.70 percentage points).
(xiii) Interest Accruing. Each Financed Student Loan
is accruing interest (whether or not such interest is being
paid currently, by the Obligor or is being capitalized),
except as otherwise expressly permitted by the Basic
Documents.
SECTION 3.2. Repurchase upon Breach; Reimbursement. The Transferor, the
Master 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 representations and warranties
of the Transferor made pursuant to Sections 3.1 and 6.1 hereof. Unless any such
breach shall have been cured within 120 days following the discovery thereof by
the Transferor or receipt by the Transferor of written notice from the Eligible
Lender Trustee or the Master Servicer of such breach, the Financed Student Loan
in which the interests of the Noteholders or the Certificateholders are
materially and adversely affected by any such breach shall be retransferred,
reassigned, resetover and otherwise reconveyed to the Transferor (a
"repurchase") as of the first day succeeding the end of such 120-day period that
is the last day of a Collection Period; provided that it is understood that any
such breach (other than a breach of Section 3.1(vii)) that has not resulted in
the failure of a Guarantee Agency to make a Guarantee Payment or the Department
of HHS to make an Insurance Payment to the Eligible Lender Trustee will not be
considered to have a material adverse effect for this purpose; and provided
further, however, that in the case of any representation or warranty the breach
of which may be cured by reinstatement of the Guarantor's obligation to
guarantee payment or the Department of HHS's obligation to insure payment, such
cure period shall be 360 days (instead of 120 days), in each case following the
earlier of the date on which such breach is discovered by the Transferor and the
date of the Servicer's receipt of the Guarantor or Department of HHS reject
transmittal form with respect to such Financed Student Loan. Notwithstanding the
foregoing, if as of the last day of any Collection Period the aggregate
principal amount of Financed Student Loans with respect to which claims have
been filed with and rejected by a Guarantor or the Department of HHS as a result
of a breach of a representation or warranty of the Transferor in Sections 3.1 or
Section 6.1 hereof or a breach of the obligations of the Master Servicer under
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Sections 4.1 through 4.4 hereof or with respect to which the Master Servicer
determines that claims cannot be filed pursuant to the Higher Education Act or
the HEAL Act, as the case may be, as a result of such a breach exceeds the
lesser of $250,000 or 0.25% of the Pool Balance as of such date, the Transferor
shall repurchase within 120 days of a written request by the Eligible Lender
Trustee or the Indenture Trustee, affected Financed Student Loans in an
aggregate principal amount such that after such repurchases (or purchases by the
Master Servicer pursuant to Section 4.5 hereof) the aggregate principal amount
of affected Financed Student Loans is equal to or less than the lesser of
$250,000 or 0.25% of the Pool Balance. The Financed Student Loans to be
repurchased by the Transferor pursuant to the preceding sentence (or by the
Master Servicer pursuant to Section 4.5 hereof) will be based on the date of
claim rejection, with the Financed Student Loans with the earliest such dates to
be repurchased or purchased first. In consideration of and simultaneously with
the repurchase of the Financed Student Loan, the Transferor shall remit the
Purchase Amount, in the manner specified in Section 5.4, and the Issuer shall
execute such assignments and other documents reasonably requested by the
Transferor 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 and, if applicable, the related
Additional Financed HEAL Loan File will thereafter belong to the Transferor.
In addition, if any such breach does not trigger such a repurchase
obligation but does result in (i) the refusal by the Department of HHS to insure
the applicable portion of the accrued interest with respect to any Financed HEAL
Loan, or (ii) the refusal by a Guarantor to guarantee the applicable portion of
the accrued interest, or the loss of (including any obligation of the Issuer to
repay to the Department of Education) certain Interest Subsidy Payments and
Special Allowance Payments, with respect to a Financed FFELP Loan, then, unless
such breach, if curable, is cured within 120 days following the discovery
thereof by the Transferor or receipt by the Transferor of written notice from
the Eligible Lender Trustee, the Transferor shall, at its option, either (y)
repurchase such Financed Student Loan (but only if an actual failure to pay any
such amount to the Eligible Lender Trustee occurs or the Eligible Lender is
required to repay such an amount which has been previously paid) at the
applicable Purchase Amount, including, by transferring to the Eligible Lender
Trustee a Subsequent Financed Student Loan pursuant to Section 2.3(b) hereof in
lieu of depositing into the Collection Account all or a portion of the Purchase
Amount (equal to the Subsequent Financing Purchase Price of such Subsequent
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Financed Student Loan as of the Subsequent Finance Date) or (z) reimburse the
Issuer by remitting an amount equal to the sum of all amounts that would have
been payable if not for such breach in the manner specified in Section 5.4 not
later than the last day of the Collection Period in which such 120th day occurs
(or, to the extent that all or a portion of such amount is not otherwise due and
payable as of such date, that portion shall be remitted to the Collection
Account on the last day of the Collection Period during which such amount would
otherwise be due and payable).
The sole remedy of the Issuer, the Eligible Lender Trustee, the
Indenture Trustee, the Noteholders or the Certificateholders with respect to a
breach of the representations and warranties of the Transferor pursuant to
Sections 3.1 and 6.1 hereof and the agreement contained in this Section 3.2
shall be to require the Transferor to repurchase Financed Student Loans or to
reimburse the Issuer as provided above pursuant to this Section 3.2, subject to
the conditions contained herein. The Eligible Lender Trustee shall have no duty
to conduct any affirmative investigation as to the occurrence of any condition
requiring the repurchase of any Financed Student Loan or the reimbursement for
any interest penalty pursuant to this Section 3.2.
SECTION 3.3. Custody of Financed Student Loan Files. To assure uniform
quality in servicing the Financed Student Loans and to reduce administrative
costs, the Issuer hereby revocably appoints the Master Servicer as custodian of
the following documents or instruments with respect to each Financed Student
Loan (such documents are referred to collectively as the "Financed Student Loan
File"):
(a) the original fully executed copy of the note evidencing
the Financed FFELP Loan (which may be included in the application)
unless such note is in the custody of a Guarantor;
(b) the original loan application fully executed by the
related borrower (which may be included in the note evidencing a
Financed FFELP Loan); and
(c) any and all other documents and computerized records that
any of the Master Servicer, the Administrator or the Transferor shall
keep on file, in accordance with its customary procedures, relating to
such Financed Student Loan or any Obligor with respect thereto.
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Notwithstanding the foregoing, each Subcustodian appointed pursuant to
Section 3.8 who enters into a Subservicing Agreement may act as a custodian of
the Related Financed Student Loan Files. The custodian for the original fully
executed copy of the note evidencing a Financed HEAL Loan (which may be included
in the application) and the original loan application for a Financed HEAL Loan
fully executed by the related borrower (if included in the note evidencing a
Financed HEAL Loan) (the "Additional Financed HEAL Loan File") shall be selected
by the Indenture Trustee at the request of the Issuer, however, such custodian
shall not be the Master Servicer and such custodian shall not hold such
documents pursuant to this Transfer and Servicing Agreement.
SECTION 3.4. Duties of Master Servicer as Custodian.
(a) Safekeeping. The Master Servicer, as custodian, shall hold
or cause one or more Subcustodians appointed pursuant to Section 3.8,
to (i) hold the Financed Student Loan Files for the benefit of the
Issuer, and (ii) 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 and the other
Basic Documents. In performing its duties as custodian, the Master
Servicer shall act with reasonable care and shall ensure that it
complies in all material respects with all applicable federal and State
laws, including the Higher Education Act and the HEAL Act, with respect
thereto. The Master Servicer shall promptly report to the Issuer and
the Indenture Trustee any failure on its part to hold the Financed
Student Loan Files and maintain its accounts, records and computer
systems as herein provided and promptly take appropriate action to
remedy any such failure. Nothing herein shall be deemed to require an
initial review or any 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 Master Servicer
shall cause each Subcustodian to maintain the Related Financed Student
Loan Files at the office specified opposite such Subcustodian's name in
Schedule B or shall cause the Financed Student Loan Files to be
maintained at such other offices as shall be specified by written
notice to the Issuer and the Indenture Trustee not later than 60 days
after any change in location. Upon reasonable prior notice, the Master
Servicer shall make available, or cause each Subcustodian to make
available, to the Issuer and the Indenture Trustee or their respective
duly authorized representatives, attorneys or auditors (i) a list of
locations of the Financed Student Loan Files and (ii) the related
accounts, records and computer systems at the locations identified in
the list provided pursuant to clause (i) of this Section 3.4(b) and at
such times which are in accordance with the applicable Subservicing
Agreements.
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SECTION 3.5. Instructions; Authority to Act. The Master Servicer shall
be deemed to have received proper instructions with respect to the Financed
Student Loan Files upon its receipt of written instructions signed by a
Responsible Officer of the Indenture Trustee.
SECTION 3.6. Custodian's Indemnification.
(a) The Master Servicer shall pay from its own funds for any
Indemnifiable Expense that may be imposed on, incurred by or asserted
against the Issuer, the Eligible Lender Trustee, the Delaware Trustee
or the Indenture Trustee or any of their officers, directors, employees
and agents to the extent such Indemnifiable Expense results from the
Master Servicer's failure to perform its duties as specified in this
Article III where the final determination that any such improper act or
omission by the Master Servicer or any Subcustodian resulted in such
Indemnifiable Expense is established by a court of law, by an
arbitrator or by way of settlement agreed to by the Master Servicer;
provided, however, that the Master 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 Master Servicer shall not be liable to the
Indenture Trustee for any portion of any such amount resulting from the
willful misfeasance, bad faith or negligence of the Indenture Trustee.
This provision shall not be construed to limit the Master 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; provided, however, the Master Servicer shall not be
liable for any such Indemnifiable Expense imposed upon such Person to
the extent that they arise out of or result from such Person's
negligence, willful malfeasance or bad faith or a breach of the
representations and warranties of such Person in this Agreement.
Notwithstanding anything to the contrary contained in this Article III,
in no event shall the Master Servicer be liable under any theory of
tort, contract, strict liability or other legal or equitable theory for
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any lost profits or exemplary, punitive, special, incidental, indirect
or consequential damages, each of which is hereby excluded by agreement
of the parties regardless of whether or not the Master Servicer has
been advised of the possibility of such damages.
(b) Promptly after receipt by an indemnified party under this
Section 3.6 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 this Section 3.6, 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 Section
3.6, except to the extent the indemnifying party is materially
prejudiced by such failure. 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 reasonably satisfactory to such indemnified
party; provided, however, that if the defendants in any such action
include both the indemnified party and the indemnifying party, and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnifying party or parties
shall have the right to select separate counsel to assert such legal
defenses and to otherwise participate in the defense of such action on
behalf of the indemnified party or parties. After notice from the
indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable
to such indemnified party under this Section 3.6 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. An indemnifying party will not, without
the prior written consent of the indemnified party, settle or
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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 may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
The indemnified party will not, without the prior written
consent of the indemnifying 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 which indemnification may be
sought hereunder.
SECTION 3.7. Effective Period and Termination. The Master Servicer's
appointment as custodian of the Financed Student Loan Files shall become
effective as of the Closing Date and shall continue in full force and effect for
so long as the Master Servicer shall remain the Master Servicer hereunder. If
the Master Servicer or any successor Master Servicer shall resign as Master
Servicer in accordance with the provisions of this Agreement or if all the
rights and obligations of the Master Servicer or any such successor Master
Servicer shall have been terminated under Section 8.1 of this Agreement, the
appointment of the Master Servicer or such successor Master Servicer as
custodian shall be terminated simultaneously with the effectiveness of such
termination. As soon as practicable on or after any termination of such
appointment (and in any event within (i) 10 Business Days, with respect to that
portion of the Financed Student Loan Files consisting of electronic records and
information that is reasonably available and deliverable within 10 Business
Days, and (ii) 30 Business Days, with respect to the remaining portion of the
Financed Student Loan Files), the Master Servicer shall deliver, to the extent
in its possession, the Financed Student Loan Files to the Indenture Trustee or
the Indenture Trustee's agent at such place or places as the Indenture Trustee
may reasonably designate.
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SECTION 3.8. Appointment of Subcustodian.
(a) The Master Servicer may at any time appoint one or more
Servicers to act as a subcustodian (each a "Subcustodian") of the
Financed Student Loan Files of the Financed Student Loans being
serviced by such Servicer (the "Related Financed Student Loan Files")
to perform all or any portion of its obligations as custodian
hereunder; provided, however, that the Master Servicer shall remain
obligated and be liable to the Issuer, the Eligible Lender Trustee, the
Indenture Trustee, the Certificateholders and the Noteholders for the
custodial services with respect to the Financed Student Loan Files in
accordance with the provisions hereof without diminution of such
obligation and liability by virtue of the appointment of such
Subcustodian and to the same extent and under the same terms and
conditions as if the Master Servicer alone were performing the
custodial services. The fees and expenses of the Subcustodian shall be
as agreed between the Master Servicer and its Subcustodian from time to
time and none of the Issuer, the Eligible Lender Trustee, the Indenture
Trustee, the Delaware Trustee, the Certificateholders or the
Noteholders shall have any responsibility therefor.
(b) The appointment of a Subcustodian by the Master Servicer
shall become effective as of the date specified in the related
Subservicing Agreement and shall continue in full force and effect with
respect to each such Subcustodian and its Related Financed Student Loan
Files for so long as such Subcustodian is a Servicer of the Financed
Student Loans relating to such Financed Student Loan Files. As soon as
practicable following the occurrence of an event of default as to which
the Master Servicer is aware or has received notice of that is
continuing under a Subservicing Agreement, the Master Servicer shall
cause each applicable Subcustodian to deliver the Financed Student Loan
Files held by it as directed by the Master Servicer.
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SECTION 3.9. Compliance by the Eligible Lender Trustee with Insurance
Agreements with the Secretary of HHS. Pursuant to paragraph 5 of the
Comprehensive Insurance Contract Health Education Assistance Loan Program,
between PHEAA and the Secretary of HHS, dated October 1, 1992 (as amended, the
"1992 Insurance Agreement"), paragraph 4 of the Comprehensive Insurance Contract
Health Education Assistance Loan Program, between PHEAA and the Secretary of
HHS, dated October 1, 1993 (as amended, the "1993 Insurance Agreement"), and
Paragraph 6 of the Secondary Market Insurance Contract Health Education
Assistance Loan Program, between the Transferor and the Secretary of HHS, dated
September 27, 1996 (the "1996 Insurance Agreement"), the Eligible Lender Trustee
agrees to comply, as if it were the lender, with the procedures set forth,
respectively, in paragraph 3 of the 1992 Insurance Agreement, paragraphs 1 and 2
of the 1993 Insurance Agreement and paragraph 6 of the 1996 Insurance Agreement.
ARTICLE IV
Administration and Servicing of Financed Student Loans
SECTION 4.1. Duties of Master Servicer. The Master 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. 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 Master 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 in all material respects with all applicable federal and State laws,
including all applicable standards, guidelines and requirements of the Higher
Education Act and any Guarantee Agreement with respect to the Financed FFELP
Loans and of the HEAL Act and the HEAL Insurance Contract with respect to the
Financed HEAL Loans, the failure to comply with which would adversely affect the
eligibility of one or more of the Financed FFELP Loans for Interest Subsidy
Payments, Special Allowance Payments or Guarantee Payments or the eligibility of
one or more of the Financed HEAL Loans for Insurance Payments or would have a
material adverse effect on the Certificateholders or the Noteholders.
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The Master 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 bills or 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 4.2, the Master Servicer shall follow customary standards, policies
and procedures in performing its duties as Master Servicer. Without limiting the
generality of the foregoing, the Master Servicer is authorized and empowered to
execute and deliver, on behalf of itself, the Issuer, the Eligible Lender
Trustee, the Indenture Trustee, the Certificateholders and the Noteholders or
any of them, instruments of satisfaction or cancellation, or partial or full
release or discharge, and all other comparable instruments, with respect to such
Financed Student Loans; provided, however, that the Master 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) except as otherwise provided in Section 4.14,
reschedule, revise, defer or otherwise compromise with respect to payments due
on any Financed Student Loan except pursuant to any applicable deferment or
forbearance periods or otherwise in accordance with all applicable standards,
guidelines and requirements with respect to the servicing of the Financed
Student Loans; provided further, however, that the Master 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 as otherwise permitted in
accordance with applicable standards, guidelines and requirements of the Higher
Education Act and any Guarantee Agreement with respect to the Financed FFELP
Loans and by the HEAL Act and the HEAL Insurance Contract with respect to the
Financed HEAL Loans. Notwithstanding the foregoing, the Master Servicer may, in
its sole discretion, without having to obtain the consent or approval of any
other party, (i) not collect late charges that may be due on Financed Student
Loans, and (ii) waive remaining amounts owing under a Financed Student Loan up
to and including $250.00. The Master Servicer also shall be responsible for
advising the Eligible Lender Trustee and the Indenture Trustee of any action
required to be taken to maintain each such Guarantee Agreement and the HEAL
Insurance Contract. The Eligible Lender Trustee on behalf of the Issuer hereby
grants a power of attorney and all necessary authorization to the Master
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Servicer to sign endorsements of the notes relating to the Financed Student
Loans on behalf of the Eligible Lender Trustee in connection with conveyances
pursuant to Section 2.3 hereof and to maintain any and all collection procedures
with respect to the Financed Student Loans, including filing, pursuing and
recovering claims against the Guarantors for Guarantee Payments and the
Department of HHS for Insurance 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 Certificateholders or the Noteholders. The Eligible
Lender Trustee or the Indenture Trustee shall upon the written request of the
Master Servicer or the Administrator furnish the Master Servicer or the
Administrator with any other powers of attorney and other documents reasonably
necessary or appropriate to enable the Master Servicer or the Administrator to
carry out its servicing and administrative duties hereunder.
SECTION 4.2. Collection of Financed Student Loan Payments.
(a) The Master Servicer shall make reasonable efforts
(including all efforts that may be specified under the Higher Education
Act or any Guarantee Agreement with respect to Financed FFELP Loans and
under the HEAL Act and the HEAL Insurance Contract with respect to
Financed HEAL Loans) to collect all payments called for under the terms
and provisions of the Financed Student Loans as and when the same shall
become due. The Master Servicer may in its discretion waive any late
payment charge or any other fees in addition to any fee or waiver
permitted under Section 4.1 that may be collected in the ordinary
course of servicing a Financed Student Loan.
(b) The Master Servicer shall make reasonable efforts to
claim, pursue and collect all Guarantee Payments from the Guarantors
pursuant to the Guarantee Agreements and all Insurance Payments from
the Department of HHS pursuant to the HEAL Insurance Contract with
respect to any of the Financed Student Loans as and when the same shall
become due and payable, and shall comply in all material respects with
all applicable laws and agreements with respect to claiming, pursuing
and collecting such payments. In connection therewith, the Master
Servicer is hereby authorized and empowered to convey to any Guarantor
the note and the related Financed Student Loan File representing any
Financed FFELP Loan in connection with submitting a claim to such
Guarantor for a Guarantee Payment in accordance with the terms of the
applicable Guarantee Agreement and to the Department of HHS the note
and the related Financed Student Loan File representing any Financed
HEAL Loan in connection with submitting a claim to the Department of
HHS for an Insurance Payment in accordance with the terms of the HEAL
Insurance Contract whereupon the Lien of the Indenture Trustee relating
to such Financed Student Loan shall be released without any further
action of any kind.
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(c) The Eligible Lender Trustee shall, with the assistance of
the Master Servicer 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 of Education with
respect to any of the Financed FFELP Loans as and when the same shall
become due and payable, shall comply in all material respects with all
applicable laws and agreements with respect to claiming, pursuing and
collecting such payments. All amounts so collected by the Eligible
Lender Trustee shall constitute Available Funds for the applicable
Collection Period or Collection Periods and shall be deposited into the
Collection Account in accordance with Section 5.4. In connection
therewith, the Master Servicer shall prepare and file with the
Department of Education 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 of
Education. The Eligible Lender Trustee shall, upon the written request
of the Master Servicer, furnish the Master Servicer with any power of
attorney and other documents reasonably necessary or appropriate to
enable the Master Servicer to prepare and file such claims, forms and
other documents and filings.
(d) The Eligible Lender Trustee may permit trusts, other than
the Trust, established by the Transferor to securitize student loans to
use the Department of Education and the Department of HHS lender
identification numbers 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
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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 of Education, any Guarantor
or the Department of HHS to any such other trust using such common
lender identification number as a result of amounts (including, but not
limited to, consolidation fees) owing to the Department of Education,
any Guarantor or the Department of HHS 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 of Education,
any Guarantor or the Department of HHS 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
Master 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. Any amounts assessed against payments due from
the Department of Education, any Guarantor or the Department of HHS to
the Trust as a result of amounts owing to the Department of Education,
any Guarantor or the Department of HHS to the Trust 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 Master 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 4.3. Realization upon Financed Student Loans. For the benefit
of the Issuer, the Master Servicer shall use reasonable efforts consistent with
customary servicing practices and procedures and including all efforts that may
be specified under the Higher Education Act or any Guarantee Agreement with
respect to the Financed FFELP Loans and under the HEAL Act and the HEAL
Insurance Contract with respect to the Financed HEAL Loans in its servicing of
any delinquent Financed Student Loans.
SECTION 4.4. No Impairment. The Master Servicer shall not impair in any
material respect the rights of the Issuer, the Eligible Lender Trustee, the
Indenture Trustee, the Certificateholders or the Noteholders in the Financed
Student Loans, in any Guaranty Agreement or in the HEAL Insurance Contract.
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SECTION 4.5. Purchase of Financed Student Loans; Reimbursement. The
Master 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 an obligation under Section 4.1,
4.2, 4.3 or 4.4 hereof. Unless any such breach shall have been cured within 120
days following the discovery thereof by the Master Servicer or receipt by the
Master Servicer of written notice from the Eligible Lender Trustee of such
breach, the Financed Student Loan in which the interests of the Noteholders or
the Certificateholders are materially and adversely affected by any such breach
shall be transferred, assigned, setover and otherwise conveyed to the Master
Servicer (a "purchase") as of the first day succeeding the end of such 120-day
period that is the last day of a Collection Period; provided that it is
understood that any such breach that has not resulted in the failure of a
Guarantee Agency to make a Guarantee Payment or the Department of HHS to make an
Insurance Payment to the Eligible Lender Trustee will not be considered to have
a material adverse effect for this purpose; and provided further, however, that
in the case of any obligation the breach of which may be cured by reinstatement
of the Guarantor's obligation to guarantee payment or the Department of HHS's
obligation to insure payment, such cure period shall be 360 days (instead of 120
days), in each case following the earlier of the date on which such breach is
discovered by the Master Servicer and the date of the Servicer's receipt of the
Guarantor or Department of HHS reject transmittal form with respect to such
Financed Student Loan. Notwithstanding the foregoing, if as of the last day of
any Collection Period the aggregate principal amount of Financed Student Loans
with respect to which claims have been filed with and rejected by a Guarantor or
the Department of HHS as a result of a breach of a representation or warranty of
the Transferor in Sections 3.1 or Section 6.1 hereof or a breach of the
obligations of the Master Servicer under Sections 4.1 through 4.4 hereof or with
respect to which the Master Servicer determines that claims cannot be filed
pursuant to the Higher Education Act or the HEAL Act, as the case may be, as a
result of such a breach exceeds the lesser of $250,000 or 0.25% of the Pool
Balance as of such date, the Master Servicer shall purchase (or Transferor shall
repurchase pursuant to Section 3.2 hereof) within 120 days of a written request
by the Eligible Lender Trustee or the Indenture Trustee, affected Financed
Student Loans in an aggregate principal amount such that after such purchases or
repurchases the aggregate principal amount of affected Financed Student Loans is
equal to or less than the lesser of $250,000 or 0.25% of the Pool Balance. The
Financed Student Loans to be purchased by the Master Servicer pursuant to the
preceding sentence (or repurchased by the Transferor pursuant to Section 3.2
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hereof) will be based on the date of claim rejection, with the Financed Student
Loans with the earliest such dates to be purchased or repurchased first. In
consideration of and simultaneously with the purchase of the Financed Student
Loan, the Master Servicer shall remit the Purchase Amount, in the manner
specified in Section 5.4, and the Issuer shall execute such assignments and
other documents reasonably requested by the Master Servicer 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 and, if applicable, the related Additional Financed HEAL Loan File will
thereafter belong to the Master Servicer.
In addition, if any such breach does not trigger such a purchase
obligation but does result in (i) the refusal by the Department of HHS to insure
the applicable portion of the accrued interest with respect to any Financed HEAL
Loan, or (ii) the refusal by a Guarantor to guarantee the applicable portion of
the accrued interest, or the loss of (including any obligation of the Issuer to
repay to the Department of Education) certain Interest Subsidy Payments and
Special Allowance Payments, with respect to a Financed FFELP Loan, then, unless
such breach, if curable, is cured within 120 days following the discovery
thereof by the Master Servicer or receipt by the Master Servicer of written
notice from the Eligible Lender Trustee, the Master Servicer shall, at its
option, either (y) purchase such Financed Student Loan (but only if an actual
failure to pay any such amount to the Eligible Lender Trustee occurs or the
Eligible Lender is required to repay such an amount which has been previously
paid) at the applicable Purchase Amount, including (if the Transferor is the
Master Servicer at the time of such purchase) by transferring to the Eligible
Lender Trustee a Subsequent Financed Student Loan pursuant to Section 2.3(b)
hereof in lieu of depositing into the Collection Account all or a portion of the
Purchase Amount (equal to the Subsequent Financing Purchase Price of such
Subsequent Financed Student Loan as of the Subsequent Finance Date) or (z)
reimburse the Issuer by remitting an amount equal to the sum of all amounts that
would have been payable if not for such breach in the manner specified in
Section 5.4 not later than the last day of the Collection Period in which such
120th day occurs (or, to the extent that all or a portion of such amount is not
otherwise due and payable as of such date, that portion shall be remitted to the
Collection Account on the last day of the Collection Period during which such
amount would otherwise be due and payable).
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The sole remedy of the Issuer, the Eligible Lender Trustee, the
Indenture Trustee, the Noteholders or the Certificateholders with respect to a
breach of the obligations of the Master Servicer under Sections 4.1 through 4.4
hereof and the agreement contained in this Section 4.5 shall be to require the
Master Servicer to purchase Financed Student Loans or to reimburse the Issuer as
provided above pursuant to this Section 4.5, subject to the conditions contained
herein. 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 4.5.
SECTION 4.6. Servicing Fee. For its services hereunder, the Master
Servicer shall be entitled to receive the Servicing Fee in the manner set
forth in Section 5.5.
SECTION 4.7. Administrator's Certificate.
(a) On each Distribution Determination Date, the Administrator
shall deliver to the Indenture Trustee and the Eligible Lender Trustee
in writing the applicable Noteholders' Interest Distribution Amount,
the Noteholders Principal Distribution Amount and all amounts to be
paid to Certificateholders on the related Distribution Date. On each
Distribution Determination Date relating to a Quarterly Distribution
Date, the Administrator also shall deliver to the Indenture Trustee and
the Eligible Lender Trustee in writing the estimated Transaction Fees
(separately and in the aggregate) for the calendar quarter in which
such Quarterly Distribution Date occurs. Two Business Days prior to the
25th day of each month, the Administrator will advise the Indenture
Trustee and the Eligible Lender Trustee in writing of the Consolidation
Loan Fees for the preceding calendar month.
(b) On each Distribution Determination Date, the Administrator
also shall deliver to the Eligible Lender Trustee, the Indenture
Trustee and the Transferor (if the Transferor is not also the
Administrator), an Administrator's Certificate containing all
information necessary to make the distributions pursuant to Sections
5.5 and 5.6, if applicable, for the upcoming Distribution Date.
Financed Student Loans to be repurchased by the Transferor or purchased
by the Master Servicer (whether pursuant to Section 2.3(b), 3.2 or
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4.5), or acquired by any Guarantor or by the Department of HHS shall be
identified by the Administrator by borrower social security number with
respect to such Financed Student Loan (as specified in Schedule A-1).
(c) On or before each Distribution Determination Date, the
Administrator shall deliver to the Eligible Lender Trustee, the
Indenture Trustee and the Transferor (if the Transferor is not also the
Administrator), the Administrator's Certificate substantially in the
form of Exhibit C setting forth by component the Available Funds for
the immediately preceding Collection Period (or the three preceding
Collection Periods if the Class A Notes are no longer Outstanding).
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SECTION 4.8. Annual Statement as to Compliance; Notice of Default.
(a) Each of the Master Servicer and the Administrator shall
deliver to the Transferor, the Eligible Lender Trustee and the
Indenture Trustee, on or before April 30 of each year beginning April
30, 1999, an Officer's Certificate of the Master 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
Master 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,
1998) 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 Master Servicer or the
Administrator, as the case may be, has fulfilled in all material
respects all its obligations 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 officer and the nature and
status thereof. The Eligible Lender Trustee shall send a copy of each
such Officers' Certificate and each report referred to in Section 4.9
to the Rating Agencies. A copy of each such Officers' Certificate and
each report referred to in Section 4.9 may be obtained by any
Noteholder 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 a
Noteholder or Note Owner. Pursuant to the Indenture, upon the telephone
request of the Eligible Lender Trustee, the Indenture Trustee will
promptly furnish the Eligible Lender Trustee a list of Noteholders as
of the date specified by the Eligible Lender Trustee.
(b) The Master Servicer shall deliver to the Eligible Lender
Trustee, the Indenture Trustee, the Transferor and the Rating Agencies,
promptly after having obtained knowledge thereof, but in no event later
than five Business Days thereafter, written notice in an Officer's
Certificate of the Master Servicer of any event which with the giving
of notice or lapse of time, or both, would become a Master Servicer
Default under Section 8.1(a).
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(c) The Administrator shall deliver to the Eligible Lender
Trustee, the Indenture Trustee, the Master 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
Officer's 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 8.1(b) (l), (2) or (3).
SECTION 4.9. Annual Independent Certified Public Accountants' Report or
Reports. Each of the Master Servicer and the Administrator shall cause KPMG Peat
Marwick LLP, or any other nationally recognized firm of independent certified
public accountants, to deliver to the Transferor, which may also render its
services to the Master Servicer and the Administrator, the Eligible Lender
Trustee, the Indenture Trustee and any Servicer on or before April 30 of each
year beginning April 30, 1999 one or more reports addressed to the Master
Servicer and to the Transferor, the Eligible Lender Trustee and the Indenture
Trustee, to the effect that such accountants have relied upon the assertions by
the Master Servicer's and Administrator's management about the Master Servicer's
and Administrator's compliance with Sections 3.3, 3.4, 4.1, 4.2, 4.3, 4.4, 4.6,
4.7, 5.2, 5.5, 5.6, 5.7 and 5.8 of the Transfer and Servicing Agreement and
Sections 1(B), 1(D), 1(G), 1(U), 2 and 3 of the Administration Agreement during
the preceding calendar year (or, in the case of the first such report(s), during
the period from the Closing Date to December 31, 1998) and in any such
accountant's opinion(s), such assertions are fairly stated in all material
respects, except for (i) such exceptions as any such firm shall believe to be
immaterial and (ii) such other exceptions as shall be set forth in such
report(s). If any such firm requires the Indenture Trustee or the Eligible
Lender Trustee to agree to the procedures performed by such firm, the Master
Servicer shall direct the Indenture Trustee or the Eligible Lender Trustee in
writing to so agree; it being understood and agreed that the Indenture Trustee
or the Eligible Lender Trustee, as applicable, will deliver such letter of
agreement in conclusive reliance upon the direction of the Master 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(s) will also indicate that the firm is independent of the
Master Servicer within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants.
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SECTION 4.10. Access to Certain Documentation and Information Regarding
Financed Student Loans. Upon reasonable prior notice, the Master Servicer shall,
or shall cause each Servicer to, provide access to the Financed Student Loan
Files and the related accounts, records and computer systems maintained by the
Master Servicer or such Servicer, as the case may be, to (i) the Eligible Lender
Trustee and (ii) the Indenture Trustee and their respective duly authorized
representatives, attorneys or auditors; provided, however, that, except as
otherwise set forth in Section 11.18 of the Indenture, agreed to by the Master
Servicer or required by law, (A) such Persons shall maintain the confidentiality
of the information in such Financed Student Loan Files and the related accounts,
records and computer systems and not use any of such information for any purpose
except in connection with performing their obligations as Eligible Lender
Trustee or Indenture Trustee, and (B) access to the computer systems shall be
limited to obtaining, and only to the extent necessary to obtain, information
relating to the Financed Student Loans for purposes of performing their
obligations as Eligible Lender Trustee or Indenture Trustee. Access shall be
afforded without charge (except that the reasonable cost of photocopying shall
be borne by the party requesting copies), but only upon reasonable request and
during the normal business hours at the respective offices of the applicable
Servicer. Nothing in this Section shall affect the obligation of the Master
Servicer (or a Servicer) to observe any applicable law prohibiting disclosure of
information regarding the Obligors and the failure of the Master Servicer to
provide (or cause each Servicer to provide) access to information as a result of
such obligation shall not constitute a breach of this Section.
SECTION 4.11. Master Servicer and Administrator Expenses. The Master
Servicer and the Administrator shall be severally required to pay all expenses
incurred by them in connection with their respective activities hereunder,
including fees and disbursements of independent accountants, taxes imposed on
the Master Servicer or the Administrator, as the case may be, and expenses
incurred in connection with distributions and reports to the Administrator, the
Noteholders and the Eligible Lender Trustee, as the case may be.
SECTION 4.12. Appointment of Servicer.
(a) The Master Servicer may at any time appoint a Servicer to
perform all or any portion of its obligations as Master Servicer
hereunder; provided, however, that the Rating Agency Condition shall
have been satisfied in connection therewith; provided further, that the
Master Servicer shall remain obligated and be liable to the Issuer, the
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Eligible Lender Trustee, the Indenture Trustee, the Certificateholders
and the Noteholders for the servicing and administering of the Financed
Student Loans in accordance with the provisions hereof without
diminution of such obligation and liability by virtue of the
appointment of such subservicer and to the same extent and under the
same terms and conditions as if the Master Servicer alone were
servicing and administering the Financed Student Loans. The fees and
expenses of each Servicer shall be as agreed between the Master
Servicer and such Servicer from time to time and none of the Issuer,
the Eligible Lender Trustee, the Delaware Trustee, the Indenture
Trustee, the Certificateholders and the Noteholders shall have any
responsibility therefor. Notwithstanding the foregoing, PHEAA shall be
deemed an approved Servicer for all purposes hereunder.
(b) The Master Servicer may at any time appoint one or more of
its Affiliates to perform all or any portion of its obligations
hereunder; provided, however, that the Master Servicer shall remain
obligated and liable to the Issuer, the Eligible Lender Trustee, the
Indenture Trustee, the Certificateholders and the Noteholders for the
servicing and administering of the Financed Student Loans in accordance
with the provisions hereof without diminution of such obligation and
liability by virtue of the appointment of such Affiliate and to the
same extent and under the same terms and conditions as if the Master
Servicer alone were servicing and administering the Financed Student
Loans. The fees and expenses of each such Affiliate shall be as agreed
between the Master Servicer and such Affiliate from time to time and
none of the Issuer, the Eligible Lender Trustee, the Delaware Trustee,
the Indenture Trustee, the Certificateholders and the Noteholders shall
have any responsibility therefor.
SECTION 4.13. Subservicing Agreements. The Master Servicer
hereby represents and warrants that: (i) as of the Closing Date it has
entered into a Subservicing Agreement with PHEAA (the "Subservicing
Agreement"); (ii) the Subservicing Agreement requires the Servicer
thereunder to service the Financed Student Loans subject thereto in
accordance in all material respects with all applicable federal and
State laws, including all applicable standards, guidelines and
requirements of the Higher Education Act with respect to Financed FFELP
Loans and the HEAL Act with respect to Financed HEAL Loans.
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SECTION 4.14. Incentive Programs. The Servicer shall be
permitted to reduce the applicable interest rate on a TP Loan by up to
(i) 1.00% per anum for Stafford Loans and Unsubsidized Stafford Loans
and 0.5% per annum for PLUS Loans, if the Obligor related to such TP
Loan makes 36 consecutive monthly payments of such TP Loan on or prior
to the applicable due dates of such TP Loan, or (ii) such greater
percentage and upon such other conditions for which a Rating Agency
Condition is satisfied.
ARTICLE V
Distributions; Reserve Account;
Statements to Certificateholders and Noteholders
SECTION 5.1. Establishment of Trust Accounts.
(a) The Indenture Trustee, for the benefit of the Noteholders,
shall establish and maintain in the name of the Indenture Trustee each
of the Collection Account, the Note Distribution Account, the Reserve
Account, the Expense Account and the Monthly Advance Account. The
Eligible Lender Trustee, for the benefit of the Certificateholders,
shall establish and maintain in the name of the Eligible Lender Trustee
the Certificate Distribution Account and the Certificate Quarterly
Advance Account. The foregoing accounts are referred to collectively as
the "Trust Accounts." Each such Trust Account shall be an Eligible
Deposit Account and, except for the Certificate Distribution Account
and the Certificate Quarterly Advance Account, shall be entitled as
follows: "[Name of Account] for the benefit of Crestar Student Loan
Trust 1997-1 and Bankers Trust Company, as Indenture Trustee, as their
interests may appear." The Certificate Distribution Account and the
Certificate Quarterly Advance Account shall be entitled as follows:
"Crestar Student Loan Trust 1997-1 Certificate Distribution Account"
and Crestar Student Loan Trust 1997-1 Certificate Quarterly Advance
Account," respectively.
(b) Funds on deposit in the Trust Accounts shall be invested
by the Indenture Trustee and, in the case of the Certificate
Distribution Account and the Certificate Quarterly Advance Account, the
Eligible Lender Trustee in Eligible Investments pursuant to written
instructions from the Administrator, on behalf of the Issuer; provided,
however, it is understood and agreed that the Indenture Trustee and the
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Eligible Lender Trustee shall not be liable for any loss arising from
such investment in Eligible Investments. All such Eligible Investments
shall be held by the Indenture Trustee and the Eligible Lender 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 the related
Distribution Date. Funds on deposit in the Trust Accounts shall be
invested in Eligible Investments that will mature or otherwise be
available so that such funds will be available at the close of business
on the Business Day preceding the day on which funds in the applicable
Trust Account may be required to be withdrawn; provided, however, that
funds on deposit in such Trust Accounts may be invested in Eligible
Investments of the Indenture Trustee or of the Eligible Lender Trustee
in the case of the Certificate Distribution Account and Certificate
Quarterly Advance Account which may mature so that such funds will be
available on the following Business Day. 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 unless otherwise directed by telephone or
facsimile and confirmed within 24 hours in writing by the
Administrator.
(c) (i) The Indenture Trustee (or the Eligible Lender Trustee
with respect to the Certificate Distribution Account and the
Certificate Quarterly Advance Account) 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 give instructions
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 (or the Eligible Lender Trustee with respect to the
Certificate Distribution Account and the Certificate Quarterly Advance
Account) for the benefit of the Noteholders and Certificateholders. If,
at any time, any of the Trust Accounts ceases to be an Eligible Deposit
Account, the Administrator, on behalf of the Issuer, agrees that it
shall within 10 Business Days (or such longer period, not to exceed 30
calendar days, as to which the Rating Agencies may consent) establish a
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new 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, on behalf of the Issuer, agrees
that, if any of the Trust Accounts are not accounts with the Indenture
Trustee (or the Eligible Lender Trustee with respect to the Certificate
Distribution Account and the Certificate Quarterly Advance Account),
the Administrator shall notify the Indenture Trustee and the Eligible
Lender 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 (or, with respect to the Certificate Distribution
Account and the Certificate Quarterly Advance Account, the Eligible
Lender Trustee agrees), by its acceptance thereof, 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 5.1(c)(i);
and, subject to Section 5.1(b), each such Eligible Deposit
Account shall be subject to the exclusive custody and control
of the Indenture Trustee (or the Eligible Lender Trustee with
respect to the Certificate Distribution Account and the
Certificate Quarterly Advance Account), and the Indenture
Trustee (or the Eligible Lender Trustee with respect to the
Certificate Distribution Account and the Certificate Quarterly
Advance Account) shall have sole signature authority with
respect thereto;
(B) any Trust Account Property that constitutes
Physical Property shall be Delivered to the Indenture Trustee
in accordance with paragraph (a) of the definition of
"Delivery" and shall be held, pending maturity or disposition,
solely by the Indenture Trustee or a financial intermediary
(as such term is defined in Article 8 of the UCC) acting
solely for the Indenture Trustee;
(C) any Trust Account Property that is a book-entry
security held through the Federal Reserve System pursuant to
federal book-entry regulation shall be Delivered in accordance
with paragraph (b) of the definition of "Delivery" and shall
be maintained by the Indenture Trustee, pending maturity or
disposition, through continued book-entry registration of such
Trust Account Property as described in such paragraph; and
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(D) any Trust Account Property that is an
"uncertificated security" under Article VIII of the UCC and
that is not governed by clause (C) above shall be Delivered to
the Indenture Trustee in accordance with paragraph (c) of the
definition of "Delivery" and shall be maintained by the
Indenture Trustee, pending maturity or disposition, through
continued registration of the Indenture Trustee's (or its
nominee's) ownership of such security.
(iii) The Administrator shall have the power, revocable for
cause or upon the occurrence and during the continuance of an
Administrator Default by the Indenture Trustee or by the Eligible
Lender Trustee with the consent of the Indenture Trustee, to instruct
the Indenture Trustee to make withdrawals and payments from the Trust
Accounts (or the Eligible Lender Trustee with respect to the
Certificate Distribution Account and the Certificate Quarterly Advance
Account) for the purpose of permitting the Master Servicer, the
Administrator or the Eligible Lender Trustee to carry out its
respective duties hereunder or under the Trust Agreement or permitting
the Indenture Trustee to carry out its duties under the Indenture.
SECTION 5.2. Collections. The Master Servicer shall cause each Servicer
to remit to the Collection Account, no less frequently than weekly, all payments
by or on behalf of the Obligors with respect to the Financed Student Loans for
which it is acting as Primary Servicer (other than Purchased Student Loans). 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, the Guarantors and the Department of HHS. The
Master Servicer shall require each Servicer to provide notice by facsimile to
the Indenture Trustee of all wire transfers made by such Servicer to the
Indenture Trustee for deposits to the Collection Account.
SECTION 5.3. Application of Collections. With respect to each Financed
Student Loan, all collections (including all Guarantee Payments and all
Insurance Payments) with respect thereto shall be applied in accordance with
regulations of the Department of Education and the applicable Guarantor in the
case of Financed FFELP Loans and the Department of HHS in the case of Financed
HEAL Loans.
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SECTION 5.4. Additional Deposits. Within two Business Days after
receipt thereof, the Eligible Lender Trustee (or the Master Servicer on its
behalf) 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 Student Loans, and the Transferor shall deposit in the Collection
Account any amount owed pursuant to Section 3.2 no later than the last day of
the Collection Period during which any such amount is owed. The Master 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 Master Servicer under Section 4.5 when such amounts are due, and
the Transferor 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 Transferor under Sections 3.2 or 9.1 when such
amounts are due. The Transferor, the Master Servicer and the Administrator also
shall deposit in the Collection Account all amounts required to be deposited
therein pursuant to, and within the time periods provided by, Section 2.3.
Notwithstanding the foregoing, the Master Servicer shall deposit, or cause to be
deposited, directly into the Reserve Account any payments of or with respect to
principal relating to a Financed Student Loan for which any payment on account
of a Realized Loss was previously distributed (but only up to the amount of such
Realized Loss), and shall deposit, or cause to be deposited, directly into the
Collection Account any payments of or with respect to interest relating to a
Financed Student Loan for which any payment on account of a Realized Loss was
previously distributed.
The Master Servicer also shall, in its sole discretion, deposit into
the Monthly Advance Account the amount of any Monthly Advances determined to be
made by the Master Servicer pursuant to Section 5.10 no later than the
Distribution Determination Date relating to the Distribution Date when such
amounts are to be applied as a payment of interest. On each Distribution Date,
the Indenture Trustee will transfer from the Monthly Advance Account to the
Eligible Lender Trustee, by wire transfer no later than 11:00 a.m. New York
time, for deposit into the Certificate Quarterly Advance Account the portion of
the Monthly Advance, if any, for such Distribution Date allocable to the
Certificates. Pursuant to Section 5.10, if after making a Monthly Advance the
Master Servicer receives the Guarantee Payment, the Special Allowance Payment,
the Interest Subsidy Payment or the Insurance Payment for which such Monthly
Advance was made, the Master Servicer shall be reimbursed immediately from such
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Guarantee Payment, Special Allowance Payment, Interest Subsidy Payment or
Insurance Payment, as the case may be, on deposit in the Collection Account up
to the amount of the related Monthly Advance or, if such Guarantee Payment,
Special Allowance Payment, Interest Subsidy Payment or Insurance Payment is not
received, the Master Servicer may reimburse itself from any funds on deposit in
the Collection Account up to the amount of the related Monthly Advance.
SECTION 5.5. Distributions.
(a) On each Distribution Date, pursuant to the Administrator's
written instructions, the Indenture Trustee will transfer from the
Collection Account, in the following priority and from Available Funds
for each Collection Period from and including the Collection Period
during which the preceding Quarterly Distribution Date occurred through
the Collection Period immediately preceding the month of such
Distribution Date (or with respect to each Distribution Date through
and including the first Quarterly Distribution Date, from the Closing
Date through the Collection Period immediately preceding such
Distribution Date), the required amounts from the Available Funds for
such Collection Periods:
(i) first, to the Expense Account, (A) an amount
equal to the Consolidation Loan Fees with respect to the
calendar month most recently ended and all overdue
Consolidation Loan Fees from any prior months and (B) if such
Distribution Date is a Quarterly Distribution Date, an amount
up to the estimated Transaction Fees for the calendar quarter
commencing in the month of such Quarterly Distribution Date
and all overdue Transaction Fees from prior calendar quarters
(plus (or minus) the difference (or excess) of the actual
Transaction Fees for the immediately preceding calendar
quarter and the Transaction Fees deposited into the Expense
Account on the preceding Quarterly Distribution Date);
(ii) second, to the Note Distribution Account, an
amount up to the aggregate Noteholders' Interest Distribution
Amount for such Distribution Date;
(iii) third, to the Note Distribution Account, an
amount up to the Noteholders' Principal Distribution Amount
for such Distribution Date;
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(iv) fourth, to the Eligible Lender Trustee, for
deposit into the Certificate Distribution Account, an amount
up to the Certificateholders' Interest Distribution Amount for
such Distribution Date; and
(v) fifth, if the Outstanding Amount of the Notes has
been paid in full, to the Eligible Lender Trustee, for deposit
into the Certificate Distribution Account, an amount up to the
Certificateholders' Principal Distribution Amount
for such Distribution Date.
(b) [Reserved]
(c) On each Quarterly Distribution Date (and in the case of
clause (i) below, on the 25th day of each month (or if such day is not
a Business Day, the next succeeding Business Day)), the Indenture
Trustee, pursuant to information contained in the Administrator's
Certificate delivered in accordance with Section 4.7, will distribute
from the Expense Account (in addition to any amounts transferred from
the Reserve Account pursuant to Section 5.6) the following amounts in
the following order of priority:
(i) to the Department of Education, the Consolidation
Loan Fees for the immediately preceding calendar month and all
overdue Consolidation Loan Fees for any prior months,
(ii) to the Master Servicer, the estimated Servicing
Fee for the calendar quarter in which such Quarterly
Distribution Date occurs and all overdue Servicing Fees,
(iii) to the Administrator, the estimated
Administration Fee for the calendar quarter in which such
Quarterly Distribution Date occurs and all overdue
Administration Fees,
(iv) to the Indenture Trustee, the estimated
Indenture Trustee Fee for the calendar quarter in which such
Quarterly Distribution Date occurs and all overdue Indenture
Trustee Fees, and
(v) to the Eligible Lender Trustee and the Delaware
Trustee, the estimated Eligible Lender Trustee Fee and
Delaware Trustee Fee, respectively, for the calendar quarter
in which such Quarterly Distribution Date occurs and all
overdue Eligible Lender Trustee Fees and Delaware Trustee
Fees.
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(d) On each Distribution Date, the Indenture Trustee will
distribute to the Noteholders as of the related Record Date all amounts
transferred to the Note Distribution Account pursuant to Section
5.5(a)(ii) and (iii) (in addition to any amounts transferred from the
Reserve Account, any amounts deposited into the Monthly Advance Account
pursuant to Section 5.4 and any Parity Percentage Payments transferred
from the Collection Account pursuant to Section 5.5(e)) in the
following order of priority:
(i) first, to each Class of Class A Noteholders, the
Class A Noteholders' Interest Distribution Amount (pro rata
based upon the portion thereof allocable to each such Class);
(ii) second, if such Distribution Date is a Quarterly
Distribution Date, to the Class B Noteholders, the Class B
Noteholders' Interest Distribution Amount;
(iii) third, to the Class A-1 Noteholders, the
Noteholders' Principal Distribution Amount until the
Outstanding Amount of the Class A-1 Notes has been reduced to
zero;
(iv) fourth, after the Outstanding Amount of the
Class A-1 Notes has been reduced to zero, to the Class A-2
Noteholders, the Noteholders' Principal Distribution Amount
until the Outstanding Amount of the Class A-2 Notes has been
reduced to zero, and
(v) fifth, after the Outstanding Amount of the Class
A Notes has been reduced to zero, if such Distribution Date is
a Quarterly Distribution Date, to the Class B Noteholders the
remaining Noteholders' Principal Distribution Amount until the
Outstanding Amount of the Class B Notes shall have been
reduced to zero.
On each Quarterly Distribution Date, the Eligible Lender
Trustee will distribute to the Certificateholders as of the related
Record Date all amounts transferred to the Certificate Distribution
Account pursuant to Section 5.5(a) (in addition to any amounts
transferred from the Reserve Account and any amount deposited into the
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Certificate Quarterly Advance Account pursuant to Section 5.4) in the
following order of priority: (i) first, to the Certificateholders, the
Certificateholders' Interest Distribution Amount and (ii) second, to
the Certificateholders, the Certificateholders' Principal Distribution
Amount. The priority of distributions set forth in this Section 5.5(d)
shall be subject to the provisions of Section 5.5(f).
(e) On each Quarterly Distribution Date, after making any and
all required transfers to the Expense Account, the Note Distribution
Account and, if applicable, the Certificate Distribution Account
pursuant to Section 5.5(a), the Indenture Trustee will transfer any
amounts remaining in the Collection Account (other than amounts
representing payments received during the month in which such
Distribution Date occurs) in the following order of priority:
(i) to the Reserve Account, the amount, if any,
necessary to increase the balance thereof to the Specified
Reserve Account Balance,
(ii) to the Note Distribution Account, the Parity
Percentage Payment, if any, for such Distribution Date,
(iii) to the Note Distribution Account, the amount of
any outstanding Noteholders' Interest Carryover, and
(iv) to the Transferor, any amounts remaining on
deposit in the Collection Account other than amounts
representing payments received on or with respect to the
Financed Student Loans during the month of such Quarterly
Distribution Date (amounts transferred to the Transferor
pursuant to this clause (iv) shall be transferred by the
Indenture Trustee to the account specified by the Transferor).
The Transferor shall have the right, at its option, to transfer and
assign, in whole or in part, its right to receive any amounts required
to be paid to it pursuant to clause (iv).
(f) Notwithstanding the foregoing, if (x) on any Distribution
Date following all distributions to be made on such Distribution Date,
the Outstanding Amount of the Class A Notes would exceed the sum of the
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Pool Balance at the end of the immediately preceding Collection Period
plus the aggregate balance on deposit in the Trust Accounts on such
Distribution Date following such distributions, or (y) an Event of
Default has occurred with respect to payment of the Notes,
distributions pursuant to Section 5.5(d) shall be made in the following
priority:
(i) first, to each Class of Class A Noteholders, the
Noteholders' Interest Distribution Amount applicable to each
such Class pro rata based upon the portion thereof
allocable to each such Class;
(ii) second, in the case of
(A) clause (x) above, to the Class A-1
Noteholders, the Noteholders' Principal
Distribution Amount until the Outstanding
Amount of the Class A-1 Notes has been
reduced to zero, and then to the Class A-2
Noteholders, the Noteholders' Principal
Distribution Amount until the Outstanding
Amount of the Class A-2 Notes has been
reduced to zero, and
(B) clause (y) above, to each Class of Class
A Noteholders, the Noteholders' Principal
Distribution Amount applicable to such
Distribution Date, pro rata based upon the
Outstanding Amount of each Class of Class A
Notes until the Outstanding Amount of each
Class of Class A Notes has been paid in
full;
(iii) third, if such Distribution Date is a Quarterly
Distribution Date, to the Class B Noteholders, the
Noteholders' Interest Distribution Amount applicable to the
Class B Notes;
(iv) fourth, after the Outstanding Amount of each of
the Class A Notes has been reduced to zero, if such
Distribution Date is a Quarterly Distribution Date, to the
Class B Noteholders, the Noteholders' Principal Distribution
Amount until the Outstanding Amount of the Class B Notes has
been reduced to zero;
(v) fifth, if such Distribution Date is a Quarterly
Distribution Date, to the Class A Noteholders, the
Noteholders' Interest Carryover applicable to the respective
Class of Class A Notes, pro rata based upon the portion
thereof allocable to each such Class;
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(vi) sixth, if such Distribution Date is a Quarterly
Distribution Date, to the Class B Noteholders, the
Noteholders' Interest Carryover applicable to the Class B
Notes;
(vii) seventh, if such Distribution Date is a
Quarterly Distribution Date, to the Certificateholders, the
Certificateholders' Interest Distribution Amount; and
(viii) eighth, if such Distribution Date is a
Quarterly Distribution Date, to the Certificateholders, the
Certificateholders' Principal Distribution Amount.
All distributions made to the Noteholders of a Class or the
Certificateholders on each Distribution Date shall be made on a pro rata basis
among the Noteholders of such Class and Certificateholders of record as of the
related Record Date based upon the Outstanding Amount of such Class (or, with
respect to payments of principal on such Class of Notes, the applicable
Principal Factor with respect to such Class) or percentage interest of
Certificates so owned.
SECTION 5.6. Reserve Account.
(a) On the Closing Date, the Transferor shall deposit the
Reserve Account Initial Deposit into the Reserve Account.
(b) If the amount on deposit in the Reserve Account on any
Quarterly Distribution Date (after giving effect to all deposits or
withdrawals therefrom on such Quarterly Distribution Date) is greater
than the then applicable Specified Reserve Account Balance, the
Administrator shall instruct the Indenture Trustee in writing to
withdraw such excess from the Reserve Account and
(i) to deposit into the Note Distribution Account, an
amount equal to the lesser of such excess and the amount
described in Section 5.5(e)(iii) for such Distribution Date
(to the extent not otherwise paid to the Note Distribution
Account on such Distribution Date),
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(ii) to deposit into the Note Distribution Account
the lesser of such excess (after giving effect to clause (i)
above) and any amounts required to be paid by the Transferor
or the Master Servicer pursuant to Sections 3.2 or 4.5 as a
result of breaches of representations, warranties and
agreements made in Sections 3.1, 4.1 through 4.4, or 6.1 to
the extent the Transferor or the Master Servicer, as the case
may be, has not made such payments within the required time
period, and
(iii) to distribute the remaining amount of such
excess (after giving effect to clauses (i) and (ii) above) to
the Transferor.
Amounts properly distributed pursuant to this paragraph (b) shall be
deemed released from the Trust Estate and the security interest therein
granted to the Indenture Trustee, and the Transferor shall in no event
thereafter be required to refund any such distributed amounts. The
Transferor shall have the right, at its option, to transfer and assign,
in whole or in part, its right to receive any amounts required to be
paid to it pursuant to clause (iii).
(c) Following the payment in full of the aggregate Outstanding
Amount of the Notes and of all other amounts owing or to be distributed
hereunder or under the Indenture or the Trust Agreement to Noteholders,
Certificateholders, the Master Servicer or the Administrator and the
termination of the Trust, any amount remaining on deposit in the
Reserve Account shall be distributed to the Transferor. The Transferor
shall in no event be required to refund any amounts properly
distributed pursuant to this Section 5.6(c).
(d) (i) If on any Quarterly Distribution Date (and with
respect to Section 5.5(c)(i), the 25th day of each month, or if such
day is not a Business Day the next succeeding Business Day), any
amounts to be distributed as calculated pursuant to Section
5.5(c)(i)-(v) exceed the amount on deposit in the Expense Account
available for such purposes, the Administrator shall instruct the
Indenture Trustee to withdraw from the Reserve Account the lesser of
such excess and the amount on deposit in the Reserve Account (after
giving effect to each withdrawal in the order specified in Section
5.5(c) (i)-(v)) and deposit such withdrawn amount in the Expense
Account for distribution as provided in Section 5.5.
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(ii) If the Noteholders' Distribution Amount for a
Distribution Date exceeds the amount in the Note Distribution Account
for such Distribution Date available for such purposes, the
Administrator shall instruct the Indenture Trustee to withdraw from the
Reserve Account an amount equal to the lesser of such excess, and the
amount on deposit in the Reserve Account (after giving effect to
paragraph (d)(i) above), and deposit such withdrawn amount into the
Note Distribution Account for distribution as provided in Section 5.5.
(iii) If the Certificateholders' Distribution Amount for a
Quarterly Distribution Date exceeds the amount for such Quarterly
Distribution Date available for such purposes, the Administrator shall
instruct the Indenture Trustee on such Quarterly Distribution Date to
withdraw from the Reserve Account an amount equal to the lesser of such
excess, and the amount on deposit in the Reserve Account (after giving
effect to paragraphs (d)(i) and (d) (ii) above), and to deposit such
withdrawn amount in the Certificate Distribution Account for
distribution as provided in Section 5.5.
SECTION 5.7. Statements to Certificateholders and Noteholders. On each
Distribution Determination Date immediately preceding a Distribution Date, the
Master Servicer or the Administrator shall provide to the Indenture Trustee with
a copy to the Rating Agencies (for the Indenture Trustee to forward on such
succeeding Distribution Date to each Noteholder of the applicable Class of
record and to the Eligible Lender Trustee for the Eligible Lender Trustee to
forward on such succeeding Distribution Date to each Certificateholder (if such
Certificateholder is not the Transferor) of record, a statement substantially in
the form of Exhibits A and B, respectively, setting forth at least the following
information with respect to such Distribution Date or the preceding Collection
Period or Collection Periods, to the extent applicable:
(i) the Principal Factor for each Class of Notes;
(ii) the amount of the distribution allocable to
principal on each Class of Notes;
(iii) the amount of the distribution allocable to
interest on each Class of Notes and on the Certificates,
together with the interest rates applicable with respect
thereto (indicating, whether such interest rates are based on
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the Formula Interest Rate or on the Net Loan Rate with respect
to each Class of the Class A Notes and on the Formula Interest
Rate or on the Net Loan Rate with respect to the Class B
Notes, 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 Net Loan Rate will be
required to be made unless the excess of One-Month LIBOR over
the 91-day T-Bill Rate is greater than 100 basis points as of
the preceding Rate Determination Date, or, in the case of the
initial Rate Determination Date, the Closing Date);
(iv) the amount of the distribution, if any,
allocable to any Noteholders' Interest Carryover together with
the outstanding amount, if any, thereof after giving effect to
any such distribution;
(v) the Pool Balance as of the close of business on
the last day of the preceding Collection Period;
(vi) the aggregate outstanding principal amount of
each Class of Notes as of such Distribution Date, after giving
effect to payments allocated to principal reported under
clause (ii) above;
(vii) the amount of the Servicing Fee, the
Administration Fee, the Indenture Trustee Fee, the Delaware
Trustee Fee and the Eligible Lender Trustee Fee to be
allocated on the upcoming Distribution Date;
(viii) the amount of the aggregate Realized Losses,
if any, for the preceding Collection Period and the aggregate
amount, if any, received (stated separately for interest and
principal) during such Collection Period relating to Financed
Student Loans for which a Realized Loss was previously
allocated;
(ix) the amount of the distribution attributable to
amounts in the Reserve Account, the amount of any other
withdrawals from the Reserve Account for such Distribution
Date, the balance of the Reserve Account on such Distribution
Date, after giving effect to changes therein on such
Distribution Date, the then applicable Parity Percentage and
the amount of the distribution, if any, attributable to Parity
Percentage Payments;
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(x) the aggregate amount, if any, paid for Financed
Student Loans purchased from the Trust during the preceding
Collection Period;
(xi) during the Subsequent Finance Period only, the
aggregate Issuer 2.3(b) Payments and Adjustment Payments,
stated separately, for the preceding Collection Period; and
(xii) the number and principal amount of Financed
Student Loans, as of the end of the preceding Collection
Period, that are (A) 31 to 60 days delinquent, (B) 61 to 90
days delinquent, (C) 91 to 120 days delinquent, (D) more than
120 days delinquent and (E) for which claims have been filed
with the appropriate Guarantor or the Department of HHS and
which are awaiting payment.
5.8. Expense Account. The Administrator shall instruct the Indenture
Trustee to deposit funds into, and withdraw funds from, the Expense Account as
set forth in Sections 5.5 and 5.6. Any funds remaining in the Expense Account
upon termination of the Trust shall be distributed to the Master Servicer as
additional servicing compensation.
5.9. Note Distribution Account and Certificate Distribution Account.
The Administrator shall instruct the Indenture Trustee and the Eligible Lender
Trustee to deposit funds into, and withdraw funds from, the Note Distribution
Account and the Certificate Distribution Account, as
applicable, as set forth in Sections 5.5, 5.6 and 5.10.
5.10. Monthly Advances. If the Master Servicer has applied for a
Guarantee Payment from a Guarantor, an Interest Subsidy Payment or a Special
Allowance Payment from the Department of Education or an Insurance Payment from
the Department of HHS, and the Master Servicer has not received the related
payment prior to the end of the Collection Period immediately preceding the
Distribution Date on which such amount would be required to be distributed as a
payment of interest, the Master Servicer may, no later than the Distribution
Determination Date relating to such Distribution Date, in its sole discretion,
deposit into the Monthly Advance Account an amount up to the amount of such
payments applied for but not received (such deposits by the Master Servicer are
referred to herein as "Monthly Advances"). Such Monthly Advances are recoverable
by the Master Servicer (i) first, from the Guarantee Payment, Interest Subsidy
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Payment, Special Allowance Payment or Insurance Payment, as the case may be, for
which such Monthly Advance was made and (ii) second, if such amounts have not
been received, from collections received generally on or with respect to the
Financed Student Loans. The Master Servicer shall have no obligation, legal or
otherwise, to make any Monthly Advance, and the making of or decision to make a
particular Monthly Advance shall not create any obligation on the Master
Servicer, legal or otherwise, to make any future Monthly Advances.
5.11. Certificate Interest. During the initial Interest Period, the
Certificates shall bear interest at the Certificate Initial Rate. Thereafter,
the Certificates shall bear interest during each applicable Interest Period at
the Certificate Rate.
During each Interest Period, interest at the Certificate Rate shall
accrue daily and shall be computed for the actual number of days elapsed on the
basis of a year consisting of 360 days.
The Master Servicer shall calculate One-Month LIBOR on each Rate
Determination Date and shall notify the Eligible Lender Trustee and the
Indenture Trustee of One-Month LIBOR. The determination by the Master Servicer
of One-Month LIBOR shall (in the absence of manifest error) be final and binding
upon all parties.
ARTICLE VI
The Transferor and the Master Servicer
SECTION 6.1. Representations of Transferor and Master Servicer. The
Transferor and Master Servicer make the following representations with respect
to the Transferor and the Master Servicer, respectively, on which the Issuer is
deemed to have relied in acquiring (through the Eligible Lender Trustee) the
Financed Student Loans being conveyed pursuant to this Agreement. The
representations speak as of the Closing Date, in the case of the Initial
Financed Student Loans, and as of the applicable Subsequent Finance Date, in the
case of the Subsequent Financed Student Loans transferred on such Subsequent
Finance Date, but shall survive the contribution, 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.
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(a) Organization and Good Standing. Each of the Transferor and
the Master Servicer is duly organized and validly existing as a
Virginia banking corporation 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, except for such power
and authority the absence of which would not have a material adverse
effect on the Master Servicer or Transferor, as the case may be, or
their respective ability to consummate the transactions contemplated by
the Basic Documents, and the Transferor had at all relevant times, and
has, the power, authority and legal right to originate, acquire and own
the Financed Student Loans and the Master Servicer had at all relevant
times, and has the power, authority and legal right to service the
Financed Student Loans.
(b) Due Qualification. The Master Servicer is duly qualified
to do business and has obtained all necessary licenses and approvals in
all jurisdictions in which the ownership and lease of property or the
conduct of its business (including the servicing of the Financed
Student Loans for which it acts as Primary Servicer as required by this
Agreement) shall require such qualifications except for such licenses
and approvals the absence of which would not have a material adverse
effect on the Master Servicer or its ability to consummate the
transactions contemplated by the Basic Documents.
(c) Power and Authority. Each of the Transferor and the Master
Servicer has the requisite corporate power and authority to execute and
deliver this Agreement and to carry out its terms; the Transferor has
requisite corporate power and authority to transfer and assign the
property to be contributed and assigned to and deposited with the
Issuer (or with the Eligible Lender Trustee on behalf of the Issuer)
and the Transferor has duly authorized such transfer and assignment to
the Issuer (or to the Eligible Lender Trustee on behalf of the Issuer)
by all necessary corporate action on Transferor's part; and the
execution, delivery and performance of this Agreement have been duly
authorized by the Transferor and the Master Servicer by all necessary
corporate action on their respective parts.
(d) Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of the Transferor and the Master Servicer,
enforceable against the Transferor and the Master Servicer in
accordance with its terms, subject to applicable bankruptcy,
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insolvency, reorganization, fraudulent conveyance 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 and the fulfillment of the terms hereof
do not violate, 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 charter or by-laws of the Transferor or the Master
Servicer, or any material indenture, material agreement or other
material instrument to which the Transferor or the Master Servicer is a
party or by which it shall be bound; or result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms
of any such material indenture, material agreement or other material
instrument (other than pursuant to the Basic Documents); nor violate
any material law or, to the knowledge of either the Transferor or the
Master Servicer, any material order, rule or regulation applicable to
it of any court or of any federal or State regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Transferor or the Master Servicer or its
properties.
(f) No Proceedings. To its best knowledge, there are no
proceedings or investigations pending or threatened against the
Transferor or the Master Servicer, before any court, regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over it 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 either the Transferor or the Master 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) seeking to affect adversely the federal or
State income tax attributes of the Issuer, the Notes or the
Certificates.
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(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 either
the Transferor or the Master Servicer in connection with the execution
and delivery by either the Transferor or the Master Servicer of this
Agreement and the performance by either the Transferor or the Master
Servicer of the transactions expressly contemplated by this Agreement,
have been duly obtained, effected or given and are in full force and
effect, except such as may be required by the blue sky laws of any
jurisdiction in connection with the sale and distribution of the Notes
and the Certificates for which no representation or warranty is being
given.
(h) No Amendment or Waiver. Except as provided in Section
4.14, 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 in any material respect to the other
warranties contained in this Section or those of the Transferor
contained in Section 3.1.
(i) Location of Financed Student Loan Files. The Financed
Student Loan Files are kept in accordance with Section 3.4(b).
SECTION 6.2. Existence. Except as permitted by Section 6.5, during the
term of this Agreement, each of the Transferor and the Master Servicer will keep
in full force and effect its existence, rights and franchises as a Virginia
banking corporation under the laws of the jurisdiction of its organization.
SECTION 6.3. Liability and Indemnities.
(a) Each of the Transferor and the Master Servicer shall be
liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Transferor and the Master Servicer, as
the case may be, under this Agreement.
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(b) The Transferor 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 (except (i) taxes
arising out of fees paid to the Eligible Lender Trustee or the
Indenture Trustee, (ii) taxes arising out of the transfer of the
Financed Student Loans to the Eligible Lender Trustee, (iii) taxes
arising out of the issuance and sale of the Certificates and the Notes,
(iv) taxes arising out of the ownership of the Financed Student Loans
(including, without limitation, income taxes), and (v) taxes arising
out of distributions on the Certificates and the Notes) and costs and
expenses in defending against the same).
(c) The Transferor shall indemnify, defend and hold harmless
the Issuer, the Eligible Lender Trustee, the Indenture Trustee, and the
Noteholders and the officers, directors, employees and agents of the
Issuer, the Eligible Lender Trustee and the Indenture Trustee from and
against any and all Indemnifiable Expenses arising out of, or imposed
upon such Person through, (i) the Transferor'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 Transferor'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; provided, however,
the Transferor shall not be liable for any such Indemnifiable Expenses
imposed upon such Person to the extent that they arise out of or result
from such Person's negligence, willful malfeasance or bad faith or a
breach of the representations and warranties of such Person in this
Agreement. Notwithstanding anything to the contrary contained in this
Agreement, in no event shall the Transferor be liable under any theory
of tort, contract, strict liability or other legal or equitable theory
for any lost profits or exemplary, punitive, special, incidental,
indirect or consequential damages, each of which is hereby excluded by
agreement of the parties regardless of whether or not the Transferor
has been advised of the possibility of such damages.
(d) The Transferor shall indemnify, defend and hold harmless
the Eligible Lender Trustee, the Delaware Trustee and the officers,
directors, employees and agents of the Eligible Lender Trustee and the
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Delaware Trustee from and against, Indemnifiable Expenses 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 such Person hereunder and under the Trust
Agreement, except to the extent that such Indemnifiable Expenses: (i)
shall be due to the willful misfeasance, bad faith or negligence of
such Person, (ii) shall arise from any breach by such Person of its
covenants under any of the Basic Documents; or (iii) shall arise from
the breach by such Person of any of its representations or warranties
set forth in Section 7.3 of the Trust Agreement. Notwithstanding
anything to the contrary contained in this Agreement, in no event shall
the Transferor be liable under any theory of tort, contract, strict
liability or other legal or equitable theory for any lost profits or
exemplary, punitive, special, incidental, indirect or consequential
damages, each of which is hereby excluded by agreement of the parties
regardless of whether or not the Transferor has been advised of the
possibility of such damages.
(e) The Transferor 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 Transferor's responsibilities
pursuant to the parenthetical in paragraph (b) above).
(f) Pursuant to Section 6.7 of the Indenture, and subject to
the limitations therein, the Transferor 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
Indemnifiable Expenses, to the extent and in the manner provided in the
Indenture. Notwithstanding anything to the contrary contained in this
Agreement, in no event shall the Transferor be liable under any theory
of tort, contract, strict liability or other legal or equitable theory
for any lost profits or exemplary, punitive, special, incidental,
indirect or consequential damages, each of which is hereby excluded by
agreement of the parties regardless of whether or not the Transferor
has been advised of the possibility of such damages.
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(g) The Master Servicer shall indemnify, defend and hold
harmless the Issuer, the Eligible Lender Trustee, the Delaware Trustee,
the Indenture Trustee, the Certificateholders, and the Noteholders and
the officers, directors, employees and agents of the Issuer, the
Eligible Lender Trustee, the Delaware Trustee and the Indenture Trustee
from and against any and all Indemnifiable Expenses arising out of, or
imposed upon such Person through, the Master Servicer's willful
misfeasance, bad faith or negligence in the performance of its duties
under this 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 or bad faith on the
part of the Master Servicer is established by a court of law, by an
arbitrator or by way of settlement agreed to by the Master Servicer;
provided, however, the Master Servicer shall not be liable for any such
Indemnifiable Expenses imposed upon such Person to the extent that they
arise out of or result from such Person's negligence, willful
malfeasance or bad faith or a breach of the representations and
warranties of such Person in this Agreement. Notwithstanding the
foregoing, if the Master Servicer is rendered unable, in whole or in
part, by a force outside the control of the Master Servicer (including
acts of God, acts of war, severe weather, communications failures or
failures to receive electronic data or labor disputes or strikes,
fires, earthquakes and other disasters) to satisfy its obligations
under this Agreement, the Master 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 Master Servicer
remains unable to perform such obligation as a result of such event.
Notwithstanding anything to the contrary contained in this Agreement,
in no event shall the Master Servicer be liable under any theory of
tort, contract, strict liability or other legal or equitable theory for
any lost profits or exemplary, punitive, special, incidental, indirect
or consequential damages, each of which is hereby excluded by agreement
of the parties regardless of whether or not the Master Servicer has
been advised of the possibility of such damages.
(h) Indemnification under this Section shall survive the
resignation or removal of the Eligible Lender Trustee, the Delaware
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 Transferor or the Master Servicer, as the case may
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be, 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 Transferor or the Master Servicer,
as the case may be without interest.
(i) Promptly after receipt by an indemnified party under this
Section 6.3 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 this Section 6.3, 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 Section
6.3., except to the extent the indemnifying party is materially
prejudiced by such failure. 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 reasonably satisfactory to such indemnified
party; provided, however, that if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnifying party or parties
shall have the right to select separate counsel to assert such legal
defenses and to otherwise participate in the defense of such action on
behalf of the indemnified party or parties. After notice from the
indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable
to such indemnified party under this Section 6.3 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. An indemnifying party will not, without
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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 may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
The indemnified party will not, without the prior written
consent of the indemnifying party, settle, compromise or consent to the
entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in which indemnification may be sought
hereunder.
SECTION 6.4. [Reserved]
SECTION 6.5. Merger or Consolidation of, or Assumption of the
Obligations of, the Transferor, the Administrator or the Master Servicer. Any
Person (a) into which the Transferor, the Administrator or the Master Servicer,
as the case may be, may be merged or consolidated, (b) which may result from any
merger or consolidation to which the Transferor, the Administrator or the Master
Servicer, as the case may be, shall be a party or (c) which may succeed to the
properties and assets of the Transferor, the Administrator or the Master
Servicer, as the case may be, substantially as a whole, shall be the successor
to the Transferor, the Administrator or the Master Servicer, 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 the Administration Agreement; provided, however,
that each of the Transferor, the Administrator and the Master Servicer hereby
covenants that it will not consummate any of the foregoing transactions except
upon satisfaction of the following: (i) the surviving Transferor, Administrator
or Master Servicer, as the case may be, if other than Crestar Bank or a Crestar
Subsidiary or Crestar Financial Corporation, executes an agreement of assumption
to perform every obligation of the Transferor, the Administrator or the Master
Servicer, as the case may be, under this Agreement and the Administration
Agreement, (ii) immediately after giving effect to such transaction, no Master
Servicer Default (in the case of the Master Servicer) or no Administrator
Default (in the case of the Administrator) shall have occurred and be
continuing, (iii) the Transferor, the Administrator or the Master Servicer, as
the case may be, if other than Crestar Bank or a Crestar Subsidiary or Crestar
Financial Corporation shall have delivered to the Eligible Lender Trustee and
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the Indenture Trustee an Officer's 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, (iv) such transaction will not result in a material adverse federal or
State tax consequence to the Issuer relating to its tax classification, or to
the Noteholders, considered as a whole, relating to a change in the
characterization of the Notes and (v) unless "Crestar Bank" is the name of the
surviving entity, the Transferor, the Administrator or the Master Servicer, as
the case may be, shall have delivered to the Eligible Lender Trustee and the
Indenture Trustee an Opinion of Counsel either (A) stating that, in the opinion
of such counsel, all financing statements and continuation statements and
amendments thereto have been executed and filed that are necessary fully to
preserve and protect the interest of the Eligible Lender Trustee and Indenture
Trustee, respectively, in the Financed Student Loans, or (B) stating that, in
the opinion of such counsel, no such action shall be necessary to preserve and
protect such interests. Nothing in this Agreement or any other Basic Document
shall be deemed to restrict or prohibit, and no consent of Noteholders or
Certificateholders, supplemental agreement, Officer's Certificate (except to the
extent provided in clause (3) below of this Section 6.5) or Opinion of Counsel
(except to the extent provided in clause (v) above of this Section 6.5) shall be
required in the case of, the merger of a Crestar Subsidiary with a Crestar
Subsidiary or Crestar Financial Corporation, the consolidation of a Crestar
Subsidiary and a Crestar Subsidiary or Crestar Financial Corporation, or the
sale or other disposition of all or substantially all of the assets of a Crestar
Subsidiary to another Crestar Subsidiary or Crestar Financial Corporation, if,
in any such case in which the surviving, resulting or acquiring entity is not
Crestar Financial Corporation, Crestar Financial Corporation would own, directly
or indirectly, at least eighty percent (80%) of the voting securities of the
Crestar Subsidiary surviving such merger, resulting from such consolidation or
acquiring such assets. For the purpose of this Section 6.5, "Crestar Subsidiary"
means each of (l) Crestar Bank, (2) any other banking subsidiaries of Crestar
Financial Corporation the consolidated assets of which constitute twenty percent
(20%) or more of the consolidated assets of Crestar Financial Corporation and
its consolidated subsidiaries, (3) any other banking subsidiary of Crestar
Financial Corporation designated as a Crestar Subsidiary pursuant to a Board
Resolution and set forth in an Officer's Certificate delivered to the Eligible
Lender Trustee and the Indenture Trustee, and (4) any subsidiary of Crestar
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Financial Corporation that owns, directly or indirectly any voting securities,
or options, warrants or rights to subscribe for or purchase voting securities of
any Crestar Subsidiary under clauses (l) through (3), and in the case of each of
clauses (1) through (4) their respected successors (whether by consolidation,
merger, conversion, transfer of substantially all their assets and business or
otherwise) so long as any successor is a banking subsidiary (in the case of
clauses (1) through (3)) or a subsidiary (in the case of clause (4)) of Crestar
Financial Corporation. References to Crestar Financial Corporation include any
name change. "Board Resolution" means a copy of a resolution certified by the
Secretary or any Assistant Secretary of Crestar Financial Corporation to have
been duly adopted by the Board of Directors of Crestar Financial Corporation, or
such committee of the Board of Directors or officers of Crestar Financial
Corporation to which authority to act on behalf of the Board of Directors has
been delegated, and to be in full force and effect on the date of such
certification, and delivered to the Eligible Lender Trustee and the Indenture
Trustee.
SECTION 6.6. Limitation on Liability of Transferor, Master Servicer
and Others.
(a) The Transferor, the Master Servicer and any director or
officer or employee or agent of either 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.
(b) Neither the Transferor, the Master Servicer nor any of its
directors, officers, employees or agents shall be under any liability
to the Issuer, the Noteholders, the Certificateholders, the Indenture
Trustee or the Eligible Lender Trustee except as provided under this
Agreement or the Administration Agreement for any action taken or for
refraining from the taking of any action pursuant to this Agreement or
for errors in judgment; provided, however, that this provision shall
not protect the Transferor or Master 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
their respective duties under this Agreement or the Administration
Agreement.
Except as provided in this Agreement, the Transferor and the
Master Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be incidental to
its duties in accordance with this Agreement, and that in its opinion
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may involve it in any expense or liability; provided, however, that the
Transferor or the Master Servicer may undertake any reasonable action
that it may deem necessary or desirable in respect of this Agreement
and the other Basic Documents and the rights and duties of the parties
to this Agreement and the other Basic Documents and the interests of
the Certificateholders under this Agreement or the Administration
Agreement and the Noteholders under the Indenture.
SECTION 6.7. Transferor May Own Certificate or Notes. The Transferor
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 Transferor or an Affiliate thereof, except as expressly
provided herein or in any other Basic Document.
SECTION 6.8. Master Servicer Not to Resign. Subject to the provisions
of Section 6.5, Crestar Bank shall not resign from the obligations and duties
imposed on it as Master Servicer under this Agreement except upon (i)
determination that the performance of its duties under this Agreement shall no
longer be permissible under applicable law or shall violate any final order of a
court or administrative agency with jurisdiction over it or its properties, or
(ii) satisfaction of a Rating Agency Condition with respect to such resignation.
Notice of any such determination permitting resignation 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 Master Servicer shall have assumed
the responsibilities and obligations of Crestar Bank in accordance with Section
8.2.
ARTICLE VII
The Administrator
SECTION 7.1. Representations of the Administrator. The Administrator
makes the following representations on which the Issuer is deemed to have relied
in acquiring (through the Eligible Lender Trustee) the Financed Student Loans
being conveyed pursuant to this Agreement. The representations speak as of the
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Closing Date, in the case of the Initial Financed Student Loans, and as of the
applicable Subsequent Finance Date, in the case of the Subsequent Financed
Student Loans being transferred on such Subsequent Finance Date, but shall
survive the contribution, 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 Administrator is duly
organized and validly existing as a Virginia banking corporation 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 except for such power and authority the absence of
which would not have a material adverse effect on the Administrator or
its ability to consummate the transactions contemplated by the Basic
Documents, and had at all relevant times, and has, the power, authority
and legal right, to administer the Financed Student Loans.
(b) Power and Authority of the Administrator. The
Administrator has the requisite corporate power and authority to
execute and deliver this Agreement and the Administration Agreement and
to carry out their respective 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 on its part.
(c) Binding Obligation. This Agreement and the Administration
Agreement each constitutes a legal, valid and binding obligation of the
Administrator, enforceable against the Administrator in accordance with
its terms, subject to applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance 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 or and subject to
general principles of equity.
(d) No Violation. The consummation of the transactions
contemplated by this Agreement and the Administration Agreement and the
fulfillment of the terms hereof or thereof do not violate, result in
any breach of any of the terms and provisions of, nor constitute (with
or without notice of lapse of time or both) a default under, the
charter or by-laws of the Administrator, or any material indenture,
material agreement or other material instrument to which the
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Administrator 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 material indenture, material
agreement or other material instrument (other than pursuant to the
Basic Documents); nor violate any material law or, to the knowledge of
the Administrator, any material order, rule or regulation applicable to
it of any court or of any federal or State regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Administrator or its properties.
(e) No Proceedings. To its best knowledge, there are no
proceedings or investigations pending or threatened against the
Administrator, before any court, regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over it or
its properties: (i) asserting the invalidity of this Agreement or the
Administration Agreement, (ii) seeking to prevent the consummation of
any of the transactions contemplated by this Agreement or the
Administration Agreement or (iii) seeking any determination or ruling
that could reasonably be expected to have a material and adverse effect
on the performance by the Administrator, of its obligations under, or
the validity or enforceability of, this Agreement or the Administration
Agreement.
(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
Administrator in its capacity as the Administrator in connection with
the execution and delivery by the Administrator of this Agreement or
the Administration Agreement and the performance by the Administrator
in its capacity as the Administrator of the transactions contemplated
by this Agreement or the Administration Agreement, have been duly
obtained, effected or given and are in full force and effect.
SECTION 7.2. Liability and Indemnities.
(a) The Administrator shall be liable in accordance herewith
only to the extent of the obligations specifically undertaken by the
Administrator under this Agreement or 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.
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Except as provided in this Agreement or the Administration
Agreement, the Administrator shall not be under any obligation to
appear in, prosecute or defend any legal action that shall not be
incidental to its duties to administer the Financed Student Loans and
the Trust in accordance with this Agreement and the Administration
Agreement, and that in its opinion may involve it in any expense or
liability; provided, however, that the Administrator may undertake any
reasonable action that it may deem necessary or desirable in respect of
this Agreement and the other Basic Documents and the rights and duties
of the parties to this Agreement and the other Basic Documents and the
interests of the Certificateholders under this Agreement and the
Noteholders under the Indenture.
(b) The Administrator shall indemnify, defend and hold
harmless from its funds, the Issuer, the Eligible Lender Trustee, the
Delaware Trustee, the Indenture Trustee, the Master Servicer, the
Noteholders and the Certificateholders and the officers, directors,
employees and agents of the Issuer, the Eligible Lender Trustee, the
Delaware Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders from and against any and all Indemnifiable Expenses
arising out of, or imposed upon such Person through, the
Administrator's willful misfeasance, bad faith or negligence in the
performance of its duties under this Agreement or the Administration
Agreement, or by reason of reckless disregard of its obligations and
duties under this Agreement or the Administration 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 or bad faith on the part of the Administrator is
established by a court of law, by an arbitrator or by way of settlement
agreed to by the Administrator. Notwithstanding the foregoing, if the
Administrator is rendered unable, in whole or in part, by a force
outside the control of the Administrator (including acts of God, acts
of war, severe weather, communications failures or failures to receive
electronic data or labor disputes or strikes, fires, earthquakes and
other disasters) to satisfy its obligations under this Agreement, the
Administrator 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 Administrator remains unable to perform such
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obligation as a result of such event; provided, however, the
Administrator shall not be liable for any such Indemnifiable Expenses
imposed upon such Person to the extent that they arise out of or result
from such Person' s negligence, willful malfeasance or bad faith or a
breach of the representations and warranties of such Person in this
Agreement or the Administration Agreement. Notwithstanding anything to
the contrary contained in this Agreement or the Administration
Agreement, in no event shall the Administrator be liable under any
theory of tort, contract, strict liability or other legal or equitable
theory for any lost profits or exemplary, punitive, special,
incidental, indirect or consequential damages, each of which is hereby
excluded by agreement of the parties regardless of whether or not the
Administrator has been advised of the possibility of such damages.
(c) Indemnification under this Section shall survive the
resignation or removal of the Eligible Lender Trustee, the Delaware
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 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 shall collect any of such amounts from
others, such Person shall promptly repay such amounts to the
Administrator without interest.
(d) Promptly after receipt by an indemnified party under this
Section 7.2 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 this Section 7.2, 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 Section
7.2., except to the extent the indemnifying party is materially
prejudiced by such failure. 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 reasonably satisfactory to such indemnified
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party; provided, however, that if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnifying party or parties
shall have the right to select separate counsel to assert such legal
defenses and to otherwise participate in the defense of such action on
behalf of the indemnified party or parties. After notice from the
indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party will not be liable
to such indemnified party under this Section 7.2 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. 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 may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
The indemnified party may not, without the prior written
consent of the indemnifying party, settle, compromise or consent to the
entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in which indemnification may be sought
hereunder.
SECTION 7.3. Administrator Not to Resign. Subject to the provisions of
Section 6.5, Crestar Bank shall not resign from the obligations and duties
imposed on it as Administrator under this Agreement except upon (i)
determination that the performance of its duties under this Agreement shall no
longer be permissible under applicable law or shall violate any final order of a
court or administrative agency with jurisdiction over it or its properties, or
(ii) satisfaction of a Rating Agency Condition with respect to such resignation.
Notice of any such determination permitting resignation shall be communicated to
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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 Crestar Bank in accordance with Section 8.2.
SECTION 7.4. Additional Services. Notwithstanding anything in the
Administration Agreement to the contrary, the Administrator is authorized and
directed to prepare, execute on behalf of the Trust in its capacity as
Administrator, and file any and all reports required to be filed under the
Exchange Act by the Trust as a result of the registration of the Notes under the
Securities Act. The Trust hereby ratifies and confirms as actions of the Trust
the execution by the Administrator on behalf of the Trust of the Registration
Statement on Form S-3, Registration No. 333-35825, and each amendment thereto,
and any related correspondence with Securities and Exchange Commission, the
Current Report on Form 8-K dated as of December 11, 1997, and the Letter of
Representations to The Depository Trust Company with respect to the Notes.
ARTICLE VIII
Default
SECTION 8.1. Master Servicer Default; Administrator Default.
(a) If any one of the following events (a "Master Servicer Default")
shall occur and be continuing:
(1) any failure by the Master Servicer to deliver to
the Indenture Trustee for deposit in any of the Trust Accounts
at the time required for such deposit any collections,
Guarantee Payments, Insurance Payments or other amounts
received by the Master Servicer with respect to the Financed
Student Loans, which failure continues unremedied for three
Business Days after written notice of such failure is received
by the Master Servicer from the Eligible Lender Trustee, the
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Indenture Trustee or the Administrator or after discovery of
such failure by an officer of the Master Servicer; or
(2) any failure by the Master Servicer duly to
observe or to perform in any material respect any other
covenants or agreements of the Master Servicer set forth in
this Agreement or any other Basic Document, which failure
shall (i) materially and adversely affect the rights of
Noteholders and Certificateholders and (ii) continue
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 Master Servicer by
the Indenture Trustee, the Eligible Lender Trustee, or the
Administrator or (B) to the Master Servicer and to the
Indenture Trustee and the Eligible Lender Trustee by the
holders of Directing Notes, representing not less than 25% of
the Outstanding Amount of the Directing Notes or
(3) an Insolvency Event occurs with respect to the
Master Servicer; or
(4) any limitation, suspension or termination by the
Department of Education or the Department of HHS of the Master
Servicer's eligibility to service Student Loans which
materially and adversely affects the Master Servicer's ability
to service the Financed Student Loans;
then, and in each and every case, so long as the Master Servicer
Default shall not have been remedied, the Indenture Trustee or the
holders of Directing Notes evidencing not less than 25% of the
Outstanding Amount of the Directing Notes, by notice then given in
writing to the Master Servicer (and to the Indenture Trustee and the
Eligible Lender Trustee if given by the Noteholders) may terminate all
the rights and obligations (other than the obligations set forth in
Section 6.3 hereof) of the Master Servicer under this Agreement. On or
after the receipt by the Master Servicer of such written notice, all
authority and power of the Master Servicer under this 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 Master Servicer as
may be appointed under Section 8.2, and, without limitation, the
Indenture Trustee and the Eligible Lender Trustee are hereby authorized
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and empowered to execute and deliver, for the benefit of the
predecessor Master 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 Master Servicer shall cooperate with the successor Master
Servicer, the Indenture Trustee and the Eligible Lender Trustee in
effecting the termination of the responsibilities and rights of the
predecessor Master Servicer under this Agreement, including the
transfer to the successor Master Servicer for administration by it of
all cash amounts that shall at the time be held by the predecessor
Master 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 from a current Master Servicer to the
successor Master Servicer and amending this Agreement and any other
Basic Documents to reflect such succession as Master Servicer pursuant
to this Section shall be paid by the predecessor Master Servicer upon
presentation of reasonable documentation of such costs and expenses.
Upon receipt of notice of the occurrence of a Master Servicer Default,
the Eligible Lender Trustee shall give notice thereof to the Rating
Agencies.
Notwithstanding the termination of the Master Servicer and the
engagement of a successor Master Servicer, each Servicer shall continue
to serve in its capacity as Servicer or subservicer, unless it is in
breach of the related Servicing or Subservicing Agreement.
(b) Administrator Default. If any one of the following
events (an "Administrator Default") shall occur and be continuing:
(1) any failure by the Administrator to direct the
Indenture Trustee or the Eligible Lender Trustee, as
applicable, to make any required distributions from any of the
Trust Accounts, which failure 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
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(2) any failure by the Administrator duly to observe
or to perform in any material respect any other covenants or
agreements of the Administrator set forth in this Agreement,
the Administration Agreement or any other Basic Document,
which failure shall (i) materially and adversely affect the
rights of Noteholders and (ii) continue 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 Directing Notes representing not less than 25%
of the Outstanding Amount of the Directing Notes;
(3) an Insolvency Event occurs with respect to the
Administrator;
then, and in each and every case, so long as the Administrator Default shall not
have been remedied, the Indenture Trustee or the holders of Directing Notes
evidencing not less than 25% of the Outstanding Amount of the Directing Notes,
by notice then given in writing to the Administrator (and to the Indenture
Trustee and the Eligible Lender Trustee if given by the Noteholders) may
terminate all the rights and obligations (other than the obligations set forth
in Sections 6.3 and 7.2 hereof) of the Administrator under this 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 and the Administration Agreement, whether with respect to the Notes,
the Certificates or the Financed Student Loans or otherwise, shall, without
further action, pass to and be vested in the Indenture Trustee or such successor
Administrator as may be appointed under Section 8.2; 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 and the Administration Agreement. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with amending this Agreement
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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 an Administrator Default, the Eligible
Lender Trustee shall give notice thereof to the Rating Agencies.
SECTION 8.2. Appointment of Successor.
(a) Upon receipt by the Master Servicer or the Administrator,
as the case may be, of notice of termination pursuant to Section 8.1,
or the resignation by the Master Servicer or the Administrator, as the
case may be, in accordance with the terms of this Agreement, the
predecessor Master Servicer or the Administrator, as the case may be,
shall continue to perform its functions as Master Servicer or
Administrator, as the case may be, 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 Master
Servicer or Administrator, as the case may be, shall become unable to
act as Master Servicer or Administrator, as the case may be, as
specified in the notice of resignation and accompanying Opinion of
Counsel. In the event of the termination hereunder of the Master
Servicer or the Administrator, as the case may be, the Issuer shall
appoint a successor Master Servicer or Administrator, as the case may
be, acceptable to the Indenture Trustee, and the successor Master
Servicer or Administrator, as the case may be, shall accept its
appointment by a written assumption in form acceptable to the Indenture
Trustee. If a successor Master Servicer or Administrator, as the case
may be, has not been appointed at the time when the predecessor Master
Servicer or Administrator, as the case may be, has ceased to act as
Master Servicer or Administrator, as the case may be, in accordance
with this Section, the Indenture Trustee without further action shall
automatically be appointed the successor Master Servicer or
Administrator, as the case may be, and the Indenture Trustee shall be
entitled to the Master Servicing Fee or the Administration Fee, as the
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case may be in accordance with the provisions of the Basic Documents.
Notwithstanding the above, the Indenture Trustee shall, if it shall be
unwilling or legally unable so to act, appoint or petition a court of
competent jurisdiction to appoint, any established institution whose
regular business shall include the servicing of student loans, as the
successor to the Master Servicer or Administrator, as the case may be,
under this 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 Master Servicer or
Administrator, as the case may be (including the Indenture Trustee
acting as successor Master Servicer or Administrator as the case may
be), shall be the successor in all respects to the predecessor Master
Servicer or Administrator, as the case may be, and shall be subject to
all the responsibilities, duties and liabilities arising thereafter
relating thereto placed on the predecessor Master Servicer or
Administrator, as the case may be, and shall be entitled to an amount
agreed to by such successor Master Servicer or Administrator as the
case may be, in accordance with the provisions of the Basic Documents
(which shall not exceed the Master Servicing Fee or Administration Fee,
as the case may be, unless such compensation arrangements will not
result in a downgrading of the Notes by any Rating Agency) and all the
rights granted to the predecessor Master Servicer or Administrator, as
the case may be, by the terms and provisions of this Agreement.
(c) Neither the Master 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 Master
Servicer or Administrator, as the case may be, pursuant hereto shall be
entitled to resign to the extent a qualified successor Master Servicer
or Administrator, as the case may be, has been appointed and has
assumed all the obligations of the Master Servicer or Administrator, as
the case may be, in accordance with the terms of this Agreement and the
other Basic Documents.
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(d) Any successor Master Servicer shall assume all the
obligations and responsibilities of the Master Servicer under each
Subservicing Agreement with a Servicer and shall only be able to modify
or terminate such Subservicing Agreements pursuant to the provisions
thereof.
SECTION 8.3. Notification to Noteholders and Certificateholders. Upon
any termination of, or appointment of a successor to, the Master Servicer or
Administrator, as the case may be, pursuant to this Article VIII, the Eligible
Lender Trustee shall give prompt written notice thereof to Certificateholders
and the Indenture Trustee shall give prompt written notice thereof to
Noteholders and the Rating Agencies (which, in the case of any such appointment
of a successor, shall consist of prior written notice thereof to the Rating
Agencies).
SECTION 8.4. Waiver of Past Defaults. The holders of Directing Notes
evidencing not less than a majority of the Outstanding Amount of the Directing
Notes may, on behalf of all Noteholders and Certificateholders, waive in writing
any default by the Master Servicer or Administrator, as the case may be, in the
performance of its obligations hereunder and any consequences thereof, except a
default in making any required 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
Master Servicer Default or Administrator Default, as the case may be, arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereto.
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ARTICLE IX
Termination
SECTION 9.1. Termination.
(a) Optional Purchase of All Financed Student Loans. As of the
last day of any Collection Period immediately preceding a Quarterly
Distribution Date as of which the then outstanding Pool Balance is 10%
or less of the Initial Pool Balance, the Transferor shall have the
option to purchase the Indenture Trust Estate, other than the Trust
Accounts. To exercise such option, the Transferor shall deposit
pursuant to Section 5.4 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, such value to be determined by
an appraiser mutually agreed upon by the Transferor, the Eligible
Lender Trustee and the Indenture Trustee, and shall succeed to all
interests in and to the Trust; provided, however, that the Transferor
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 (x) the unpaid principal balance of the Notes plus
accrued and unpaid interest thereon at the related Class Interest Rate
to the last day of the Collection Period during which such purchase
occurs and (y) the unpaid Transaction Fees, if any.
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(b) Auction of Financed Student Loans. Any Financed Student
Loans remaining in the Trust as of February 28, 2007 will be offered
for sale by the Indenture Trustee on or prior to the April 2007
Distribution Date if the then outstanding Pool Balance is 10% or less
of the Initial Pool Balance. The Transferor, its Affiliates and
unrelated third parties may offer bids to purchase such Financed
Student Loans on or prior to such Distribution Date. If PHEAA is a
Servicer of the Financed Student Loans at such time, the Indenture
Trustee shall notify PHEAA of the auction and invite PHEAA to submit a
bid. If at least two bids are received, the Indenture Trustee will
accept the highest bid equal to or in excess of the greater of (x) the
aggregate Purchase Amounts of such Financed Student Loans as of the end
of the Collection Period immediately preceding such Distribution Date
or (y) an amount that would be sufficient to (i) reduce the outstanding
principal amount of the Notes on such Distribution Date to zero and
(ii) pay to the Noteholders the Noteholders' Interest Distribution
Amount payable on such Distribution Date (the "Minimum Purchase
Price"). If at least two bids are not received or the highest bid is
not equal to or in excess of the Minimum Purchase Price, the Indenture
Trustee will not consummate such sale. The proceeds of any such sale
will be used to redeem any outstanding Notes on such Distribution Date.
The proceeds of any sale will be applied in the order and priority set
forth in 5.4(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.
(c) Insolvency of Transferor . Upon any sale of the assets of
the Trust pursuant to Section 9.2 of the Trust Agreement, the Master
Servicer 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 applicable 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 Master
Servicer shall instruct the Indenture Trustee to make the following
distributions (after the application on such Distribution Date of the
amount of Available Funds and amounts on deposit in the Reserve Account
pursuant to Sections 5.5 (other than pursuant to Section 5.5(a) (ii))
and 5.6) 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):
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(i) to the Department of Education, the Indenture
Trustee, the Delaware Trustee and the Eligible Lender Trustee,
any unpaid Consolidation Loan Fees, Indenture Trustee Fees,
Delaware Trustee Fees and Eligible Lender Trustee Fees,
respectively, and other amounts owed the Indenture Trustee,
the Delaware Trustee or the Eligible Lender Trustee hereunder
or under any other Basic Document and not otherwise paid on
such Distribution Date;
(ii) to each Class of Class A Noteholders, pro rata
based upon the portion thereof allocable to each such Class,
any portion of the Noteholders' Interest Distribution Amount
applicable to the Class A Noteholders not otherwise
distributed to such Class A Noteholders on such Distribution
Date;
(iii) to each Class of Class A Noteholders, pro rata
based upon the Outstanding Amount of such Class (after giving
effect to the reduction in the Outstanding Amount of such
Class resulting from the distributions to such Class on such
Distribution Date and on prior Distribution Dates) until the
Outstanding Amount of each Class of Class A Notes has been
reduced to zero;
(iv) to the Class B Noteholders, any portion of the
Noteholders' Interest Distribution Amount applicable to the
Class B Noteholders not otherwise distributed to the Class B
Noteholders on such Distribution Date;
(v) after the Outstanding Amount of the Class A Notes
has been reduced to zero, to the Class B Noteholders, the
Outstanding Amount of the Class B Notes (after giving effect
to the reduction in the Outstanding Amount of the Notes
resulting from the distributions to Noteholders on such
Distribution Date and on prior Distribution Dates);
(vi) to the Master Servicer, any unpaid Servicing Fee
and other amounts owed to the Master Servicer hereunder or
under any other Basic Document and not otherwise paid on such
Distribution Date;
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(vii) to the Class A-1 Noteholders and the Class A-2
Noteholders, any portion of the Noteholders' Interest
Carryover applicable to any such Class, pro rata based upon
the portion thereof allocable to each such Class not otherwise
distributed to the Class A Noteholders on such Distribution
Date;
(viii) to the Class B Noteholders, any portion of the
Noteholders' Interest Carryover applicable to the Class B
Noteholders not otherwise distributed to the Class B
Noteholders on such Distribution Date;
(ix) to the Certificateholders, any portion of the
Certificateholders' Interest Distribution amount not otherwise
distributed to the Certificateholders on such Distribution
Date; and
(x) to the Certificateholders, the Certificate
Balance (after giving effect to the reduction in the
Certificate Balance to result from the distributions to
Certificateholders on such Distribution Date).
Any investments on deposit in the Reserve Account which will not mature
on or before the Distribution Date when needed shall be sold by the
Indenture Trustee at such time as will result in the Indenture Trustee
receiving the proceeds from such sale not later than the Business Day
preceding such Distribution Date. Any Insolvency Proceeds remaining
after the deposits described above shall be paid to the Transferor.
(d) Notice. Notice of any termination of the Trust shall be
given by the Administrator to the Master Servicer, the Eligible Lender
Trustee, the Indenture Trustee and the Rating Agencies 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 Certificateholders will succeed to the rights of the
Noteholders hereunder other than Section 5.6(b) and the Eligible Lender
Trustee will succeed to the rights of, and assume the obligations of,
the Indenture Trustee pursuant to this Agreement and any other Basic
Documents.
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ARTICLE X
[Reserved]
ARTICLE XI
Miscellaneous
SECTION 11.1. Amendment.
(a) This Agreement may be amended by the Transferor, the
Master Servicer and the Eligible Lender Trustee, with the prior consent
of the Indenture Trustee (which consent 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 Noteholders or the Certificateholders; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel delivered
to the Eligible Lender Trustee and the Indenture Trustee, adversely
affect in any material respect the interests of any Noteholder.
(b) This Agreement may also be amended from time to time by
the Transferor, the Master Servicer and the Eligible Lender Trustee,
with the prior consent of the Indenture Trustee and the consent of the
holders of Directing Notes evidencing not less than a majority of the
Outstanding Amount of the Directing Notes, for the purpose of adding
any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights
of the Noteholders or the Certificateholders; provided, however, that
no such amendment shall (i) increase or reduce in any manner the amount
of, or accelerate or delay the timing of, collections of payments with
respect to Financed Student Loans or distributions that shall be
required to be made for the benefit of the Noteholders or the
Certificateholders or (ii) reduce the aforesaid percentage of the
Outstanding Amount of the Notes and the Certificate Balance, the
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Noteholders and the Certificateholders of which are required to consent
to any such amendment, without the consent of all outstanding
Noteholders and Certificateholders affected thereby.
(c) Promptly after the execution of any amendment pursuant to
clause (ii) above, the Eligible Lender Trustee shall furnish written
notification of the substance of such amendment or consent to each
Certificateholder and the Indenture Trustee.
(d) It shall not be necessary for the consent of
Certificateholders or Noteholders pursuant to this Section to approve
the particular form of any proposed amendment or consent, but it shall
be sufficient if such consent shall approve the substance thereof.
(e) 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 11.2(i)(l).
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.
Notwithstanding anything to the contrary contained in this Section
11.1, neither this Agreement nor the Indenture may be amended unless such
amendment satisfies the Rating Agency Condition.
SECTION 11.2. Protection of Interests in Trust.
(a) The Transferor 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 Transferor
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.
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(b) Neither the Transferor nor the Master Servicer shall
change its name, identity or corporate structure in any manner that
would, could or might make any financing statement or continuation
statement filed in accordance with paragraph (a) above seriously
misleading within the meaning of ss. 9-402(7) of the UCC, unless it
shall have given the Eligible Lender Trustee and the Indenture Trustee
at least five days' prior written notice thereof and shall have
promptly filed appropriate amendments to all previously filed financing
statements or continuation statements.
(c) Each of the Transferor and the Master Servicer shall have
an obligation to give the Eligible Lender Trustee and the Indenture
Trustee at least 30 days' prior written notice of any relocation of its
principal executive office if, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any
amendment of any previously filed financing or continuation statement
or of any new financing statement and shall promptly file any such
amendment. The Master 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 Master Servicer shall maintain, or cause the Servicers
to maintain, accounts and records as to each Financed Student Loan for
which it is the Primary Servicer (or provide access to such accounts
and records being serviced by a Servicer) accurately and in sufficient
detail to permit (i) the reader thereof to know at any time the status
of such Financed Student Loan, including payments and recoveries made
and payments owing (and the nature of each) and (ii) reconciliation
between payments or recoveries on (or with respect to) each Financed
Student Loan and the amounts from time to time deposited in the
Collection Account in respect of such Financed Student Loan.
(e) The Master Servicer shall cause each Subcustodian to
maintain its computer systems so that, from and after the time of
transfer under this Agreement of the Financed Student Loans, each
Subcustodian's master computer records (including any backup archives)
that refer to a Financed Student Loan shall indicate clearly the
interest of the Issuer and the Indenture Trustee in such Financed
Student Loan and that such Financed Student Loan has been assigned by
the Transferor to the Issuer and has been pledged to the Indenture
Trustee. Indication of the Issuer's and the Indenture Trustee's
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interest in a Financed Student Loan shall be deleted from or modified
on the applicable Subcustodian'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 Transferor shall propose to contribute,
grant a security interest in, or otherwise transfer any interest in
Financed Student Loans to any prospective purchaser, lender or other
transferee, the Master Servicer shall give notice to such prospective
purchaser, lender or other transferee that such Financed Student Loan
has been assigned to the Issuer and has been pledged to the Indenture
Trustee.
(g) Upon reasonable notice, the Master Servicer shall permit
the Indenture Trustee and its agents once each calendar year (unless
there is a Servicer Default, in which case at any time) during normal
business hours to inspect, audit and make copies of and abstracts from
the Master Servicer's records regarding any Financed Student Loan.
(h) Upon request at any time the Eligible Lender Trustee or
the Indenture Trustee shall have reasonable grounds to believe that
such request would be necessary in connection with its performance of
its duties under the Basic Documents, the Master Servicer shall furnish
to the Eligible Lender Trustee or to the Indenture Trustee, within
twenty Business Days following the receipt by the Master Servicer and
the Servicer of such a request, a list of all Financed Student Loans
(by borrower social security number and date of issuance) then held as
part of the Trust, and a comparison of such list to the list of the
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 Transferor shall deliver to the Eligible Lender
Trustee and the Indenture Trustee:
(l) promptly after the execution and delivery of this
Agreement and of each amendment thereto an Opinion of Counsel
either (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements have been
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executed and filed that are necessary to preserve and perfect
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 maintain such interest; and
(2) within 120 days after the beginning of each
calendar year beginning with the first calendar year beginning
more than three months after the Closing Date, an Opinion of
Counsel, dated as of a date during such 120-day period, either
(A) stating that, in the opinion of such counsel, all
financing statements and continuation statements have been
executed and filed that are necessary to preserve and perfect
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 maintain such interest; provided
that a single Opinion of Counsel may be delivered in
satisfaction of the foregoing requirement and that of Section
3.6 of the Indenture.
Each Opinion of Counsel referred to in clause (l) or (2) above
shall specify (as of the date of such opinion and given all applicable
laws as in effect on such date) any action necessary to be taken in the
following year to preserve and protect such interest.
(j) The Administrator shall file all reports with respect to
the Notes and the Certificates as may be required by the Commission or
state securities authorities.
SECTION 11.3. Notices. All demands, notices and communications upon
or to the Transferor, the Master Servicer, the Administrator, the Eligible
Lender Trustee or the Indenture Trustee under this Agreement shall be in
writing, personally delivered or mailed by certified mail or overnight
courier, return receipt requested or overnight courier (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 Transferor, the Master Servicer or Administrator, two copies, one to
Crestar Bank, 919 East Main Street, Richmond, Virginia 23219, Attention:
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Marke A. Thomas, Vice President - Securitizations Manager; (telephone: (804)
343-9400; facsimile: (804) 782-7155), with a copy to Crestar Bank, 919 East
Main Street, Richmond, Virginia 23219, Attention: Linda Rigsby, Senior Vice
President and General Counsel (facsimile (804) 782-7244); (b) in the case of
the Issuer or the Eligible Lender Trustee, at the Corporate Trust Office of
the Eligible Lender Trustee, (c) in the case of the Indenture Trustee, at its
Corporate Trust Office; (d) in the case of Moody's, to Moody's Investors
Service, Inc., 99 Church Street, New York, New York 10007, Attention:
Structured Finance Department / Student Loans (telephone: (212) 553 0300;
facsimile: (212) 553 4792): (e) in the case of Standard & Poor's, to Standard
& Poor's Ratings Service, 25 Broadway (20th Floor), New York, New York 10004,
Attention: Asset Backed Surveillance Department (telephone: (212) 208-8000;
facsimile: (212) 412 0225); (f) in the case of Fitch, to Fitch IBCA, Inc., One
State Street Plaza, New York, New York 10007, Attention: Asset-Backed
Securities Group (telephone (212) 908-0500; facsimile: (212) 480-4438); or, as
to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.
SECTION 11.4. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 4.12 and in Section 6.5 and as
provided in the provisions of this Agreement concerning the resignation of the
Master Servicer, this Agreement may not be assigned by the Transferor or the
Master Servicer. This Agreement may only be assigned by the Eligible Lender
Trustee to its permitted successor pursuant to the Trust Agreement.
SECTION 11.5. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Transferor, the Master Servicer, the
Issuer and the Eligible Lender Trustee and for the benefit of the
Certificateholders, the Indenture Trustee, the Delaware Trustee and the
Noteholders as third party beneficiaries, and nothing in this Agreement, whether
express or implied, shall be construed to give to any other Person any legal or
equitable right, remedy or claim in the Trust Estate or under or in respect of
this Agreement or any covenants, conditions or provisions contained herein.
SECTION 11.6. 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.
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SECTION 11.7. 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 11.8. 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 11.9. 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 Transferor hereby
acknowledges and consents to any mortgage, pledge, assignment and grant by the
Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of the
Noteholders of a security interest in all right, title and interest of the
Issuer in, to and under the Financed Student Loans and/or the assignment of any
or all of the Issuer's rights and obligations hereunder to the Indenture
Trustee.
SECTION 11.11. Nonpetition Covenants. Notwithstanding any prior
termination of this Agreement, the Master Servicer, the Administrator and the
Transferor shall not, prior to the date that is one year 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.
SECTION 11.12. Limitation of Liability of Eligible Lender Trustee,
Indenture Trustee and Delaware Trustee.
(a) Notwithstanding anything contained herein to the contrary,
this Agreement has been signed by Star Bank, National Association not
in its individual capacity but solely in its capacity as Eligible
Lender Trustee of the Issuer and in no event shall Star Bank, National
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Association in its individual capacity or 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.
Notwithstanding any provision in this Agreement or the Basic
Documents, nothing in such Agreement and Basic Documents shall be
construed to limit the Eligible Lender Trustee's responsibility to (i)
the U.S. Secretary of Education or a Guarantor in its capacity as
Eligible Lender Trustee for any violations of statutory or regulatory
requirements that may occur with respect to loans held in the Trust,
pursuant to 34 CFR 682.203(b) or any successor provision thereto, or
(ii) the Department of HHS in its capacity as Eligible Lender Trustee
for any violations of statutory or regulatory requirements that may
occur with respect to loans held in the Trust, pursuant to the HEAL
Act.
(b) 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.
(c) In no event shall the Delaware Trustee 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.
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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.
CRESTAR STUDENT LOAN TRUST 1997-1
By: STAR BANK, NATIONAL ASSOCIATION,
not in its individual
capacity but solely as
Eligible Lender Trustee on
behalf of the Trust
By:__________________________________
_____________________________________
Name:
Title:
CRESTAR BANK
Transferor, Master Servicer and
Administrator
By:__________________________________
_____________________________________
Name:
Title:
Acknowledged 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: Vice President
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APPENDIX A
TO THE
TRANSFER AND SERVICING AGREEMENT
DEFINITIONS AND USAGE
Usage
The following rules of construction and usage shall be applicable to
any instrument that is governed by this Appendix:
(a) All terms defined in this Appendix shall have the defined meanings
when used in any instrument governed hereby and in any certificate or other
document made or delivered pursuant thereto unless otherwise defined therein.
(b) As used herein, in any instrument governed hereby and in any
certificate or other document made or delivered pursuant thereto, accounting
terms not defined in this Appendix or in any such instrument, certificate or
other document, and accounting terms partly defined in this Appendix or in any
such instrument, certificate or other document to the extent not defined, shall
have the respective meanings given to them under generally accepted accounting
principles as in effect on the date of such instrument. To the extent that the
definitions of accounting terms in this Appendix or in any such instrument,
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Appendix or in any such instrument, certificate or other document shall
control.
(c) The words "hereof", "herein", "hereunder" and words of similar
import when used in an instrument refer to such instrument as a whole and not to
any particular provision or subdivision thereof; references in an instrument to
"Article", "Section" or another subdivision or to an attachment are, unless the
context otherwise requires, to an article, section or subdivision of or an
attachment to such instrument; and the term "including" means "including without
limitation".
(d) The definitions contained in this Appendix are equally applicable
to both the singular and plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to below
or in any agreement or instrument that is 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
<PAGE>
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 11.3(a) of the Indenture.
"Additional Financed HEAL Loan File" has the meaning set forth in
section 3.3 of the Transfer and Servicing Agreement.
"Adjustment Payments" has the meaning set forth in Section 2.3(d) of
the Transfer and Servicing Agreement.
"Administration Agreement" means the Administration Agreement dated as
of December 1, 1997, among the Issuer, the Indenture Trustee and the
Administrator, as amended from time to time.
"Administration Fee" has the meaning specified in Section 3 of the
Administration Agreement.
"Administrator" means Crestar Bank, in its capacity as administrator of
the Issuer and the Financed Student Loans, or any successor as Administrator
under the Transfer and Servicing Agreement.
"Administrator Default" has the meaning specified in Section 8.1(b)
of the Transfer and Servicing Agreement.
"Administrator's Certificate" means an Officer's Certificate of the
Administrator delivered pursuant to Section 4.7 of the Transfer and Servicing
Agreement, substantially in the form of Exhibit C thereto and as the
Administrator and the Indenture Trustee may agree.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
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"Authenticating Agent" means the Person appointed by the Indenture
Trustee at the request of the Issuer as Authenticating Agent for the Notes
pursuant to the Indenture, and any successor Authenticating Agent for the Notes.
"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 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
Transferor, any officer of the Transferor who is authorized to act for the
Transferor in matters relating to or to be acted upon by the Transferor pursuant
to the Basic Documents and who is identified on the list of Authorized Officers
delivered by the Transferor 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 a Servicer, any officer of such Servicer who is authorized to
act for such Servicer in matters relating to or to be acted upon by such
Servicer pursuant to the Basic Documents and who is identified on the list of
Authorized officers delivered by such Servicer to the Indenture Trustee, or the
Closing Date (as such list may be modified or supplemented from time to time
thereafter).
"Available Funds" means, with respect to any Collection Period, the
excess of (A) the sum, without duplication, of the following amounts with
respect to such Collection Period: (i) all collections received by the Master
Servicer or any Servicer on the Financed Student Loans (including any Guarantee
Payments and Insurance Payments received with respect to the Financed Student
Loans) during such Collection Period; (ii) any payments, including without
limitation Interest Subsidy Payments and Special Allowance Payments, received by
the Eligible Lender Trustee during such Collection Period with respect to
Financed Student Loans; (iii) all proceeds from any sales of Financed Student
Loans by the Trust during such Collection Period; (iv) any payments of or with
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respect to interest received by the Master Servicer or a Servicer during such
Collection Period with respect to a Financed Student Loan for which a Realized
Loss was previously allocated; (v) the aggregate Purchase Amounts received for
those Financed Students Loans purchased by the Transferor or the Master Servicer
during the related Collection Period; (vi) the aggregate amounts, if any,
received from the Transferor or the Master Servicer as reimbursement of
non-guaranteed or uninsured interest amounts (which shall not include, with
respect to Financed FFELP Loans, the portion of such interest amounts (i.e., 2%)
for which the Guarantor did not have an obligation to make a Guarantee Payment),
or lost Interest Subsidy Payments and Special Allowance Payments, with respect
to the Financed Student Loans pursuant to Sections 3.2 or 4.5, respectively, of
the Transfer and Servicing Agreement (vii) all Adjustment Payments, if any,
received from the Transferor during such Collection Period and (viii)
Investments Earnings for such Collection Period over (B) the Issuer 2.3(b)
Payments for such Collection Period; provided, however, that Available Funds
will exclude all payments and proceeds of any Financed Student Loans the
Purchase Amount of which has been included in Available Funds for a prior
Collection Period, which payments and proceeds shall be paid to the Transferor,
and amounts used to reimburse the Master Servicer for Monthly Advances pursuant
to Section 5.4 of the Transfer and Servicing Agreement.
"Basic Documents" means the Trust Agreement, the Master Indenture, the
Terms Supplement, the Transfer and Servicing Agreement, the Administration
Agreement, the Note Depository Agreement, the Guarantee Agreements, the HEAL
Insurance Contract, the Underwriting Agreement and other documents and
certificates delivered in connection with any thereof and all amendments and
supplements thereto.
"Benefit Plan" means any employee benefit plan, retirement arrangement,
individual retirement account or Keogh Plan subject to either Title I of ERISA
or Section 4975 of the Code, or any entity (including an insurance company
general account) whose underlying assets include plan assets by reason of a
plan's investment in the entity.
"Book-Entry Note" means a beneficial interest in the Notes, ownership
and transfers of which shall be through book entries by a Securities Depository
as described in Section 2.14 of the Indenture.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which national banking associations or banking institutions or trust
companies in New York, Ohio, Pennsylvania or Virginia are authorized or
obligated by law, regulation or executive order to remain closed.
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"Certificate" means a certificate evidencing the beneficial interest of
a Certificateholder in the Trust, substantially in the form of Exhibit A to the
Trust Agreement.
"Certificate Balance" equals, initially, the Initial Certificate
Balance and, thereafter, equals the Initial Certificate Balance reduced by all
amounts previously distributed to Certificateholders as principal. In
determining whether the Certificateholders which hold Certificates representing
the requisite Certificate Balance have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any other Basic
Document, the Certificate Balance shall not include the principal balance of
Certificates owned by the Transferor or any Affiliate of the Transferor.
"Certificate Distribution Account" means the account designated as
such, established and maintained pursuant to Section 5.1 of the Transfer and
Servicing Agreement.
"Certificate Paying Agent" means any paying agent or co-paying agent
appointed pursuant to Section 3.10 of the Trust Agreement, which shall initially
be the Eligible Lender Trustee.
"Certificate Initial Rate" means 7.48% per annum.
"Certificate Quarterly Advance Account" means the account designated as
such, established and maintained pursuant to Section 5.1 of the Transfer and
Servicing Agreement.
"Certificate Rate" means One-Month LIBOR plus 1.50% per annum.
"Certificate Register" and "Certificate Registrar" means the register
mentioned and the registrar appointed pursuant to Section 3.4 of the Trust
Agreement.
"Certificateholder" means a Person in whose name a Certificate is
registered in the Certificate Register.
"Certificateholders' Distribution Amount" means, as to any Class of
Certificates, with respect to any Quarterly Distribution Date, the
Certificateholders' Interest Distribution Amount for such Quarterly Distribution
Date plus, for each Quarterly Distribution Date on and after which the Notes
have been paid in full, the Certificateholders' Principal Distribution Amount
for such Quarterly Distribution Date.
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"Certificateholders' Interest Shortfall" means, as to any Class of
Certificates, with respect to any Quarterly Distribution Date, the excess, if
any, of (i) the sum of the related Certificateholders' Interest Distribution
Amount on the preceding Quarterly Distribution Date and any outstanding
Certificateholders' Interest Shortfall on such preceding Quarterly Distribution
Date over (ii) the amount of interest actually distributed to the
Certificateholders of such Class on such preceding Quarterly Distribution Date,
plus interest on the amount of such excess interest due to the
Certificateholders of such Class, to the extent permitted by law, at the related
Certificate Rate from such preceding Quarterly Distribution Date to the current
Quarterly Distribution Date.
"Certificateholders' Interest Distribution Amount" means, as to any
Class of Certificates, with respect to any Quarterly Distribution Date relating
to such Certificates, the sum of (i) the amount of interest accrued at One Month
LIBOR plus 1.50% per annum for each related Interest Period since the last
Quarterly Distribution Date (or, in the case of the first Quarterly Distribution
Date, the Closing Date) on the outstanding principal amount of such Certificates
on the immediately preceding Quarterly Distribution Date, after giving effect to
all distributions of principal to Certificateholders of such Class on such
Quarterly Distribution Date (or, in the case of the first Quarterly Distribution
Date, on the Closing Date) and (ii) the Certificateholders' Interest Carryover
Shortfall relating to such Certificates for such Quarterly Distribution Date.
"Certificateholders' Principal Carryover Shortfall" means, as of the
close of any Quarterly Distribution Date relating to a Class of Certificates on
or after which the Notes have been paid in full, the excess, if any, of (i) the
sum of the Certificateholders' Principal Distribution Amount on such Quarterly
Distribution Date and any outstanding Certificateholders' Principal Carryover
Shortfall for the preceding Quarterly Distribution Date over (ii) the amount of
principal actually distributed to the Certificateholders on such Quarterly
Distribution Date.
"Certificateholders' Principal Distribution Amount" means, on each
Quarterly Distribution Date occurring after the principal balance of each Class
of Notes has been paid in full, the sum of (i) the Principal Distribution Amount
for the three Collection Periods preceding such Quarterly Distribution Date, and
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(ii) the Certificateholders' Principal Carryover Shortfall as of the close of
the preceding Quarterly Distribution Date; provided, however, that the
Certificateholders' Principal Distribution Amount will in no event exceed the
outstanding principal balance of the applicable class of Certificates. Further,
on the first Quarterly Distribution Date occurring on or after the Distribution
Date on which the principal balance of the last outstanding Class of Notes is
paid in full, the Certificateholders' Principal Distribution Amount also will
include the excess, if any, of the amount of principal available to be
distributed on such Distribution Date over the amount of principal paid on the
Notes on such date.
"Class" means any class of Notes.
"Class A Notes" means the Class A-1 Notes and the Class A-2 Notes.
"Class A-1 Notes" means Notes of the Issuer designated as "Crestar
Student Loan Trust 1997-1, Senior LIBOR Rate Class A-1 Student Loan Asset
Backed Notes."
"Class A-1 Noteholder" means any Noteholder of the Class A-1 Notes.
"Class A-2 Notes" means Notes of the Issuer designated as "Crestar
Student Loan Trust 1997-1, Senior LIBOR Rate Class A-2 Student Loan Asset
Backed Notes."
"Class A-2 Noteholder" means any Noteholder of the Class A-2 Notes.
"Class B Notes" means Notes of the Issuer designated as "Crestar
Student Loan Trust 1997-1, Subordinate LIBOR Rate Class B Student Loan Asset
Backed Notes."
"Class B Noteholder" means any Noteholder of the Class B Notes.
"Class Initial Rate" means, with respect to any Class of Notes, the
rate identified as such in the Terms Supplement.
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"Class Interest Rate" means, with respect to any Class of Notes, the
interest rate determined as set forth in the Terms Supplement.
"Closing Date" means December 17, 1997.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 5.1 of the Transfer and Servicing Agreement.
"Collection Period" means, initially, with respect to each of the
Initial Financed Student Loans, the period beginning on the Closing Date and
ending on December 31, 1997, inclusive, and thereafter, the Collection Period
means the calendar month immediately following the end of the previous
Collection Period.
"Commission" means the Securities and Exchange Commission.
"Consolidation Loan" means a FFELP Loan designated as such, made by the
Transferor to an eligible borrower that represents the refinancing of student
loans to such borrower and his or her spouse in accordance with the applicable
terms and provisions of the Higher Education Act.
"Consolidation Loan Fees" means, as to any Collection Period, an amount
equal to 1.05% per annum of the outstanding principal balances of and accrued
interest on the Consolidation Loans owned by the Trust as of the last day of
such Collection Period.
"Consolidation Prepayments" means, on any Subsequent Finance Date, the
amount of principal then on deposit in the Collection Account representing
payments received as a result of Financed Student Loans being repaid with the
proceeds of Consolidation Loans or HEAL Consolidation Loans (provided, however,
if a Subsequent Finance Date occurs during the month of a Distribution Date,
Consolidation Prepayments shall not include amounts received during the month of
such Distribution Date).
"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
on the Closing Date is located at Four Albany Street, New York, New York 10006
Attention: Corporate Trust and Agency Group, Structured Finance Group
(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, the Certificateholder and the Transferor, or the principal
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corporate trust office of any successor Indenture Trustee (the address of which
the successor Indenture Trustee will notify the Noteholders and the Transferor)
and (ii) with respect to the Eligible Lender Trustee, the principal corporate
trust office of the Eligible Lender Trustee located at 425 Walnut Street,
Cincinnati, Ohio 45201, Attention: Steve Blackstone, telephone: (513) 632-4622;
facsimile (513) 632-5511; or at such other address as the Eligible Lender
Trustee may designate by notice to the Certificateholders and the Transferor, 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 Transferor).
"Crestar Subsidiary" has the meaning specified in Section 6.5 of the
Transfer and Servicing Agreement.
"Cut-off Date" means for the Financed Student Loans set forth on
Schedule A-1 to the Transfer and Servicing Agreement, November 25, 1997.
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Deferment Period" means certain deferment periods authorized by the
Higher Education Act and the HEAL Act during which the related borrower's
scheduled payments are deferred.
"Deferral Phase" means the period during which the related borrower is
in school and for certain authorized periods as described in the Higher
Education Act.
"Delaware Trustee" means Delaware Trust Capital Management, Inc., not
in its individual capacity but solely as the Delaware Trustee under the Trust
Agreement, and its successors and assigns in such capacity.
"Delaware Trustee Fee" has the meaning specified in Section 8.3 of
the Trust Agreement.
"Definitive Notes" has the meaning specified in Section 2.14 of the
Indenture.
"Delivery" when used with respect to Trust Account Property means:
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(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that
constitute "instruments" within the meaning of Section 9-105(l) (i) of
the UCC and are susceptible of physical delivery, transfer thereof to
the Indenture Trustee or its nominee or custodian by physical delivery
to the Indenture Trustee or its nominee or custodian endorsed to, or
registered in the name of, the Indenture Trustee or its nominee or
custodian or endorsed in blank, and, with respect to a certificated
security (as defined in Section 8-102 of the UCC) transfer thereof (i)
by delivery of such certificated security endorsed to, or registered in
the name of, the Indenture Trustee or its nominee or custodian or
endorsed in blank to a financial intermediary (as defined in Section
8-313) of the UCC) and the making by such financial intermediary of
entries on its books and records identifying such certificated
securities as belonging to the Indenture Trustee or its nominee or
custodian and the sending by such financial intermediary of a
confirmation of the purchase of such certificated security by the
Indenture Trustee or its nominee or custodian, or (ii) by delivery
thereof to a "clearing corporation" (as defined in Section 8-102(3) of
the UCC) and the making by such clearing corporation of appropriate
entries on its books reducing the appropriate securities account of the
transferor and increasing the appropriate securities account of a
financial intermediary by the amount of such certificated security, the
identification by the clearing corporation of the certificated
securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities by such
clearing corporation or a "custodian bank" (as defined in Section
8-102(4) of the UCC) or the nominee of either subject to the clearing
corporation's exclusive control, the sending of a confirmation by the
financial intermediary of the purchase by the Indenture Trustee or its
nominee or custodian of such securities and the making by such
financial intermediary of entries on its books and records identifying
such certificated securities as belonging to the Indenture Trustee or
its nominee or custodian (all of the foregoing, "Physical Property"),
and, in any event, any such Physical Property in registered form shall
be in the name of the Indenture Trustee or its nominee or custodian;
and such additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such
Trust Account Property to the Indenture Trustee or its nominee or
custodian, consistent with changes in applicable law or regulations or
the interpretation thereof;
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(b) with respect to any securities issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the Federal
National Mortgage Association that is a book-entry security held
through the Federal Reserve System pursuant to federal book-entry
regulations, the following procedures, all in accordance with
applicable law, including applicable federal regulations and Articles 8
and 9 of the UCC: book-entry registration of such Trust Account
Property to an appropriate book-entry account maintained with a Federal
Reserve Bank by a financial intermediary which is also a "depository"
pursuant to applicable federal regulations and issuance by such
financial intermediary of a deposit advice or other written
confirmation of such book-entry registration to the Indenture Trustee
or its nominee or custodian of the purchase by the Indenture Trustee or
its nominee or custodian of such book-entry securities; the making by
such financial intermediary of entries in its books and records
identifying such book-entry security held through the Federal Reserve
System pursuant to federal book-entry regulations as belonging to the
Indenture Trustee or its nominee or custodian and indicating that such
custodian holds such Trust Account Property solely as agent for the
Indenture Trustee or its nominee or custodian; and such additional or
alternative procedures as may hereafter become appropriate to effect
complete transfer of ownership of any such Trust Account Property to
the Indenture Trustee or its nominee or custodian, consistent with
changes in applicable law or regulations or the interpretation thereof;
and
(c) with respect to any item of Trust Account Property that is
an uncertificated security under Article 8 of the UCC and that is not
governed by clause (b) above, registration on the books and records of
the issuer thereof in the name of the financial intermediary, the
sending of a confirmation by the financial intermediary of the purchase
by the Indenture Trustee or its nominee or custodian of such
uncertificated security, the making by such financial intermediary of
entries on its books and records identifying such uncertificated
certificates as belonging to the Indenture Trustee or its nominee or
custodian.
"Department of Education" means the United States Department of
Education.
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"Department of HHS" means the United States Department of Health and
Human Services.
"Depositor" means Crestar Bank in its capacity as Depositor under the
Trust Agreement.
"Directing Notes" means the Class A Notes while any such Notes are
Outstanding, and, when no Class A Notes remain Outstanding, the Class B Notes.
"Distribution" means, with respect to any Financed Student Loan, the
amount of the monthly remittance payable to the holder of such Financed Student
Loan in accordance with its terms.
"Distribution Date" means, the 25th day of each month or if such day is
not a Business Day in New York, the next succeeding Business Day in New York,
commencing January 26, 1998.
"Distribution Determination Date" means, with respect to any
Distribution Date, the third Business Day immediately preceding such
Distribution Date.
"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 each Rating Agency in one of its generic
rating categories which signifies investment grade. An Eligible Deposit Account
may not be evidenced by a certificate of deposit, passbook or other instrument.
"Eligible Institution" means an entity which is an institution whose
deposits are insured by the FDIC and the unsecured and uncollateralized
long-term debt obligations of which shall be rated "AA-" or better by Standard &
Poor's, A2 or better by Moody's and, if rated by Fitch, "AA-" or better by Fitch
or the highest short-term rating by Standard & Poor's, the highest short term
rating by Moody's, and, if rated by Fitch, the highest short term rating by
Fitch which is either (i) a federal savings association duly organized, validly
existing and in good standing under the federal banking laws, (ii) an
institution duly organized, validly existing and in good standing under the
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applicable banking laws of any state, (iii) a national banking association duly
organized, validly existing and in good standing under the federal banking laws,
or (iv) a principal subsidiary of a bank holding company.
"Eligible Investments" As used herein, Eligible Investments shall
include the following:
(1) Cash (insured at all times by the Federal Deposit Insurance
Corporation);
(2) Direct obligations of (including obligations issued or held in
book entry form on the books of) the Department of the
Treasury of the United States of America;
(3) obligations of any of the following federal agencies which
obligations represent the full faith and credit of the United
States of America, including:
- Export-Import Bank
- Farm Credit System Financial Assistance Corporation
- Farmers Home Administration
- General Services Administration
- U.S. Maritime Administration
- Small Business Administration
- Government National Mortgage Association (GNMA)
- U.S. Department of Housing & Urban Development
(PHA's)
- Federal Housing Administration;
(4) senior debt obligations rated "AAA" by Standard & Poor's,
"Aaa" by Moody's and, if rated by Fitch, "AAA" by Fitch issued
by the Federal National Mortgage Association or the Federal
Home Loan Mortgage Corporation;
(5) U.S. dollar denominated deposit accounts, federal funds and
banker's acceptances with domestic commercial banks which
have a rating on their short term certificates of deposit on
the date of purchase of "A-1+" by Standard & Poor's, "P-1"
by Moody's and, if rated by Fitch, "F-1+" by Fitch and
maturing no more than 360 days after the date of purchase
(ratings on holding companies not being considered the
rating of the bank);
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(6) commercial paper which is rated at the time of purchase in the
single highest classification, "A-1+" by Standard & Poor's,
"P-1" by Moody's and, if rated by Fitch, "F-1+" by Fitch and
which matures not more than 270 days after the date of
purchase;
(7) Investments in money market funds (including, but not limited
to, money market mutual funds) rated "AAAm" or "AAAm-G" or
better by Standard & Poor's and, if rated by Fitch, "AAA" by
Fitch;
(8) investment agreements acceptable to the Rating Agencies,
written confirmation of which shall be furnished to the
Indenture Trustee prior to any such investment; and
(9) other forms of investments acceptable to the Rating Agencies,
written confirmation of which shall be furnished to the
Indenture Trustee prior to any such investment.
Notwithstanding anything in this Agreement or the Basic Documents to
the contrary, for so long as the Transferor is a Certificateholder, all
investments of the Trust shall be made in investments permissible for a national
bank.
The value of the above investments shall be determined as follows:
a) as to investments the bid and asked prices of which are
published on a regular basis in The Wall Street Journal (or,
if not there, then in The New York Times): the average of the
bid and asked prices for such investments so published on or
most recently prior to such time of determination;
b) as to investments the bid and asked prices of which are not
published on a regular basis in The Wall Street Journal or
The New York Times: the average bid price at such time of
determination for such investments by any two nationally
recognized government securities dealers (selected by the
Administrator in its absolute discretion) at the time making
a market in such investments or the bid price published by a
nationally recognized pricing service;
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c) as to certificates of deposit and bankers acceptances: the
face amount thereof, plus accrued interest; and
d) as to any investment not specified above: the value thereof
established by prior agreement between the Issuer and the
Administrator.
"Eligible Lender Trustee" means Star Bank, National Association not in
its individual capacity but solely as Eligible Lender Trustee under the Trust
Agreement, and its successors and assigns in such capacity.
"Eligible Lender Trustee Fee" has the meaning specified in Section 8.1
of the Trust Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" has the meaning specified in Section 5.1 of the
Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"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, the Controller or the Treasurer of such corporation; and with respect
to any partnership, any general partner thereof.
"Expense Account" means the account designated as such pursuant to
Section 5.1 of the Transfer and Servicing Agreement.
"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.
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"FFELP Loan" means a student loan which is a PLUS Loan, SLS Loan,
Consolidation Loan, Stafford Loan or Unsubsidized Stafford Loan.
"FHLMC" means Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
"Final Maturity Date" means, with respect to any Note, the date on
which the entire unpaid principal amount of such Note becomes due and payable as
provided in the Terms Supplement.
"Financed FFELP Loan" means a Financed Student Loan that also is a
FFELP Loan.
"Financed HEAL Loan" means a Financed Student Loan that also is a HEAL
Loan.
"Financed Student Loan" means the FFELP Loans and HEAL Loans set forth
in Schedule A-1 to the Transfer and Servicing Agreement and Schedule A to each
Transfer Agreement, as amended or supplemented from time to time by the Master
Servicer to accurately reflect the Financed Student Loans then subject to the
Lien of the Indenture. The Schedule of Financed Student Loans may be in the form
of microfiche or other form of electronic media.
"Financed Student Loan Files" means the documents specified in Section
3.3 of the Transfer and Servicing Agreement.
"Fitch" means Fitch IBCA, Inc., and its successors and assigns.
"FNMA" means Federal National Mortgage Association, a federally
chartered and privately owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, or any successor thereto.
"Formula Interest Rate" means, with respect to any Class of Notes, the
interest rate determined as set forth in the Terms Supplement.
"Grace Period" means certain grace periods authorized by the Higher
Education Act and the HEAL Act during which the related borrower's scheduled
payments are deferred.
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"Grant" means mortgage, pledge, hypothecate, 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 Trust Estate 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 Trust Estate 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 each agreement entered into between the
Eligible Lender Trustee and a Guarantor pursuant to which such Guarantor
guarantees payments on Financed FFELP Loans.
"Guarantee Payment" means any payment made by a Guaranty Agency
pursuant to a Guarantee Agreement in respect of a Financed FFELP Loan.
"Guarantor" means the Department of Education, Educational Credit
Management Corporation, a Minnesota non-profit corporation (formerly known as
Transitional Guaranty Agency, Inc.), PHEAA, United Student Aid Funds, Inc., a
Delaware non-profit corporation, the Florida Department of Education, an agency
of the State of Florida, New York Higher Education Services Corporation, an
agency of the State of New York, and Texas Guaranteed Student Loan Corporation,
a Texas nonprofit corporation, and their respective successors and assigns.
"Guaranty Agency" means any agency which has an agreement with the
Department of Education of Education to be a guarantor of FFELP Loans.
"HEAL Act" means Title VII, ss.ss.701-720 of the Public Health Services
Act, as amended, 42 U.S.C. ss.ss. 292-292p, together with any rules and
regulations promulgated thereunder by the Department of HHS.
"HEAL Consolidation Loan" means a HEAL Loan that is designated as such
that is made under the HEAL Act.
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"HEAL Insurance Contract" means the HEAL Insurance Contract entered
into between the Eligible Lender Trustee and the Department of HHS pursuant to
which the Department of HHS insures payments on Financed HEAL Loans.
"Higher Education Act" means Title IV, Part B of the Higher Education
Act of 1965, as amended, together with any rules and regulations promulgated
thereunder by the Department of Education or the Guarantors.
"Indemnifiable 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 a Person (or any of its officers, directors, employees
or agents) who is entitled to be indemnified.
"Indenture" means the Master Indenture and the Terms Supplement, each
as amended or supplemented from' time to time.
"Indenture Trust Estate" means all money, instruments, rights and other
property that are, from time to time, subject or intended to be subject to the
Lien and security interest of the Indenture for the benefit of the Noteholders
(including all property and interests Granted to the Indenture Trustee),
including all proceeds thereof.
"Indenture Trustee" means Bankers Trust Company, not in its individual
capacity but solely as Indenture Trustee under the Indenture and its successors
and assigns in such capacity.
"Indenture Trustee Fee" has the meaning specified in Section 6.7 of the
Master Indenture, as may be amended pursuant to any amendment to the Terms
Supplement.
"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 Transferor 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 Transferor or any Affiliate
of any of the foregoing Persons and (c) is not connected with the Issuer, any
such other obligor, the Transferor or any Affiliate of any of the foregoing
Persons as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
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"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 11.1 of the
Master 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" and that the signer is Independent within
the meaning thereof.
"Individual Note" means a Note of an initial principal amount equal to
$50,000. A Note of an original principal amount in excess thereof shall be
deemed to be a number of Individual Notes equal to the quotient obtained by
dividing such initial principal amount by $50,000, without regard to fractions.
"Initial Financed Student Loans" has the meaning specified in Section
2.1 of the Transfer and Servicing Agreement.
"Initial Certificate Balance" means $1,000, representing the
Certificate Balance as of the Closing Date.
"Initial Pool Balance" means $211,956,796 representing the sum of Pool
Balance for the Initial Financed Student Loans set forth on Schedule A-1 as of
the Cut-off 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
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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.
"Insurance Payment" means any payment made by the Department of HHS
pursuant to the HEAL Insurance Contract in respect of a Financed HEAL Loan.
"Interest Payment Period" has the meaning set forth in the Terms
Supplement.
"Interest Period" has the meaning set forth in the Terms Supplement.
"Interest Subsidy Payments" means payments, designated as such,
consisting of interest subsidies by the Department of Education in respect of
the Financed Student 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 5.1(b) of the Transfer and
Servicing Agreement.
"Issuer" means Crestar Student Loan Trust 1997-1.
"Issuer 2.3(b) Payments" has the meaning set forth in Section 2.3(e) of
the Transfer and Servicing Agreement.
"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.
"LIBOR Rate" means, with respect to the Notes or the Certificates, the
related Class Interest Rate or Certificate Rate, as the case may be, that
results from a determination based on One-Month LIBOR and is determined as
described in the Terms Supplement, the Transfer and Servicing Agreement or the
Trust Agreement, as the case may be.
"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
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of any act or omission by the related Obligor or obligations under Subservicing
Agreements in effect as of the Closing Date.
"London Banking Day" means any business day on which dealings in
deposits in United States dollars are transacted in the London interbank market.
"Majority Certificateholder" means the holders of more than 50% of the
Certificate Balance of the Certificates without regard to the Certificates held
by the Depositor.
"Margin" has the meaning set forth in the Terms Supplement.
"Master Indenture" means the Indenture dated as of December 1, 1997
between the Issuer and the Indenture Trustee, as amended or supplemented from
time to time.
"Master Servicer" means Crestar Bank, and its permitted successors and
assigns, as Master Servicer of the Financed Student Loans and the Transfer and
Servicing Agreement.
"Master Servicer Default" means an event specified in Section 8.1(a) of
the related Transfer and Servicing Agreement or Supplemental Transfer and
Servicing Agreement.
"Minimum Purchase Price" has the meaning set forth in Section 9.1(b) of
the Transfer and Servicing Agreement.
"Moody's" means Moody's Investors Service, Inc.
"Monthly Advance" means the amount, if any, advanced by the Master
Servicer pursuant to Section 5.10 of the Transfer and Servicing Agreement with
respect to Guarantee Payments or Interest Subsidy Payments applied for but not
received as of the end of the Collection Period immediately preceding the date
such Monthly Advance is made.
"Monthly Advance Account" means the account designated as such,
established and maintained pursuant to Section 5.1 of the Transfer and Servicing
Agreement.
"Net Loan Rate" shall have the meaning set forth in the Terms
Supplement.
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"91-day T-Bill Rate" shall have the meaning set forth in the Terms
Supplement.
"Notes" means the notes designated as the Issuer's Student Loan
Asset-Backed Notes, issued pursuant to the terms of the Master Indenture and the
Terms Supplement and having an original principal amount equal to $222,900,000.
"Note Depository Agreement" means the agreement dated as of the Closing
Date relating to the Notes among the Issuer, the Indenture Trustee, the
Administrator and the Depository Trust Company, as the initial Securities
Depository.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.1 of the Transfer and Servicing
Agreement.
"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
Securities Depository, or on the books of a Person maintaining an account with
such Securities Depository (directly as Securities Depository Participant or as
an indirect participant, in each case in accordance with the rules of such
Securities Depository).
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.6 of the Indenture.
"Noteholder" means the Person in whose name a Note is registered in
the Note Register.
"Noteholders' Distribution Amount" means, as to any Class of Notes,
with respect to any Distribution Date, the sum of the related Noteholders'
Interest Distribution Amount and the Noteholders' Principal Distribution
Amount for such Distribution Date.
"Noteholders' Interest Carryover" has the meaning set forth in the
Terms Supplement.
"Noteholders' Interest Shortfall" means, as to any Class of Notes, with
respect to any Distribution Date (which, for the Class B Notes, shall be a
Quarterly Distribution Date), the excess of (i) the sum of the related
Noteholders' Interest Distribution Amount on the preceding Distribution Date for
such Class of Notes and any Noteholders' Interest Shortfall on such preceding
Distribution Date for such Class of Notes over (ii) the amount of interest
actually allocated to such Noteholders on such preceding Distribution Date for
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such Class of Notes, plus interest on the amount of such excess interest due to
the Noteholders, to the extent permitted by law, at the related Class Interest
Rate from such preceding Distribution Date for such Class of Notes to the
current Distribution Date for such Class of Notes.
"Noteholders' Interest Distribution Amount" means, as to any Class of
Notes, with respect to any Distribution Date (which, for the Class B Notes,
shall be a Quarterly Distribution Date), the sum of (i) the amount of interest
accrued at the respective Class Interest Rate for each Interest Period since the
last Distribution Date for such Class of Notes (or, in the case of the first
Distribution Date for such Class of Notes, the Closing Date) on the outstanding
principal balance of such Class of Notes on the immediately preceding
Distribution Date for such Class of Notes after giving effect to all principal
distributions to holders of Notes of such Class on such date (or, in the case of
the first Distribution Date for such Class of Notes, on the Closing Date) and
(ii) the Noteholders' Interest Shortfall for such Class of Notes for such
Distribution Date; provided, however, that the Noteholders' Interest
Distribution Amount will not include any Noteholders' Interest Carryover.
"Noteholders' Principal Carryover Shortfall" means, as of the close of
any Distribution Date, the excess of (i) the sum of the Noteholders' Principal
Distribution Amount on such Distribution Date and any outstanding Noteholders'
Principal Carryover Shortfall for the preceding Distribution Date over (ii) the
amount of principal actually allocated to the Noteholders on such Distribution
Date.
"Noteholders' Principal Distribution Amount" means, (A) as to any
Distribution Date on or after February 25, 1998 and on or before the
Distribution Date on which the Class A Notes are paid in full, the sum of (i)
the Principal Distribution Amount for the Collection Period immediately
preceding the month of such Distribution Date (and, in the case of the February
25, 1998 Distribution Date, all preceding Collection Periods), (ii) any Parity
Percentage Payments to be made on such Distribution Date, (iii) the Noteholders'
Principal Carryover Shortfall as of the close of the preceding Distribution Date
and (iv) the amount, if any, remaining on deposit in the Note Distribution
Account following the preceding Distribution Date, and (B) as to any Quarterly
Distribution Date after the Distribution Date on which the Class A Notes are
paid in full, the sum of (i) the Principal Distribution Amount for the three
Collection Periods immediately preceding the month of such Quarterly
Distribution Date, (ii) any Parity Percentage Payments to be made on such
Quarterly Distribution Date, (iii) the Noteholders' Principal Carryover
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<PAGE>
Shortfall as of the close of the preceding Quarterly Distribution Date and (iv)
the amount, if any, remaining on deposit in the Note Distribution Account
following the preceding Quarterly Distribution Date; provided, however, that the
Noteholders' Principal Distribution Amount allocable to a Class of Notes will
not exceed the outstanding principal balance of such Class of Notes. In
addition, with respect to each Class of Notes, on the related Final Maturity
Date the Noteholders' Principal Distribution Amount will include the amount
required to reduce the outstanding principal balance of such Notes to zero.
"Obligor" on a Financed Student Loan means the borrower or co-borrowers
of such Financed Student Loan and any other Person who owes payments in respect
of such Financed Student Loan, including (i) the Guaranty Agency thereof with
respect to a Financed FFELP Loan and the Department of HHS with respect to a
Financed HEAL Loan, and (ii) with respect to any Interest Subsidy Payment or
Special Allowance Payment, if any, thereon, the Department of Education.
"Officer's Certificate" means (i) in the case of the Issuer, a
certificate signed by an Authorized Officer of the Issuer, under the
circumstances described in, and otherwise complying with, the applicable
requirements of Section 11.1 of the Indenture, and delivered to the Indenture
Trustee, (ii) in the case of the Transferor, the Master Servicer or the
Administrator, a certificate signed by an Authorized Officer of the Transferor,
the Master Servicer or the Administrator, as appropriate and (iii) in the case
of the Servicer, a certificate signed by an Authorized Officer of the Servicer.
"One-Month LIBOR" means the rate of interest per annum equal to the
London interbank offered rate for deposits in U.S. dollars having a maturity of
one month commencing on the related Rate Determination Date (the "Index
Maturity") which appears on Telerate Page 3750 as of 11:00 a.m., London time, on
such Rate 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 Reuters
Screen LIBOR Page. If such rate does not appear on Telerate Page 3750 or the
Reuters Screen LIBOR Page, 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 Rate Determination Date to prime
-24-
<PAGE>
banks in the London interbank market by the Reference Banks. The Master Servicer
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,
One-Month LIBOR for that day will be the arithmetic mean (rounded upwards, if
necessary, to the nearest .01%) of the quotations. If fewer than two quotations
are provided, One-Month LIBOR for that day will be the arithmetic mean (rounded
upwards, if necessary, to the nearest .01%) of the rates quoted by three major
banks in New York City, selected by the Master Servicer, or by the Trustee, as
applicable, at approximately 11:00 a.m., New York City time, on such Rate
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, however, that if the banks selected as aforesaid are
not quoting as mentioned in this sentence, One-Month LIBOR in effect for the
applicable Interest Period will be One-Month LIBOR in effect for the previous
Interest Period.
"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 Master Indenture, be employees of or counsel to the Issuer or Administrator
or any of their Affiliates and who shall be reasonably 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 11.1 of the Master Indenture, and shall be in form and
substance reasonably satisfactory to the Indenture Trustee and (ii) with respect
to the Transferor, the Administrator or the Master Servicer, one or more written
opinions of counsel who may be an employee of or counsel to the Transferor, the
Administrator or the Master Servicer, which counsel shall be reasonably
acceptable to the Indenture Trustee and the Eligible Lender Trustee.
"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 or irrevocably provided for
pursuant to the Indenture); and
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<PAGE>
(iii) Notes in exchange for or in lieu of other Notes which
have been authenticated and delivered pursuant to the Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a bona fide purchaser;
provided that in determining whether the Noteholders of the requisite
Outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any other Basic
Document, Notes owned by the Issuer, any other obligor upon the Notes, the
Transferor 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 do 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 Transferor or any Affiliate of any
of the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of all Notes,
or Class of Notes or Certificates, as applicable, Outstanding at the date of
determination.
"Parity Percentage" means, as of any date of determination, the
fraction expressed as a percentage, the numerator of which is the sum of (i) the
then Pool Balance plus accrued interest thereon due from borrowers, and accrued
Interest Subsidy Payments and Special Allowance Payments, if any, as of the end
of the preceding Collection Period, and (ii) all amounts on deposit (including
any accrued interest thereon) in the Collection Account and the Reserve Account
and the denominator of which is the sum of the aggregate Outstanding Amount of
the Notes and the Certificates, accrued and unpaid interest thereon plus accrued
and unpaid Transaction Fees and Consolidation Loan Fees.
"Parity Percentage Payment" means, with respect to any Distribution
Date, the amount, if any, to be transferred from the Collection Account to the
Note Distribution Account pursuant to Section 5.5(e) of the Transfer and
Servicing Agreement, up to the amount necessary for the Parity Percentage to
equal 101.50% after giving effect to all distributions to be made on such
Distribution Date.
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<PAGE>
"Participant" means a Securities Depository Participant.
"Paying Agent" means the Indenture Trustee or any other Person that
meets the eligibility standards for the Indenture Trustee specified in Section
6.12 of the Master 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 Pennsylvania Higher Education Assistance Agency.
"Physical Property" has the meaning assigned to such term in the
definition of "Delivery" above.
"Pledged Account or Fund" means the Collection Account, the Reserve
Account, the Note Distribution Account and the Certificate Distribution
Account.
"PLUS Loan" means a FFELP Loan made pursuant to the provisions of the
PLUS program established under Section 428B of the Higher Education Act (or
predecessor provisions).
"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 to the extent such interest was capitalized
as of the end of such Collection Period), after giving effect to the following,
without duplication: (i) all payments in respect of principal received by the
Trust during such Collection Period from or on behalf of borrowers and
Guarantors and, with respect to certain payments on certain Financed Student
Loans, the Department of Education and the Department of HHS, (ii) the principal
portion of all Purchase Amounts received by the Trust for such Collection Period
and (iii) any Subsequent Financed Student Loans conveyed to the Trust and any
-27-
<PAGE>
Financed Student Loans conveyed by the Trust in exchange for such Subsequent
Financed Student Loan during such Collection Period, in each case pursuant to
Sections 2.2 and 2.3 of the Transfer and Servicing Agreement.
"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 2.7 of the Master Indenture and in
lieu of a mutilated, lost, destroyed or stolen Note shall be deemed to evidence
the same debt as the mutilated, lost, destroyed or stolen Note.
"Primary Servicer" means, with respect to any Financed Student Loan,
the entity responsible for the primary servicing of such Financed Student Loan
on a day to day basis, it being understood that where a subservicer appointed in
accordance with the terms of the Transfer and Servicing Agreement has
responsibility for servicing a Financed Student Loan, such subservicer and not
the Master Servicer shall be the Primary Servicer with respect such Financed
Student Loan.
"Principal Distribution Amount" means, with respect to any Collection
Period, the amount, if any, by which the Pool Balance as of the last day of such
Collection Period is exceeded by the Pool Balance as of the last day of the
preceding Collection Period (or, in the case of the initial Collection Period,
the Cut-off Date).
"Principal Factor" means, as of any Distribution Date for each Class of
Notes, a seven-digit decimal figure equal to the Outstanding Amount of such
Class of Notes (after giving effect to any payments of principal made on such
Distribution Date) divided by the original Outstanding Amount of such Class. The
Principal Factor will be 1.0000000 for each Class of Notes as of the Closing
Date; thereafter, the Principal Factor for each Class of Notes will decline to
reflect reductions in the outstanding principal balance of such Class.
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Purchase Amount" means, as to any Financed Student Loan on any date of
determination, the amount required to prepay in full the outstanding principal
balance of such Financed Student Loan as of the last day of the most recently
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<PAGE>
completed Collection Period, including all accrued but unpaid interest thereon
(including interest to be capitalized) through the last day of the Collection
Period in which such Financed Student Loan is being purchased.
"Purchased Student Loan" means a Financed Student Loan purchased
pursuant to Section 4.5 of the Transfer and Servicing Agreement or repurchased
pursuant to Section 3.2 of the Transfer and Servicing Agreement.
"Qualified Letter of Credit" means a letter of credit delivered or to
be delivered to the Indenture Trustee in lieu of a deposit of cash or Eligible
Investments in the Reserve Account for such Class, which letter of credit shall
(a) be irrevocable and name the Indenture Trustee, in its
capacity as such, as the sole beneficiary thereof;
(b) be issued by a bank whose credit standing is acceptable to each of
the rating agencies which are rating or have rated the Notes of such
Class;
(c) provide that if at any time the then current credit standing of the
issuing bank is such that the continued reliance on such letter of
credit for the purpose or purposes for which it was originally
delivered to the Indenture Trustee would result in a downgrading of any
rating of the Notes of such Class, the Indenture Trustee may either
draw under such letter of credit any amount up to and including the
entire amount then remaining available for drawing thereunder or
terminate such letter of credit;
(d) be transferable to any successor trustee hereunder with
respect to such Class; and
(e) meet such other standards as may be specified in the Terms
Supplement.
"Qualified Institutional Buyer" has the meaning ascribed to such term
in Rule 144A under the Securities Act.
"Quarterly Distribution Date" means the Distribution Date in each
January, April, July and October, commencing April 27, 1998.
"Rate Adjustment Date" has the meaning set forth in the Terms
Supplement.
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<PAGE>
"Rate Determination Date" means for the Notes and the Certificates, the
date which is both two Business Days (in New York and Virginia) and two London
Banking Days preceding the related Rate Adjustment Date.
"Rating Agency" means Moody's, Fitch and Standard & Poor's. If no such
organization or successor is any longer in existence, "Rating Agency" shall be a
nationally recognized statistical rating organization or other comparable Person
designated by the Transferor, notice of which designation shall be given to the
Indenture Trustee, the Eligible Lender Trustee and the Servicer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days' prior notice thereof and that each
of the Rating Agencies shall have notified the Transferor, the Master Servicer,
the Eligible Lender Trustee and the Indenture Trustee in writing that such
action will not result in and of itself in a reduction or withdrawal of the then
current ratings of each Class of Notes.
"Realized Loss" means, for each Financed Student Loan submitted to a
Guarantor for a Guarantee Payment or the Department of HHS for an Insurance
Payment, the excess, if any, of (i) the unpaid principal balance of such
Financed Student Loan on the date it was first submitted to a Guarantor for a
Guarantee Payment or the Department of HHS for an Insurance Payment over (ii)
all amounts received on or with respect to principal on such Financed Student
Loan (including amounts received pursuant to Section 3.2 and 4.5 of the Transfer
and Servicing Agreement) up through the earlier to occur of (A) the date a
related Guarantee Payment or Insurance Payment is made or (B) the last day of
the Collection Period occurring 12 months after the date the claim for such
Guarantee Payment or Insurance Payment is first denied.
"Record Date" means, with respect to a Distribution Date, the close of
business on the second Business Day (in New York) preceding such Distribution
Date.
"Reference Banks" means four leading banks, selected by the Master
Servicer, or by the Trustee, as applicable, (i) engaged in transactions in
Eurodollar deposits in the international Eurocurrency market, (ii) not an
Affiliate of the Master Servicer, the Administrator or the Transferor and (iii)
and having an established place of business in London.
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<PAGE>
"Related Financed Student Loan File" has the meaning specified in
Section 3.8(a) of the Transfer and Servicing Agreement.
"Repayment Phase" means the period during which the related borrower is
required to make payments of principal and interest on the related Financed
Student Loan.
"Requisite Amount" has the meaning set forth in the Terms Supplement.
"Reserve Account" means the account designated as such, established and
maintained pursuant to Section 5.1 of the related Transfer and Servicing
Agreement.
"Reserve Account Initial Deposit" means, $2,190,464.
"Responsible Officer" means, with respect to the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee with direct
responsibility for the administration of the Indenture and the other Basic
Documents on behalf of the Indenture Trustee, including any Managing Director,
Vice President, Assistant Vice President, Assistant Treasurer, Assistant
Secretary, or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers 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.
"Reuters Screen LIBOR Page" will be the display designated as page
"LIBOR" on the Reuters Monitor Money Rates Service (or such other page as may
replace the LIBOR page for the purposes of displaying London interbank offered
rates of major banks).
"Schedule of Financed Student Loans" means the master listing of the
Financed Student Loans set forth in Schedule A-1 to the Transfer and Servicing
Agreement and Schedule A to each Transfer Agreement, in each case as from time
to time amended or supplemented to reflect the Financed Student Loans then
subject to the Lien of the Indenture. The Schedule of Financed Student Loans may
be in the form of microfiche or in the form of electronic media.
"Securities Act" means the Securities Act of 1933, as amended.
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<PAGE>
"Securities Depository" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Securities Depository Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Securities
Depository effects book-entry transfers and pledges of securities deposited with
the Securities Depository.
"Senior Notes" means the Class A Notes.
"Senior Noteholder" means the holder of a Senior Note.
"Serial Loan" means a Student Loan that is owned by a third party that
is serial to a Financed Student Loan.
"Servicer" means PHEAA or, subject to satisfying the Rating Agency
Condition, another entity appointed by the Master Servicer to service the
Financed Student Loans, in its capacity as servicer of the Financed Student
Loans.
"Servicer's Report" means any report of the Master Servicer delivered
pursuant to Section 4.8(a) of the Transfer and Servicing Agreement,
substantially in the form acceptable to the Administrator.
"Servicing Fee" means a quarterly fee in an amount equal to (i) 0.70%
per annum of the average of the Pool Balance as of the last day of the calendar
quarter and the last day of the immediately preceding calendar quarter (or the
Cut-off Date with respect to the calendar quarter ending March 31, 1998), or
(ii) such greater amount for which a Rating Agency Condition is satisfied.
"SLS Loan" means a FFELP Loan designated as such that is made under the
Supplemental Loans for Students Program pursuant to the Higher Education Act.
"Special Allowance Payments" means payments, designated as such, by the
Department of Education in respect of the Financed FFELP Loans to the Eligible
Lender Trustee on behalf of the Trust in accordance with the Higher Education
Act.
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<PAGE>
"Specified Reserve Account Balance" means, with respect to any
Distribution Date, an amount equal to the greater of (i) 1.00% of the sum of the
Outstanding Amount of the Notes and the Certificate Balance on such Distribution
Date, after giving effect to all payments to be made on such date; or (ii)
$500,000; provided, however, that such balance shall not exceed the sum of the
aggregate Outstanding Amount of the Notes and the Certificate Balance.
"Stafford Loan" means a student loan designated as such that is made
under ss. 428 of the Higher Education Act (excluding Unsubsidized Stafford
Loans).
"Standard & Poor's" means Standard & Poor's Rating Services, a division
of The McGraw-Hill Companies, Inc., and its successors and assigns.
"State" means any one of the 50 States of the United States of
America or the District of Columbia.
"Subcustodian" has the meaning specified in Section 3.8 of the
Transfer and Servicing Agreement.
"Subordinated Notes" means the Class B Notes.
"Subordinated Noteholder" means any Noteholder of a Subordinated Note.
"Subsequent Cut-off Date" means the day as to which principal and
interest accruing with respect to an Subsequent Financed Student Loan are
transferred to the Eligible Lender Trustee on behalf of the Issuer pursuant to
Section 2.2 of the Transfer and Servicing Agreement.
"Subsequent Finance Date" means, with respect to any Subsequent
Financed Student Loans, the date specified as such in the related Transfer
Agreement.
"Subsequent Finance Period" means the period commencing on the Closing
Date and ending on December 31, 2002.
"Subsequent Financed Student Loan" means any FFELP Loan or HEAL Loan
transferred to the Eligible Lender Trustee on behalf of the Issuer during the
Subsequent Finance Period pursuant to Section 2.2 of the Transfer and Servicing
Agreement.
"Subsequent Financing Purchase Price" means, as to any Subsequent
Financed Student Loan, the principal amount of such Subsequent Financed Student
Loan as of the Subsequent Cut-off Date for such loan and all accrued and unpaid
interest on (including interest to be capitalized) such Subsequent Financed
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Student Loan (other than Interest Subsidy Payments and Special Allowance
Payments payable through the Subsequent Cut-Off Date) through the Subsequent
Cut-off Date for such loan.
"Subservicing Agreement" has the meaning specified in Section 4.13 of
the Transfer and Servicing Agreement.
"Successor Administrator" has the meaning specified in Section 3.7(e)
of the Indenture.
"Successor Master Servicer" has the meaning specified in Section
3.7(e) of the Indenture.
"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).
"Terms Supplement" means, the Terms Supplement to the Indenture dated
as of December 1, 1997 between the Issuer and the Indenture Trustee.
"TP Loans" means all Stafford Loans, Unsubsidized Stafford Loans and
PLUS Loans with a first disbursement made by the Transferor on or after November
l, 1996.
"TP Program" means the Crestar Bank Top Performer Program and any
similar program with respect to which a Rating Agency Condition is satisfied.
"Transaction Fees" means, collectively, the Servicing Fee, the
Administration Fee, the Indenture Trustee Fee, the Delaware Trustee Fee and
the Eligible Lender Trustee Fee.
"Transfer Agreement" has the meaning set forth in Section 2.2(b) of
the Transfer and Servicing Agreement.
"Transfer and Servicing Agreement" means the Transfer and Servicing
Agreement dated as of December 1, 1997, among the Issuer, the Transferor, the
Administrator, the Eligible Lender Trustee and the Master Servicer, as amended
from time to time.
"Transferor" means Crestar Bank.
"Treasury Regulations" means regulations, including proposed or
temporary regulations, promulgated under the Code. References in any document or
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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, if any,
and all proceeds of the foregoing.
"Trust Accounts" has the meaning specified in Section 5.1 of the
Transfer and Servicing Agreement.
"Trust Agreement" means the Trust Agreement dated as of December 1,
1997, among the Depositor, the Eligible Lender Trustee and the Delaware Trustee,
as amended and supplemented from time to time.
"Trust Certificate" means a Certificate.
"Trust Certificateholder" means a person in whose name a Trust
Certificate is registered in the Certificate Register.
"Trust Estate" means all right, title and interest of the Trust (or the
Eligible Lender Trustee on behalf of the Trust) in and to (i) the property and
rights assigned to the Trust pursuant to Article II of the Transfer and
Servicing Agreement and each Transfer Agreement, (ii) all funds on deposit from
time to time in the Trust Accounts and (iii) all other property of the Trust
from time to time, including any rights of the Eligible Lender Trustee and the
Trust pursuant to the Transfer and Servicing Agreement, the Administration
Agreement and the other Basic Documents.
"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.
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<PAGE>
"Unsubsidized Stafford Loan" means a FFELP Loan designated as such that
is made under ss. 428H of the Higher Education Act.
"VELA Service Errors" has the meaning assigned to such term in the
letter to the Transferor, dated March 7, 1996, from the Department of Education.
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<PAGE>
SCHEDULE A-1
TO THE
TRANSFER AND SERVICING AGREEMENT
Schedule of Financed Student Loans
Schedule of Financed Student Loans was delivered to Trustee and is not
included herein.
A-1
<PAGE>
SCHEDULE B
TO THE
TRANSFER AND SERVICING AGREEMENT
Location of Financed Student Loan Files
Name of subcustodian Location of Related Financed
Student Loan Files
Pennsylvania Higher 1200 N. 7th Street
Education Assistance Harrisburg, PA 17102
Agency
B-1
<PAGE>
EXHIBIT A
TO THE
TRANSFER AND SERVICING AGREEMENT
Form of Noteholders' Statement
pursuant to Section 5.7(a) of Transfer and
Servicing Agreement (capitalized terms used
herein are defined in Appendix A thereto)
Distribution Date:____________________
(i) Principal Factor
(a) Class A-1 Notes: _________________
(b) Class A-2 Notes: _________________
(c) Class B Notes: _________________
(ii) Amount of principal being paid or distributed:
(a) Class A-1 Notes: _________________
(b) Class A-2 Notes: _________________
(c) Class B Notes: _________________
(d) Certificates: _________________
(iii) (a) Amount of interest being paid or distributed:
(1) Class A-1 Notes: $__ (based on [Formula Interest Rate]
[Net Loan Rate])
(2) Class A-2 Notes: $___(based on [Formula Interest Rate]
[Net Loan Rate])
(3) Class B Notes: $___(based on [Formula Interest Rate]
[Net Loan Rate])
(4) Certificates: $____ (based on [One-Month LIBOR]
[Net Loan Rate])
(b) Applicable Interest Rate:
A-1
<PAGE>
(1) Class A-1 Notes: ______%
(2) Class A-2 Notes: ______%
(3) Class B Notes: ______%
(4) Certificates: ______%
(iv) Amount of distribution allocable to any Noteholders' Interest Carryover:
(a) Class A-1 Notes: $____________
(b) Class A-2 Notes: $____________
(c) Class B Notes: $____________
(v) Pool Balance at end of preceding Collection Period: __________
(vii) After giving effect to distributions on this Distribution Date:
(a) outstanding principal amount of Class A-1 Notes: $____________
(b) outstanding principal amount of Class A-2 Notes: $____________
(c) outstanding principal amount of Class B Notes: $____________
(d) Certificate Balance: $____________
(vii) Amount of Servicing Fee, Administration Fee, Indenture Trustee
Fee, Delaware Trustee Fee and Eligible Lender Trustee Fee to be
allocated for the upcoming Distribution Date: ($____________)
(viii) Aggregated amount of Realized Losses (if any) for the Collection
Period immediately preceding the Distribution Date: ____________
(ix) (a) Amount of distribution attributable to amounts
in the Reserve Account: $____________
(b) Amount of other withdrawals from the Reserve Account $____________
(c) Reserve Account Balance $____________
(d) Parity percentage _____%
(e) Amount of Parity Percentage Payments $____________
A-2
<PAGE>
(x) The aggregate Purchase Amount paid for Financed Student Loans
purchased from the trust during the immediately preceding
Collection Period: ____________
(xi) During the Subsequent Finance Period only, the aggregate
Issuer 2.3(b) Payments and Adjustment Payments, stated
separately, for the immediately preceding Collection Period:
$____________
(xii) Amount of Financed Student Loans:
(a) that are 31 to 60 days delinquent: $____________
(b) that are 61 to 90 days delinquent: $____________
(c) that are 91 to 120 days delinquent: $____________
(d) that are 120 days delinquent: $____________
(e) for which claims have been filed with the
appropriate Guarantor or the Department
of HHS and which are awaiting payment $____________
A-3
<PAGE>
EXHIBIT B
TO THE
TRANSFER AND SERVICING AGREEMENT
Form of Certificateholders' Statement
pursuant to Section 5.7(a) of
Transfer and Servicing Agreement
(capitalized terms used herein are
defined in Appendix A thereto)
Distribution Date:____________________
(i) Principal Factor
(a) Class A-1 Notes: _________________
(b) Class A-2 Notes: _________________
(c) Class B Notes: _________________
(ii) Amount of principal being paid or distributed:
(a) Class A-1 Notes: _________________
(b) Class A-2 Notes: _________________
(c) Class B Notes: _________________
(d) Certificates: _________________
(iii) (a) Amount of interest being paid or distributed:
(1) Class A-1 Notes: $__ (based on [Formula Interest Rate]
[Net Loan Rate])
(2) Class A-2 Notes: $__ (based on [Formula Interest Rate]
[Net Loan Rate])
(3) Class B Notes: $__ (based on [Formula Interest Rate]
[Net Loan Rate])
(4) Certificates: $____ (based on [One-Month LIBOR]
[Net Loan Rate])
(b) Applicable Interest Rate:
B-1
<PAGE>
(1) Class A-1 Notes: ______%
(2) Class A-2 Notes: ______%
(3) Class B Notes: ______%
(4) Certificates: ______%
(iv) Amount of distribution allocable to any Noteholders' Interest Carryover:
(a) Class A-1 Notes: $____________
(b) Class A-2 Notes: $____________
(c) Class B Notes: $____________
(v) Pool Balance at end of preceding Collection Period: __________
(vii) After giving effect to distributions on this Distribution Date:
(a) outstanding principal amount of Class A-1 Notes: $____________
(b) outstanding principal amount of Class A-2 Notes: $____________
(c) outstanding principal amount of Class B Notes: $____________
(d) Certificate Balance: $____________
(vii) Amount of Servicing Fee, Administration Fee, Indenture Trustee
Fee, Delaware Trustee Fee and Eligible Lender Trustee Fee to be
allocated for the upcoming Distribution Date: ($____________)
(viii) Aggregated amount of Realized Losses (if any) for the Collection
Period immediately preceding the Distribution Date: $____________
(ix) (a) Amount of distribution attributable to amounts in the
Reserve Account: $____________
(b) Amount of other withdrawals from the Reserve Account $____________
(c) Reserve Account Balance $____________
(d) Parity percentage _____%
(e) Amount of Parity Percentage Payments $____________
B-2
<PAGE>
(x) The aggregate Purchase Amount paid for Financed Student Loans
purchased from the Trust during the immediately preceding
Collection Period: ____________
(xi) During the Subsequent Finance Period only, the aggregate
Issuer 2.3(b) Payments and Adjustment Payments, stated
separately, for the immediately preceding Collection Period:
$____________
(xii) Amount of Financed Student Loans:
(a) that are 31 to 60 days delinquent: $____________
(b) that are 61 to 90 days delinquent: $____________
(c) that are 91 to 120 days delinquent: $____________
(d) that are 120 days delinquent: $____________
(e) for which claims have been filed with the
appropriate Guarantor or the Department
of HHS and which are awaiting payment $____________
B-3
<PAGE>
EXHIBIT C
TO THE
TRANSFER AND SERVICING AGREEMENT
Form of Administrator's Certificate
[To be provided by the Administrator pursuant to
Section 4.7 of the Transfer and
Servicing Agreement]
<PAGE>
EXHIBIT D
TO THE
TRANSFER AND SERVICING AGREEMENT
ASSIGNMENT FOR
FINANCED STUDENT LOANS
For value received, in accordance with the Transfer and Servicing
Agreement (the "Transfer and Servicing Agreement") dated as of December 1, 1997,
among the undersigned, as transferor (the "Transferor"), as master servicer (the
"Master Servicer") and as administrator (the "Administrator"), Crestar Student
Loan Trust 1997-1 (the "Trust"), and Star Bank, National Association, not in its
individual capacity but solely as Eligible Lender Trustee (the "Eligible Lender
Trustee"), the undersigned does hereby contribute, 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 Transfer and
Servicing Agreement), all right, title and interest of the undersigned in and to
(i) the FFELP Loans and the HEAL Loans set forth on Schedule A-1 to the Transfer
and Servicing Agreement and all obligations of the Obligors thereunder,
including all monies paid or payable thereunder (other than Interest Subsidy
Payments and Special Allowance Payments to the Cut-off Date) on or after the
Cut-off Date, including the right to enforce such FFELP Loans and HEAL Loans in
the same manner and to the same extent as the Transferor would have the power to
do but for the execution and delivery of the Transfer and Servicing Agreement,
(ii) all funds on deposit from time to time in the Trust Accounts and in all
investments and proceeds thereof (including all income thereon) and (iii) the
proceeds of any and all of the foregoing. The foregoing contribution,
assignment, transfer and conveyance 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 Transferor to the borrowers of Initial Financed Student Loans
or any other person in connection with the Financed Student Loans or any
agreement or instrument relating to any of them, except to the extent required
by the Higher Education Act or the HEAL Act, as the case may be.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the
Transfer and Servicing Agreement and is to be governed by the Transfer and
Servicing Agreement.
D-1
<PAGE>
Capitalized terms used but not defined herein shall have the meaning
assigned to them in Appendix A to the Transfer and Servicing Agreement, which
also contains rules as to usage that shall be applicable herein.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of [_______,] 1997.
CRESTAR BANK,
as Transferor
By:______________________________
Name:
Title:
D-2
<PAGE>
EXHIBIT E
TO THE
TRANSFER AND SERVICING AGREEMENT
TRANSFER AGREEMENT
TRANSFER AGREEMENT No. ___dated as of ,_____, among CRESTAR STUDENT
LOAN TRUST 1997-1, a Delaware business trust (the "Issuer"), CRESTAR BANK, a
Virginia banking corporation, as transferor (the "Transferor"), and STAR BANK,
NATIONAL ASSOCIATION, a national banking association, not in its individual
capacity but solely as Eligible Lender Trustee of the Issuer (the "Eligible
Lender Trustee").
WITNESSETH:
WHEREAS the Issuer, the Transferor, the Eligible Lender Trustee, the
Administrator and the Master Servicer (as defined in the Appendix A to the
Transfer and Servicing Agreement) are parties to the Transfer and Servicing
Agreement dated as of December 1, 1997 (as amended or supplemented, the
"Transfer and Servicing Agreement");
WHEREAS pursuant to the Transfer and Servicing Agreement, the
Transferor wishes to convey the FFELP Loans [and HEAL Loans] referred to in
Section 2 hereof (the "Subsequent Financed 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, intending to be
legally bound hereby, 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
Transfer 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:
E-1
<PAGE>
"Subsequent Finance Date" means, with respect to the
Subsequent Financed Student Loans, [_______].
"Subsequent Cut-Off Date" means, with respect to each Subsequent
Financed Student Loan, the date specified as such on Schedule A hereto.
2. Schedule of Subsequent Financed Student Loans. Attached
hereto as Schedule A is a supplement to the Schedule of Financed Student
Loans listing the Subsequent Financed Student Loans to be conveyed on
the Subsequent Finance Date to the Eligible Lender Trustee on behalf of
the Issuer pursuant to this Agreement. Attached hereto as Schedule B is
a list of Financed Student Loans conveyed to the Transferor by the
Eligible Lender Trustee on behalf of the Issuer in exchange for the
Subsequent Financed Student Loans conveyed pursuant to Section 2.3(b) of
the Transfer and Servicing Agreement, which Schedule B shall be deemed
to modify the Schedule of Financed Student Loans to delete therefrom
such Financed Student Loans being so conveyed to the Transferor.
3. Conveyance of Subsequent Financed Student Loans. In
consideration of the payment of the Subsequent Financing Purchase Price
or, with respect to a conveyance of Subsequent Financed Student Loans
pursuant to Section 2.3(b) of the Transfer and Servicing Agreement, the
Issuer's delivery to or upon the order of the Transferor of the Financed
Student Loans listed on Schedule B attached hereto, the Transferor does
hereby contribute, transfer, assign, set over and otherwise convey,
without recourse (subject to the obligations set forth in the Transfer
and Servicing Agreement), to the Eligible Lender Trustee on behalf of
the Issuer:
(a) all right, title and interest in and to each
Subsequent Financed Student Loan, and all obligations of the
Obligors thereunder, including all moneys paid thereunder
(other than Interest Subsidy Payments and Special Allowance
Payments payable through the Subsequent Cut-Off Date), and all
written communications received by the Transferor with respect
thereto and still retained by the Transferor in accordance with
its retention policies (including borrower correspondence,
notices of death. disability or bankruptcy and requests for
deferments or forbearances), on and after the Subsequent
Cut-Off Date; and
(b) the proceeds of any and all of the foregoing.
E-2
<PAGE>
4. Representations and Warranties of the Transferor. The Transferor
hereby represents and warrants to the Issuer as of the date of this Agreement
and as of the Subsequent Finance Date that:
(a) Organization and Good Standing. The Transferor is duly
organized and validly existing as a Virginia banking corporation 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, except for such power and authority the absence of
which would not have a material adverse effect on the Transferor or its
ability to consummate the transactions contemplated by this Agreement
and the Transferor had at all relevant times, and has, the power,
authority and legal right to originate, acquire and own the Subsequent
Financed Student Loans.
(b) Power and Authority. The Transferor has the requisite
corporate power and authority to execute and deliver this Agreement and
to carry out its terms; the Transferor has requisite corporate power
and authority to transfer and assign the property to be contributed and
assigned to and deposited with the Issuer (or with the Eligible Lender
Trustee on behalf of the Issuer) and the Transferor has duly authorized
such transfer and assignment to the Issuer (or to the Eligible Lender
Trustee on behalf of the Issuer) by all necessary corporate action on
the Transferor's part; and the execution, delivery and performance of
this Agreement have been duly authorized by the Transferor by all
necessary corporate action.
(c) Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of the Transferor enforceable against the
Transferor in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance and
similar laws relating to creditors' rights generally or the rights of
creditors of banks the deposit accounts of which are insured by the
FDIC and subject to general principles of equity.
(d) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof
do not violate, 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 charter or by-laws of the Transferor, or any
material indenture, material agreement or other material instrument to
which the Transferor is a party or by which it shall be bound; nor
E-3
<PAGE>
result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such material indenture,
material agreement or other material instrument (other than pursuant to
the Basic Documents); nor violate any material law or, to the knowledge
of the Transferor, any material order, rule or regulation applicable to
it of any court or of any federal or State regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Transferor or its properties.
(e) No Proceedings. To its best knowledge, there are no
proceedings or investigations pending or threatened against the
Transferor, before any court, regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over it or its
properties: (i) asserting the invalidity of this Agreement, (ii)
seeking to prevent the consummation of any of the transactions
contemplated by this Agreement, (iii) seeking any determination or
ruling that could reasonably be expected to have a material and adverse
effect on the performance by the Transferor of its obligations under,
or the validity or enforceability of, this Agreement 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
Transferor in connection with the execution and delivery by the
Transferor of this Agreement and the performance by the Transferor of
the transactions contemplated by this Agreement have been duly
obtained, effected or given and are in full force and effect.
(g) Principal Balances. (i) The aggregate principal balance of
the Consolidation Loans, the HEAL Consolidation Loans, the Serial Loans
and the Student Loans transferred by the Transferor pursuant to Section
2.3(b) of the Transfer and Servicing Agreement that are Subsequent
Financed 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 Cut-Off
Dates is $________, $________, $_______ and $________, respectively;
(ii) the aggregate principal balance of the Financed Student Loans
E-4
<PAGE>
listed on Schedule B attached hereto and to be conveyed to the
Transferor pursuant to Section 2.3(b) of the Transfer and Servicing
Agreement is $_______ ; (iii) the Consolidation Prepayments on deposit
in the Collection Account is $________; (iv) the Issuer 2.3(b) Payments
for the Subsequent Finance Date is $__________; and (v) the Adjustment
Payment for the Subsequent Finance Date is $________.
5. Conditions Precedent. The obligation of the Issuer to acquire the
Subsequent Financed Student Loans hereunder is subject to the satisfaction, on
or prior to the Subsequent Finance Date, of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Transferor in Section 4 of
this Agreement and the representations and warranties made with respect
to the Subsequent Financed Student Loans in Section 3.1 of the Transfer
and Servicing Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Subsequent
Finance Date.
(b) Transfer and Servicing Agreement Conditions. Each of the
conditions set forth in Section 2.2(b) of the Transfer and Servicing
Agreement shall have been satisfied.
(c) Delivery of Assignment. The Transferor shall have
delivered an Assignment substantially in the form of Annex A hereto.
Upon the satisfaction of the conditions set forth in this Section 5,
the Eligible Lender Trustee shall have executed and delivered to the Transferor
an Assignment, substantially in the form of Annex B hereto, with respect to any
Financed Student Loans to be conveyed to the Transferor pursuant to Section
2.3(b) of the Transfer and Servicing Agreement, and direct the Indenture Trustee
to transfer to the Transferor the Subsequent Financing Purchase Price in
immediately available funds to an account designated in writing by the
Transferor to the Indenture Trustee.
6. Ratification of Agreement. As supplemented by this Agreement, the
Transfer and Servicing Agreement is in all respects ratified and confirmed and
the Transfer 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.
E-5
<PAGE>
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.
CRESTAR STUDENT LOAN TRUST
1997-1
By: STAR BANK, NATIONAL
ASSOCIATION, not in its
individual capacity but
solely as Eligible Lender
Trustee
By:______________________________________________________
Name:
Title:
STAR BANK, NATIONAL
ASSOCIATION,
not in its individual
capacity but solely as
Eligible Lender Trustee
By:
----------------------------
Name:
Title:
E-6
<PAGE>
CRESTAR BANK, as
Transferor
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:
E-7
<PAGE>
ANNEX A
TO THE TRANSFER AGREEMENT
ASSIGNMENT
For value received, in accordance with the Transfer and Servicing
Agreement (the "Transfer and Servicing Agreement") dated as of December 1, 1997,
among the undersigned, as transferor (the "Transferor"), as master servicer and
as administrator, Crestar Student Loan Trust 1997-1 (the "Trust"), Star Bank,
National Association, not in its individual capacity but solely as Eligible
Lender Trustee (the "Eligible Lender Trustee"), and the Transfer Agreement No.
__ dated as of____, (the "Transfer Agreement") among the Transferor, the Trust
and the Eligible Lender Trustee, the undersigned does hereby contribute, 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 Transfer
and Servicing Agreement), all right, title and interest of the undersigned in
and to (i) the Subsequent Financed Student Loans and all obligations of the
Obligors thereunder, including all moneys paid or payable thereunder (other than
Interest Subsidy Payments and Special Allowance Payments through the related
Subsequent Cut-Off Date) after the related Subsequent Cut-Off Date and (ii) the
proceeds of any and all of the foregoing. The foregoing contribution,
assignment, transfer and conveyance 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 Transferor to the borrowers of such Subsequent Financed
Student Loans or any other person in connection with the Subsequent Financed
Student Loans or any agreement or instrument relating to any of them, except to
the extent required by the Higher Education Act or the HEAL Act, as the case may
be.
In addition, the undersigned, by execution of this instrument, hereby
endorses the promissory notes evidencing each Subsequent Financed 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 Transfer 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
Transfer and Servicing Agreement and the Transfer Agreement and is to be
governed by the Transfer and Servicing Agreement and the Transfer Agreement.
A-1
<PAGE>
Capitalized terms used but not defined herein shall have the meaning
assigned to them in the Transfer Agreement or in Appendix A to the Transfer and
Servicing Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to
be duly executed as of______
CRESTAR BANK,
as Transferor
By:
-----------------------------------
Name:
Title:
A-2
<PAGE>
ANNEX B
TO THE TRANSFER AGREEMENT
ASSIGNMENT
For value received, in accordance with the Transfer and Servicing
Agreement (the "Transfer and Servicing Agreement") dated as of December 1, 1997,
among the undersigned, (the "Trust"), as Master Servicer and as Administrator
(the "Transferor"), and Star Bank, National Association, not in its individual
capacity but solely as Eligible Lender Trustee (the "Eligible Lender Trustee"),
and the Transfer Agreement No. __ dated as of ____________, ____ (the "Transfer
Agreement") among the Transferor, the Trust and the Eligible Lender Trustee, the
undersigned does hereby contribute, assign, transfer and otherwise convey unto
the Transferor, without recourse (subject to the obligations set forth in the
Transfer and Servicing Agreement), all right, title and interest of the
undersigned in and to (i) the Financed Student Loans set forth on Schedule B to
the Transfer Agreement and all obligations of the Obligors thereunder, including
all moneys paid or payable thereunder (other than Interest Subsidy Payments and
Special Allowance Payments through the related Subsequent Cut-off Date) after
the related Subsequent Cut-off Date and (ii) the proceeds of any and all of the
foregoing. The foregoing contribution, assignment. transfer and conveyance does
not constitute and is not intended to result in any assumption by the Transferor
of any obligation of the Eligible Lender Trustee or the Trust to the borrowers
of such Financed Student Loans or any other person in connection with such
Financed Student Loans or any agreement or instrument relating to any of them,
except to the extent required by the Higher Education Act or the HEAL Act, as
the case may be.
In addition, the undersigned, by execution of this instrument, hereby
endorses the promissory notes evidencing each Financed Student Loan described in
Schedule B to the Transfer Agreement in favor of the Transferor, without
recourse, 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
Transfer and Servicing Agreement and the Transfer Agreement and is to be
governed by the Transfer and Servicing Agreement and the Transfer Agreement.
B-1
<PAGE>
Capitalized terms used but not defined herein shall have the meaning
assigned to them in the Transfer Agreement or in Appendix A to the Transfer and
Servicing Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to
be duly executed as of______
CRESTAR STUDENT LOAN TRUST
1997-1
By: STAR BANK, NATIONAL
ASSOCIATION,
not in its individual
capacity but solely as
Eligible Lender Trustee
on behalf of the Trust
By:
---------------------------
Name:
Title:
B-2
<PAGE>
B-4
SCHEDULE A
TO THE TRANSFER AGREEMENT NO.____
[List of Subsequent Financed Student Loans and
their related Subsequent Cut-Off Dates]
B-1
<PAGE>
SCHEDULE B
TO THE TRANSFER AGREEMENT NO.___
[List of Financed Student Loans
to be Conveyed to the Transferor]
B-2
<PAGE>
EXHIBIT F
TO THE
TRANSFER AND SERVICING AGREEMENT
OFFICER'S CERTIFICATE
REQUIRED BY SECTION 2.2(b)(viii) OF THE TRANSFER AND SERVICING AGREEMENT
The undersigned, _____________________, a _____________ of Crestar Bank
(the "Transferor"), hereby certifies for and on behalf of the Transferor as
follows:
1. this Certificate is given pursuant to Section 2.2(b)(viii) of the
Transfer and Servicing Agreement (the "Transfer and Servicing Agreement"), dated
as of December 1, 1997, among the Transferor, Crestar Student Loan Trust 1997-1
(the "Trust"), and Star Bank, National Association, not in its individual
capacity but solely as Eligible Lender Trustee (the "Eligible Lender Trustee"),
and the Transfer Agreement No. __ dated as of____________, ____ (the "Transfer
Agreement") among the Transferor, the Trust and the Eligible Lender Trustee, in
connection with the transfer of certain Subsequent Financed Student Loans on the
date hereof;
2. any words or phrases capitalized in this Certificate but not
defined herein shall have the meaning assigned thereto in the Transfer and
Servicing Agreement;
3. the undersigned is an Authorized Officer of the Transferor; and
4. with respect to the transfer on the date hereof of Subsequent
Financed Student Loans and the other property and rights related thereto as
described in Section 2.2(a) of the Transfer and Servicing Agreement, each of the
conditions precedent set forth in Section 2.2(b) of the Transfer and Servicing
Agreement have been satisfied on or prior to the date hereof.
IN WITNESS WHEREOF, the undersigned, being duly authorized, has caused
this certificate to be executed and delivered as of this ____ day of ________,
____.
CRESTAR BANK
B-3
<PAGE>
By:
- ---------------------------
-----------------------
Its ___________________
DOC # 106573 V1
EXHIBIT 99.2
ADMINISTRATION AGREEMENT dated as of December 1, 1997, among
CRESTAR STUDENT LOAN TRUST 1997-1, a Delaware business trust (the "Issuer"),
CRESTAR BANK, a Virginia banking corporation, as administrator (the
"Administrator"), and BANKERS TRUST COMPANY, a New York banking corporation, not
in its individual capacity but solely as Trustee (the "Indenture Trustee").
W I T N E S S E T H
WHEREAS the Issuer was created pursuant to a Trust Agreement
dated as of December 1, 1997 (the "Trust Agreement") among the Administrator, as
depositor, Star Bank, National Association, as Eligible Lender Trustee and
Delaware Trust Capital Management, Inc., as Delaware Trustee;
WHEREAS the Issuer may issue Student Loan Asset Backed
Certificates (the "Certificates") pursuant to the Trust Agreement and, if
applicable, a related Trust Supplement;
WHEREAS the Issuer may issue, in one or more Classes, Student
Loan Asset Backed Notes (the "Notes") pursuant to the Indenture dated as of
December 1, 1997 (the "Indenture"), between the Issuer and the Indenture Trustee
and a related Terms Supplement (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 or will enter into certain
agreements in connection with the issuance of the Notes and the Certificates,
including the Transfer and Servicing Agreement, the Guarantee Agreements, the
HEAL Insurance Contract, and the Indenture and related Terms Supplement (all
such agreements being collectively referred to herein as the "Related
Agreements");
WHEREAS, pursuant to the Basic Documents Issuer and the
Eligible Lender Trustee are required to perform certain duties in connection
with (a) the Notes and the Trust Estate therefor pledged to the Indenture
Trustee pursuant to the Indenture and the related Terms Supplement 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
<PAGE>
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 or cause
to be provided the services required hereby and is willing to perform or cause
to be performed 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, intending to be legally
bound hereby, agree as follows:
1. Duties of the Administrator. (a) Duties with Respect to the
Indenture and Trust Agreement. The Administrator shall perform all its duties as
Administrator under the Trust Agreement, the Indenture, the Transfer and
Servicing Agreement and this 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, the Terms Supplement and
the Trust Agreement. The Administrator shall monitor the performance of the
Issuer and shall advise the Eligible Lender Trustee when action by the Issuer or
the Eligible Lender Trustee is necessary to comply with the Issuer's or the
Eligible Lender Trustee's duties under the Indenture, the Terms Supplement, the
Trust Agreement and any of the other Basic Documents. The Administrator shall
prepare for execution, if required, 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, the Terms Supplement, the
Trust Agreement or any of the other Basic Documents. In furtherance of the
foregoing, the Administrator shall take all appropriate action that is the duty
of the Administrator and of the Issuer to take pursuant to the Trust Agreement,
the Indenture and the Terms Supplement, including such of the foregoing as are
required of the Issuer with respect to the following matters (references are to
sections of the Indenture:
(A) the duty to cause the Note Registrar to keep the Note
Register and to give the Indenture Trustee notice of any appointment of
-2-
<PAGE>
a new Note Registrar and the location, or change in location, of the
Note Registrar (Section 2.6);
(B) the fixing or causing to be fixed of any specified record
date and the notification of the Indenture Trustee and Noteholders with
respect to special payment dates, if any (Section 2.9(d));
(C) 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 2.11);
(D) the preparation, obtaining or filing of the instruments,
opinions and certificates and other documents required for the release
of collateral (Section 2.12);
(E) the duty to cause the Note Registrar to maintain on behalf
of the Issuer an office in the Borough of Manhattan, City of New York,
for registration of transfer or exchange of Notes (Section 3.2);
(F) the duty to cause newly appointed Paying Agents, if any,
to deliver to the Indenture Trustee the instrument specified in the
Indenture regarding funds held in trust (Section 3.3);
(G) the direction to the Paying Agents to deposit moneys with
the Indenture Trustee (Section 3.3);
(H) the obtaining and preservation of the Issuer's
qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of the Indenture, the Notes and each other instrument
and agreement included in the Indenture Trust Estate (Section 3.4);
(I) the preparation of all supplements, amendments, financing
statements, continuation statements, instruments of further assurance
and other instruments, in accordance with Section 3.5 of the Indenture,
necessary to protect the Indenture Trust Estate (Section 3.5);
(J) the identification to the Indenture Trustee in an
Officer's Certificate of the Issuer of a Person with whom the Issuer
has contracted to perform its duties under the Indenture (Section
3.7(b));
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<PAGE>
(K) the notification of the Indenture Trustee and the Rating
Agencies (if any Notes or Certificates are then rated by the Rating
Agencies) of a Master Servicer Default known to the Administrator
pursuant to the Transfer and Servicing Agreement and, if such Master
Servicer Default arises from the failure of the Master Servicer to
perform any of its duties under the Transfer 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
3.7(d));
(L) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligations under the
Indenture (Section 3.10);
(M) the delivery of notice to the Indenture Trustee and the
Rating Agencies (if any Notes or Certificates are then rated by the
Rating Agencies) of each Event of Default, any Default under Section
5.1 (iii) of the Indenture and each default by the Master Servicer, the
Administrator or the Seller under the Transfer and Servicing Agreement
or any Supplemental Transfer and Servicing Agreement known to the
Administrator (Section 3.18);
(N) 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 4.1);
(O) the compliance with any written directive of the Indenture
Trustee to compel performance by the Master Servicer under the Transfer
and Servicing Agreement (Section 5.16);
(P) the reimbursement to the Indenture Trustee to the extent
provided in Section 6.7 of the Indenture of all reasonable
out-of-pocket expenses (including the fees and expenses of counsel)
incurred or made by it in accordance with any provision of the
Indenture as well as the indemnification, to the extent provided in the
Indenture, of the Indenture Trustee in connection with the
administration of the Trust and the performance of the Indenture
Trustee's duties under the Indenture and the other Basic Documents
(Section 6.7);
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(Q) the removal of the Indenture Trustee and appointment of a
successor Indenture Trustee (Section 6.8);
(R) the preparation of any written instruments required to
confirm more fully the authority of any cotrustee or separate trustee
and any written instruments necessary in connection with the
resignation or removal of any co-trustee or separate trustee (Section
6.10);
(S) the furnishing of the Indenture Trustee with the names and
addresses of Noteholders during any period when the Indenture Trustee
is not the Note Registrar (Section 7.1);
(T) 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 Noteholders
(Section 7.3);
(U) the opening of one or more accounts in the Issuer's, the
Indenture Trustee's or the Eligible Lender Trustee's name, the
preparation of Issuer Orders, Officers Certificates of the Issuer and
Opinions of Counsel and all other actions reasonably necessary with
respect to investment and reinvestment of funds in the Trust Accounts
(Sections 8.2 and 8.3);
(V) the preparation of Issuer Orders and the obtaining of
Opinions of Counsel with respect to the execution of supplemental
indentures and the mailing to the Noteholders of notices with respect
to such supplemental indentures (Sections 9.1, 9.2 and 9.3);
(W) the preparation of or obtaining of the documents and
instruments required for the execution and authentication of new Notes
conforming to any supplemental indenture and the delivery of the same
to the Eligible Lender Trustee and the Indenture Trustee, respectively
(Section 9.6);
(X) the preparation of all Officers' Certificates of the
Issuer, or obtaining 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 11.1(a));
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(Y) 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
11.1(b));
(AA) the preparation and delivery to Noteholders and the
Indenture Trustee of any agreements with respect to alternate payment
and notice provisions (Section 11.6); and
(BB) the recording of the Indenture, if applicable
(Section 11.15).
(b) Duties with Respect to the Issuer. (i) In
addition to the duties of the Administrator set forth above and those provided
in the other Related Agreements and the Trust Agreement which the Administrator
agrees herein to perform, 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, the Trust Agreement or any of the other
Basic Documents, 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, the Trust Agreement or any of the other Basic Documents.
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 Trust
Estate (including the Related Agreements and other Basic Documents) 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) 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.
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(c) Non-Ministerial Matters. With respect to
matters that in the reasonable judgment of the Administrator are
non-ministerial, the Administrator shall not take any action unless within a
reasonable time before the taking of such action, the Administrator shall have
notified the Eligible Lender Trustee of the proposed action and the Eligible
Lender Trustee shall not have withheld consent or provided an alternative
direction. For the purpose of the preceding sentence, "non-ministerial matters"
shall include:
(A) the amendment of or any supplement to the Indenture
or any Terms Supplement;
(B) the initiation of any claim or lawsuit by the Issuer and
the compromise of any action, claim or lawsuit brought by or against
the Issuer (other than in connection with the collection of the
Financed Student Loans);
(C) the amendment, change or modification of the Related
Agreements or the Trust Agreement;
(D) the appointment of successor Note Registrars, successor
Certificate Paying Agents and successor Indenture Trustees pursuant to
the Indenture or to the appointment of successor Administrators or
successor Master Servicers, or the consent to the assignment by the
Note Registrar, Certificate Paying Agent or Indenture Trustee of its
obligations under the Indenture;
(E) the removal of the Indenture Trustee; and
(F) the buying or selling of assets in the Trust Estate,
including student loans.
(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, (l) make any payments to the Noteholders under the Related Agreements, (2)
make any payments to Certificateholders under the Trust Agreement or the
Transfer and Servicing Agreement, (3) sell the Trust Estate pursuant to Section
5.4 of the Indenture, (4) take any other action that the Issuer directs the
Administrator not to take on its behalf, (5) in connection with its duties
hereunder assume any indemnification obligation of any other Person or (6)
service the Financed Student Loans.
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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 reasonably 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 a fee (the
"Administration Fee"), payable quarterly in advance on each Quarterly
Distribution Date (and, with respect to the initial payment, payable on the
Closing Date for the period from the Closing Date to the initial Quarterly
Distribution Date), in an amount equal to 0.02% per annum of the principal
amount of the Notes Outstanding on such Quarterly Distribution Date (following
any principal reductions of the Notes on such Distribution Date) or, with
respect to the initial payment, on the Closing Date (following the issuance of
the Notes).
4. Additional Information To Be Furnished to the Issuer. The
Administrator shall furnish the Issuer from time to time such additional
information regarding the Trust Estate 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 or provided in
the Basic Documents, the Administrator shall have no authority to act for or
represent the Issuer or the Eligible Lender Trustee in any way and shall not
otherwise be deemed an agent of the Issuer or the Eligible Lender Trustee.
6. No Joint Venture; Not Trustee. Nothing contained in this
Agreement (i) shall constitute the Administrator and any of the Issuer, the
Indenture Trustee 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.
Further, nothing contained in this Agreement shall constitute or be deemed to
constitute the Administrator as a trustee or cotrustee of the Trust.
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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 VII and
Article VIII of the Transfer 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 pursuant to
Section 8(a) or the resignation or removal of the Administrator pursuant to
Section 8(b) and the Transfer 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:
(a) if to the Issuer or the Eligible Lender
Trustee, to
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Star Bank, National Association
Corporate Trust Office
425 Walnut Street
Cincinnati, Ohio 45201
Attention: Corporate Trust Department
Steve Blackstone
Telephone: (513) 632-4622
Fax: (513) 632-5511
(b) if to the Administrator, to
Crestar Bank
919 East Main Street
Richmond, Virginia 23219
Attention: Marke A. Thomas
Vice President-Securitizations
Manager
Telephone: (804) 343-9400
Fax: (804) 782-7155
with a copy to
Crestar Bank
919 East Main Street
Richmond, Virginia 23219
Attention: Linda Rigsby
Senior Vice President and General
Counsel
Fax: (804) 782-7244
(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
Telephone: (212) 250-2500
Fax: (212) 250-6439
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.
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11. Amendments.
(a) This Agreement may be amended by the Administrator, the Issuer, and
the Indenture Trustee, with the prior consent of the Eligible Lender Trustee
(which consent 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
Noteholders or the Certificateholders; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel delivered to the Indenture Trustee
and the Eligible Lender Trustee, adversely affect in any material respect the
interests of any Noteholder.
(b) This Agreement may also be amended from time to time by the
Administrator, the Issuer, and the Indenture Trustee, with the prior consent of
the Eligible Lender Trustee, and the consent of the holders of Directing Notes
evidencing not less than a majority of the Outstanding Amount of the Directing
Notes, for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholders; provided,
however, that no such amendment shall (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments with
respect to Financed Student Loans or distributions that shall be required to be
made for the benefit of the Noteholders or the Certificateholders or (ii) reduce
the aforesaid percentage of the Outstanding Amount of the Notes and the
Certificate Balance, the Noteholders and the Certificateholders of which are
required to consent to any such amendment, without the consent of all
outstanding Noteholders and Certificateholders affected thereby.
(c) It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.
(d) 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 (if any Notes or Certificates are then rated by the Rating
Agencies).
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12. Successors and Assigns. Notwithstanding anything to the
contrary contained herein, except as provided in Sections 6.5 and 6.8 of the
Transfer 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 Crestar Bank in Other Capacities.
Nothing in this Agreement shall affect any obligation Crestar Bank may have in
any other capacity under the Basic Documents.
18. Provisions of Transfer and Servicing Agreement Control.
The provisions of the Transfer and Servicing Agreement and of each Supplemental
Transfer 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 Transfer and Servicing Agreement, the Transfer and Servicing Agreement shall
govern.
19. Limitation of Liability of Eligible Lender Trustee and
Indenture Trustee. (a) Notwithstanding anything contained herein to the
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contrary, this instrument has been countersigned by Star Bank, National
Association not in its individual capacity but solely in its capacity as
Eligible Lender Trustee of the Issuer and in no event shall the Eligible Lender
Trustee in its individual capacity or the Delaware Trustee in its individual
capacity or as Delaware Trustee or any Owner of the Issuer have any liability
for the representations, warranties, covenants, agreements or other obligations
of the Issuer hereunder, as to all of which recourse shall be had solely to the
assets of the Issuer. For all purposes of this Agreement, in the performance of
any duties or obligations of the Issuer thereunder, the Eligible Lender Trustee
shall be subject to, and entitled to the benefits of, the terms and provisions
of Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to
the contrary, this Agreement has been countersigned by Bankers Trust Company not
in its individual capacity but solely as Indenture Trustee and in no event shall
Bankers Trust Company have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
20. Third-Party Beneficiary. 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.
IN WITNESS WHEREOF, the parties hereto have caused this
Administration Agreement to be duly executed and delivered as of the day and
year first above written.
CRESTAR STUDENT LOAN TRUST 1997-1
by STAR BANK, NATIONAL
ASSOCIATION, not in its
individual capacity but solely
as Eligible Lender Trustee,
By:_______________________________
Name:
Title:
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BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Indenture Trustee,
By:_______________________________
Name:
Title:
CRESTAR BANK, as Administrator,
By:_______________________________
Name:
Title:
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